February 20, 2021 • 39 mins
People find it difficult to re-invent themselves. Our next guest did...several times. From being a church volunteer in Taiwan, to creating bean bags in his parent’s basement, to opening a chain of furniture stores, to filing for bankruptcy and now becoming the fastest growing furniture retailer in the US. Plus, We’ll tell you what made the electricity grid in Texas fall apart and how it could have been avoided.
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Episode Transcript
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Speaker 1 (00:00):
Follow. The profit is a production of Gingwich three sixty
and I Heart Radio. So let's say you live in
a US city where the temperature rarely gets below freezing
in the winter, but then suddenly a storm comes through
and brings it down to four degrees. So not only
are you now living in the tundru and surrounded by
(00:20):
snow and ice, your electricity and water go out as well,
and you don't really know when it's gonna come back. Well,
we're going to tell you what happened in Texas and
how it could have been avoided. Plus, people find it
difficult to reinvent themselves what our next guest did several times.
He's might be worse than prints in some ways, from
(00:42):
being a church volunteer in Taiwan, to creating bean bags
and his parents basement, to opening a chain of furniture
stores which you've probably seen have been in a few
of them, to filing for bankruptcy and now winning becoming
the fastest growing furniture retailer in the United States. You'll
hear Sean's history and insight. Next, I'm follow the Prophet.
(01:03):
I'm David Grasso. So when you think about furniture, it's
a little bit like toothpaste. Everyone needs it. There's so
many variations of it. You've probably seen it all. So
how do you create a great piece of popular furniture? Well,
it's actually really hard. Our next guest, Sean Nelson, focused
(01:27):
on a couple of different styles, first starting with bean
bags and then sectional sofaz and now much more. The
love Sack and the Sactionals became a hit, and it
was quite a journey to get there. If you haven't
visited one of their stores, they're really innovative and they're
fun to visit. I actually went to one after I
met Sean. So Sean David Nelson, he's the CEO and
(01:49):
founder of Love Sack. Hey, Sean, Hey, great to be
with you, so Seana, like many people, I just moved
into a home, and furniture is, you know, one of
the things that bedevils me. How on earth did you
decide to get into what, I think, maybe besides food service,
is the hardest industry I've ever heard of. Yeah. Well,
(02:12):
I did not go to college thinking anything about furniture
other than I had made a giant bean bag when
I was eighteen, right right as I began college. Actually
because I thought it'd be funny and filled it with
shredded foam like I actually cut up my parents camping mattresses,
you know, the kind of finding the basement with a
bungee cord around that on a paper pedder to fill
(02:35):
this thing because I couldn't, of course, possibly buy enough
bean bag beads, things like eight feet across, right, and
everywhere I took it, everyone loved it, and so before
long was convinced by neighbors and friends to start making
them one of these things, and needed a name. And
you know, it's like hippie bean bag love, Peace Hate
(02:56):
War seventies bag love, bag love sack. Oh that's and
I had a little company at twenty one years old now,
and I just kind of fell into it, you know,
And to be honest with you, I was I was
trying to plan for my real job the whole time
I was running the side hustle through college that never
made me any money. You know, every time we made
a dime that the van broke down, the shredder broke down.
(03:19):
It sounds like life, right, yeah, yeah, for sure. And
in fact, I took this opportunity to go to a
trade show that we had heard of in Chicago to
try and get bigger orders because Red Bull Energy Drink
had bought a bunch of sacks from us. Selling fifty
times sounded better than selling one at a time. So
we we did this kind of this last ditch effort
so that I could either you know, get some big
(03:40):
order or or just wipe my hands a bit saying okay,
at least I tried. So we went to the trade show,
showed it off. Lots of people jumped on the sack
and thought it was cool, but no one bought anything.
And came back home in the spring of two thousand one,
about to graduate university and had this job waiting for me.
Actually overseason China seak Mandarin Chinese. I majored in Chinese,
(04:01):
having served as a missionary for my church over there
a few years before college. And I had this job
waiting for me. And I got his phone call at
phone rang. I looked at his out state number, so
I thought, maybe it's from the trade show. So I
picked up my phone and said, you know, love Sack Corporation,
And it was the Limited Corporation, one of the biggest
retailers in the United States. Right, this is like Victoria's
Secret Bath and body Works Limited and Limited two stores
(04:24):
for Little Girls, wanted twelve thousand little love sacks for Christmas.
They sent me this piece of fabric that I had
to match, and I flew to North Carolina to match it.
I found its way too expensive. You know, they wanted
these things so cheap. I'm about to give up again,
thinking like, okay, what am I even doing here. I'm
a waiter at night, by the way, paying my way
through school, about to graduate. The guy said that you
know you're not gonna find the same cheaper. And you
(04:46):
had these boxes of samples behind him with Chinese writing
on them. It's the address of the fabric factory in
China that makes the stuff, and of course I can
read it. So I get on the plane and I
fly to Shanga. I'm like, I can't give up now.
I walk in the front office of this fabric mill.
I said I need this stuff. I did this in English,
by the way, because I was nervous and I just
wanted to hold my cards. And they said it's five
(05:08):
bucks that you already said no, no, I did it
for like half that, and they start talking amongst themselves
in Chinese, right in front of me about how much
it costs to make this stuff, because you know they'll
do that and talk right in front of you, and
I can understand everything. So I knew that they could
make this fabric for my price. So I just sat
there for three days and negotiated and down and down,
and finally they're gonna make them. They're gonna cut them,
they're gonna sell them or ship them to me. They
(05:29):
just needed deposit for sixty dollars. No big deal. Yeah,
So I called it the Limited too, and I said, hey,
I'm over here at my factory in China. I'm ready
to go with your order. I just need sixty five
tho dollars to get started. And they said, well, you know,
we're the Limited. We don't give deposits, said, we're love seck.
We've never done a deal without a deposit, what's wrong
with you? And they end up wiring me sixty five
(05:50):
granded my University of Utah credit Union account, which is
all I had, and I wired that to China. They
got make him, and I flew back home and built
a factory on credit cards to stuff these things. And
so that was kind of like our humble beginnings and
then from there, you know, we just needed more sales.
And having completed that order through the time frame of
(06:10):
two thousand one, nine eleven happened. Price of foam went up,
price of shipping one up. We made no money, and
so we scrambled to all the retailers. They laughed at us,
told us that giant beanbacks were stupid, heavy, too expensive.
Nobody wants these things. So we just opened our own store,
trying to frankly pay back all the debt we created
building that factory. So Sean, the furniture mafia's in North Carolina,
(06:34):
and you're out in Utah and you're taking them on
and they think you're stupid, so they won't let you in. Well,
they what's funny about this industry is it's really fragmented, right,
Like you're correct that the mecca is in North Carolina,
but every state or region has its, you know, you
know them, the rainmoren Flannagan's, the R. C. Willie's in
the West, the American Furniture Warehouse in Colorado. We went
(06:56):
to all these guys out west, and they're the ones
who told us, you know, this would never work. So
we opened our own store and and and it worked,
and it surprised us even we were you know, the
first time I paid myself, I was working in the
mall open until close for ten bucks an hour or whatever.
But we were making money. And we took that money
and opened more stores. And we had some failures and
(07:17):
and some winds and ups and downs, and you know,
the story gets longer and crazier, but that's how I
got into furniture. And frankly, in that first Love Sacks store,
there was a couch in the corner, just to look pretty,
just to make it. You know, the Sacks have context
and a big screen TV playing movies, and people kept
asking about the stupid couch. And I couldn't sell the
couch because it was there to look pretty. And by
(07:39):
the way, I couldn't get another one. But after months
and and and frankly, maybe a year or two of
hearing this, how much is that couch? How much much
as that couch? We decided to try and make one,
and only make one that we could deliver easily, Make
one that could be stored easily, shipped, easily, packed easily,
and we invented saxtionals, and sactionals are now eight percent
(08:00):
of Love sex business. It's blown us up. We I
think we still have many hundreds of millions to go
an opportunity there, maybe billions. It's a couch that could
be anything to anyone, and it's a very special invention
with lots of patents around. So one of my cousins, Manolo,
had his own furniture store, and he got crushed by
these big retailers that offered free financing. And so how
(08:22):
the hell did you make it, Sean, because these furniture
guys are basically cartels from what my cousin has explained it.
You know, they basically moved into his neighborhood. So Rooms
to Go shows up and goes, oh, we'll give you
the furniture cheaper than what my cousin could sell it
for and we'll finance it for free. I've always been
(08:43):
obviously selling furniture now for two decades, but never considered
myself part of the industry. Were like the outsiders, you know,
we don't go to their shows, we don't buy from
the same sources. We manufacture everything we we make through
our own sources, and we invented everything we make. There
in is the key. So for us, where your cousin.
