Smart Mattresses, "The Future of Sleep" with Alexandra Zatarain

Interviewee

For today's agenda we have Alexandra Zatarain, Co-Founder and VP of Brand and Marketing at Eight Sleep, the world's first sleep fitness company that leverages innovation, technology, and personal biometrics. Eight has raised nearly $30 million from investors such as Khosla Ventures, Y Combinator,Yunqi Partners, Comcast Ventures and StartX. It has over 20,000 customers and its smart mattress cover is sold via retailers like Amazon, Costco and Walmart. Of four co-founders, Zatarain is the only female and only Hispanic.

Transcript

Elisa Muñoz: Hey guys and welcome to one more episode of Builder Nation,  for today's agenda we have Alexandra Zatarain, Co-Founder and VP of Brand and Marketing at Eight Sleep, the world's first sleep fitness company  that leverages innovation, technology, and personal biometrics.

Alexandra Zatarain: Thank you. Thank you for having me.

I am a co-founder and I lead brand and marketing at Eight Sleep, that is a health and wellness company focused on sleep fitness. What we essentially do is we use technology to help you sleep better. When we started the company, more than eight years ago, we realized that there was no innovation in this space that would actually go beyond just giving you data and actually help you optimize your sleep to perfection so that you could get the best recovery possible. So we set out on a mission to do just that. 

And people nowadays know us for our signature product which  is the Pod. That is a technology you can put on any bed to allow you to track your biometrics, whether it's sleep and health seamlessly without any wearables, and then use that information to create the perfect microclimate for your sleep, which clinical data has proven.

People who sleep on the pod are getting up to 35% higher quality sleep. They get 10% more deep sleep. They had better recovery as measured by their HRV. So it's just really exciting to see that all those years of innovation have paid out.

Elisa Muñoz: Wow. Eight years. I mean, I'm pretty sure that's a longer career. And how did you start? Like, what did you do before starting these with your husband? And I know that you went to school in Mexico, right? 

Alexandra Zatarain:  Correct. So I grew up in Mexico. That's where I'm originally from and where my parents are from. So I went to school in Mexico as well as in Monterey. And then after I graduated from a Communications degree, which has always been my passion. That's what I always wanted to do. I moved to New York city. I had already met my now husband. So we've been together for a long time, probably 12 years now. And we just, both of us had sort of like more different jobs. I wouldn't say regular jobs. Because he was actually an entrepreneur who was a lawyer.

Then he became an entrepreneur and had a couple of companies in a very different space. And I was just basically doing jobs as a marketer initially. Actually when I moved to New York, I was just like taking an assistant job and just, you know, anywhere where I could get a job basically and get my professional career started. And I made my way to Eight Sleep when Mateo, who's my co-founder and husband developed the technology, invited me to join him. And they said, “Well, we're looking to launch this product to market. We need someone who can bring this to consumers. Do you want to do that? Do you like marketing?”

I had been sort of helping them on the side and I was really freaked out and scared because I had never actually done this specific type of work. So I was young, you know, that was eight years ago and I was like 24. And I was really scared that because I didn't know, I wouldn't actually be able to succeed. So, you know, I was very candid with them and I said, “Well, we'll figure it out. If you trust me”. And I was very passionate about the mission. I think that that was the most important thing for me, because I think most people don't realize when you decide to start a company that you should consider, you'll be spending at least 10 years of your life building it.

And so you need to just be very committed to what you're doing day in and day out. And there has to be like, in my case, I really wanted there to be a bigger purpose to all of the work.

​​Elisa Muñoz: So how was that experience  building the company from scratch, raising money, gaining funds, what was that like, especially being a woman?

Alexandra Zatarain: I think looking back, honestly, being that young was an advantage because I think I was very naive in my decision making, meaning you are probably less risk averse. You know, when you're younger, you have for good or bad, just foster responsibilities, more flexibility. And I just felt like I could just eat the world in one bite and I could figure everything out. And I think that is really to your advantage in that point in time, when you're making such a big decision, like I left my comfortable job, I was working at a financial tech company in New York, right. Where you get your salary, your bonuses at the end of the year. And like just, everything was sort of easier.

