Shawn Nelson: Founder & CEO of Lovesac

Episode 281

Shawn Nelson knows how to make some of the most comfy pieces of furniture you will ever experience. But that isn’t all he has been working on at Lovesac. Shawn founded Lovesac in 1998 and after some highs and lows along the way, Lovesac is going gangbusters. We will hear about how the innovation has made Lovesac so unique as well as how Shawn got started and all the things that he has learned about business and himself along the way. You will love this honest discussion straight from a founder who has seen the highs and lows. So much to unpack here. On this episode of #TheKaraGoldinShow.

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Kara Goldin 0:00
I am unwilling to give up that I will start over from scratch as many times as it takes to get where I want to be I want to be, you just want to make sure you will get knocked down. But just make sure you don’t get knocked down knocked out. So your only choice should be go focus on what you can control control control. Hi, everyone, and welcome to the Kara golden show. Join me each week for inspiring conversations with some of the world’s greatest leaders. We’ll talk with founders, entrepreneurs, CEOs, and really some of the most interesting people of our time. Can’t wait to get started. Let’s go Let’s go. Such an incredible episode with Shawn Nelson founder and CEO of Lovesac. He’s had quite a journey, starting his company in 1998. And we hear all about his journey and can’t wait for you to also hear his opinions about what it takes to really be a successful person. And I can’t wait for you to hear what he thinks it really takes to be successful. Let’s jump in right now. Let’s start at the beginning. So I’d love to get a picture of Shawn as a kid, you mentioned that you’re currently in San Diego. Talk to me about what you thought you might be doing when you grew up. Were you the creative kid that was always selling things or setting up ideas? Who was Sean?

Shawn Nelson 1:29
Yeah, you know, I was not one of these. That’s a weird mix. I was not one of these kids who drops out of high school or college and tells you to like go become a millionaire, you don’t need it, you don’t need that I was I was a straight A student, kind of all the way through. But I was a major troublemaker. And I think that a lot of my creativity came from finding creative ways growing up in Salt Lake City, Utah, to be a bit rebellious and think of wild ways to entertain myself as a as a young person. It really was an outlet, you know, without without hurting anyone without you know, without destroying any meaningful property. But we found lots of crazy ways to entertain ourselves. And, and meanwhile, you know, so I was kind of hanging out with a group of kids that were that were a bit nuts in high school. But I don’t even think they knew that I was like a straight A student and I was learning the piano and I can sing and play and I have all these I have all of these. I’m kind of like a jack of all trades, but master of none. And somehow it’s all played into, I guess, where life has led me today.

Kara Goldin 2:45
So you’re in San Diego now. Did you leave Salt Lake?

Shawn Nelson 2:49
Yeah, so the book in this, I made the first Lovesac 10 days out of high school. So you asked what it was as a kid, I was still a kid. Wow. When I made the it wasn’t called the love sack. It was just like I was sitting on my parents couch, watching TV, I thought would be really funny to have a beanbag, like this big right from me to the TV, got off the couch, drove down to the fabric store bought some fabric came out. And so that’s, that’s what I’m describing, right? Like, I was a very impulsive person. Like, if we could think of it, we could do it. And I think that, you know, upon reflection, of course, this I call it Get Off the Couch mentality, like a lot of people have ideas, but do you get off the couch, drive down to the fabric store, buy the fabric and, and start it. And I mean, you know, Lovesac wouldn’t exist had I not done that. And that was at 18 years old. And I was going I was just about to begin University, University of Utah. I lived in my parents basement which was which allowed me to sort of roll out fat my mum was a ballet teacher for 40 years in that basement. And after she retired, I got to live there and so I had the space that I could roll out fabric and cut them out. So I began making them for friends and family who saw it and that was the genesis of Lovesac. So as a side hustle of as going through college and since then, you know the companies I mean been through nine lines and raised every kind of money from you know, weird debt friends, family venture capital private equity. Now we’re publicly listed on NASDAQ did about half a billion in sales last year, and of course grow probably the fastest. We’re one of the fastest growing furniture companies in United States for many years now and continue to be and have been worth more than a billion dollars depending on on on the day, or the condition of the market. So it’s been a wild ride taken me to live in different countries taken me to live in different states. All my kids were born in Connecticut when we moved the company out there for a time and now I live in San Diego. So it’s just all over the map.

Kara Goldin 4:46
I’m dying to note so did you know how to sew?

