How Lovesac Is Building the World's Most Loved Brand with Founder & CEO Shaun D. Nelson

Yeah. Um, in terms of the, um, uh, the, the product today, sustainability has a lot to do with it. And I've heard you say that you want to encourage people to buy less stuff. And by virtue of that, your design, it's interchangeable. You're, you build products that are made to grow with people's lives.

Yeah.

So, you know, you, you, you start, I mean, it's got a price point on it, right? So maybe young families and things like that, but if you get this piece of furniture, you can change the covers on it, you can change the configuration on it. You've got your technology in it with your, still have the music sound system inside of it. Yeah, man. So talk to, talk, you know, how does the sustainability angle help you with customer loyalty?

Well, first of all, let's back up. We didn't start with any sort of this vision, but Lovesac will be a leader in sustainability, but in a way that people I think will want right now, people, you know, everyone agrees that we should be more inclusive. We should be more sustainable. We should be a lot of things, but really consumers, when they, you look at their purchasing behavior, they don't care. Like they, they say they care, but they're not really changing their buying behavior. So the key is to make sustainability, if you believe in it, useful. To people. You know, a lot of times people think when you're buying something like organic or sustainable, that it's like less good. In our case, we make really amazing resilient products and we were just trying to do that. But as we got further down the road, you know, this Sactional chair that I'm sitting in right this minute, the seat that I'm sitting on is 17 years old. It's been with me You know, it's older than my children. And by the way, it's combined with newer pieces. Uh, stealth tech has been integrated. You know, you can own these pieces for decades because they're built to last. That's one half of it. But they were designed to evolve with you as life changes. You can recover them. This is like its 10th set of covers. Smells new, looks new. You'd have no idea unless I peeled the covers off and showed you. How old the actual original piece is, but the only reason it can even be here is because again, it was built to last that long in the first place, but the whole platform was designed to evolve with you as you grow. So this led us, it was like step by step, just trying to make good stuff, led us to a place where we really unearth the most valuable piece of our strategy that we call Designed for Life. And it's an overall design philosophy that again, calls for stuff, not just couches, but stuff that's built to last a lifetime, but can evolve with you as life changes. I don't think there's any other firm on earth designing things in that way. Now, like, forget couches, forget cars, whatever. Um, you know, this is a unique approach to product. And ultimately, if we have long enough, we're going to win you over with now our couches. You're going to be a believer in this brand because of what we stand for, because it's not just about recycling water bottles into fabric. By the way, we do that. We probably recycle more than all those shirt and shoe companies combined because we're doing millions and millions of yards of fabric across very large objects. But, but we don't barely talk about that because the real sustainability comes from things that can actually sustain. And the bigger point in all of this, as it relates back to like the bigger picture of business, is you don't have to start with the grand vision. You just need to get off the ground. You just need to find a way to eke out some profits and build something that can sustain itself. And if you pay attention and you're willing to do more than just try and make money, but you're really trying to pay attention to what customers are saying, you're trying to pay attention to the trends that are happening around you and connect the dots along the way. You might just stumble forward to a place like we have where A grand future unfolds before you and leveraging the design philosophy that I just articulated, which I think is pretty unique and special. We actually have a shot at building a brand that could someday become the most loved brand because instead of trying to sell you the same stupid object every year, like the biggest company in the world does and con you into buying something that was intentionally, uh, self-destructing in your pocket. And we all know this is happening, by the way. So even though you'd say, oh my gosh, Apple, like that's the most loved brand. No, I don't think so. There's a lot of people that worship Apple, but do they, how many people really love that company when we know what they're doing, not just to us, but to the world and the resources they're sucking out of the globe to just, you know, recycle and sell to us all the time. We're trying to build a brand on honesty. You know, these are the things we are, these things we're not, but, but, and look, our stuff's not cheap, but If you buy our couch, you will buy fewer couches in your lifetime. And that's what we want. And we mean it sincerely. And in fact, the more things we invent now, like the recliner that came out just a few weeks ago that you can add to the pieces you already own, the more we're proving to you that we mean it. Because when we bring out the recliner, we're not saying, oh, sorry, you should have waited. Now our whole thing reclines. You can add it to what you already have. You can replace what you already have. And soon we're taking trade-ins. And allowing you to trade it in and trade it up and recycle it right to other people. Like there is no firm doing that. Now I'm not saying that that's the only way to do business. I'm saying that we've evolved to what I think is a really special vision that'll take us to many, many product categories and allow us to compete into the billions because we were willing to just stuff foam into sacks and keep going and connect those dots along the way. Yeah.