(09:03):
I think you're right. Main Street versus these behemos, it's
a tough battle, and everybody's kind of playing the same game,
selling the same things. What finally worked for us was
the fact that we invented a better mouse trap. Like,
nobody has sactionals, they have sectionals, they have couches, But
(09:23):
if you really understand what sactionals do, they're they're quite unique.
It's washable, changeable, kid proof, life proof furniture that could
be with you the rest of your life. You can
change the fabrics, you can wash it, you can rearrange it,
reconfigure it can change shape, do all sorts of things,
add things to it later that we invent later, and
it's all reverse compatible. So and the reason I think
we accidentally fell into doing business this way was because
(09:45):
we were too stupid to know that it couldn't be done.
Like when we first invented Sationals and the prototypes. This
is a story that I haven't told very often. When
we first invented Saxtionals prototypes, Like, I took our models.
We had built them out of two by fours in
the garage sort of thing, and I didn't have the
the machinery to like stretch the sinuous steel springs across
that would make them sit well, and and that sort
of thing. So I took him to a proper furniture
(10:07):
maker with our drawings and I said, hey, will you
make these? And it's a seat and a side. That's
what we sell today, right, these these things you can
arrange and rearrange like legos kind of. And he gave
me all the reasons it wouldn't work, It wouldn't be comfortable,
and I said, look, just make them. And came back
two weeks later he said he had it done. And
you know what he had made for me. He had
(10:27):
made me a little removable cover sectional, which never is
very good. He made be a sectional like like pottery
barn sells, like anyone sells. I said, well, where's the
thing that I gave you? And he said, oh, that
will never work. Look, I've been making furniture for four years.
My Dada made furniture for four years before that. Your
thing will be uncomfortable, flat, too stiff, won't hold together,
(10:47):
I said. So I took my prototypes and drawings to
another furniture maker and just said, hey, I'm gonna paying
you for these prototypes, please make this thing, and you
know what happened, saying, of course predictable. I did not
even believe it. He made me a little sectional because
we had these love sack stores. He said, oh, you'll
be able to put this in the corner of your
storage against I said, no, no, no no, I can't ship
(11:07):
that ups, I can't store it. The covers look like
they're slip covers, like I don't want that. I want
what I made. And he said, oh, that will never work.
And so finally we took it frankly overseas, where they'll
do whatever you ask them to do for money, and
the Chinese helped me develop this. My Chinese factories over there.
It was many, many years of refining and bringing them
to the standard they are today. But the point is,
(11:29):
because we were not from the furniture industry, we did
not think like they thought, and we knew that this
could be done. We at least believe that we could
do whatever we wanted to do. And and now I
think we have what is the best couch in the
whole landscape, and we've since adopted a whole business model
around it, and we have more to come on that
(11:53):
we're gonna take a quick break here, be right back.
So Schean China has been in the news lot, and
by the way, shing quite little for those of you
who speak Mandarin, that's Happy New Year, right, That's about
the extent of my Chinese, right, John, China has been
in the news a lot. Specifically, you know, I see
a lot of the stuff just in my life, including
this microphone and this computer that I'm on right now,
(12:16):
is made in China, and I know it's political, but
at the same time, there is a beneficial relationship. So
what's your take on that. Well, Love Sack was made
sort of a postal child of tariffs because at the
time when those special tariffs were announced by the Trump administration,
we had most of our manufacturing in China, and luckily
we had one foot out already. We were working on
(12:36):
sourcing and across different geographies in Southeast Asian. By the way,
we have a long term view of possibly manufacturing most
of our stuff in the United States, so we were
able to quickly react and get ahead of that. But
we've been right at the tip of the spear of
both experiencing this transition and getting talked about in the
(12:57):
context of China, and so I've spent about a tenth
of my life in China. I lived there for two
years as missionary. I lived there for another year as
a working professional in my early twenties, management training consultant,
leading courses in Mandarin Chinese and fluent Mandarin Chinese. And
then I've been back there seventy times probably since then,
on sourcing trips and whatnot. And China is gigantic, and
(13:23):
I think that most Americans, I don't think, can really
fathom what's going on there and how advanced that society
is in many ways. Obviously it has its own struggles
and by the way, from a human rights perspective, all
kinds of serious issues. But as an economic powerhouse, it's
for America's. There's four full America's of people. They're consuming, living, buying,
(13:50):
And to be honest with you, I don't think China
really needs us anymore like they used to. And and
in fact, I think that while it's fantastic in a
lot of ways that America's consumer is m has lifted
countries like China, like Vietnam, much of Asia and other
places out of poverty through manufacturing. Through our own consuming
(14:10):
of goods, On the other hand, we've turned a lot
of Chinese factory owners and entrepreneurs into millionaires and billionaires. Generally. Now,
I think that country has a chance to just become
the world economic powerhouse by sheer virtue of demography, just
because the number of people. So I think that it's
(14:31):
going to be a very interesting next few decades is
China emerges on the scene. So Sean, everything's political, right,
Like you try to avoid love sack being political, but
these tariffs come out and look it worked. You know,
how do you navigate that when you're when your business
is suddenly thrust into the political spotlight. I think that
generally might take on politics lately is people are just
(14:53):
too hard on each other, you know. I think we're
all just trying to survive. There's all kinds of craziness
happening in the world, and and it's being amplified by
politicians on every side and the media who wants to
get clicks, who wants to get noticed, who wants to
be heard, And sadly, I think a lot of people
are being manipulated, you know. I think ultimately you just
(15:14):
we just roll with it. As entrepreneurs, for instance, you know,
tariffs come, we shift the business, We react quickly. We
don't whine about it. You know. I spent some time
in Washington. I met with senators at that time and
tried to figure out, you know, if there was some
way to lobby around these tariffs or who knows what,
and ultimately got nothing. And so I think we just
(15:35):
make our way and keep our head down and do good.
I think that unfortunately, a lot of these things that
we can't control become hot politically, and then we're just
hard on those around us, or we're hard on different groups,
and I just don't believe in that. I believe in
minding your own business and Junior best to roll with
the punches as they come. That's the extent to which
I get political. What do you think it is because
(15:57):
you live in Utah and you're a Mormon. What is
it about Mormon culture? We're not going to talk about
religion on this show that really fosters entrepreneurship. I'm always
fascinated when I go to Utah how entrepreneurial it is,
and a lot of that has to do with its
Mormon history, right and the culture around it is. There
are there any tips for people who aren't in that
culture that. You know, the show is called Follow the Prophet?
(16:19):
What do you all do over there that we could
learn for ourselves. I'm not talking about the religion. I'm
talking about the culture around the religion. Yeah, I don't
think the title of this show is lost on We
Follow the Prophet is actually a Mormon primary songs so
we sing it when we're children. It's fun, you know, Um,
it's one of the more fun ones. So I appreciate
(16:40):
the wink and the nod to that. Yeah. The the
the Church of Us Christ War day Saints has developed
a culture I think that is really centered around self
reliance and I think it goes back to our pioneer roots. Ultimately,
the culture has come up then on self reliance and
survival and so I think that's bred a culture of
(17:02):
entrepreneurship that is admirable and sometimes even annoying. You know,
when love Stack first was getting started, nine out of
ten of our copycats and this is over the course
of a decade, actually came out of Provo Utah, which
is like the b y U Epicenter for that's like
the Vatican for for Catholics. Provo over there, you know,
(17:22):
you're dealing with the most Mormon place in the universe, right, Yeah.
But to their credit, these are people who see a
good idea and they jump on it and they go
do it. You see a restaurant pop up in Utah,
you'll see you know, some something unique, something clever. You'll
see another concept like it within six months. And it's
just a very entrepreneurial place, both for creation and for copycatting,
(17:45):
but one way or another, getting things off the ground,
getting things started, and there is a huge outgrowth of
entrepreneurship and billion dollar businesses grown out of this little
place called Utah. I think it really is a cultural thing,
and I think it ultimately, to answer your question, it
is back to self reliance, to people who who don't
want to work for the man who believed they could
(18:06):
do it just as good as you could, and and
and they'll go try. That just comes with entrepreneurship. Entrepreneurship
is a messy game, and it requires a lot of guts,
and it requires a lot of fortitude. And um, I
think that ultimately, somehow this culture has inspired some of
those attributes in people. So let's talk a little bit
(18:28):
about failure, because failure is one of the hallmarks of entrepreneurship. Right,
it's never a straight line. Tell us about your failure,
the bankruptcy and before that, of course, And I know
every time I mentioned this to you, because I've been
interviewing you for a long time. Sean, you were on
Rebel Billionaire. You kind of enjoyed the celebrity moment. Right.