Shawn Nelson 4:49
Yeah, I mean that first sack I brought the fabric home and cut it into two figure eights like a baseball and yes stuck it on my mom’s sewing machine and tried to sew it together with my home ec seven grade sewing skills you know I’d made my sister’s some fuzzy slippers for Christmas sort of thing. I love it figured I could do it got about you know, I don’t know, a quarter of the way in real jammed up my mom’s sewing machine on a thick fabric but by my girlfriend’s mom finished sewing it up for me put a zipper in it and I began filling it with stuff you know, cut up all my parents camping mattresses, you know, like a piece of yellow foam with a bungee cord around them cut those up on a rice paper cutter, like chop them into strips, chop those into squares. And that was the best stuff like we had tried beanbag beads, they’d made a mess we had tried, you know, packing peanuts, but old blankets, but like that foam really gave this thing a different quality, you know, squishy, and if you’ve ever sat in a love sack, they never go flat that lasts forever, I meet people who I sold them to back in college, you still have them today. And it was you know, really proud of that. And that actually let that that right there, which was not intentional, led to our whole ethos today, which is around sustainability products that can actually sustain things that can actually last a lifetime. Like no one’s talking about that, like everyone’s recycling, everyone’s making stuff out of reset. And we do that too. But we’ve taken it further. And it’s become our entire now strategic approach to design. And it’s going to be what leads Lovesac to be here in 50 years. And I’m very proud to be building a company like that. And it’s certainly not my intention when I began doing that thing up 24 years ago.

Kara Goldin 6:24
I mean, I always talk about when entrepreneurs have ideas. And obviously you wanted to create a really comfortable beanbag chair as you were talking about, but then you started to realize pretty quickly that no one was really doing what you were doing the internal part of the chair. And so you’re, you’re creating a new category and an industry. Did you realize that back then, or did you I mean, what was it that was kind of allowing you to know that this was okay, I guess,

Shawn Nelson 6:58
you know, I began this thing without any kind of plan. It was not I was not thinking about a category, I was not thinking about competence, I was just making. In fact, it was three years after I made the first one in 95 before my neighbor finally convinced me to make them one. I mean, it took me three weeks to cut up that stupid phone that’s not going to do that again. But they bugged me and bugged me they’d see me driving down the street with it to go to the driving movies or the beach or whatever we throw in the back of a truck. And so my point is, look, I’m not sharing this as anything. I’m proud of it. I’m just you asked and this is the real story. Like I finally made them one and then their friends one on one of their friends one on one and it might sound like a runaway success. It wasn’t this was a side hustle that made me no money. It took all my money. You know, every time I every time we ever made a dime from making and selling a Lovesac. You know, we had to fix the van we had to fix the foam Shredder, we were using the backroom and it’s Furniture Warehouse. I mean, it was three years of just survival as I was trying to get through university. And by the end of it, I just wanted to quit, I want to close it down. And in fact, it took those people who own one saying you can’t close like I love my love, Zach. So we went we took it to a trade show in Chicago, we showed it to hoping to sell you know, more than one at a time. Sure enough, we got this huge order from from a national retailer that allowed us to that they had no idea it was me and a friend and like this wood chipper foam shredder thing. But I think there’s still a lesson that you know, you just do the next thing. And the next thing came and we got that order we had that had to build a factory, we then have to source out of China, you know, and we just kept doing the next thing. And this thing that was sort of a side hustle that I was trying to desperately get out of and get to my real job waiting for me I had this job waiting for me this big company in China. It’s a long story. I speak Mandarin Chinese and it’s over there. The point is like, we just kept doing the next thing. And now today, you know, we believe now we sell more couches, than almost any of our competitors and I’m talking about the biggest furniture brand names you can think of Lovesac sells more couches than any of them. And we have one line of couch and we will become very quickly you know, the dominant player and in what is a category that every one in the nation has there is no one in the world almost in any kind of home that doesn’t have a couch and I think we make the best one now I could never have predicted that it was like one thing led to another led to another and we’ll get to how sectionals came to be I’m sure but it came from just doing the next thing.

Kara Goldin 9:40
You touched on this but the newest product that you have the sectional stealth tech sound and charge system so you have a patent on that product as well.

Shawn Nelson 9:50
Yeah, we have a lot of patents Lovesac has over 40 issued patents. sectionals have become more than 80% of our business. So these are these are couches that It changed and grow with you. You can add to them my sectionals in the next room, I’m sitting on one right now, but some of them are 15 years old. They’re wearing their tents set of covers, you can arrange arrange them, our latest edition, the stealth Tech is a completely invisible sound system wireless sound system integrated into the software, you don’t see anything, it looks exactly like what I’m sitting is. That’s what makes it beautiful. But it provides homage to that the closest thing I can liken it to would be to sitting inside your automobile watching, watching a movie like it’s, it’s around you, you’re inside of it. And it’s crisp and beautiful. And we’re very proud of that we invented that. So now we’re competing in homage to you know, this brand called Lovesac that began with this giant not beanbag is a real player and a home audio. And we’re not kidding around. And we will do more in that category as well.

