Unboxing Disruption The Endy Story
The mattress in a box industry is a strange, fast moving and innovative beast, and the Endy story is no exception. In early December headlines were made when it was announced that an $88.7 million landmark deal was reached between retail giant Sleep Country Canada and disruptive brand Endy.
People lay down on mattresses after long days, their bodies sinking slightly with every adjustment. Then, with some level of serenity or another, they rest. That is, largely, how customers interact — or are at least supposed to interact, in theory — with the springs, or foam, or gel they sleep on: tranquilly. Industry side, things are hectic — long-standing, brick-and-mortar businesses are dealing with a large and sudden disruption. It all began with the mail delivery mattress-in-a-box, an innovation that dramatically changed how people purchase the surface on which they sleep. Brands like Casper, Endy and Leesa, to name a few, all popped up in the span of a few years, each riffling on a similar idea — selling a premium product for a decent price, with a risk-free trial period and, the businesses advertise, less stress than a traditional mattress store.
According to Rajen Ruparell, co-founder and chair of Endy — a Canadian iteration of this business mod- el — people used to see buying mattresses as a bit of a chore. There was no excitement in it. Now, though, people order one of these mattresses in a box and are psyched to see it arrive at their homes — and, he adds, give glowing referrals to their friends. Endy isn’t the oldest of this new crowd of sleep sellers — United States-based Casper is roughly a year its senior — but, all the same, it made headlines in early December when it announced that it would be purchased by mattress retail giant Sleep Country Canada. The young upstart is being purchased for $88.7 million. Endy will receive the first chunk of this sum, $63.7 million, when the deal closes in January — an additional $25 million will come in 2021 if Endy sells and grows enough to meet prespecified targets. It’s a landmark deal, and the veteran of the industry announced the deal while singing End’s praises.
“We have watched and admired End’s growth for the last three years and respect the work they have done to build and grow their business,” Steward Schaefer, Sleep Country’s chief business development officer, said in a press release. Ruparell and Gettis seem equally excited about the deal, and their new partner.
“We are a disruptive brand. For us it was really about — could we do this without getting chained down?” Ruparell says.
It’s a landmark deal, having an established industry leader in a disrupted field buying out a disruptor — and it’s even more rare that Sleep Country Canada is going to allow Endy to operate at arm’s length. Endy’s profitability is solid, it has won various awards like the audience choice award at Toronto TechCrunch Pitcho in 2015, and it ranked fourth in Canadian Business’ Startup 50 lineup in 2018. There wasn’t too much to change.
But, for those who follow upstart companies and how they can disrupt an entire industry, the Endy sale comes with a slew of uncertainties. In an interview with Bay Street Bull, Endy co-founder and CEO Mike Gettis outlines three lessons on disruption: “Disruption and innovation are not the same,” “Build Disruption by design,” and “Sustain disruption.” “Not all innovations are disruptive innovations. Truly disruptive innovations start as low-cost, minimally featured innovations that take market share, and improve over time to better suit alarger, high-value market,” Gettis says in the post. How these themes t into the deal with Sleep Country Canada remains to be seen. Sleep Country Canada told Endy to stay the course (both Ruparell and Gettis will keep their positions), and the fledgling company has spent a lot of time working with its supplier in Canada, sorting out the details of construction and quality control. The founders say they won’t pursue some kind of cost-saving e ort in the deal, unless it benefits the consumers.
However, in an industry that is constantly changing nothing is certain. Sleep Country Canada recently began its own line of delivered mattresses — under the name Bloom — and they and Endy mattresses are set to compete going forward. While Gettis says that there will be a “friendly competitive spirit” between the two brands, Bloom mattresses come with a lower price tag than Endy’s — $350 and $595 versus $675 and $850 for twin and queen mattresses, respectively. But it will be interesting to see how both offerings compete with Amazon Basic’s memory foam mattress — which quietly launched last October — whose smallest, most basic unit starts at $175.
Ruparell and Gettis are no strangers to starting trouble. The two friends can recall the raw amount of time they spent in detention during their time in a Calgarian high school, compared to the amount of time they spent listening to their teachers. But this irreverence has served the duo well enough that the industry they helped shake up took notice. “We got along in that sense because we both liked to do things our own way,” Gettis. “That kind of feeds into our entrepreneurial personalities.”