You could tell it's been a while because you had
like long, highlighted hair that was very you know, typical
(18:51):
back then. But you were on Richard Branson's show, right,
Rebel Billionaire. Did you fail before that or after that?
I failed all along the way. We had from the
first love sax Store, which luckily was a success. We
then had some that worked after that and some that
were abject failures. You know, we were kids running around
(19:13):
playing in an in an adult world at high stakes,
signing up leases, long term leases and these shopping malls,
paying high rents and trying to figure out why the
first one worked and again someone worked, someone didn't. But ultimately,
to your point, I want a million dollars on TV
on this crazy show called The Rebel Billionaire with Richard Branson.
It was his answer to Trump's Apprentice. He wanted to
(19:34):
show kind of like that, but not for apprentices for entrepreneurs.
And we competed against other entrepreneurs for the biggest prize
reality TV show history. And I was also made president
of Virgin Worldwide for a minute. And when that happens,
particularly to your point in the state of Utah, little place,
fish Bowl, everybody knew me and I had this celebrity. Yeah,
I saw the stupid hair. So you and your stupid
(19:56):
hair were all over the place, weren't they all over
the play And you can't believe everything you see on TV.
You never know the backstory. At the time that Richard
gave me a million dollar check on National TV Fox
Prime Time, I had like two million in debt, having
scrapped it together to build all these stores and grow
and we had a dozen dozens of them and whatever, Right,
(20:17):
So what's a million bucks? And I don't mean to sound,
you know, brickish, but like it just went into the
pot and it was gone and paid back a little
bit of debt. And that's why you never know what
someone is actually going through when you see anybody have
any success. And and and then we parlayed that into
raising our first round of true big venture capital. We
(20:38):
raised about thirteen million dollars and their first idea was, Hey,
let's bankrupt this company you've created called love Sack. Let's
exit some of these bad leases through a reorganization. Let's
buy back some of the franchisees and close the ones
down who aren't up to snuff, and we'll start over.
And I was like, holy crap, that's super scary and
not something I wanted to do, but kind of, you know,
(21:01):
wedged into the corner there, and that's what took us
to Stanford, Connecticut. We moved the company from Utah to Stanford, Connecticut.
That's where all my children were born. And that's you know,
and I raised my family for eleven years out there
rebuilding this company that was in the limelight win one minute,
and then you know, in the limelight again for bad reasons,
having gone through a full bankruptcy reorganization. Extremely embarrassing, painful,
(21:25):
but we survived it. And by the way, if you
ever want a six month NBA, that's better than any
NBA you could ever get. Steer a company through a
reorganization successfully, and you see what contracts are really made of,
and you see how the American system really works, and
you see all kinds of things while you're operating by
the way and staying open and motivating people and hiring
(21:47):
people and also laying off people in closing down store.
I mean, it's it's a messy, ugly process that taught
me so much about business that you can only learn
in that way. And so while I don't encourage it,
my point is just there is always something to be
gained from any situation, no matter how uglier bad it is.
These days, we hear a lot about the big versus small,
(22:09):
Wall Street versus Main Street. You did it? Do you
think it's still possible? Do you think your story would
still be possible today? Oh? I think entrepreneurship is on
fire and and and the opportunity to do what I've
done has never been more accessible. I think. You know,
when when we started selling love Sacks on the lawn
of the University of Utah, we were like weirdos and
(22:33):
people talk about bootstrapping today, and you know, building a
business that that word didn't even exist. There was no
word for what we were doing. You know, it's funding
your company out of your credit cards and your savings.
We were bootstrapping in those early days. By the way,
there's a hundred other phrases that you could pick up
from spending a week listening to Gary Vayner Chuck, for instance.
And my point is is, whether it's Vayner Chuck or
(22:55):
whatever podcaster you want to listen to her this one.
I never had all these resources. I never was able
to listen to people like me pontificate on, you know,
how to do things or what they've been through. Like
we were just on our own and we had maybe
some books to read, and I did tons of that,
and I would encourage people to network. And but all
these things are now so accessible, and there's courses on this,
(23:15):
and there's online stuff, there's free stuff, and it's all
out there now, and I think it's more accessible than
ever to young people. It's amazing. I I didn't think
I would be doing love Sack as a career. I
thought it might be a company at one point that
I get out of, and then I thought it might
be a company I could build and then sell and
do the next thing. And now I really want to
(23:37):
be here for the next few decades because to make
designed for life products that are built to last lifetime,
designed to evolve, and and can truly become, you know,
ultimately competitive in their category and change the way people
think about the stuff they buy. Like once you want sectionals,
you start to think differently about the crap you own
that dies, like this phone right that is going to
(23:58):
be dead in two years because they wanted to be Like,
I'm really proud of what we're doing. My oldest daughter,
she's an entrepreneur at heart, but starts at a young age.
You can spot these tendencies. She wants to build things,
she wants to invent things. She's she starts things, and um,
not every person is like that. And by the way,
I've never been one to encourage everyone to go be
an entrepreneur. I think you either kind of have those
(24:21):
tendencies and that sort of resiliency and you need it
or you don't. I think it's something to be pursued
by people who have the right, weird mix of strengths.
You said there's a problem with consumerism. Consumerism you know,
just a hint, hint, wink wink. It's destroying the planet,
and your products are attempting to begin to solve that
(24:42):
systemic problem that we have. Yeah, I'll quote William McDonald
who wrote the up cycle. We don't have a pollution problem.
We have a design problem. Like if if things were
designed better from the beginning, we wouldn't be chewing through
all of our natural resources in the way that we are.
Where they're talking about vehicles, we're talking about clothing. When
(25:03):
you're talking about you know, this phone I'm holding, you know,
Like what frustrates me is is I had, for instance,
for six years, I had an UH I carried in
or maybe longer, an iPhone SE which was a six
and a five body. And what's funny is if you
know now I'm carrying this twelve which looks exactly like
the SC that I used to have, same body, same shape,
(25:26):
And through the upgrades of software, I was able to
maintain that sc and it could do all the same
things except for maybe take as great at pictures. But
what sucked is right near the end there, the last
two upgrades I made I accepted from Apple, killed it
turned it into much slowed it down to the point
it just didn't even work anymore in features. You know,
that's intentional. And with it goes all of the aluminum
(25:50):
and all of the precious metals and all the silica
and all of the wonderful things that are in there,
and terrible things bromine chlorine, you know, packed into the
arsenic landfill usually in Africa, because we don't want to
bury that stuff on our soil and it becomes garbage.
And it didn't need to be. The phone could have
been made modular like our Sactionals, to let that camera
(26:10):
be upgradable. And look, they won't because they need to
sell more phones, because they need to be the biggest
company in the world. What bugs me is that if
you gave me a few hundred billion in cash, I
think I could redeploy it higher the right designers and
and go attack another category rather than just try and
shove a new phone down your throat every couple of years.
And that's what love Sack flies in the face of. Like,
(26:31):
if we succeed with Sactionals, and the way I want
to succeed, which is to capture more than one percent
of the market. Right now, we have one percent of
the couch market, and I think we make the best
couch so more people need to know about them. We're
working on that, right, We'll grow and grow. But if
we really succeed and we gobble up many percents of
the couch market. Ultimately there will be fewer couches sold
(26:51):
because our stuff lasts forever, and and all the stuff
that we invent going forward for sactionals are reverse compatible
with the stuff. You know, I've got sexual in my
living room that are ten years old mated with pieces
that are brand new. And that's a beautiful thing, wearing
new covers and they smell great and they look great.
They've been through four kids, two dogs, and two cats.
And so my point is it's incoming upon me. Then
(27:12):
if I shrink the couch category by selling couches that
last forever, to go attack another category if I want
my business to grow, and that's that's called designed for life,
and that's what I'm all about. And my goal is
to spend the rest of my life on Earth attacking
categories and shrinking them by making products that are better.
And then and then what's cool is if we are
radically successful at love Sack, other entrepreneurs must copy us,
(27:37):
not because you know, I'm preaching sustainability, but because like
it works and it resonates with people to have a
brain that are piste off with buying stuff that's turning
into garbage around them because they don't have another option.
And then those people, the consumers, not only did the
entrepreneurs begin to move the needle in other categories that
I don't have time to attack, but consumers start thinking
differently about the crap they own two and they start
(27:59):
buying stuff. And that's our ultimate purpose of love Steck.
