About the Company

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Colin McIntosh is the Founder and CEO of Sheets & Giggles, an eco-friendly bedding brand known for its pun-based name. The company launched in May 2018 on Indiegogo with its first product: lyocell bed sheets made from eucalyptus trees. These sheets offer superior softness compared to cotton, enhanced breathability, and better moisture-wicking properties. Additionally, their production process uses up to 95% less water than that of cotton sheets. However, they are generally more expensive and require careful maintenance, such as avoiding bleach and washing in cold water.

In its first six months of operation, Sheets & Giggles achieved significant success, receiving over 6,000 orders and generating nearly half a million dollars in revenue. The company gained further recognition by winning first place at Denver Startup Week 2018 in September. By October, they began shipping preorders, managing to dispatch around 4,500 orders, though they continued to work hard to meet the ongoing demand.

The brand's customer base is predominantly women, with nearly 80% of their customers being female. Additionally, over half of their clientele are in their 20s and 30s, highlighting the appeal of their products to a younger, eco-conscious demographic. Sheets & Giggles' initial success showcases the growing market for sustainable and high-quality bedding options.

Idea Behind Company

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Colin McIntosh's entrepreneurial journey began from 2015 to 2017, when he managed business development at a Techstars-backed wearable tech startup in Denver. During his tenure, the company raised a $3 million seed round, expanded to a 25-person team, and secured placements in major US retailers. However, the startup abruptly shut down in September 2017, leaving McIntosh disheartened, especially since it left retail partners without holiday inventory. This experience emphasized to him the importance of building a solid business model before developing a product, a lesson he would carry into his next venture.

Following the startup's closure, McIntosh decided it was the right time to establish his own company. He leveraged his strong network in Colorado, his experience with Techstars, and his background in launching and marketing crowdfunded physical products. Despite limited funds, he opted for a crowdfunding campaign to finance his new business. He devised criteria for his new venture, aiming for a large, fragmented market with little brand loyalty and a product that could transition from physical retail to an online direct-to-consumer model. He sought a low-complexity supply chain and stumbled upon the domain SheetsGiggles.com, which inspired him to explore the bed sheets market.

McIntosh validated his business idea by running Facebook ads to gauge interest. He built a landing page using Kickoff Labs and Shopify, attracting potential customers with witty copy and engaging visuals. The response was overwhelmingly positive, with 46% of visitors providing their emails, resulting in over 11,000 interested buyers in just eight weeks. This preparation allowed him to secure a manufacturer and finalize initial designs and order quantities. On May 1, Sheets & Giggles launched on Indiegogo, attracting nearly 500 customers and raising $45,000 on the first day, surpassing the $25,000 goal.

Creating the Company

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Colin McIntosh navigated the design, prototyping, and manufacturing process for Sheets & Giggles by leveraging outside expertise due to his lack of textile experience. He enlisted consultants to help develop and test the product based on his high-level criteria, which included using lyocell for sustainability, ensuring premium softness, durability, and partnering with a socially conscious manufacturer. These consultants created the necessary tech packs and designs, laying the groundwork for sourcing a manufacturer.

In March 2018, McIntosh sourced a manufacturer during market week in New York City, securing a handshake agreement with an Indian company that met all his criteria. A visit to the manufacturer in June confirmed the partnership, although initial production runs faced significant setbacks due to fabric rejections caused by poor quality. These issues delayed the shipping date and reduced the sales potential for the year, but McIntosh prioritized product perfection over immediate sales.

The unboxing experience was a critical aspect of McIntosh's vision, given that Sheets & Giggles was a direct-to-consumer (DTC) company with no plans for physical retail in its first year. He aimed to create a premium feel, starting with a sleek white box featuring a wax coating and a central logo. Inside, the packaging was designed to delight customers with humorous copy, a social call-to-action, and extra surprises like a knapsack, an eye mask, and a donation bag for old sheets. This attention to detail ensured that the unboxing experience was as memorable and enjoyable as the product itself.

