What if bankruptcy, a global financial crisis, and other hurdles along the way aren’t the end of your brand, but instead a way to help you define what it truly is?
Agility requires a willingness to experiment and adapt, not just in your technology stack, but also in your organizational structure and the very culture of your company. It also demands a deep understanding of your customer and a commitment to delivering personalized experiences.
Today, we’re going to talk about building a resilient brand in the face of uncertainty, balancing the need for both efficiency and innovation, and the critical role of company culture in achieving long-term success. To help me discuss this topic, I’d like to welcome, Shawn D. Nelson, CEO at Lovesac.
About Shawn D. Nelson
Shawn D. Nelson is the author of Let Me Save You 25 Years: Mistakes, Miracles, and Lessons from the Lovesac Story. He is the founder and CEO of the Lovesac Company, which designs, manufactures, and sells such furniture as modular couches and bean bag chairs. Nelson holds a BA in Mandarin Chinese from the University of Utah and a Master’s degree in Strategic Design and Management from Parsons, The New School for Design in New York City, where he later became an instructor.
Shawn D. Nelson on LinkedIn: https://www.linkedin.com/in/shawndnelson/
Resources
Lovesac: https://www.lovesac.com
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Transcript
Greg Kihlstrom (00:01)
What if bankruptcy, global financial crisis and other hurdles along the way aren’t the end of your brand, but instead a way to help you define what it truly is? Agility requires a willingness to experiment and adapt, not just in your technology stack, but also in your organizational structure and the very culture of your company. It also demands a deep understanding of your customer and a commitment to delivering personalized experiences. Today, we’re going to talk about building a resilient brand in the face of uncertainty balancing the need for both efficiency and innovation and the critical role of company culture in achieving long-term success. To help me discuss this topic, I’d like to welcome Sean D. Nelson, CEO at Lovesac. Sean, welcome to the show.
Shawn Nelson (00:45)
Excellent, thanks for having me.
Greg Kihlstrom (00:46)
Yeah, looking forward to talking about this with you. Definitely a great story to talk through here. But before we dive into some background on Lovesac and its journey, why don’t you give a little background on yourself and what led you to start the company?
Shawn Nelson (01:00)
Yeah. mean, Lovesack is a saga. began because I had the idea to make a giant bean bag when I was about 18 years old and, you know, got off the couch, drove down to the fabric store, bought the fabric, brought it home, cut it up, made it. It would fill the back of a truck and everywhere we took it, everyone just, you know, lost their mind. Like, my gosh, that’s so cool. It was actually full of foam, not bean bag beads, you know, like chopped up. Right.
Yeah. Can’t be mattresses kind of thing. And people just loved it. became my side hustle in college by 2001 opened our first retail store called love sack. Cause all of the furniture stores wouldn’t have us. And so that was like our last ditch effort and it just exploded. then from there grew into, you know, a little retail chain across the West. And we had people asking about the couch that’s in the corner. then we started inventing clever couches that could be shrunken down like our sacks. And that led us to what you see today, which drive 90 % of our sales sectionals and has grown the company toward a billion in sales, 700 million give or take. And we’re a public company listed on NASDAQ.
Greg Kihlstrom (02:05)
Yeah, that’s amazing. Yeah. So let’s, ⁓ let’s, let’s dive in a little bit and I want to start towards the beginning and, ⁓ you know, some of the early challenges and lessons that, that you learned and you’ve openly discussed a love sex journey through chapter 11 bankruptcy early in the company’s history. What was the single most crucial lesson that you learned from that experience that still informs your decision making today?
Shawn Nelson (02:31)
Yeah. mean, you know, it’s a complicated scenario that led us to a situation where our venture capital partners wanted to bankrupt the company, take it through chapter 11, exit a bunch of leases that we had signed as, kids and, kind of clean it up. And it was dicey. It was scary. It was not certain how it would end up as those situations are. And it was humiliating. You know, it came on the heels of me achieving a little bit of local fame, having won a reality TV show business competition a year before. And so it was very spotlighted. Meanwhile, you, if you want to emerge and continue to have a company on the other side of that, you’ve got to keep running. You’ve got to keep selling. You’ve got to keep people energized and excited. And that’s difficult to do while you’re out there shutting down half your locations and whatnot, but that’s exactly what we did. And, you know, looking back now,
I kind of call it my MBA in a box, right? Like if you want to see how contracts really play out, if you want to see the teeth in these leases and what they mean in action, there’s no other way really to push it to that point other than something like a chapter 11 reorganization. so, you my understanding of all of these things and the stakes at which we’re playing and
And by the way, the outcomes and even possible outcomes, these are things you can only learn that way. And I’m really grateful for that. feel like, you know, I have a lot of, I know a lot of great business people who haven’t had to, you know, go through things like that. And there’s things I know that they don’t. And I, and I enjoy the knowledge and I enjoy the perspective it brings. And of course, it only makes the successes sweeter when you’re able to recover in and of course thrive later on when you’ve achieved your lowest lows. You can also.
achieve higher highs, I think. And it’s been a really exciting journey since then at Lovesac.
Greg Kihlstrom (04:23)
Yeah, yeah, definitely. And yeah, to your point, I mean, there’s there’s no way to learn like that firsthand experience. And I’m sure it taught you a lot of other things as well that you’ve been able to leverage in the in the years since. Another challenge along the way that I know, you know, my company and many others dealt with as well as the financial crisis in 2008. And so, you know, navigating that while personally facing some financial strain, yet another challenge to overcome. How did you kind of, to what you were saying earlier, compartmentalize some of those pressures while leading a team and again, ultimately growing and growing a successful company?