It's written on the wall. We we hope to inspire
mankind to buy less stuff, but by better, and that's
what we're all about. I am so sick of hearing
people pitting the economy against the environment. I'm glad someone
finally came along and cleared that up that there's a
lot of economic opportunity in helping protect our environment by
(28:23):
creating higher levels of sustainability. And no one ever gets that.
It's like either you've got to raise the forest to
make money, and that's the only option. So I'm really
happy to hear that there's a social mission in mind,
and I think that's really important to people. Our age
absolutely by less stuff and by better, you know, That's
what I believe, And we'll try and make the better stuff,
(28:43):
at least in our little category. I mean, if you
think about it, what our parents did to our planet
is devastating, and by the time your kids are our age,
it's very concerning the stuff they're going to be dealing with.
We have five guiding principles that we live by and
we talk about a lot in our company and we
hired to it. And one of those guiding principles is
an iroquois idiom. We borrow this earth from our children.
(29:08):
And I believe that. And by the way, it's why
every time you've ever seen me, David, I'm wearing this
dumb black T shirt. By the way, this black T
shirt is nine years old, and I wear them as
a silent, quiet protest to the fashion industry that convinces
us that our collars are too taller, that our jeans
are too tired, and oh now they're too loose, or
now they're too high on another're too low waisted, whatever
it is. Black T shirts last a long time. They
(29:29):
kind of go with everything, and like they don't stay
very easily. And so this is the kind of behavior
I'm talking about, and I think it's possible, and you
don't need to live a boring life to to just
make better decisions. I think, well, on that note, all
the best to your staff in Stanford, I love them,
and to your family out in St. George's, Utah. Thank
you Sean for making the time to talk to follow
the profit. Thanks David. We're gonna take a quick break here,
(29:57):
be right back. So I know this is already behind us,
but it's important that we talk about it. Texas it's
a really big state. Texas is the size of France.
It's also Texas is a word in Norwegian that means crazy.
Texas is crazy big. It spans two time zones and
has a huge border with our neighbor to the south, Mexico.
(30:19):
And it has a lot of big, important cities. And
one of those is Austin. And Austin is a town
that has been in the news again and again recently
because it's booming and it's transforming into Silicon Valley. In fact,
Tesla is there now. They're opening up a factory, Oracle
is moving their headquarters there. You've never heard of that company,
(30:42):
trust me, It's involved in every single facet of your
life and reasons why people are moving to Austin. One
is Texas. Texas doesn't have a state income tax. And
to his weather, have you ever been to Austin. Austin
is pretty nice weather. It barely rains and really the
lows don't go the freezing. Well, we saw recently that
(31:02):
a major winter storm hit all of Texas, all the
way down to Houston, if you know the geography, and
even down to the Mexican border, and Austin went down
to four degrees. In fact, that day, Anchorage, Alaska was warmer,
and really it plunged everything into chaos. The power went off,
and when the power went off, a lot of people
(31:23):
were cold. My friend sent me a picture of her
thermostatic forty four degrees. Her dogs almost die of hypothermia,
and a lot of people did die. So you might
be saying Texas is one of the places that is
growing the fastest in this country. And hey, it's Texas.
I lived in Texas. Texas is wonderful. Texans are independent,
(31:46):
They're strong, they have a great culture. Texas made me
a better person. I love Texas and Texas. Notwithstanding, Texas
has a little problem that they're unwilling to confer onto.
We'll call it Texas isn't really ready for prime time
for all this growth. And I'll tell you why Texas
(32:07):
is run like a frontier state, and I'm going to
tell you why. There's a lot of things that don't
make sense in the modern world. Hey, and we love
small government and we love low taxes. God bless Texas
for all of that. But Texas is growing faster than
nearly anywhere else in this country and they need to
change the way they do things. Number One, their legislature
(32:29):
only meets every other year in Austin, in fact, because
Austin's the state capital. That's probably not gonna cut it
in a state that is now the second most populous
and growing by the minute. Two, Texas has its don't
electricity grid and by the way, it's terrible. In fact,
it's named ur COT and the R in that acronym
(32:51):
stands for reliability. And Elon Musk, the newest resident of Buston,
came out and said they don't deserve the R for
rely ability on the Electric Reliability Council of Texas. They're
not reliable and in fact, they were minutes away from
having their grid completely collapse and be unfixable. And you know,
(33:13):
we can blame things that politicians came out and blamed
the windmills, which is false. It wasn't the windmills. It
was just literally a situation where it was too cold.
And people say, well, this is a once in a
thirty year event. No it isn't. It's called all the
time in Texas. Texas is a problem. Texas government focuses
(33:34):
on issues that don't matter, and whether it's a Democrat
or Republican in charge is irrelevant. They need to stop
arguing about issues and build infrastructure. If you go to Austin,
they never really planned for all this growth. Austin is
a mess. There's not enough infrastructure where I lived in Texas.
No matter what we would ask for, they never plowed
(33:55):
the roads. Folks. Texas is so big that in the
north its nose. Texas is unwilling to change the way
they function. Public corruption is a problem in Texas. They
are too busy squabbling about issues that do not matter.
The government of Texas needs to adjust to the new
realities in that state. It is no longer the frontier.
(34:19):
If they want to keep their system of small government
and low taxes, they need to focus on efficient and
effective government, stop arguing about cultural issues, and build roads.
Build a reliable electricity grid, and when it fails, don't
blame the windmills that has nothing to do with it.
In fact, windmills in Texas are one of the most
successful energy stories of modern times. Texas is blessed. It
(34:43):
has a vibrant economy built on top of another economy,
which of course is energy. And there's as much petroleum
and byproducts in Texas as there is in Saudi Arabia.
So let me tell you, folks, Texas is blessed with geography,
with culture, with money. It needs a government that recognizes
(35:04):
that the old way of doing business is not going
to cut it. Texas is not ready for prime time.
They are not ready for the growth that is coming
and it will continue growing because guess what, Texas is
a great place to live. But folks, if you continue
to run a government that cannot service the basic needs
of their citizens, they're gonna lose out on the growth.
(35:27):
And I'll tell you why. I'll tell you about another
place that's growing just as fast, and that's Florida. And
we're accommodating the growth just fine. You know, we have
issues on our coast there white out there for public consumption,
about rising tides and you know, sinking Miami Beach. We
know about all of that but guess what, our grid
is reliable. We build highways before the growth comes. We
(35:50):
rely on charter schools when school districts are overcrowded. We're
doing a great job. And really, if Texas wants some
lessons to learn, they probably should come over here to
Florida and study what we do. So thanks to all
of you for joining me as we follow the profit.
You know, I really want to thank Sean Nelson. He's
(36:12):
a friend of ours and furniture entrepreneur and someone really
cares about the planet, and we appreciate that he told
us all about the ups and downs of creating a
retail store and becoming a celebrity thanks to Richard Branson,
then filing for bankruptcy, and then resurrecting like the phoenix,
reinventing his product line and becoming successful once more. I
(36:35):
want to take the time, of course, to think my
fabulous team of producers, Emileano, Lemon, Scott Handler, Cheyenne Read,
and specifically my executive producers. You might recognize former Speaker
of the House Nuke King Rich and of course his
right hand lady, Debbie Myers. I'm your host, David Grosso.
Give us five stars if you enjoyed the show. We
work really hard to make this something you want to
(36:57):
listen to. So if you're happy, I mean if you're sad,
give us a review so that others can learn what
the show is all about. Follow the Profit is a
production of gen Rich three sixty and I Heart Radio.
For more podcasts for my Heart Radio, visit the iHeart
Radio app, Apple Podcasts, Spotify, or wherever you get your podcasts.
(37:22):
All opinions expressed by David Grasso and his guests on
the show are solely their opinions and do not reflect
the opinions of Gingrich three sixty or affiliates, and may
have been previously disseminated by David Grasso on this podcast, television, radio, internet,
or another medium. You should not treat any opinion expressed
by David Grass so as a specific inducement to make
(37:42):
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as an expression of his opinion. David Grass's opinions are
based upon information he considers reliable, but neither ging Rich Productions,
nor its affiliates and or subsidiaries warrant its completeness or accuracy,
and it should not be re lighted up on as such.
David Grasso, ging Ridge Productions, its affiliates, and or subsidiaries
(38:04):
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(38:24):
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or investment discussed on this website or on the show.
Strategies or investments discussed may fluctuate in price or value.