Uh, I love the take on sustainability, the observation that you make that people won't pay for it. I learned that years and years ago in the building industry. You can build the perfect house would be like an igloo cooler, you know, 12 inches of foam insulation. You could heat it with a candle, you could ventilate it for this, but it would be ugly and people wouldn't like it. So what the consumers vote with their dollars is, is they don't really care about how efficient a home is. They want it to look good from the curb. They want to have walk-in closets. They want to have high ceilings, which are incredibly inefficient. High ceilings are horrible, but they look nice. Yeah. So, and they've got broad shoulders, 3-car garage and all of this stuff. But if you say, you know, if you pay 6% more for this home, it'll use half the electricity. It'll stand up to water. It won't, you know, when it gets wet, it won't explode. You get all, you can do all of these things that are sustainable, But the consumers won't pay for it.

Mm-hmm.

And you know, they'll just say, I don't care, I'll pay the high, I'll just burn natural resources to have the home that when people pull up on it, like it looks really cool. So you took that sustainability and you must have learned early that's that, you know, you're beating that drum and it's like, well, people really don't care about it. But the concept of design for life, the concept of, of having kind of an heirloom or a legacy piece that's going to be with you through your kids, your kids going to college, you can give it to them. You can change it, you can upgrade it. And then to make something that, that's durable because like, I mean, look, cereal boxes are getting smaller. Every 3 or 4 years, like clockwork, my phone blows up. It stops working. It gets slow. I have to think that there's designed obsolescence into these things. And then the next version of the phone comes out. It's not remarkably better. There's like a couple of features. This one has 3 cameras.

Instead of 2. No, yeah, listen, so if you—

it doesn't matter.

Planned obsolescence is not a conspiracy theory. It is a fact. It is a hard ingrained feature of our modern economy that was intentionally installed originally just to lift us out of the Great Depression. But then it played its way through automobiles and they discovered, you know, hey, you know, you had Ford on one hand that was, you know, you can have any color you want as long as it's black. That's his famous quote, right? Because that was the most efficient way. And like, he couldn't see a reason why anyone would want anything else.

Right.

