Resident Home was acquired for ~$1 billion
In its first 4 years, they only raised $10 million. Here’s their story…
Resident Home is a mattress maker that primarily sells via direct digital marketing.
Today, they own of 5 key brands:
Nectar
DreamCloud
Awara
Siena
Cloverlane
And sell the brands online and in 2,600 retailers nationwide.
Plus, Canada & UK.
Prior to launching Resident, Eric started a couple companies…
Home Value Protection, a home insurance product (sold)
Madison Reed, a women’s hair brand (active)
In 2016, him & his partners saw what was happening with Casper, Purple, Tuft & Needle.
And they thought there was a big opportunity to take on the market with attribution data and performance marketing.
From the beginning, they were hyper focused on unit economics.
Their 2 North Star metrics were contribution margin and CPA.
Unlike others, they looked at CPA as a % of gross sales.
It was critical to their survival to be cashflow positive from day zero to fund the business.
So they relied on negative working capital.
Getting money from consumers on day 0 and paying suppliers on day 30 to 45.
They used that cycle to scale this by relying on other people’s balance sheets.
Over the next 5 years, they launched…
Nectar (2017) - memory foam
DreamCloud (2018) - hybrid
Awara (2019) - sustainability focused
Siena (2022) - affordable memory foam
By 2018, Nectar became one of the fastest growing DTC mattress brands.
They sold over 100K beds in a year.
The next year, they expanded Nectar into UK.
By year 3, it was on Amazon and selling in retailers
Most of the initial focus was DTC.
Resident only opened its first showroom in 2019.
In 2021, they finally raised $130 million led by ION fund valuing the business at ~$700 million.
Still a fraction of what their competitors raised.
They used the funds to…
expand the into brick-and-mortar
strengthen supply chain & infrastructure
The following year, they opened a 300k sq ft manufacturing facility.
Apparently by 2023, Resident was at ~$900 million in revenue with 10% EBITDA margin.
Just this month, Ashely acquired Resident.
For context, Ashley operates in 1,100 locations across 67 countries.
Their retail presence is expected to be a complementary fit to Resident’s unique approach.
Their success can be partially attributed to…
one part data
one part attribution
one part technology.
Despite a multiple month decline in home furnishing sales, it’s great to see some acquisition momentum.
Sources:
https://www.retaildive.com/news/ashley-home-acquires-resident-nectar-dreamcloud/709587/
https://www.axios.com/2024/03/13/ashley-resident-home-billion-mattress
https://www.residenthome.com/