Gettis and Ruparell still have the easy rapport of two high schoolers spending their lunch hour in-doors for some infraction or another. “We were good friends before, but we became even better. We definitely had big arguments. We definitely have things where we don’t see eye to eye about, and I think that’s the most profound thing for me in terms of getting this company from zero to hero, as it were,” Gettis says.
It probably irritated their families a bit, the co-founders admit — but the founders talked almost every night. Sometimes, they got heated, but, that’s part of the journey, Ruparell says. Old-school business folk always told the pair to never start a business with family or friends — it’s a kind of unwritten rule. And, they admit, in many ways they’re both very different people. Gettis’ background in in the “cognitive,” engineering side of things, while Ruparell’s style is a little more intuitive, which stems from his history in marketing. But they work well together, and their disparate skills mesh — sometimes, they even learn from each other.
“We may have gotten into detention for different reasons, but we ended up in the same place,” Ruparell says. “The journey was us getting to the same place. We just had different ways of getting there.” Maybe it’s because they’ve known each other for so long, but Endy’s owners have always been cautious of outside investments. Despite being one of the fastest growing companies in Canada, Endy was even loath to let Toronto Blue Jay’s heavy hitter Jose Bautista onboard when he wanted to invest. Gettis and Ruparell met Bautista in 2016 through some mutual contacts, and the six- time MLB All-Star eventually tried sleeping on an Endy mattress. He liked it so much, he wanted in. Gettis and Ruparell hemmed and hawed over the decision, but eventually acquiesced in 2018. Since then, Bautista has become one of the brand’s most vocal ambassadors, on top of being a minority investor. A short blurb from the athlete appears on Endy’s website — in short, it praises the quality of sleep an Endy mattress gives him, and the company “for flipping an industry on its head.”
According to Ruparell, the company didn’t want to pay for a celebrity endorsement. Word-of-mouth from consumers was more important — but Bautista was a welcome addition since he actually enjoyed the product without a paycheque. “It was way beyond him putting a name to it. He genuinely, authentically loved the mattress,” Ruparell says. Other companies made Endy offers over its short life, but its creators decided to go with Sleep Country Canada, in part, because they regard the buyers as standing in line with their vision. Sleep Country Canada will pick up old mattresses from Canadians and, assuming the mattresses are in good enough condition, will donate them to families in need through its various connections with charities. The company’s website boasts that between this and its mattress recycling e orts, it saves thousands of mattresses from the land fill every year. “Their social mission is a big part of why we liked working with them too,” Gettis says. “They are big into donating mattresses; they’ve donated thousands and thousands of them, and our goal is to ramp up our side of that as well.”
The history of other disrupted industries looms over mattresses, now. Facebook purchased WhatsApp and basically lets it run its own operations. On the other end of the equation, now defunct video rental company Block- buster passed on purchasing Net ix, which has all but re- placed cable television for millennials. Gettis and Ruparell don’t see themselves as Net ix in this equation — nor do they see Sleep Country Canada as Blockbuster. Sleep Country Canada was, back in the day, disruptive in its own right, Endy’s founders say. In 1994, when it started, there were precious few retailers in Canada that specialized in mattresses. Endy’s founders know this tidbit of history all too well — and consider it when they think about the future. The goal, Gettis says, is to not be shaken up by what comes next.
End’s story is a strange one — as strange as its unsuspecting industry has gotten recently. Like most other disrupted sectors, the world of mattresses is grappling, to the best of its abilities, with many young upstarts. The summer before ling for bankruptcy, Mattress Firm began stocking Purple Mattresses (another Endy-like product) in some of its locations around the U.S. The move, in the end, didn’t save the business, but it and Endy’s sale are a sign of things to come. In an odd twist of fate, industry competitor Casper is trying to break into traditional retail with a series of Sleep Shops in Canada. The most recent one just opened in Toronto in mid-December.
In a sense, Sleep Country Canada through this purchase is, yet again, being disruptive. According to disruption strategist Shawn Kanungo, the company disrupted itself before someone else did — and, he says, considering U.S.-based business mattress Firm led for bankruptcy last October, the decision is a timely one. “With Casper opening up their new Sleep Shops in Canada, I think the new war for sleep in Canada is just starting,” Kanungo says in an email. “Now, with a young, innovative, millennial-friendly brand in Endy, Sleep Country can leverage Endy’s brand relevance to reimagine their existing brick- and-mortar stores — or create new ones.”
Unboxing Disruption The Endy Story
Unboxing Disruption The Endy Story