Kara Goldin 10:49
So as you have been doing this for a while, I guess officially since 1998. How do you think people’s lifestyles have changed? And maybe even more so in the last couple of years? And what are you seeing in terms of home furnishings? And overall, how people are living?

Shawn Nelson 11:10
Well, I mean, the last few years in particular, right? I think I’m emblematic of I’m sitting here on my couch working I think many people are there, you know, the work from home revolution that was driven by COVID the entire office space in the city, you know, everything’s changing there. And whether companies want to wrestle with it or not, they will be primarily remote over the next few years. So the couch is like ground zero for family life now even some some of work life. And so it was a great category to have fallen into. And we fell into it because in our first Lovesac stores, these are giant, not beanbag stores, there was a couch in the corner just to kind of look pretty, but people kept trying to buy the couch and we couldn’t sell the couch. We were trying to sell them the giant, you know, not being back. But finally we will we should be able to sell the couch but it’s a pain in the butt you know so so again, one thing led to another we just wanted to make a couch you could shrink down like we do a love sack and we broke them apart and we intended sectionals as modular changeable thing. But my point is, all of these attributes that sectionals represent, you know changeability movability relocate ability washability really play into people’s modern lives. You know, the open concept, the great room concept, the kitchen great room, stealth tech, right was an almost invented by my wife because when I got in our own home around to trying to wrestle with having surround sound speakers right here off the kitchen is like what there’s nowhere to put them and didn’t exactly want to cut holes in the ceiling. And by the way, the audio isn’t good there anyway, like all the reverberation in a rectangle room, like it’s actually terrible audio, what most people think of is really fancy. I got speakers in the ceiling. It’s not good stealth tech solved all that. Right. And so my point is, as, and you could call it luck, right? But as Richard Branson mutual friend would tell you, as he told me laying on the roof of Necker Island after I won a million dollars on his TV show. That’s a whole other story right on the rebel billionaire back in 2005, I won this reality TV show with Richard Branson, and they were laying there talking about life and religion and God and everything. And he said, to me, I believe we make our own luck. And at the time, it bothered me because like luck, like, like, you’re gonna, I don’t know, I didn’t like the concept. But, but once you’ve experienced a lot of bad luck in your life, you can’t not believe in luck, good or bad. And because sometimes things are just totally outside of your control. And if you know, you’ll go nuts, if you can’t, you know, just throw it to the whims of luck. My point being, I’ve since come around. And I really have thought about those words from one of my mentors, deeply. And and I think that Lovesac has, you know, created its own luck by doing the next thing by taking action. And here we are today now as the disrupter in the furniture category that no one sees coming. And they don’t not even my competitors, they don’t they they pay no attention to us because we were the beanbag brand under the escalator, like in the mall for years and years. And yet, we will eat their lunch. And we when we already sell more couches than any of them and we will continue to and it’s the biggest category within the home cat home furnishings category. My point is, and now by the way will compete in home audio. I think that Lovesac right now offers the coolest and most credible and useful home audio system on the planet. And it didn’t come from one of the names you’d think of in home audio, one of the big brands, it came from this not being back brand called Lovesac. And I think you’ll see us do hundreds of millions in home audio just in the next few years and I don’t think anyone saw Coming. And we didn’t see it coming. Because again, we were just doing the next thing, right? My wife didn’t want speakers in the ceiling. So how do we? Well, I mean, the obvious place, the obvious place where it should be is right here. It’s behind me, it’s around me, it’s under me. And so that drove us into home audio, and to be audacious enough to think that we could do it and do it with elegance, you know, and we have it, we have almost no warranty issues. It’s a beautiful product, it works extremely well. And it’s, it’s not cheap. You know, I think that we have in a lot of ways you can say, well, you know, we’re very lucky to be in this category, at this time, when everyone was on lockdown. And now they’re thinking about their home. And the remodeling is spending money on the home category, and you know, loves the X blown, we were blowing up before COVID. But COVID was just like another turbo boost. And then coming out of COVID, everyone’s life has changed, and we’re more relevant than we ever have been. Well, if that’s not luck, I don’t know what it is. But we did put ourselves in the right place at the right times,

Kara Goldin 15:54
you can definitely hear your passion. And I love talking to founders, because you can always hear it. I mean, they know the why behind the brand and all the stories, and it’s definitely shining through in this conversation for sure. When you think back on those early days of Lovesac. And talking to you and hearing you I mean, you were definitely learning as you went along. I mean, did you feel like you needed to hire all these industry experts in to come and show you how to do things? And I’m curious to hear what your thoughts are uncertain of a new entrepreneur coming in? Do you need to hire people who have had tons of experience? Or are they actually going to slow you down?