But Chevy, on the other hand, that was putting now tail fins different model year to model year, even within submodels, so that by the time yours was a year old, it already looked kind of dated and created perceived obsolescence. Right. And, and then those trends took, you know, played all the way, of course, through fashion and through every industry. And these things now we just accept, like the truth is there is no force in the universe telling us that our genes are all too tight. That's not a real thing. That's, that is a, that is a, uh, that is a ploy by the machine just to get us all to replace our whole gene collection. And if we don't do it, they will use the youth to shame us into doing it by calling us old or by calling us out of date or by telling how stupid we look or whatever. And that's straight up communistic. You know, that's like Maoist era propaganda. Right? Being tools being leveraged against us just to get us to buy a whole new suite of pants. And so I could go on and on like these, these forces are evil and corrupt, but at the same time, they're, they're not even conscious anymore. They're just the way the systems work because after many decades of executing to that end and training the next generation of, let's say, fashionistas, merchants, buyers, you know, they're not evil people. They're just doing what they were taught to do and create, you know, the next wave of trends and pursue the next wave of trends. But the original intent was absolutely just to rape and pillage and extract more wealth out of the consumer base. And so by us saying overtly, even as a public company to our investors, our stated purpose at Lovesac is to inspire humankind to buy better. Stuff so they can buy less stuff and be sincere about it. You know, this is actually kind of groundbreaking and kind of risky because there's a lot of business people who, who, whether they admit it or not, realize that that's the way you grow into the hundreds of billions and trillions is by doing something, you know, antithetical to what we preach. Now we'll get pretty big. And thankfully we're small enough, we still have a lot of road ahead of us that even if we play it out to the nth degree and can't just sell you a brand new couch because our original one is still going with you, we can still get pretty big and pretty profitable and generate a business that's worth a lot of money. And that's what I'm out to do. And so by the way, if you believe in sustainability or some other, you know, I don't know, well-meaning force that isn't necessarily the driver of your business. It doesn't need to be. That's why with LoveSac, we don't lead with it. We don't come at you and beat you over the head with guilt trying to get you to be sustainable. We just do it. Yeah, we just do it. And you got to go back to first principles. We're connecting the dots, right? We're seeing the trend of sustainability being embraced. It's still decades early, but we're choosing to go there on our, for our own reasons. And because we also believe in it, we think consumers will be attracted to it over time. At the same time, we're connecting that dot back to first principles, which is You have to leverage personal interest. And what I mean by that is like, you have to make people want it on its own merits, right? Because people are going to make decisions, like you said, that suit them. And so if you can find a way to leverage, um, you know, just people's— call it greed, people's self-interest, that's the right word, leverage people's self-interest to achieve the ends that you mean to achieve, then you have something. And so we're not trying to win through sustainability. We're just trying to do it because we believe in it and do it in a way that's good for people by explaining to them, hey, buy this thing and keep growing with it. You'll never have, you know, you may not ever have to buy another one. You're going to have all these ways to upgrade and change it over time. Isn't that good for you? Might you be willing to pay a little more for that? Not a little more because it's super green, whether it is or not, but a little more because it's good for you and your life. And I think if, you know, and by the way, none of this we had in the beginning. I just have to remind, that's why I wrote the book. Let me save you 25 years. You know, I think we're such a good example that you don't need to have it all figured out. You don't need to have your vision, mission, purpose all figured out on day one. You can take a stab at that. And by the way, we always had something to row towards. But we really evolved into all this thinking over a very long time, actually.

Your career is one that deserves a book. It's a story of taking action, taking radical action. You, you did speak Chinese. You're, you saw writing on a, you, you picked up a manufacturer off of a box. Next thing you know, you're, you're flying over to China. You're turning down a job that you had over there. And say, I'm gonna start this company. And then, uh, and then you've survived, you've survived through venture capital, you've survived, you've survived through the build, you've survived through the venture capital. By the way, that's when a lot of people get kicked off the bus.

Venture capital, private equity, now public company, private equity, and then public.

And you're still the CEO. Mm-hmm. Um, what do you attribute your resilience to in your career? And, and I know that it, in the beginning of your book,, you, your, your dedication, is basically to your mother. And, and it says, mom, I owe you my, to mom, I owe you my life. What is it about you and the way that you were brought up that made you so resilient to be able to go through this journey and be one of the few real founders of big companies like a Phil Knight that has been able to survive and thrive?

