For those not paying attention—mattresses are a huge industry that has been exploding in the past few years. Some of the best mattress reviews are now coming from consumers that have purchased directly from manufacturers. Innovative brands like Casper, Zinus, Purple, and Tuft & Needle have paved a path through the heart of direct-to-consumer sales.
What’s the Big Deal?
Mattresses have been victim of notoriously-inflated price points since their inception. Consumer goods in general have been victim of obscene price mark ups. The best mattresses on the market sometimes go for as much as $2500 for a ‘decent’ model—which is no small fee. The internet has changed the way business are able to communicate with customers. Rather than relying on bloated supply chains full of many markups, manufacturers can now sell directly to consumers through their own websites or markets like Amazon. To give an illustration of just how much this market has exploded in recent years, consider the recent merger of Purple, as told by TechCrunch:
Purple was already well on its way to that valuation when we got to take a sneak peek at operations at the company’s headquarters in the small town of Alpine, Utah and its giant factory an hour away in rural Grantsville last April. The new deal is known as a “reverse merger” and would result in Purple becoming a publicly traded company overnight, but without the formal IPO process.
HighTimes pulled something similar today when it sold itself to an already public special-purpose acquisition company called Origo. GPAC is the same type of setup but owned by a number of financial management organizations.
At the close of this transaction, GPAC will add $90 million to the company coffers and take a 14 percent stake in the company.
About a decade ago, founders and brothers Tony and Terry Pearce bootstrapped the company, building it up from a wheelchair business to the thriving direct-to-consumer mattress company it is today. In just the last year Purple went from a team of 30 to 600 people, built out an enormous manufacturing facility the size of eight Walmarts and more than tripled its net revenue.
The brothers still own a sizable stake in the company and are estimated to take home $850 million when the deal is done.