Launching the Business

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Colin McIntosh founded Sheets & Giggles (S&G) in October 2017, with the business operations commencing in earnest on January 2, 2018. The initial months were focused on creating a solid foundation, which involved building a brand identity, setting up a basic website, finalizing the logo, refining messaging, and defining success metrics. McIntosh also expanded the team by hiring a part-time intern, engaging a marketing agency for their crowdfunding campaign, and enlisting a PR agent based in Denver.

By March, McIntosh had assembled a small two-person product team to design the envisioned products. During Market Week in New York City, they met with numerous manufacturers, ultimately securing a handshake deal with an Indian company that met all their criteria. The preparations for their 30-day Indiegogo campaign, scheduled for May 1, included initial photo shoots in February and a video shoot in March, leveraging local contacts in Denver for these efforts. Despite some minor mishaps, such as using a single unwashed set of white sheets for all their promotional materials, these steps were crucial for the campaign's visual and marketing content.

The ten-week preparation for the Indiegogo campaign involved extensive email list building and ad testing. Using Kickoff Labs for landing pages and running a social sharing competition, they captured 11,000 emails with a high conversion rate. The targeted marketing efforts included running various ad variants to optimize conversions, and the result was an impressive 46% conversion rate. Regular engagement with the email list and customer feedback informed their product offerings, ensuring a strong launch. On May 1, the campaign raised $45,000 from over 400 backers on the first day. Following successful product development, testing, and packaging approvals, McIntosh traveled to India in June to inspect production. The first batch of preorders shipped in October, receiving predominantly five-star reviews, setting the stage for continued growth through the holiday season.

Since the launch of Sheets & Giggles (S&G), several strategies have proven effective in attracting and retaining customers. A significant factor has been the company's engagement on social media. The team responds to Facebook comments and messages almost immediately, providing on-brand answers, jokes, pictures, and gifs. This real-time interaction not only addresses individual queries but also serves as a marketing tool, influencing potential buyers who read the comments before clicking on ads. This approach highlights the importance of viewing responses as public-facing marketing language rather than just customer service.

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Earnings

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Sheets & Giggles (S&G) is currently operating profitably, with plans to close the year at approximately $600K in revenue, constrained primarily by inventory limitations. The company has maintained impressive financial metrics, including 65% gross margins and about 10% net margins. Their customer acquisition cost remains under $30, and they are converting over 5% of visitors on SheetsGiggles.com, with all sales occurring directly through their site. Average initial cart values hover around $140, and they project a lifetime customer value of over $1000, leveraging the fact that 38% of Americans purchase new sheets annually. Day-to-day operations focus on production management, customer service, digital marketing, website improvements, content creation, fundraising, and logistics.

Looking ahead to the next year, S&G plans to expand its product lines to include new sizes like Twin and Split King, as well as new colors such as red, green, and beige. They also intend to introduce their first non-bedding product, a eucalyptus lyocell throw blanket. International sales are on the horizon, with potential expansions into the UK, Australia, Canada, and possibly the EU. Domestically, the company aims to explore new sales channels like Amazon and possibly HSN or QVC in the latter part of the year. The founder, Colin McIntosh, plans to start drawing a salary in December after a year of reinvestment into the business, and the company targets a 4-5x increase in revenue for the coming year.

S&G deliberately avoids physical retail for several strategic reasons. The high margin share requirements of 40-60% in retail significantly increase their cost of acquisition compared to their standard channels. Additionally, merchandising costs, training sales associates, and the need for eye-catching packaging add substantial expenses without guaranteed returns. Retail return policies also pose significant financial risks for startups, potentially crippling cash flow if unsold inventory is returned. Instead, S&G focuses on building a strong, well-known brand that can eventually command better terms and presence in retail settings. Long-term success for S&G involves becoming a brand that can hold its own in retail, avoiding premature and costly expansions into physical stores.