Shawn Nelson 16:38
Oh, man, I could write a book on that topic. too. Yeah, fairly, right. fairly early days, hired, I was always hiring people older than me more, you know, because I was 1821 2223 as we got going. But I don’t think that my ego really let some of those people lead in the way that that they could have in the early days. And I think it led to our downfall. In many respects, you know, shortly after winning a million dollars on TV, you know, we had to raise venture capital, pay off a bunch of debt, we were growing like us too fast. And it made a lot of the same mistakes that a lot of brands make early on, and go through a full reorganization, it was messy, it was ugly. And it was to be honest with you, I don’t think until a decade beyond that, that I really got to the point where I was able to embrace top talent, the way that I do today, and really allow my ego to let them really lead. And it’s hard to describe, but what’s crazy is there really are people out there who know what they’re doing. And in their realm, you know, whether we’re talking about marketing, you know, consumer research, whether we’re talking about operating in business, you know, process, in every discipline, there are experts, and the funny thing is they they may want to be mean, but they can’t be they don’t expect to be actually, and they don’t necessarily even want to be most most of time, they they just want to do what they do well, and at a place that they can really have an impact. And once you once you really are humble enough to seek out the best talent, meaning they’re all better than you like. And I mean that like it’s a trite phrase, like hire better than you, you hear it all the time. But I mean, you have to be really sincere about it, you have to hire people that are a total threat to your existence, because they’re so good, they could replace you in every room. And then let those people make you very successful. And they will make your company very successful that you own or that you own a piece or whatever it is, and they will and do it gladly. And they’ll make tons of money doing it too. But But I don’t think that I really, I always hired great people from the beginning, and people that were experts, but I don’t think I let go enough, early enough on to really let those people have the kind of success, you know, like I had to be involved in every decision and this and that the other and once it once I finally let go enough to let those people really prosper. And of course, they had to be people you can trust them. And the sad part is you don’t always know. And in fact, you never know, with a high level executive or a top talent, you won’t know for two years. I mean, you’ll have an instinct like oh, they’re awesome or they’re amazing. But you know, it takes two years before you really know what you have. So you better take your time to make those decisions very carefully. Bring them on with all the good faith and then let them run and hopefully you’re right and I’ve had a few wrong and they hurt and they take time to recover from whatever that means. The organization what have you or the you know, the lost opportunities, but more than more not I’ve got them right particularly in the last 10 years of our existence. And the results are obvious you know, love sex. just exploded where we really are doing really well. And I’m really proud of the organization we’re building. And but that took me a long time to learn those lessons in the way that I understand them today.

Kara Goldin 20:11
I think what you touched on is, so there’s two different types of experience, there is experience I think that people hire for that helps them get the job done. I mean, whether it’s a CFO or head of finance, or or even a head of marketing, but then I think the mistake that a lot of entrepreneurs make early on, especially if they don’t have experience in an industry is going in hiring somebody else with experience in an industry. And I think like, that’s the hard thing, because if they’ve never been in a company that is innovating at the rate that you are, right, that they’re almost going to slow you down along the way, in terms of you saying we’re going to rip up a bunch of, you know, foam and put it in every bit and be like, No, that’s not how we make sofas. Right. That’s not how we make beanbags. And so did you ever run into that?

Shawn Nelson 21:04
Oh, I mean, I’ll go to a very early story because it illustrates the point so well, when we first invented sectionals. So if you understand sectionals, you can buy a bunch of seats by a bunch of sides and build anything you want. They’re kind of like Legos, and but there’s only two components, seats, the sides, and it’s really quite magical. Now, we came up with that idea by tearing apart couches just for the purpose of trying to put them in a box and make them shippable make them so we could deal with them. And along the way through that process we discovered oh my gosh, what once you do that you can have removable covers, they can fit like a glove. Unlike all the other kind of slip cover sofas out there. These can look like upholstery. But you know, they can be washed more than once all these advantages that came with satchels, but those first prototypes that were basically these rectangles we built in our garage. And I remember we took them to the owner of the factory that we were renting the back room of it was a proper sofa factory. And I said, Hey, we have these prototypes in these drawings, but I need you to make them properly. For me, I can’t put the springs and I don’t have the technology like you do on your furniture lines to build them the right way. So here’s the prototypes. Here’s a drawing, make this for us. Here’s a few $100 We’ll be back. And you know, like, let me know when they’re done. And so I go back there and a couple weeks and this furniture expert you know, built these prototypes, theoretically for me, calls me back says come see it. And he showed me this little sectional in the corner. You know like a sectional you’d find it any of our company like anywhere been around for 100 years like a sectional. It has a corner piece and a middle piece and an ottoman. And you can kind of arrange rearrange it a little bit, but they slide apart if you sit on it too fast. And this one had a slip cover it looked like a floppy, you know, slipcover like a sheet over? I said no, no, no. Where’s the thing I gave you? He said, Oh, that that’ll never work? Is it like I’ve been making furniture for 40 years? My dad he made furniture for 40 years before that, like that thing will never hold together. It’ll never sit right is you know, it’ll be rickety. Like, nobody asked for. So we took it to another one out down the street. And we had worked with Al on different upholstery projects. And I said, Well, here’s the prototypes or the drawings, would you make this for us? said Yep, no problem came back in two weeks, he did the same thing. He made me a little sectional. He said these will do so great in your stores? And I said no, no, where’s the thing I left you he said, Oh, that’ll never work. He’s like, I’ve been making furniture. I was like, Oh my gosh, these furniture experts were unwilling to even I gave it to them. And they were unwilling to even try. And so there are exactly zero executives that Lovesac that come from the furniture industry

