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This Side Hustle Spotlight Q&A features Shawn Nelson, founder and CEO of a furniture manufacturer. love sack.The company saw Annual revenue of over $650 million January 2023
Image credit: Provided by Lovesac
When did you start Love Sac as a side hustle and what inspired you?
It was 1995, I was 18 years old, and I was sitting on my parents’ couch in Salt Lake City, Utah. One morning I had an idea and thought: Wouldn’t it be fun to make a giant beanbag chair the size of your entire living room floor? So I got up from the couch, drove to the fabric store, and bought enough fabric to make something this big. Then I started sewing it together. It took her three weeks to fill it with soft materials cut from around the house. But everywhere I went, people loved it and begged me to make it. In the end, I did. It cost $25 to register a name, and Lovesac officially started as a company in October 1998.
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What was the first step you took to get your side hustle off the ground?
When I enrolled at the University of Utah, I lived in my parents’ basement, which was the perfect place to roll out giant, long rolls of dough. My friends and I made sacks in our basement and sold them at the university. We quickly became known on campus as the “love sack guys” and even the frats and sororities bought some sacks for their homes. From there, we became a staple at boat shows, home shows, car shows, Oktoberfests, and just about everything else, and that’s how we grew our company in the early days.
Were there any challenges in having a side hustle? If so, how did you navigate them?
After a few years of running Lovesac as a side hustle while in college, it was clear that it wasn’t really profitable in its current form. In fact, it probably cost money to maintain. Sure, you can make a profit by selling your product, but doing so will destroy your van. Otherwise, the foam shredder will be damaged. Otherwise, the state would fine me and my friend for workplace violations. The bottom line is that businesses are hard to build and can require a lot of money to reach some sort of meaningful critical mass.
As I grew up, I started working harder than ever. Although I was exhausted, I couldn’t resist giving it one last try at the Chicago trade show in hopes of reaching the next level. One of America’s largest retailers ordered 12,000 bags without knowing that it was just me and a friend working in a dilapidated building using a wood chipper as a foam shredder.
Despite all the inefficiencies, we completed the order and realized we had no other large customers to sell to. We went to the furniture store and they all laughed at us and told us it was a stupid idea. So we decided to open our own store. Lovesac’s first store he opened on November 17, 2001.
Image credit: Provided by Lovesac
Related article: The ‘simple’ side hustle he started in college made him more than $1 million in revenue – and taught him 3 business lessons he still uses today
When did you decide to take your business from a side hustle to a full-time venture?
Our first store changed everything. This is when I pivoted the company into a full-time venture. Consumers fell in love with Lovesac. They came and bought saxophones and hung out and played with their friends. This product was the best sales pitch we could make. I made a six-figure profit in the first few weeks alone, and I had never seen anything like this. We soon opened his second store in Provo, Utah, followed by his second stores in Las Vegas, Phoenix, and Southern California. Growth has been rapid.
What has been the biggest hurdle you have faced over the years since you started doing it? Business full time? How did you overcome them?
By the time I was scouted to appear on Richard Branson’s reality show, we had grown to 35 to 40 locations. rebel billionaireIt was a national prime time show on the Fox network and I got a million dollar investment. Of course, he was $2 million in debt for building this growing retail chain, but what are we going to do? We’re going to take the prize money, pay off some of the debt, and raise more money through venture capital. has been procured. However, the venture capitalists wanted to bankrupt the company and start clean through a Chapter 11 reorganization. I was devastated. I had come this far and somehow I had no choice but to start again.
We moved the company to Stamford, CT, downsized our staff to a skeleton staff, and restarted with just 12 locations and about 12 employees in a small new headquarters on the East Coast. It was the right move in the long run. We learned, we focused, and we rebuilt the company to 30, 40, and he 50 locations. Some people may have just coasted on after that, but I came up with another crazy idea. Ironically, this also happened because of the couch.
In its first store, it placed a sofa in the corner to display the saxophone in a living room-like environment. We realized that customers were always asking to buy the sofa, but it was too big to sell. So I thought, What if this sofa could be shrunk the same way we shrink our sacs? and that’s the concept Demagogue born.
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In 2012, Lovesac was named America’s Fastest Growing Furniture Company. today’s furniture —What made this rapid growth possible? How has the company approached scaling over the years?