Investors may get back less than invested. Investments or strategies
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(38:45):
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take an independent decision regarding investments or strategies mentioned on
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whether it is suitable for your particular circumstances, and strongly
(39:06):
consider seeking advice from your own financial or investment advisor.
Follow. The profit is a production of Gingwich three sixty
and I Heart Radio. So let's say you live in
a US city where the temperature rarely gets below freezing
in the winter, but then suddenly a storm comes through
and brings it down to four degrees. So not only
are you now living in the tundru and surrounded by
(00:20):
snow and ice, your electricity and water go out as well,
and you don't really know when it's gonna come back. Well,
we're going to tell you what happened in Texas and
how it could have been avoided. Plus, people find it
difficult to reinvent themselves what our next guest did several times.
He's might be worse than prints in some ways, from
(00:42):
being a church volunteer in Taiwan, to creating bean bags
and his parents basement, to opening a chain of furniture
stores which you've probably seen have been in a few
of them, to filing for bankruptcy and now winning becoming
the fastest growing furniture retailer in the United States. You'll
hear Sean's history and insight. Next, I'm follow the Prophet.
(01:03):
I'm David Grasso. So when you think about furniture, it's
a little bit like toothpaste. Everyone needs it. There's so
many variations of it. You've probably seen it all. So
how do you create a great piece of popular furniture? Well,
it's actually really hard. Our next guest, Sean Nelson, focused
(01:27):
on a couple of different styles, first starting with bean
bags and then sectional sofaz and now much more. The
love Sack and the Sactionals became a hit, and it
was quite a journey to get there. If you haven't
visited one of their stores, they're really innovative and they're
fun to visit. I actually went to one after I
met Sean. So Sean David Nelson, he's the CEO and
(01:49):
founder of Love Sack. Hey, Sean, Hey, great to be
with you, so Seana, like many people, I just moved
into a home, and furniture is, you know, one of
the things that bedevils me. How on earth did you
decide to get into what, I think, maybe besides food service,
is the hardest industry I've ever heard of. Yeah. Well,
(02:12):
I did not go to college thinking anything about furniture
other than I had made a giant bean bag when
I was eighteen, right right as I began college. Actually
because I thought it'd be funny and filled it with
shredded foam like I actually cut up my parents camping mattresses,
you know, the kind of finding the basement with a
bungee cord around that on a paper pedder to fill
(02:35):
this thing because I couldn't, of course, possibly buy enough
bean bag beads, things like eight feet across, right, and
everywhere I took it, everyone loved it, and so before
long was convinced by neighbors and friends to start making
them one of these things, and needed a name. And
you know, it's like hippie bean bag love, Peace Hate
(02:56):
War seventies bag love, bag love sack. Oh that's and
I had a little company at twenty one years old now,
and I just kind of fell into it, you know,
And to be honest with you, I was I was
trying to plan for my real job the whole time
I was running the side hustle through college that never
made me any money. You know, every time we made
a dime that the van broke down, the shredder broke down.
(03:19):
It sounds like life, right, yeah, yeah, for sure. And
in fact, I took this opportunity to go to a
trade show that we had heard of in Chicago to
try and get bigger orders because Red Bull Energy Drink
had bought a bunch of sacks from us. Selling fifty
times sounded better than selling one at a time. So
we we did this kind of this last ditch effort
so that I could either you know, get some big
(03:40):
order or or just wipe my hands a bit saying okay,
at least I tried. So we went to the trade show,
showed it off. Lots of people jumped on the sack
and thought it was cool, but no one bought anything.
And came back home in the spring of two thousand one,
about to graduate university and had this job waiting for me.
Actually overseason China seak Mandarin Chinese. I majored in Chinese,
(04:01):
having served as a missionary for my church over there
a few years before college. And I had this job
waiting for me. And I got his phone call at
phone rang. I looked at his out state number, so
I thought, maybe it's from the trade show. So I
picked up my phone and said, you know, love Sack Corporation,
And it was the Limited Corporation, one of the biggest
retailers in the United States. Right, this is like Victoria's
Secret Bath and body Works Limited and Limited two stores
(04:24):
for Little Girls, wanted twelve thousand little love sacks for Christmas.
They sent me this piece of fabric that I had
to match, and I flew to North Carolina to match it.
I found its way too expensive. You know, they wanted
these things so cheap. I'm about to give up again,
thinking like, okay, what am I even doing here. I'm
a waiter at night, by the way, paying my way
through school, about to graduate. The guy said that you
know you're not gonna find the same cheaper. And you
(04:46):
had these boxes of samples behind him with Chinese writing
on them. It's the address of the fabric factory in
China that makes the stuff, and of course I can
read it. So I get on the plane and I
fly to Shanga. I'm like, I can't give up now.
I walk in the front office of this fabric mill.
I said I need this stuff. I did this in English,
by the way, because I was nervous and I just
wanted to hold my cards. And they said it's five
(05:08):
bucks that you already said no, no, I did it
for like half that, and they start talking amongst themselves
in Chinese, right in front of me about how much
it costs to make this stuff, because you know they'll
do that and talk right in front of you, and
I can understand everything. So I knew that they could
make this fabric for my price. So I just sat
there for three days and negotiated and down and down,
and finally they're gonna make them. They're gonna cut them,
they're gonna sell them or ship them to me. They
(05:29):
just needed deposit for sixty dollars. No big deal. Yeah,
So I called it the Limited too, and I said, hey,
I'm over here at my factory in China. I'm ready
to go with your order. I just need sixty five
tho dollars to get started. And they said, well, you know,
we're the Limited. We don't give deposits, said, we're love seck.
We've never done a deal without a deposit, what's wrong
with you? And they end up wiring me sixty five
(05:50):
granded my University of Utah credit Union account, which is
all I had, and I wired that to China. They
got make him, and I flew back home and built
a factory on credit cards to stuff these things. And
so that was kind of like our humble beginnings and
then from there, you know, we just needed more sales.
And having completed that order through the time frame of
(06:10):
two thousand one, nine eleven happened. Price of foam went up,
price of shipping one up. We made no money, and
so we scrambled to all the retailers. They laughed at us,
told us that giant beanbacks were stupid, heavy, too expensive.
Nobody wants these things. So we just opened our own store,
trying to frankly pay back all the debt we created
building that factory. So Sean, the furniture mafia's in North Carolina,
(06:34):
and you're out in Utah and you're taking them on
and they think you're stupid, so they won't let you in. Well,
they what's funny about this industry is it's really fragmented, right,
Like you're correct that the mecca is in North Carolina,
but every state or region has its, you know, you
know them, the rainmoren Flannagan's, the R. C. Willie's in
the West, the American Furniture Warehouse in Colorado. We went
(06:56):
to all these guys out west, and they're the ones
who told us, you know, this would never work. So
we opened our own store and and and it worked,
and it surprised us even we were you know, the
first time I paid myself, I was working in the
mall open until close for ten bucks an hour or whatever.
But we were making money. And we took that money
and opened more stores. And we had some failures and
(07:17):
and some winds and ups and downs, and you know,
the story gets longer and crazier, but that's how I
got into furniture. And frankly, in that first Love Sacks store,
there was a couch in the corner, just to look pretty,
just to make it. You know, the Sacks have context
and a big screen TV playing movies, and people kept
asking about the stupid couch. And I couldn't sell the
couch because it was there to look pretty. And by
(07:39):
the way, I couldn't get another one. But after months
and and and frankly, maybe a year or two of
hearing this, how much is that couch? How much much
as that couch? We decided to try and make one,
and only make one that we could deliver easily, Make
one that could be stored easily, shipped, easily, packed easily,
and we invented saxtionals, and sactionals are now eight percent
(08:00):
of Love sex business. It's blown us up. We I
think we still have many hundreds of millions to go
an opportunity there, maybe billions. It's a couch that could
be anything to anyone, and it's a very special invention
with lots of patents around. So one of my cousins, Manolo,
had his own furniture store, and he got crushed by
these big retailers that offered free financing. And so how
(08:22):
the hell did you make it, Sean, because these furniture
guys are basically cartels from what my cousin has explained it.
You know, they basically moved into his neighborhood. So Rooms
to Go shows up and goes, oh, we'll give you
the furniture cheaper than what my cousin could sell it
for and we'll finance it for free. I've always been
(08:43):
obviously selling furniture now for two decades, but never considered
myself part of the industry. Were like the outsiders, you know,
we don't go to their shows, we don't buy from
the same sources. We manufacture everything we we make through
our own sources, and we invented everything we make. There
in is the key. So for us, where your cousin.