Kara Goldin 23:35
today. And you can tell and companies that are growing at your rate, too. I mean that the exact same thing happened to us with hints. I mean, we I wanted to produce a product that didn’t use preservatives. And you know, having people from the Big Soda companies, everybody they would yes me initially and then they wouldn’t produce the product that I wanted to see produced and bottlers that had worked for soda companies as well. I was like, I want to produce this product, and how do we do it? And everybody’s like, you can’t? And I’m like, Well, how can we? And so we just kept working until we did it not so what we did for the industry, we created a product that didn’t use preservatives, and everybody thought you had to have it because they had been working in big companies and thinking that’s how things are done. And I think that it’s the people that think differently and come from outside of an industry are really the ones that are going to change, change an industry change the world.

Shawn Nelson 24:37
Yeah. Well, I think the key is not to blow off talent or training or experience. You need it in the discipline like marketing, like accounting, like finance, like what design but somehow you need to cling on to what makes you unique. And so somehow, you know, I think it loves that we’ve done that. We’ve tried to do that. And I think that’s where a founder plays a significant role in a brand I like it or not, like the founder or not like who they are or not right? The trick is, I think most founders, because they are audacious, headstrong people to begin with, you know, they, they brought themselves into existence, like in business unit, it’s like you need, you need that stubbornness on one hand. But if you, if you exert that stubbornness in every realm, then you end up with an organization that will always be stunted by to the degree of your expertise and your expertise. While you may be okay at a bunch of things like I was, when I was a kid, I was, I was good at a bunch of things. And that’s what again, brought me into existence, it was, I was able to get a company going, because I could even do a little bit of accounting, and I could even do a little bit of, but like, you have to then extract yourself and boil it down to them. Okay, as you get bigger and bigger and bigger, what are the things that I can truly let go of to the right kind of people? And what I’m Where, where are the rooms where I need to remain totally involved in. And so anyway, it’s tricky, and it’s and it’s an arc, and your role in a company has to change over time. And I think like, it took me way too long to learn that, sadly, like I could have done this much quicker if I had learned that sooner. But thankfully, we’re still here, and we’re crushing it. And, you know, we’ve we’ve made it this far.

Kara Goldin 26:24
I love hearing that. And you are still very involved in the design and the vision of the company, which is you can always tell great companies, when the founder is still involved. You mentioned Richard Branson, of course, you know, he is a great example of that as well. And super, super cool to really hear a lot more about your company. So when when you think about success, and sort of every point along the way that you know, you’ve had lows and highs, and you’re now a public company. I mean, you’ve been through an incredible journey from making beanbags just out of high school, right? I mean, this is amazing to think back on. What do you think is the key thing that creates success? And, you know, if you were to look at your own journey, what do you think? Is it about you, like, you didn’t just snap your fingers, and this thing is, you know, doing what it is today, I mean, most incredible companies, founder led companies to be a founder and the CEO of the company for you know, many, many years is that is a massive task. And in you seem quite humble. So what, what’s the formula?