We moved from New York to San Francisco for the first year of the company. And so it was just a big change in all respects. And when I now think back to those years, they were some of the most fun years, but in a different way than how they are fun today, if they work hard in a lot of respects because we were creating a product that just didn't exist before, when we started putting together this technology, there was not even a clear way on how do we call it? No people were not going online, searching for a smart mattress cover or for something like a sleep improvement machine. Like it just didn't exist. And so we're creating our own category.

We didn't necessarily have tons of connections in Silicon Valley because all of us are actually immigrants. I was born in the United States, but none of us went to school here. We didn't have any networks. So that was a really steep climb at the beginning because when you're trying to hire, you're trying to raise funds and you don't have the networks. It's pretty hard. And I think that's one of the things that I admire the most in founders who have some kind of have to go through that process because I know what it's like, and you keep getting rejected mostly at the beginning because there's no trust point. You know, even when we would go and meet with investors, like you, they would ask you where you went to school and they even know when you would tell them the name. Right? Like, it's not Exactly like, even though I'm like, oh, it's like one of the best schools in Latin America, but it's just what it is. It was hard.

But eventually what happened is that when we just kept our heads down, we raised a little bit of money from friends and family. We launched the first product I'm crowdfunding. And that was a huge success. We raised over 1.2 million in pre-orders just directly on Indiegogo, which is a public platform. Everyone could see the success that that product had. And so at that point we were validated. Now everyone said, okay, like this is interesting.

And we finally got into Y Combinator after being rejected two times. And that sort of changed the trajectory of the business because it gave us a bit of a, like an in, on a network that is really powerful and really valuable. And it helped us start connecting with the right people.

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​​Elisa Muñoz: Wow. Such an experience.The raising money, gaining funds, all of these first parts of the company, the YC experience. Did you feel that it was maybe more challenging because it's a hardware company instead of a software company?

Alexandra Zatarain:  Hundred percent, it's harder to raise money for hardware. I think right now we're going through such interesting times in the market where a lot of the heart softer valuations are dropping, right? So things sort of stabilize and move forward. But for many years there's been a huge gap in terms of the multiples, you'd get an evaluation for hardware company, your software, your recurring revenue versus just a one-time consumer goods purchase. So also sort of dark consumer brands have been overvalued at times that are undervalued. So it's been a roller coaster and we've been doing this for eight years now, like I mentioned. And so we've seen a lot of different cycles, but it is harder.

There's not, not all investors that are willing to put their money into hardware companies. So what has helped us is that we are a health company and we are diversifying beyond hardware as well in terms of the products that we sell. So a couple of months ago we announced the acquisition of a company that focuses on digital coaching. So now a fleet that is a mission driven company. We want to help people get sleep fit. It's fake. We're figuring out all the ways in which we can help you achieve fitness. Some of those will be through our hardware, but also through digital tools, coaching insights, reports, anything that will help you live healthier, longer, or sleep better. Those are all products we can build.

Elisa Muñoz: Talking  about fitness, maybe the market thinks that it's only for athletes, right?  So how did you change this mentality and open the market for everyone? Or what does Eight Sleep means when it says that it's, that “You need to have the athletes mentality”?

Alexandra Zatarain: Actually having an athletes mentality is one of our internal values. You know, we see sleep fitness definitely as a very performance driven term. And Eight sleep definitely is probably a performance driven brand. And it is in our hands to extend this concept of performance to other aspects of life. Athletes are figures that gravitate towards our product. For sure. We have hundreds of professional athletes asleep on them. We're an official partner of the Mercedes from the one team and we have CrossFit champions and sleep on it. And we also have DJs like Steve AOP, and we also have actors and you'll talk CEOs and you have venture capitalists.

Like it's insane. Like if I could say all the names of all the famous people who sleep on it, like you'd be in shock. It's really amazing. And I think the most rewarding part of what we do, but we know that over time because athletes and top performers, as we define them are influential to many of us, whether you're an athlete or not, this is going to help us build trust on what we do and it's going to help us spread the word. And I always tell my team that our goal should be to make sleep fitness relevant to all of our grandmothers and grandfathers. Right? It's just about time. One of the core principles for building the brand and the positioning is that you can't be all things to all people.