Yeah, thank you. I think that, Resilience is both an ability that can be cultivated and a choice. And here's what I mean by that. Uh, look, I try, I'm trying to teach 4 kids. We have 4 children, you know, 16, 14, 12, and 10, how to be resilient, how to be, how to live in discomfort, how to hit deadlines and get their homework in. And, uh, you know, develop talents, some that take years to develop through a lot of hard work and how to, you know, lose and lose and lose again at tennis and still keep showing up and get to that 10,000, you know, hours kind of achievement that you can maybe see some results and push through, right? We can develop these traits in ourselves if we choose to put ourselves in different situations that allow us to develop. Just like any other, you know, ability. And so there's that. And LoveSac for me, look, I had already, I think, put myself through some of those crucibles growing up, and that's why I dedicated it to my mom. I mean, she had me involved in all sorts of things that really taught me the ability to multitask, to develop skills, to put in the effort. You know, I, I play the piano, I've played it professionally, I've performed on stages, I sang and danced, learned Mandarin Chinese. I've, you know, I've put a lot of time and energy into my life to develop skills and abilities that you can only develop by persevering. And so I believe in that, and I believe in that for my children. I believe in that for anyone. On the other hand, as it relates back to LoveSac, not only was LoveSac a further crucible as I had to muscle through just really hard times, you know, as you bootstrap a company and you're also waiting tables, you're paying your way through school, that itself is a crucible. The early days of running the stores, some work, some don't. Hiring people, firing people, you know, all the things that continue to roughen you up and make you stronger if they don't break you, all of that's true. But you also reach a point, like in my case, where, look, through the, if you read the whole book, you know, you discover like we had to go through a complete Chapter 11 reorg that was humiliating. This is after I won $1 million on TV with Richard Branson, the crazy highs. The lowest lows, the most embarrassing, humiliating moments of my life as we reorged the company, had to keep going. Talk about resiliency, right? There's a chapter in the book, Quit or Keep Going. And that came from my mother. 'Cause I had, I was faced with that choice. It would've been a lot frankly easier for me to quit at that time and just kind of skulk out the back door. I'd already wrecked a lot of lives, you know, brought this company into a position where it had to be Chapter 11 reorg, and I lost all my equity and had to rebuild that back. And frankly, if I wanted to, maximize my wealth today, I should sell all my stock and found another company with a few million bucks or whatever and own it outright and build it up and sell that. Like, I know how to do that, but I'm also in touch with myself over all these years. And I've realized I've made the choice now. So this is the choice part. I've made the choice to stay here and build this because not only do I see a grand vision that I want to be a part of,, but also, um, I know what motivates me and I'm, and frankly, I, I, I'm friends with many, many hundred millionaire billionaire people. Um, but that's not what motivates me. Yes, I, I'm, I'm happy that, you know, wealth can be had by myself and, and many others around me because of LoveSac success, let's say. But what motivates me is building, and it's so hard to get a company to the size and scale that LoveSac is on the public markets that's floating by itself, generating income, generating cash flow and has a shot at building a brand that really matters to people doing some, something that really, it's so rare and so difficult that I really wanna see it through. 'Cause I see a path where we can become, like I said, no joke, the most loved brand, the most loved brand. 'Cause we're the only one that's telling the truth honestly. And, and branch out into other categories and everything else. And, and that's what motivates me. So regardless of whether that's the, best way for me to become the richest, I don't care. And it's not because I'm magnanimous, it's because I know what drives Sean Nelson. And that's for me what drives me. And by the way, the most loved brand, if I can get there or even close to that, it's probably also very valuable. It probably will make me quite wealthy and I'll be just fine. But that's just not my core motivation. And so, you know, and by the way, it may be for some, Some people just want them, the, I don't know, like the points for being, uh, what's it called? A repeat entrepreneur, you know, um, whatever, but that's not what I'm after. I'm, I'm, I'm trying to build something lasting. That's, that's what gets me. And, and so, because I'm in tune with that, like I said, resiliency has been a choice, right? I've chosen to be resilient. And by the way, now I've chosen to manage myself. And the way that I hire, the way that I staff, the way that I build from the board of directors to the team around me in a way that won't just get me sideways and won't— I've had to escape that founder's trap and not be that impetuous. At the same time, you have to maintain a little bit of that impetuousness as a founder, as an inventor, as let's call it, you know, the creator of the vision for this brand, because there was a time where you need to, and so managing oneself in a way judged by the harsh light of the public company, um, demands, you know, for a person who doesn't own the majority shares in this company, for a person who doesn't, you know, Mark Zuckerberg it and just have wanton control, like now you have to also manage yourself and do it in an artful way and be self-aware and self-conscious, all of these things, right? And I love the challenge of that. I love the challenge of it. I love the honesty of it.