Shawn Nelson 27:41
Yeah. And my answer to that, is very clear. To me. Anyway, the answer to that, as I see it as self awareness. And, you know, I’ve been preaching this for a long time, I’ve thought about it for a long time, read the book, emotional intelligence back when it was written in the early 2000s. It’s now required reading it love sec, by the way, we have three books that are required when you join the company. And that’s one of them, even though it’s a little bit dated. But sadly, even though I knew it and preached it for a very long time, it took me a very long time, to achieve a level of self awareness that really had the outcome necessary to drive success. We had plenty of success along the way. But like I said, I think I could have done this even sooner, if I had learned some lessons faster. And so I can and the nice thing about that answer is that it can apply to any human, any, any leader, right, you may be very different than me, in your expertise, and your background and your personality, what have you. But the answer still, from, in my opinion, holds, if you can truly be honest with yourself and others about, about what you’re best at. And also not just what you’re best at, but also like your interactions with others. You know, your is my ego getting in the way is is is my motivation, this or that, you know, if you can really be honest with yourself, and really push yourself toward that, than most of the answers become apparent. And, you know, it’s hard for me maybe to articulate what I’m trying to express. But I think that most people are lying to themselves a lot of the time and we have to to survive some times and protect our own ego and protect our you know, but I think that when we when we’re able to get really honest with ourselves and those around us even then we’re able to attract that kind of honesty. We’re able to attract those kinds of individuals to work with us in their capacity and their expertise. And they bring that and they’re able to and it’s just very it’s a very powerful thing. And I think that some if you’re not often it will be forced upon you by If you’re not brutally self aware, in some form or fashion, it will be forced upon you, by those around you or by the marketplace, or the outcome. Because if you really look at, you know, strategic, for instance, strategic missteps, you know, look at the classic, this is such a dumb one, it’s probably not relevant, but you know, pops to mind like the classic, it’s easy to throw Kodak under the bus, right? Like, like they, like all they needed to do, they had the technology they could, they had the size, they had the scale, they were unwilling to go digital, they stuck to their guns. And that’s the, that’s a perfect example. Like, there’s a time to be stubborn. And there’s a time to not be stubborn, right. And that, but But what it required was brutal honesty, and someone in that organization, or some or many in that organization must not have been brutally honest with what they were observing and what you know, I don’t know, I don’t know the I don’t know the whole story. But my point is, I think that many organizations, and many individuals, particularly in leadership positions are just not brutally honest enough, particularly with themselves.

Kara Goldin 31:04
And also to your point, not hiring, you know, people that are better than you. But that

Shawn Nelson 31:08
comes that comes from not being brutally honest, you know, and it’s an insecurity. And it’s amazing, when you are willing to let go and embrace that brutal honesty, it’s amazing how many other good people that are, are out there who don’t want to try and steal your company away from you necessarily don’t want to try and be you or replace you. They just want to be on a rocket ship with you. And those people are out there, but you have to be willing to because but they’re not going to get on your rocket ship, if they don’t think that they can actually hold the stick in their hands, whatever they’re, you know, and you got all these different sticks, all these different control panels, like on the Starship Enterprise, but they have to really feel like you’re giving them the helm, so to speak, in their respective role. And if you’re always in there, muddle meddling and muddling, because you’re the founder, and like, you know, this is your brand, and you eat and breathe, and you know better. There’s a time and a moment for that. But it is so rare. Actually, if you have the right people, your need to pull the CEO card or your need to pull rank or your need to like inject yourself and and make a decision should come so rarely, that that you recognize it at those moments where in my early days, it was all I was in every meeting I was in every decision I was in. And even if I wasn’t making them, I was influencing, I don’t know, it’s so hard to describe. And it’s tricky, because in the in the earliest, earliest moments, you have to be you have to own everything. There’s just no way to survive, you have to do ever I was literally doing doing the books on my futon in my parents basement, you know, there was a time, but then there’s a time where like, I’m just completely out of the accounting completely other than, you know, a top level review not have to sign for it as a public company. But I’m out of it. And I need to be out of it. You know what I’m saying? It’s so hard. If it were easy, everyone would do it.

Kara Goldin 32:57
How has your life changed since becoming a public company?

Shawn Nelson 33:00
You know, for me, it was a really great evolution. It’s not always the case, you know, you’ll hear all these horror stories. And I’m like, oh, everything was great. And then we went public. And we have to, you know, pay all these fees and do all these meetings, but Lovesac had lived through, like I said, every kind of financing from venture capital, the private equity. And each one of those financings helped us get to where we got to I don’t regret them, I don’t regret those different modus operandi that we lived through. But for me, especially becoming public was was really exciting, because we really got to get out from under the thumb of venture capital or private equity and be become our own person again, you know, we needed money to grow, some businesses are able to do it with with very little or no financing. And wow, you know, like, hats off to them. product based businesses require so much money, most people don’t appreciate that, like anything with a real physical product. They are just cash suckers in different stages. Now they can become cash machines and throw off incredible profits as Lovesac does today, finally, but in those middle stages, it requires more cash than most people have the ability to generate themselves, and most businesses do as well. So long story short, we live through all those times becoming public has been great, you know, we’re now on by, you know, 1000s of, of individuals and funds. And it actually returns a lot of the power back to me and to my team who I think should have it because we’re making good decisions and driving the organization in a good way. On the other hand, like you’re always on the chopping block, like you know, like you the business has to perform. You can’t just you know, fold your arms say, Well, I’m the owner and this is how it’s going to be. But there again comes the brutal honesty, the bright light of real competition, a real marketplace forces driving real proof. formance. So I really support the whole public company structure. I think all businesses should be run as if they were public companies, the scrutiny and accounting, the discipline in every realm, the controls, like that’s how a company should be run. Now, it’s really difficult, especially when you’re just surviving in the early days, you couldn’t you couldn’t survive that kind of harsh light. You need the room to get your feet beneath you. But I think once a company reaches any meaningful size, I really actually appreciate the discipline has come from