Around this time, I realized that if I was really going to compete, I needed to pivot my business. With this in mind, I changed my focus to becoming a direct-to-consumer furniture brand with his Sactionals as the flagship. I took a risk and invested in local and national TV advertising for Sactionals, along with all new digital approaches. Sactionals quickly became the best-selling sofa solution in the United States. Lovesac expanded to nearly 80 of his locations and then [we] The company went public in 2018 with sales of $100 million.
After listing, there are no limits. The company was valued at $200 million to $300 million overnight. It was like a dream. I couldn’t believe it. By the 2020s, we had grown to hundreds of locations. We have thousands of employees and have been named America’s Fastest Growing Furniture Company multiple times. Our sales will double and we will probably grow to more than $1 billion. Sactionals has given us a new future. Their rapid adoption has made it clear that people love the idea that things are made to last a lifetime and are designed to evolve over a lifetime. We are proving that planned obsolescence is the wrong way to keep a brand alive. We call this new approach to innovation “Designed for Life,” and it will influence everything we do going forward.
Image credit: Provided by Lovesac
What is the company’s current valuation? How much revenue does it generate today?
Looking back over the past year, Lovesac’s growth and performance is a testament to the resilience of our brands and our disruptive business model that has consistently delivered category-beating performance and customer loyalty. Despite a challenging year for the category, we were able to maintain our momentum through product innovation, compelling marketing and a commitment to productive omnichannel deployment. These strategies continue to drive consumer demand and further differentiate our unique brands from a crowded market. Looking to the future, we believe we are poised to accelerate our pace of expansion and innovation and continue to invest in the future to further unlock customer enthusiasm.
Ahead of the company’s year-end earnings report, Wall Street analysts estimated Lovesac’s sales for the year to be about $700 million, with adjusted EBITDA margins in the low single digits. The company has seen multiples and market cap valuations fluctuate between $300 million and $400 million over the past four years, peaking in 2021 when the residential category hit record highs during the pandemic and reaching $1 billion. exceeded the dollar.
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When you think about the future of your company, what are you most looking forward to?
At Lovesac, innovation is at the heart of our design philosophy, as we continue to prioritize developing breakthrough technology and pushing the boundaries of what’s possible in the furniture category. Challenging traditional definitions of comfort and home style has been the hallmark of the Lovesac brand since its inception, and over the past few years we have collaborated with various high-end fashion brands in this field to create truly unique I’ve created things. market. Anti Social Social Club, Jeremy Scott, alice + olivia, and KidSuper are among the brands he has collaborated with on our two signature style covers and ornaments. We look forward to creating a blend of fashion-forward design and unparalleled comfort that speaks to today’s consumers.
What is the biggest lesson you have learned during your entrepreneurial journey? Journey?
in my new memoir Let Me Save You for 25 Years: Mistakes, Miracles, and Lessons from the Lovesac Story, details my eventful 25-year story of building the Love Sac business, from my college side hustle days to my successful IPO on the Nasdaq stock exchange and beyond. But if you can learn from my mistakes, perhaps your ambitions, big or small, will be better than the 25 years it took me to finally learn something and achieve my goals. You can do it without any problems.
The biggest lesson I learned was:
1. Listen to the experts. But sometimes you need to trust your intuition.
2. Before any major changes occur in your career, business, or personal life, there comes a point where you can significantly increase your chances of a positive outcome by making the bold decision to throw away your safety net and go all in. .
3. Play along the way, taking the time you need to relax and stay sharp.
4. You are of no use to anyone because you are a miserable, rigid workaholic.
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What advice do you have for people who want to start a side hustle or business?
The entrepreneurial journey I’ve faced over the past quarter century has been full of glorious victories and humiliating defeats born of sweat, tears, and relentless determination. With my new podcast series and memoir, I’ll tell you the raw, real stories of industry pioneers about the movement we’ve built to create and foster a sense of community through these channels, and provide valuable insight and knowledge to those who seek it. I look forward to shedding light on it. that.
It took my entire adult life to grow Lovesac to what it is now, and it’s the hardest thing I’ve ever done. I have so many memories and made so many lifelong friends through this trip. Thanks to that, all the stumbles, obstacles, sleepless nights and constant stress are worth it. My advice to anyone thinking of starting their entrepreneurial journey is this: Get off the couch! Trust your instincts and just keep going. The moment that changes your life may be just around the corner. The last thing you want to do is turn around right before you arrive.
Entrepreneurship is a never-ending pursuit, but traveling is a gift. With an open mind, an honest heart, some ambition, time, help, and a little luck, all things are possible.