(09:03):
I think you're right. Main Street versus these behemos, it's
a tough battle, and everybody's kind of playing the same game,
selling the same things. What finally worked for us was
the fact that we invented a better mouse trap. Like,
nobody has sactionals, they have sectionals, they have couches, But
(09:23):
if you really understand what sactionals do, they're they're quite unique.
It's washable, changeable, kid proof, life proof furniture that could
be with you the rest of your life. You can
change the fabrics, you can wash it, you can rearrange it,
reconfigure it can change shape, do all sorts of things,
add things to it later that we invent later, and
it's all reverse compatible. So and the reason I think
we accidentally fell into doing business this way was because
(09:45):
we were too stupid to know that it couldn't be done.
Like when we first invented Sationals and the prototypes. This
is a story that I haven't told very often. When
we first invented Saxtionals prototypes, Like, I took our models.
We had built them out of two by fours in
the garage sort of thing, and I didn't have the
the machinery to like stretch the sinuous steel springs across
that would make them sit well, and and that sort
of thing. So I took him to a proper furniture
(10:07):
maker with our drawings and I said, hey, will you
make these? And it's a seat and a side. That's
what we sell today, right, these these things you can
arrange and rearrange like legos kind of. And he gave
me all the reasons it wouldn't work, It wouldn't be comfortable,
and I said, look, just make them. And came back
two weeks later he said he had it done. And
you know what he had made for me. He had
(10:27):
made me a little removable cover sectional, which never is
very good. He made be a sectional like like pottery
barn sells, like anyone sells. I said, well, where's the
thing that I gave you? And he said, oh, that
will never work. Look, I've been making furniture for four years.
My Dada made furniture for four years before that. Your
thing will be uncomfortable, flat, too stiff, won't hold together,
(10:47):
I said. So I took my prototypes and drawings to
another furniture maker and just said, hey, I'm gonna paying
you for these prototypes, please make this thing, and you
know what happened, saying, of course predictable. I did not
even believe it. He made me a little sectional because
we had these love sack stores. He said, oh, you'll
be able to put this in the corner of your
storage against I said, no, no, no no, I can't ship
(11:07):
that ups, I can't store it. The covers look like
they're slip covers, like I don't want that. I want
what I made. And he said, oh, that will never work.
And so finally we took it frankly overseas, where they'll
do whatever you ask them to do for money, and
the Chinese helped me develop this. My Chinese factories over there.
It was many, many years of refining and bringing them
to the standard they are today. But the point is,
(11:29):
because we were not from the furniture industry, we did
not think like they thought, and we knew that this
could be done. We at least believe that we could
do whatever we wanted to do. And and now I
think we have what is the best couch in the
whole landscape, and we've since adopted a whole business model
around it, and we have more to come on that
(11:53):
we're gonna take a quick break here, be right back.
So Schean China has been in the news lot, and
by the way, shing quite little for those of you
who speak Mandarin, that's Happy New Year, right, That's about
the extent of my Chinese, right, John, China has been
in the news a lot. Specifically, you know, I see
a lot of the stuff just in my life, including
this microphone and this computer that I'm on right now,
(12:16):
is made in China, and I know it's political, but
at the same time, there is a beneficial relationship. So
what's your take on that. Well, Love Sack was made
sort of a postal child of tariffs because at the
time when those special tariffs were announced by the Trump administration,
we had most of our manufacturing in China, and luckily
we had one foot out already. We were working on
(12:36):
sourcing and across different geographies in Southeast Asian. By the way,
we have a long term view of possibly manufacturing most
of our stuff in the United States, so we were
able to quickly react and get ahead of that. But
we've been right at the tip of the spear of
both experiencing this transition and getting talked about in the
(12:57):
context of China, and so I've spent about a tenth
of my life in China. I lived there for two
years as missionary. I lived there for another year as
a working professional in my early twenties, management training consultant,
leading courses in Mandarin Chinese and fluent Mandarin Chinese. And
then I've been back there seventy times probably since then,
on sourcing trips and whatnot. And China is gigantic, and
(13:23):
I think that most Americans, I don't think, can really
fathom what's going on there and how advanced that society
is in many ways. Obviously it has its own struggles
and by the way, from a human rights perspective, all
kinds of serious issues. But as an economic powerhouse, it's
for America's. There's four full America's of people. They're consuming, living, buying,
(13:50):
And to be honest with you, I don't think China
really needs us anymore like they used to. And and
in fact, I think that while it's fantastic in a
lot of ways that America's consumer is m has lifted
countries like China, like Vietnam, much of Asia and other
places out of poverty through manufacturing. Through our own consuming
(14:10):
of goods, On the other hand, we've turned a lot
of Chinese factory owners and entrepreneurs into millionaires and billionaires. Generally. Now,
I think that country has a chance to just become
the world economic powerhouse by sheer virtue of demography, just
because the number of people. So I think that it's
(14:31):
going to be a very interesting next few decades is
China emerges on the scene. So Sean, everything's political, right,
Like you try to avoid love sack being political, but
these tariffs come out and look it worked. You know,
how do you navigate that when you're when your business
is suddenly thrust into the political spotlight. I think that
generally might take on politics lately is people are just
(14:53):
too hard on each other, you know. I think we're
all just trying to survive. There's all kinds of craziness
happening in the world, and and it's being amplified by
politicians on every side and the media who wants to
get clicks, who wants to get noticed, who wants to
be heard, And sadly, I think a lot of people
are being manipulated, you know. I think ultimately you just
(15:14):
we just roll with it. As entrepreneurs, for instance, you know,
tariffs come, we shift the business, We react quickly. We
don't whine about it. You know. I spent some time
in Washington. I met with senators at that time and
tried to figure out, you know, if there was some
way to lobby around these tariffs or who knows what,
and ultimately got nothing. And so I think we just
(15:35):
make our way and keep our head down and do good.
I think that unfortunately, a lot of these things that
we can't control become hot politically, and then we're just
hard on those around us, or we're hard on different groups,
and I just don't believe in that. I believe in
minding your own business and Junior best to roll with
the punches as they come. That's the extent to which
I get political. What do you think it is because
(15:57):
you live in Utah and you're a Mormon. What is
it about Mormon culture? We're not going to talk about
religion on this show that really fosters entrepreneurship. I'm always
fascinated when I go to Utah how entrepreneurial it is,
and a lot of that has to do with its
Mormon history, right and the culture around it is. There
are there any tips for people who aren't in that
culture that. You know, the show is called Follow the Prophet?
(16:19):
What do you all do over there that we could
learn for ourselves. I'm not talking about the religion. I'm
talking about the culture around the religion. Yeah, I don't
think the title of this show is lost on We
Follow the Prophet is actually a Mormon primary songs so
we sing it when we're children. It's fun, you know, Um,
it's one of the more fun ones. So I appreciate
(16:40):
the wink and the nod to that. Yeah. The the
the Church of Us Christ War day Saints has developed
a culture I think that is really centered around self
reliance and I think it goes back to our pioneer roots. Ultimately,
the culture has come up then on self reliance and
survival and so I think that's bred a culture of
(17:02):
entrepreneurship that is admirable and sometimes even annoying. You know,
when love Stack first was getting started, nine out of
ten of our copycats and this is over the course
of a decade, actually came out of Provo Utah, which
is like the b y U Epicenter for that's like
the Vatican for for Catholics. Provo over there, you know,
(17:22):
you're dealing with the most Mormon place in the universe, right, Yeah.
But to their credit, these are people who see a
good idea and they jump on it and they go
do it. You see a restaurant pop up in Utah,
you'll see you know, some something unique, something clever. You'll
see another concept like it within six months. And it's
just a very entrepreneurial place, both for creation and for copycatting,
(17:45):
but one way or another, getting things off the ground,
getting things started, and there is a huge outgrowth of
entrepreneurship and billion dollar businesses grown out of this little
place called Utah. I think it really is a cultural thing,
and I think it ultimately, to answer your question, it
is back to self reliance, to people who who don't
want to work for the man who believed they could
(18:06):
do it just as good as you could, and and
and they'll go try. That just comes with entrepreneurship. Entrepreneurship
is a messy game, and it requires a lot of guts,
and it requires a lot of fortitude. And um, I
think that ultimately, somehow this culture has inspired some of
those attributes in people. So let's talk a little bit
(18:28):
about failure, because failure is one of the hallmarks of entrepreneurship. Right,
it's never a straight line. Tell us about your failure,
the bankruptcy and before that, of course, And I know
every time I mentioned this to you, because I've been
interviewing you for a long time. Sean, you were on
Rebel Billionaire. You kind of enjoyed the celebrity moment. Right.