So we are focused on where we are today. And that is very important because when you're building a movement, you need those people to be very passionate about it. And you can only achieve that level of passion if there's this clear sort of a limit to like who belongs and who doesn't, that's just how humans behave. And over time, those limits will expand. The bounds of this movement will expand and our grandparents can come in and they will understand what fitness is. And our marketing will have to look different and evolve in order to get there. But we're not in a rush. And we think like a few years down the line, we're basically going to be able to achieve what Nike did going from being a runners brand, to being for everybody and the everyday athlete, if they define it.

​Elisa Muñoz: I wanted to ask you,have you found any challenges in the development process when it comes to the purchasing?

Alexandra Zatarain: Yeah. I mean, there's a lot of challenges I think in building the product, a lot of challenges in building the business. So there's, you know, like just growing the business, there's its own sets of challenges. And so how do you build awareness for a brand that people can only find online and advertising the line is only becoming more expensive? And so what is the strategy like that maybe allows you to get to people in a more cost-effective way now we're starting to do, which we have done in the past a lot of explorations around retail.

And do we do pop-ups? Do you go with third party retailers? Because in the purchasing process, we have found that people there's this certain number of a percentage of our potential customers who would want to try before they buy it. So that's sort of pushing us to think, well, what would that look like? We're also doing a lot of work with hotels. So we are in close to a hundred rooms now across the United States and expanding. And so those are just places where people can discover, but also if you are considering it, you could probably try it as you're traveling on the road and that could then lead to a conversion on our site.

​Elisa Muñoz:  Well, and maybe let's say the biggest technical challenge you have ever faced? Maybe I think it was at the beginning, right? 

Alexandra Zatarain: There's probably still a lot now. Like I think that that bar is always rising in terms of what we're trying to achieve from a technical perspective. And so that's why there's always a lot of technical challenges because we're constantly innovating initially. Yes, it was very hard to just gather enough data in order to build out great. I was like anyone who has used our products for a long time could say, could really speak to how much they've improved in terms of accuracy, right? Because the longer we're out there on the field, the more people are using it. The more information, the better the intelligence of the product actually gets.

So now people are able to integrate devices and wearables and they can read all this data and send you correlations and tell you when you run or see you asleep, but when you go cycling, here's how you sleep. Right? And so that's pretty magical, but it took many, many years in order to get there. So that was very technically challenging. The other part has probably been just when we think about manufacturing a product, right, when you're designing it in your head and then translating that into a manufacturable product that could be built at scale. So as founders, we've had to hire people into our team that are really knowledgeable in those areas because they were really foreign to us.

And so even just one understanding all of that, and then the limitations of how do you design a product and how do you make sure that you're taking to manufacturing something that can be built at scale that doesn't have to be built by hand because then the costs go higher. And there's a lot of technical things there that every time I hear the team talk about them, I'm very surprised because it's not what I get to work on day in and day out. And you realize how much more complex it is to build the business. And people think.

​Elisa Muñoz: Wow. That's great. Thank you so much. And do you have any last advice for people for entrepreneurs starting on this path?

Alexandra Zatarain: It's actually probably something I was talking about with one of my team members, who's our design lead. And she was asking me of times whenever I've had to make decisions without having all of the complete set of information. And as an entrepreneur, sometimes you need to trust your gut and trust your, your, your gut or your sense of what's right. It also developed over time. And I think there's that fine line that for entrepreneurs, you have to be always developing. You know, my gut has become smarter as I've been exposed to people that are smarter than me or people who have achieved more things than I have and mentors and advisors and investors. And for other entrepreneurs who I can learn from, or I listen to all of a sudden podcasts or books. So develop your gut, grow it, grow your intuition, but also listen to it when it matters.

Elisa Muñoz: That's amazing advice. Thank you so much for being a part of this community. Thank you so much for taking the time and sharing your experiences. Hopefully we’ll see eachother soon!

Alexandra Zatarain: Of course. Thank you as well.

This interview was brought to you by ControlHub, the most intuitive purchasing software to request, approve and track all your business purchases.

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