Talking about the vision, uh, you've got incredible product focus. So in terms of geography, international, and then product line extensions, how do you think about leveraging the brand from here? Uh, and when you talk about it being the most loved brand, is that globally?

Hmm. Eventually, sure. But you know, America, look, America is hands down the biggest economy in the world and is going to be for a very long time.

Yeah.

And one of the biggest mistakes that a lot of up and coming brands make is it's so exciting when you get someone from the UAE who wants to license your brand and open a store in Dubai or like the UK or Netherlands or something. It just is exciting. And then by the way, even the biggest companies you can think of often, and even recently come back with their tail between their legs. We're pulling out of Germany. We're pulling out of the UK because it never was profitable. Now I'm not saying we can't go international. I'm sure we will. Um, but what LoveSac also has developed over time is a lot of discipline and a lot of patience. And that's really the final chapter in my book, right? It's called Maintain Top Ambition with Infinite Patience. And man, that is, if you really think about that, it is so hard for entrepreneurs to do that because it just seems antithetical. Like entrepreneurs are like, no, I'm going to do it today. And by the way, I've gotten pretty far by getting off the couch, go down by the fabric, build the sack today. And that same chapter 1 in the book, just do something, that same just do something attitude persists today with me. On the other hand, when I cannot lose vision for that grand ambition, right, to become the most loved brand, in an honest way, not loved because, you know, we bought our way there through advertising, loved because we've really created value for people. We've managed the brand deftly. We've done, made the right choices, right? And, and people love what we're doing. Okay. So that's a high bar when I can maintain that, but also be patient enough to not go to the UK, to not go to the UAE yet, to not just branch out into other categories because, oh, it'd be so easy just to make a LoveSac dog bed. We could do it tomorrow. Right? Make mattresses. We're synonymous with comfort. We'll slap our name on a mattress and now we're in the mattress. And by the way, we could do a few hundred million. Think about this, Jeff. I could do a few hundred million this year in mattresses just by putting my name on one because the brand already is synonymous with comfort and we have a lot of credibility, et cetera. I will not do that. Now, I'm not saying that I won't attack this category or that category, but when I do it, back to first principles, because I know what we're really trying to do here, because I've taken the long road to really uncover it, really be thoughtful about it, really strategize about it. We have great discipline around what? Around that design for life philosophy that I told you about. So if we do any of those things, if we make a LoveSac dog bed, again, we had them before and it was a foam bag, had a cover on it for your dog, is great. But if we make one again, it will be built to last a lifetime and designed to evolve as your life changes, because that's what we've committed to. And when you can identify a core strategy that's unique in the landscape and then adhere to it like glue, you're going to win something. Now, if the strategy is big enough and broad enough, you can win in the billion-dollar realms, which I think we can. So to answer your question, Jeff, we will do all the things given enough time. What will we do? We'll do all the things. You know, if I had enough time on earth, I'd do this thing because you and I can both imagine what a design for life mobile phone could look like. Oh yeah. That camera could be modular as camera technology changes. It could pop out, pop in. That battery could come out and be swapped after a year or two because it's getting tired. There is a reason this sucker's glued together and pressed together and they do not allow you to do that. And it's not because it's just a slicker way to design things. No, they masquerade behind that. Excuse to do exactly what you think they're doing. And I intend to be a truth teller and I intend to, you know, keep, and I, and the reason I'm trying to put it out there is so others hold me accountable to it. So I don't just slap my label on things and make things cuz I can get another $100 million. By the way, when I attack some of those categories that I mentioned through the Design for Life strategy that I've described, Not only will I then create better products in those categories, but there'll be billion-dollar extensions instead of just a few hundred million.