You could tell it's been a while because you had
like long, highlighted hair that was very you know, typical
(18:51):
back then. But you were on Richard Branson's show, right,
Rebel Billionaire. Did you fail before that or after that?
I failed all along the way. We had from the
first love sax Store, which luckily was a success. We
then had some that worked after that and some that
were abject failures. You know, we were kids running around
(19:13):
playing in an in an adult world at high stakes,
signing up leases, long term leases and these shopping malls,
paying high rents and trying to figure out why the
first one worked and again someone worked, someone didn't. But ultimately,
to your point, I want a million dollars on TV
on this crazy show called The Rebel Billionaire with Richard Branson.
It was his answer to Trump's Apprentice. He wanted to
(19:34):
show kind of like that, but not for apprentices for entrepreneurs.
And we competed against other entrepreneurs for the biggest prize
reality TV show history. And I was also made president
of Virgin Worldwide for a minute. And when that happens,
particularly to your point in the state of Utah, little place,
fish Bowl, everybody knew me and I had this celebrity. Yeah,
I saw the stupid hair. So you and your stupid
(19:56):
hair were all over the place, weren't they all over
the play And you can't believe everything you see on TV.
You never know the backstory. At the time that Richard
gave me a million dollar check on National TV Fox
Prime Time, I had like two million in debt, having
scrapped it together to build all these stores and grow
and we had a dozen dozens of them and whatever, Right,
(20:17):
So what's a million bucks? And I don't mean to sound,
you know, brickish, but like it just went into the
pot and it was gone and paid back a little
bit of debt. And that's why you never know what
someone is actually going through when you see anybody have
any success. And and and then we parlayed that into
raising our first round of true big venture capital. We
(20:38):
raised about thirteen million dollars and their first idea was, Hey,
let's bankrupt this company you've created called love Sack. Let's
exit some of these bad leases through a reorganization. Let's
buy back some of the franchisees and close the ones
down who aren't up to snuff, and we'll start over.
And I was like, holy crap, that's super scary and
not something I wanted to do, but kind of, you know,
(21:01):
wedged into the corner there, and that's what took us
to Stanford, Connecticut. We moved the company from Utah to Stanford, Connecticut.
That's where all my children were born. And that's you know,
and I raised my family for eleven years out there
rebuilding this company that was in the limelight win one minute,
and then you know, in the limelight again for bad reasons,
having gone through a full bankruptcy reorganization. Extremely embarrassing, painful,
(21:25):
but we survived it. And by the way, if you
ever want a six month NBA, that's better than any
NBA you could ever get. Steer a company through a
reorganization successfully, and you see what contracts are really made of,
and you see how the American system really works, and
you see all kinds of things while you're operating by
the way and staying open and motivating people and hiring
(21:47):
people and also laying off people in closing down store.
I mean, it's it's a messy, ugly process that taught
me so much about business that you can only learn
in that way. And so while I don't encourage it,
my point is just there is always something to be
gained from any situation, no matter how uglier bad it is.
These days, we hear a lot about the big versus small,
(22:09):
Wall Street versus Main Street. You did it? Do you
think it's still possible? Do you think your story would
still be possible today? Oh? I think entrepreneurship is on
fire and and and the opportunity to do what I've
done has never been more accessible. I think. You know,
when when we started selling love Sacks on the lawn
of the University of Utah, we were like weirdos and
(22:33):
people talk about bootstrapping today, and you know, building a
business that that word didn't even exist. There was no
word for what we were doing. You know, it's funding
your company out of your credit cards and your savings.
We were bootstrapping in those early days. By the way,
there's a hundred other phrases that you could pick up
from spending a week listening to Gary Vayner Chuck, for instance.
And my point is is, whether it's Vayner Chuck or
(22:55):
whatever podcaster you want to listen to her this one.
I never had all these resources. I never was able
to listen to people like me pontificate on, you know,
how to do things or what they've been through. Like
we were just on our own and we had maybe
some books to read, and I did tons of that,
and I would encourage people to network. And but all
these things are now so accessible, and there's courses on this,
(23:15):
and there's online stuff, there's free stuff, and it's all
out there now, and I think it's more accessible than
ever to young people. It's amazing. I I didn't think
I would be doing love Sack as a career. I
thought it might be a company at one point that
I get out of, and then I thought it might
be a company I could build and then sell and
do the next thing. And now I really want to
(23:37):
be here for the next few decades because to make
designed for life products that are built to last lifetime,
designed to evolve, and and can truly become, you know,
ultimately competitive in their category and change the way people
think about the stuff they buy. Like once you want sectionals,
you start to think differently about the crap you own
that dies, like this phone right that is going to
(23:58):
be dead in two years because they wanted to be Like,
I'm really proud of what we're doing. My oldest daughter,
she's an entrepreneur at heart, but starts at a young age.
You can spot these tendencies. She wants to build things,
she wants to invent things. She's she starts things, and um,
not every person is like that. And by the way,
I've never been one to encourage everyone to go be
an entrepreneur. I think you either kind of have those
(24:21):
tendencies and that sort of resiliency and you need it
or you don't. I think it's something to be pursued
by people who have the right, weird mix of strengths.
You said there's a problem with consumerism. Consumerism you know,
just a hint, hint, wink wink. It's destroying the planet,
and your products are attempting to begin to solve that
(24:42):
systemic problem that we have. Yeah, I'll quote William McDonald
who wrote the up cycle. We don't have a pollution problem.
We have a design problem. Like if if things were
designed better from the beginning, we wouldn't be chewing through
all of our natural resources in the way that we are.
Where they're talking about vehicles, we're talking about clothing. When
(25:03):
you're talking about you know, this phone I'm holding, you know,
Like what frustrates me is is I had, for instance,
for six years, I had an UH I carried in
or maybe longer, an iPhone SE which was a six
and a five body. And what's funny is if you
know now I'm carrying this twelve which looks exactly like
the SC that I used to have, same body, same shape,
(25:26):
And through the upgrades of software, I was able to
maintain that sc and it could do all the same
things except for maybe take as great at pictures. But
what sucked is right near the end there, the last
two upgrades I made I accepted from Apple, killed it
turned it into much slowed it down to the point
it just didn't even work anymore in features. You know,
that's intentional. And with it goes all of the aluminum
(25:50):
and all of the precious metals and all the silica
and all of the wonderful things that are in there,
and terrible things bromine chlorine, you know, packed into the
arsenic landfill usually in Africa, because we don't want to
bury that stuff on our soil and it becomes garbage.
And it didn't need to be. The phone could have
been made modular like our Sactionals, to let that camera
(26:10):
be upgradable. And look, they won't because they need to
sell more phones, because they need to be the biggest
company in the world. What bugs me is that if
you gave me a few hundred billion in cash, I
think I could redeploy it higher the right designers and
and go attack another category rather than just try and
shove a new phone down your throat every couple of years.
And that's what love Sack flies in the face of. Like,
(26:31):
if we succeed with Sactionals, and the way I want
to succeed, which is to capture more than one percent
of the market. Right now, we have one percent of
the couch market, and I think we make the best
couch so more people need to know about them. We're
working on that, right, We'll grow and grow. But if
we really succeed and we gobble up many percents of
the couch market. Ultimately there will be fewer couches sold
(26:51):
because our stuff lasts forever, and and all the stuff
that we invent going forward for sactionals are reverse compatible
with the stuff. You know, I've got sexual in my
living room that are ten years old mated with pieces
that are brand new. And that's a beautiful thing, wearing
new covers and they smell great and they look great.
They've been through four kids, two dogs, and two cats.
And so my point is it's incoming upon me. Then
(27:12):
if I shrink the couch category by selling couches that
last forever, to go attack another category if I want
my business to grow, and that's that's called designed for life,
and that's what I'm all about. And my goal is
to spend the rest of my life on Earth attacking
categories and shrinking them by making products that are better.
And then and then what's cool is if we are
radically successful at love Sack, other entrepreneurs must copy us,
(27:37):
not because you know, I'm preaching sustainability, but because like
it works and it resonates with people to have a
brain that are piste off with buying stuff that's turning
into garbage around them because they don't have another option.
And then those people, the consumers, not only did the
entrepreneurs begin to move the needle in other categories that
I don't have time to attack, but consumers start thinking
differently about the crap they own two and they start
(27:59):
buying stuff. And that's our ultimate purpose of love Steck.
It's written on the wall. We we hope to inspire
mankind to buy less stuff, but by better, and that's
what we're all about. I am so sick of hearing
people pitting the economy against the environment. I'm glad someone
finally came along and cleared that up that there's a
lot of economic opportunity in helping protect our environment by
(28:23):
creating higher levels of sustainability. And no one ever gets that.