Kara Goldin 35:32
it. Last question, what do you motivated? What is it that Shawn, I mean, you must, you know, have those moments when you look back and say, holy moly, holy crap, whatever, you end up saying, this is pretty damn cool. And maybe you run into those high school friends and Utah, who, you know, remember Sean as like, they can’t believe it. Like, you. It’s really, really cool. And you’ve got a physical product that you can sit on that you can listen from. I mean, it’s awesome. What is it that really keeps you motivated?

Shawn Nelson 36:09
Yeah, it’s become very clear now to me. And let me let me digress for one minute into love sacks kind of purpose. Now, as its evolved, look, in the beginning, we just as I described, you were just surviving, I made beanbags to, like pay off my debt, and, you know, then we open a store and we had more debt. And then we were, you know, we just kept going doing the next thing and, and grew the company. And it was exciting back then the motivation is just survival, you know, like, and it is exciting just to grow and to build something with your name on it. And it’s, that’s exciting for anyone. But as we invented sectionals and then realized why people love them, it says washable, changeable, life proof couch people can have the rest of their life. And we’ve realized, wow, you know, it wasn’t our intention. But that’s the most sustainable solution to furniture that exists. I mean, because they can actually sustain because we just build them so well. You know, they’re older than all My children, these pieces out here wearing their tents set of covers, I’m really proud of that they’re not in the landfill, like most of the couches, even you’ve probably moved on from that’s just the way the world works. Well, then, of course, we’re compelled to be to lean into that now we make all of our upholstery fabric from recycled plastic bottles, little Lovesac recycles more plastic bottles than any company in the United States to home deck fabric period. And because couches are huge, we use millions and millions and millions of yards of towers all made from recycled but now my point is that’s led to this entire design ethos called designed for life, buildings that are built to last a lifetime designed to evolve grow with you change with you, no one else is designing in that way period. In any realm. I think it’s the answer. You know, it’s the book, it’s the book we will write it’s we open source it, we blog about it, we want others to adopt this way they won’t, because Apple like these guys would rather sell you the same thing. Every two years, we’ve we’ve allowed them to become the biggest company on the planet by selling us the same thing every two years, they should have been forced to innovate, they should have been forced to use their hundreds of billions in cash to hire designers to innovate into other categories in a way that’s more sustainable and just thrusting all of this physical stuff, harvesting it from the Earth only so that we could chew through it, be done with it, bury it in Africa, because where we ship it to our E waste might miss what’s my point? My point is I’m so inspired by what we’re doing. And the idea that that we can we can make things that are designed for life. Let me put it this way. If we are radically successful at what we do, there will be fewer couches sold. That’s my category. What business book Can you open that will tell you to shrink the category zero, but I’m dead serious about shrinking the couch category by selling so many of my couches, love sectors, billions in just couches alone. Now, with my profits, I’ll get to reinvest that in my design team, etc. And attack another category, we just entered home audio, there might be less home audio sold. Because we got involved with it. I want to spend a balance of my life on Earth, shrinking physical product categories, because they never should have grown so large in the first place. Fashion, electronics, automobiles, appliances, take your pick, none of them should be as large as they are. But for the school that teaches us to make them obsolete, so that you can sell them another one in a few years. That is garbage thinking, and I hate it. And that’s what the free market economy has led to. Now it’s produced tons of wealth. I’m not anti capitalistic. In fact, I want to use the judo of capitalism to get there. Like essentially I want to be so successful as a brand that other brands must be forced to copy the way that we think and do things because it’s the path to success now. There may be fewer couches sold someday there maybe fewer mobile phones sold, because you can pop the camera out and replace it and upgrade it. And if it can last you 10 years, let’s say the money will find its way to services, the money will find its way to Disneyland, the money will find its way to restaurants, the money will find its way to grow in other ways. But the physical economy should have never raped and pillaged the Earth, so drastically over and over and over again, just so that we could have this you know, just so that corporations can become a naturally large, and consumers can become a naturally, you know, wealthy. And so I made a bean bag and people liked it. And I just kept making more friends. I could have never imagined it could evolve into a vision and a purpose that is this meaningful it took by the way, you know, everyone’s looking for a purpose, like what’s your purpose statement, let it come. Spend some time just sell couches. You might observe Oh, people like these couches, because they’re built to last a lifetime. And they evolve with them. Whoa, wow. You know, and now now we have this whole ethos of sustainability that’s unlike any other. But that came after 20 years of just surviving in business. So if you don’t have a purpose today, you’re not a heartless, soulless business, you’re just you’re a toddler, you know, let your purpose come to you, when you’re an adolescent, or a young adult, or even an older adult. And I’m really proud of what we built it love. Second, where we’re going. That’s what motivates me.

