Brooklinen’s Strategy & Growth: 7 Keys to its Success
If like many people you have filled your extra hours at home since the COVID-19 pandemic hit sprucing up your home then you are not alone. While thinking about new patio furniture you may have also decided your bedroom needs a makeover. Did you by chance make a purchase at Brooklinen for some luxurious but affordable bedding? If you did you were among many who helped to drive Brooklinen’s sales up by 100% last year.
The millennial favourite direct to consumer bedding brand launched in 2014 and has continued to expand with the opening of its first store last year. If you are curious about how the brand has grown over time then consider these seven keys to its success.
1. The best ideas are often the result of a problem you wish didn’t exist. What’s bothering you today? If you asked the co-founders of Brooklinen, husband and wife, Rich and Vicki Fulop that question in 2012 when they were on a trip to Las Vegas they would have said sheets, bedsheets. Not the sheets in their hotel room but the sheets in their home.
The bedsheets in the hotel the couple was staying at in Las Vegas were so luxurious they wanted them for themselves. There was just one catch, they didn’t want to pay the $800.00 price tag for the bedsheets. That set the couple off on an expedition to find high quality bedsheets at affordable prices. After trying to find inexpensive luxury bedsheets to no avail the couple started to wonder if they could sell their own bedsheets. “We did the legwork for about two years, searching for partners, for factories. Rich made this his project all throughout business school,” says Vicki Fulop. Nearly a decade later, how Brooklinen got its start sounds so simple but often all it takes to build a great company is a great idea and the discipline to pursue it.
2. If you don’t find funding at first don’t give up. Like many founders the Fulops couldn’t get venture capitalists to give them a chance. “One of the reasons we couldn’t get funding at first was because people thought customers would need to physically feel the sheets in order to buy them,” says Vicki Fulop.
At the time when the Fulops were getting started nearly a decade ago not as many people were buying merchandise online as they are today. Undaunted, the couple started a Kickstarter campaign in 2014 and ended up raising $236,888. “With good storytelling and a good return policy, we were able to prove that people were definitely willing to shop for bedding online.” After three years in business Brooklinen eventually received a $10 million investment from FirstMark Capital, a venture capital firm, in 2017. Then last year Summit Partners a private equity firm invested $50 million in Brooklinen. Brooklinen also received funding from Freeman Spolgi & Co., another private equity firm, for an undisclosed amount earlier this year.
3. Sometimes a scrappy approach works best. To drum up interest in Brooklinen when the founders were starting out they didn’t sit back and take a passive approach or invest in a lot of expensive PR. Instead they got into a rented van and drove around New York City dropping off samples of their bedsheets to 60 bloggers and other people in the media industry. They included a handwritten note with each package of bedsheets explaining that they are a husband and wife team and how they wanted to change the bedding industry. “It was well-received, and we made a quarter million dollars in the first month,” said Fulop. “Our Kickstarter backers were very happy about that and made lots of referrals for us. Then we started growing our social presence and email marketing.”
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4. Be financially disciplined. Brooklinen has been profitable for most of its existence. It was profitable when it launched in 2014 and in an interview with Techcrunch in 2020 Rich Fulop said the brand had been profitable for the last three out of five years. That is no easy feat for a direct to consumer brand since these brands typically suffer from high customer acquisition costs.
Rich Fulop chalks up the brand’s ability to stay above water to the fact that it didn’t get funding in the beginning. Instead they bootstrapped the business which meant they didn’t have a lot of room for error. “It’s honestly basic stuff. We focused on margins,” says Rich Fulop. Rich Fulop has also said not getting venture capital in the beginning was: “the best thing that could have ever happened to us.” “Obviously, you feel desperate at that time and as you need it, everybody’s getting VC funding. It’s all you hear about and read about in Mashable or TechCrunch, but it’s not the most important thing. What it actually taught us was how to be very responsible, and how to be very efficient and test a lot, in terms of data. That’s the most important part for us. We test everything. Anything anyone tells me, I will give it a shot with a small budget and see what happens.”
Brooklinen was also very disciplined about analyzing the various marketing channels it uses to ensure it isn’t investing in any channels that aren’t providing the right rate of return. A/B testing is also an important tool for the brand as it allows Brooklinen to really understand what’s working and what’s not.
“Brooklinen’s profitability, customer repeat rate, and consistently smart and deliberate growth decisions make them a rare brand to partner with,” said Summit Partners Managing Director Chris Dean. “Many brands focus on a growth-at-all-costs model that we believe isn’t sustainable for longevity; we are thrilled to find a like-mindedpartner and to work together on the next stage of growth for Brooklinen.”
5. Customer feedback is more valuable than you may realize. Brooklinen is a fan of surveying existing and potential customers directly. Before Brooklinen launched the founders asked people coming out of bedding stores about their bedding needs. After speaking to about 500 people and hearing the same thing many times the founders had the data they needed to further refine their idea.
Brooklinen continues to solicit feedback from customers as a way to discover what they should focus on next. One of the ways Brooklinen does this is by asking customers when they return items what the reason was for the return so they can identify new opportunities. Customer feedback led the brand’s decision to launch its own line of pillows since customers were asking where they could find the best pillows and at the time Brooklinen did not offer any of its own.
6. Digital marketing isn’t the only way to advertise. Brooklinen has long been a fan of advertising in the subway system. It has run campaigns where it plasters its ads in every prominent space in a subway station. Getting on and off a train and walking through a subway station is often the kind of captive time which is getting harder to come by. Speaking about subway advertising, Jasmine Rayonia, Director of growth marketing at Brooklinen, has said that subway advertising creates: “a captive audience for storytelling” that allows Brooklinen “to connect with ... customers and tell them about who we are and what we sell.”
Thinking about the ways to advertise outside of the standard Instagram ad is important if you want to standout. “A lot of people tend to think, myself [Rich Fulop] included, you have a great product. If you build a great looking website, people will come, and you’re going to sell millions of units,” says Rich Fulop. “It doesn’t really work like that in reality. Having new strategies to acquire customers and drive traffic to the site, is definitely the hardest piece to learn with no prior experience.” “It’s easy to throw money away.” “To do it efficiently, in a responsible way that you’re actually making money, is very challenging.”
7. Instead of fast and furious, often slow and steady wins the race. In 2019 Brooklinen launched Spaces by Brooklinen a place on its website where other brands can sell their merchandise. This is similar to the marketplace approach retailers like Walmart have started to focus on in the last few years to not only attract new customers but also to make more money by charging sellers on its website a transaction fee. The items sold on Spaces are items customers typically look for as they buy items for their bedroom like art, lounge chairs or lighting. In the past Rich Fulop has said that Spaces could one day compromise half of Brooklinen’s revenues.
Like many digitally native brands Brooklinen has moved from solely selling direct to consumer to bricks and mortar retail. Last year Brooklinen opened its first store in Brooklyn where it sells goods from its Brooklinen brand as well as merchandise from merchants that sell on Spaces. In 2019 the brand stated its interest to use its $50 million investment from Summit Partners to open 30 stores within a three year period but the COVID-19 pandemic put those expansion plans on hold.