Starter Story - The business of sleep

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This is Pat, founder of Starter Story - every week I write this email to share the lessons we learned after talking to successful founders around the world. If you're not interested, you can unsubscribe here.

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Here are this week's stories, enjoy!

The business of sleep

A good night's rest is key. The global sleep economy is valued at $488 billion.

Just think about how many products and services are involved in people’s sleep routine… mattresses, supplements, linens, apps, and more - the opportunities are endless.

This sleep-related business made $600K in its first 8 months. That’s how big the demand is in this space.

More thriving businesses in this space:

• These weighted blankets make $4M/year
• This pillow covers brand reached $550K in sales
• These sleep masks raised $700K in Kickstarter
• Over 1M pairs of these headphones to sleep better have been sold

By the numbers:

• $81B -> global mattress market valuation
• $19M -> raised by the top 10 sleep products on Kickstarter
• $600K -> revenue generated by these bed sheets in 8 months

Our take:

A bad night’s sleep means being cranky the next day. Nobody wants that. Consumers are willing to spend big money to get a good rest.

Apple and other unicorn tech companies are pouring millions into sleep-related products, apps and devices. That should tell you how key this space is.

But the thing is, there’s no need to bring disruptive innovation to succeed. Sheets with a cool design? That can be a hit.

Another great thing about this industry is the high ticket prices (average cost of products sold), which often means high-profit margins. Gen Xers spend an average of $674 a year in the pursuit of better sleep.

Quick hitters

(1) 2021 was the “best year in Airbnb’s history”. It was a disruptive business idea when it launched and it has inspired countless businesses that replicated the same model. 

Like this $1.5M/year Airbnb for motorcycles, this $3.6M/year Airbnb for office space, or this $120K/year Airbnb for campervans.

(2) Elon Musk’s obsession of the week is Twitter bots. How many are they? Hard to tell, apparently. But besides being used to troll political conversations, bots can be awesome products. 

This Slack bot was built and monetized in 3 weeks, this SMS bot helps you build new habits, and this Messenger bot eliminates 99% of time-wasting messages of this $24M/year company.

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Early bird catches the worm

How did Nikon and Canon miss the GoPro? Why didn’t Gillette see Dollar Shave Club coming? 

Because people are too busy to notice these trends right in front of their faces.

But there’s one thing that busy people do have: money. 

And busy people will happily pay for a service that helps keep them exposed to these trends, so they feel like they can stay ahead of the pack.

For example, this newsletter makes $54K/year finding trending stocks to buy before they blow up. A few months after our interview, it got acquired by a $500M fintech company.

There’s also a growing trend of services that provide deal flow to investors and VCs. Their users are growing by the thousands in just months.

By the numbers:

• $27M -> Hubspot paid to acquire The Hustle and Trends.co
• $40K -> potential income discovering future music stars on Spotify
• 50K -> Trends.vc newsletter subscribers

Our take:

Being early pays off. Catching trends before they blow up is very valuable and it’s information that companies are willing to pay lots of money for.

Following a basketball player since high school, discovering the next big band playing in a small club, investing in a unicorn startup’s seed round. These are huge wins that can result in millions of dollars.

VCs and investors are more than willing to pay $49/month for a newsletter if they get valuable information. That’s peanuts if they’re able to close a juicy deal thanks to it.

One last thing...

Want to see exactly how 3,000+ founders built businesses with thousands of customers? Join Starter Story to access our business knowledge database.

P.S. Again, a huge thank you to Klaviyo - our sponsor at Starter Story. Try Klaviyo!