Kara Goldin 41:21
Now, I love it. And that is really motivational. And I think that you touched on, on this too, that you’re learning all the time, right? And you’re pushing yourself to continue learning about new things. I mean, you know, 1998, you weren’t thinking about this. Right? You were just trying to create a great product that you could sell and and where you are today with the business. I mean, it’s absolutely incredible. So it’s such a pleasure to talk to you, Sean. And I mean, you definitely described a leader for sure. And everything that you were talking about, and a visionary leader and somebody who is just has created an incredible product and an incredible company that everybody needs to go out and buy Lovesac today because it is definitely something that you guys are doing all the right things. So really, really incredible. Where’s the best place? I know you guys have stores as well, but people can go online. Yeah, we

Shawn Nelson 42:24
only sell through our own channels to Lovesac showrooms. We have 180 touch points now including shopping shops inside of some Best Buy’s that’s growing, but mostly our own Lovesac proper showrooms. They’re in a mall or street location near you.

Kara Goldin 42:43
How much are you doing? We’re a US company. How much international business are you doing right now?

Shawn Nelson 42:49
Yeah, zero international business. We hold all of our patents worldwide and our trademarks. And we will certainly take this concept worldwide. But but the truth is, even at our scale now, we’re still only a couple percent of the couch category, such a huge category. So we’re focused on North America still, we hold the right to go international. We’re excited to go international. But, you know, we’re trying to make good sound decisions. That’s another one. So often, I think these companies go international because it sounds so sexy. It’s all ego, man. They want to be in Dubai, they want to be in your house. Like just pump your brakes. Yeah, build a profitable by the way, most of the companies that that are, you know, we get thought of with these new economy, direct consumer companies. They’ve never made a dime. They never will. By the way, most of them, they’ll make their founders rich to make some private equity group rich who pawned it off on the next private equity group or took it public. And they’ll never even make a profit, there’ll be gone. Meanwhile, little Oh, Lovesac will just keep doing its thing, profitably until we’re billions and billions. Yeah. And so build that kind of company. Whatever happened to you know, that I think in this day, and age is wacky, there’s, you know, so but again, ego driven, money driven, you know, just personal gain driven, as opposed to like, let’s build something that’s good for the world. Yeah, I’m really passionate about that. I love what you’re doing.

Kara Goldin 44:07
I love it. Well, we need to talk more about the plastic bottles, because that could be a terrific partnership for sure. So Well, thank you. I could talk for hours with you about this. It’s so interesting. And thanks, everybody for listening to this incredible episode. Definitely give it five stars that really helps with the rating. We really appreciate Shawn coming on. And just a reminder, I can be found online at Kara golden all over social and my book undaunted talks about the journey of building the company that I built hints with lots of incredible people as well. And we are here now every Monday, Wednesday and Friday. So thanks, everyone, for listening. Thanks again, Shawn, and have a great rest of the week. Thanks all for listening to this episode. We hope you You enjoyed it. And I want to thank all of our guests and our sponsors. And finally our listeners. Keep the great comments coming in. And one final plug. If you have not read or listened to my book undaunted, please do so you will hear all about my journey, including founding, scaling and building the company that I founded. Hint we are here every Monday, Wednesday and Friday. Thanks everyone for listening and goodbye for now. Before we sign off, I want to talk to you about fear. People like to talk about fearless leaders. But achieving big goals isn’t about fearlessness. Successful leaders recognize their fears and decide to deal with them head on in order to move forward. This is where my new book undaunted comes in. This book is designed for anyone who wants to succeed in the face of fear, overcome doubts and live a little undaunted. Order your copy today at undaunted, the and learn how to look your doubts and doubters in the eye and achieve your dreams. For a limited time. You’ll also receive a free case of hint water. Do you have a question for me or want to nominate an innovator to spotlight send me a tweet at Kara golden and let me know. And if you liked what you heard, please leave me a review on Apple podcasts. You can also follow along with me on Facebook, Instagram, Twitter and LinkedIn at Kara golden thanks for listening