Right.

But that takes a lot of discipline, man. And that's why you hardly see anything from Lovesac. You're about to. We're about to start going a lot faster because we've gotten to a point where we have enough engineers and designers and we're cooking multi-layers. But that's the reason we've kind of moved so slow. And look, you know, back to your question about resiliency. This is a choice. This is a choice that I've made for this company because one, I believe in it. Two, I know it's right because in my heart, like, I know that this strategy is right, but it's a longer, harder road that requires tremendous patience and discipline. And I didn't always have that.

What is your unique ability in the company?

Me? Yes.

What's your unique ability? Are you a product guy? Are you a strategy guy?

A leader?

Like if you had to say what my unique ability is and your unique contribution, what would that be?

I think, yeah, look, I'm good at product and I'm good at being a part of that team and creative and I'm a problem solver, but I would say my, and you know, I, I think like I have some leadership capability and I'm, I'm good at, um, enrolling people and, you know, keeping people focused, but I think the number one kind of core thing that I feel most responsible for is keeping the, keeping the whole team, right? And starts, of course, with my top team, but disciplined around this North Star that I've been describing to you in bits and pieces around our purpose, our mission, our vision, our values. And by the way, refining those with a scalpel, and we're doing it even right now as we gear up for our own annual kickoff. In just a week. You know, we, we, we dust off and refine what I call our strategic guide. And that is my baby, right? That is like, and it's not just words on a wall. It's not just one of these like brand books or something that gets kind of cracked open when we do a campaign. We live and die by, by those values, by those principles, by those tenets, by those philosophies. And we train and I train on it. Kind of endlessly, like a broken record I have for more than a decade, you know, and I'm sure that some of my longest tenure people are to some degree sick of me saying sort of the same things for like a decade or two, but I have the discipline to do exactly that. And that's what's amazing. And that's why I know it sounds kind of a bit crazy, but when you can be that certain as I am that it's the right strategy and it's evolving a little bit, you know, as everything should evolve. You know, but the core of it remains the same. And when you can be that disciplined around it for a very long time, and of course you got to be seeing the results, like Love Sack's grown because of this. It's not like we're just beating our heads into a wall, right? Uh, standing on principle, but when you can have proof of the principle through growth, through success, through profits, whatever, and you're willing to not sacrifice, not just take the easy path, but stick to that strategy. That's how you build something that's enduring. That's how you build a Nike. That's how you build a Tesla. That's how you build an Apple. And I, that's the board I want to be on right now. Lovesac's compared to, you know, Restoration Hardware, Our House, Pottery Barn, Crate and Barrel, whatever. They sell expensive sectionals. We sell expensive sectionals. But that is like comparing Apple to Dell. There was a time when Apple And Dell or Compaq were in the same conversation. That's not the conversation anymore. You know, now it's like, I don't know, Meta, Google, Apple, Tesla, Amazon, right? That's a completely different landscape for what sounded in the 1980s like banana computer company. My point is that brand, you know, as critical as I am of that brand, has transcended what they began from. And you are going to see Lovesac transcend from being a furniture brand someday to being just— Apple still makes computers, by the way.

Right.

Okay.

Right.

But, but that's not how we think of them. And that's the best analogy I can make for Lovesac. So look, you can, if you're listening, you can believe it or not. I don't really care, but I'm gonna do exactly that. On these rails. And I know it sounds strange coming from a brand that started with giant beanbags with a weird name like LoveSac, but don't forget most of my name and my stock ticker on NASDAQ is the most powerful word in the universe. L-O-V-E. Yeah. And, and so, you know, why not? If they can do it, like you said, Phil Knight, and this is my point of view, if he can do it, why not me? It's not like he's a mysterious You know, individual. He's a great business person. There's, there's many of them, but like, if it can be, if it has been done, it can be done. Why not me?