It's like either you've got to raise the forest to
make money, and that's the only option. So I'm really
happy to hear that there's a social mission in mind,
and I think that's really important to people. Our age
absolutely by less stuff and by better, you know, That's
what I believe, And we'll try and make the better stuff,
(28:43):
at least in our little category. I mean, if you
think about it, what our parents did to our planet
is devastating, and by the time your kids are our age,
it's very concerning the stuff they're going to be dealing with.
We have five guiding principles that we live by and
we talk about a lot in our company and we
hired to it. And one of those guiding principles is
an iroquois idiom. We borrow this earth from our children.
(29:08):
And I believe that. And by the way, it's why
every time you've ever seen me, David, I'm wearing this
dumb black T shirt. By the way, this black T
shirt is nine years old, and I wear them as
a silent, quiet protest to the fashion industry that convinces
us that our collars are too taller, that our jeans
are too tired, and oh now they're too loose, or
now they're too high on another're too low waisted, whatever
it is. Black T shirts last a long time. They
(29:29):
kind of go with everything, and like they don't stay
very easily. And so this is the kind of behavior
I'm talking about, and I think it's possible, and you
don't need to live a boring life to to just
make better decisions. I think, well, on that note, all
the best to your staff in Stanford, I love them,
and to your family out in St. George's, Utah. Thank
you Sean for making the time to talk to follow
the profit. Thanks David. We're gonna take a quick break here,
(29:57):
be right back. So I know this is already behind us,
but it's important that we talk about it. Texas it's
a really big state. Texas is the size of France.
It's also Texas is a word in Norwegian that means crazy.
Texas is crazy big. It spans two time zones and
has a huge border with our neighbor to the south, Mexico.
(30:19):
And it has a lot of big, important cities. And
one of those is Austin. And Austin is a town
that has been in the news again and again recently
because it's booming and it's transforming into Silicon Valley. In fact,
Tesla is there now. They're opening up a factory, Oracle
is moving their headquarters there. You've never heard of that company,
(30:42):
trust me, It's involved in every single facet of your
life and reasons why people are moving to Austin. One
is Texas. Texas doesn't have a state income tax. And
to his weather, have you ever been to Austin. Austin
is pretty nice weather. It barely rains and really the
lows don't go the freezing. Well, we saw recently that
(31:02):
a major winter storm hit all of Texas, all the
way down to Houston, if you know the geography, and
even down to the Mexican border, and Austin went down
to four degrees. In fact, that day, Anchorage, Alaska was warmer,
and really it plunged everything into chaos. The power went off,
and when the power went off, a lot of people
(31:23):
were cold. My friend sent me a picture of her
thermostatic forty four degrees. Her dogs almost die of hypothermia,
and a lot of people did die. So you might
be saying Texas is one of the places that is
growing the fastest in this country. And hey, it's Texas.
I lived in Texas. Texas is wonderful. Texans are independent,
(31:46):
They're strong, they have a great culture. Texas made me
a better person. I love Texas and Texas. Notwithstanding, Texas
has a little problem that they're unwilling to confer onto.
We'll call it Texas isn't really ready for prime time
for all this growth. And I'll tell you why Texas
(32:07):
is run like a frontier state, and I'm going to
tell you why. There's a lot of things that don't
make sense in the modern world. Hey, and we love
small government and we love low taxes. God bless Texas
for all of that. But Texas is growing faster than
nearly anywhere else in this country and they need to
change the way they do things. Number One, their legislature
(32:29):
only meets every other year in Austin, in fact, because
Austin's the state capital. That's probably not gonna cut it
in a state that is now the second most populous
and growing by the minute. Two, Texas has its don't
electricity grid and by the way, it's terrible. In fact,
it's named ur COT and the R in that acronym
(32:51):
stands for reliability. And Elon Musk, the newest resident of Buston,
came out and said they don't deserve the R for
rely ability on the Electric Reliability Council of Texas. They're
not reliable and in fact, they were minutes away from
having their grid completely collapse and be unfixable. And you know,
(33:13):
we can blame things that politicians came out and blamed
the windmills, which is false. It wasn't the windmills. It
was just literally a situation where it was too cold.
And people say, well, this is a once in a
thirty year event. No it isn't. It's called all the
time in Texas. Texas is a problem. Texas government focuses
(33:34):
on issues that don't matter, and whether it's a Democrat
or Republican in charge is irrelevant. They need to stop
arguing about issues and build infrastructure. If you go to Austin,
they never really planned for all this growth. Austin is
a mess. There's not enough infrastructure where I lived in Texas.
No matter what we would ask for, they never plowed
(33:55):
the roads. Folks. Texas is so big that in the
north its nose. Texas is unwilling to change the way
they function. Public corruption is a problem in Texas. They
are too busy squabbling about issues that do not matter.
The government of Texas needs to adjust to the new
realities in that state. It is no longer the frontier.
(34:19):
If they want to keep their system of small government
and low taxes, they need to focus on efficient and
effective government, stop arguing about cultural issues, and build roads.
Build a reliable electricity grid, and when it fails, don't
blame the windmills that has nothing to do with it.
In fact, windmills in Texas are one of the most
successful energy stories of modern times. Texas is blessed. It
(34:43):
has a vibrant economy built on top of another economy,
which of course is energy. And there's as much petroleum
and byproducts in Texas as there is in Saudi Arabia.
So let me tell you, folks, Texas is blessed with geography,
with culture, with money. It needs a government that recognizes
(35:04):
that the old way of doing business is not going
to cut it. Texas is not ready for prime time.
They are not ready for the growth that is coming
and it will continue growing because guess what, Texas is
a great place to live. But folks, if you continue
to run a government that cannot service the basic needs
of their citizens, they're gonna lose out on the growth.
(35:27):
And I'll tell you why. I'll tell you about another
place that's growing just as fast, and that's Florida. And
we're accommodating the growth just fine. You know, we have
issues on our coast there white out there for public consumption,
about rising tides and you know, sinking Miami Beach. We
know about all of that but guess what, our grid
is reliable. We build highways before the growth comes. We
(35:50):
rely on charter schools when school districts are overcrowded. We're
doing a great job. And really, if Texas wants some
lessons to learn, they probably should come over here to
Florida and study what we do. So thanks to all
of you for joining me as we follow the profit.
You know, I really want to thank Sean Nelson. He's
(36:12):
a friend of ours and furniture entrepreneur and someone really
cares about the planet, and we appreciate that he told
us all about the ups and downs of creating a
retail store and becoming a celebrity thanks to Richard Branson,
then filing for bankruptcy, and then resurrecting like the phoenix,
reinventing his product line and becoming successful once more. I
(36:35):
want to take the time, of course, to think my
fabulous team of producers, Emileano, Lemon, Scott Handler, Cheyenne Read,
and specifically my executive producers. You might recognize former Speaker
of the House Nuke King Rich and of course his
right hand lady, Debbie Myers. I'm your host, David Grosso.
Give us five stars if you enjoyed the show. We
work really hard to make this something you want to
(36:57):
listen to. So if you're happy, I mean if you're sad,
give us a review so that others can learn what
the show is all about. Follow the Profit is a
production of gen Rich three sixty and I Heart Radio.
For more podcasts for my Heart Radio, visit the iHeart
Radio app, Apple Podcasts, Spotify, or wherever you get your podcasts.
(37:22):
All opinions expressed by David Grasso and his guests on
the show are solely their opinions and do not reflect
the opinions of Gingrich three sixty or affiliates, and may
have been previously disseminated by David Grasso on this podcast, television, radio, internet,
or another medium. You should not treat any opinion expressed
by David Grass so as a specific inducement to make
(37:42):
a particular investment or follow in particular strategy, but only
as an expression of his opinion. David Grass's opinions are
based upon information he considers reliable, but neither ging Rich Productions,
nor its affiliates and or subsidiaries warrant its completeness or accuracy,
and it should not be re lighted up on as such.
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(38:04):
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Grasso's compensation from ging Ridge Productions is related to the
specific opinions he expresses. Past performance is not indicative of
future results. Neither David Grasso nor ging Rich three sixty
(38:24):
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of the real risk of loss in following any strategy
or investment discussed on this website or on the show.
Strategies or investments discussed may fluctuate in price or value.
Investors may get back less than invested. Investments or strategies
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(38:45):
account your particular investment objectives, financial situation, or needs, and
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take an independent decision regarding investments or strategies mentioned on
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(39:06):
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