Shawn Nelson (05:10)
Yeah. You know, what’s interesting is 2008, nine 10 was a housing led recession, which of course had a huge effect on the furniture category on category. was a tough time at the same time, because it was so tough. The retailers were apt to make deals with any brand that could possibly find growth. And so we actually grew a ton of retail locations during that time period. Cause the getting was good. Now was, it was tight and it was tough.
Money didn’t grow on trees, but we really leaned into growth during that time. That can be a scary thing to do, but we saw the opportunity we took it and it turned out to be a platform from which we could jump as the market came back later on. Now, if I parlay that to today, what’s interesting is that this post COVID period, call it 22, 23, 24 into 25 is worse for the home category than 2008, nine, 10. Oh, wow. You wouldn’t think so, but there was just so much of a pull forward effect. So many people redoing their homes, adding on, relocating, buying furniture, buying furniture for second homes, Airbnbs, who knows? That the markets were just absolutely ripping and having to deal with sort of this trough that follows that massive heap of activity is in some ways more challenging than it was in 2008 and 10. And so we’re experiencing a lot of the same kind of pains and difficulties. And it’s a different day though. Lovesac has 300 locations, roughly 2000 employees, and we’re doing great. We’re doing better than probably any of our peers from a growth perspective and from many perspectives, but it still makes it hard. But this is where I think to your point early on,
When you’ve lived through the worst kinds of things, you realize you can live through anything. And so you learn to sort of stay cool, be kind, operate, you know, with vigilance and keep a steady hand. And it’s amazing to me. I think of it as a huge blessing to have lived through this many cycles, have seen these ups and downs and develop the stomach to handle these things.
And it’s not to say it’s not, it’s easy. It’s not to say I’m flippant about it. It’s just to say that if you want to play at this level, you have to develop a stomach to deal with the uncertainty that is bound to beset you. And it’s not often talked about and it’s hard to put your finger on. And it’s amazing to me how many people that I think are smarter than me, more talented than me that I’ve observed or even gotten to hire and work with can’t handle that kind of pressure and it manifests itself in all kinds of weird ways. And so I think that, you know, an entrepreneur, a founder, a CEO either has developed that ability or not, or maybe was born with it, but it’s something that I’m very grateful, I think, to be able to observe.
Greg Kihlstrom (08:20)
Yeah, yeah. Well, and I think the you know, they say change is the constant. But I think the other thing here is that there are always going to be ups and downs. And, whether it’s sometimes it’s localized to the company itself, but quite often it’s economic. You know, it’s covid-19 or it’s a financial crisis, which, you know, we obviously have minimal impact on on initiating. But yet we’re some of us are still dealing with the repercussions of it. So.
You know, it’s it sounds like you as as a leader yourself have been able to adapt and grow, you know, in spite or, you know, in some cases, finding opportunities where they arise within some of those those challenging times. How do you look at fostering that within the people that work with you within your teams? And, you know, how do you kind of some people maybe are not cut out for that, but those that are, you know, what do you do to inspire them?
Shawn Nelson (09:14)
I mean, first it starts with you, you know, the way you show up, your overall demeanor, you know, if you’re nervous and distracted or stressed out, it will be contagious. And so you either find a way to compartmentalize and to, you know, mask that if necessary or better to genuinely deal with it in a more sincere way. so for me, I continue, I refuse to just hunker down in a hole and get depressed. I ride my dirt bike, I go water skiing, I do all the same things that I do when times are good. Of course, you know, and then get to work and work hard and control everything I can control. So it starts with you. Secondarily, these are the times when you begin to recognize who can hang and who can’t. And you have to root that out. And obviously you want to develop it in your people and you can first by modeling it and second by talking about it.
You um, like you develop any other skill or capability, but if you come to the observation that someone can’t Hank and, uh, they are going to crumble under pressure or treat people poorly or manifested poorly, you have to make changes. and, and, by the way, if, you know, it’s not enough to be good when it’s good, you need people around you, particularly at the top. Look,
Throughout an organization, you’ve got thousands of people and not everyone has to have the same capacity or skillset, but especially at the top. You know, I have this little shantism I live by, get it right at the top and the rest takes care of itself. And if you have something wrong at the top, it’s maybe cataclysmically wrong, structurally wrong, you’re going to have major problems and you can’t hide from it.
Greg Kihlstrom (11:02)
Yeah, yeah. That’s a tough thing for a lot of people. mean, I know myself, you know, I’ve I’ve always had a hard time making tough choices like that, laying people off, whatever the case may be. You know, what what’s your advice to those that are listening to that totally agree with what you’re saying and yet still have a hard time when it comes to you know, there’s lots of excuses. Well, they’re they’re good in X, Y, Z, but they kind of look the other way when, know, what’s your advice to those leaders? Like how can they think differently about that?
Shawn Nelson (11:34)
Look, nobody’s perfect and including, you know, of course me, course, and people should be given some latitude to have shortcomings, but if they’re fundamental and again, the higher you get in an org structure, the greater the demands to be a complete person. So my resounding advice is don’t let somebody else F up your career. Don’t let somebody else F up your company.
Like that’s what you’re doing if you’re turning a blind eye to these things, if you’re unwilling to deal with them. And by the way, when I say your company, it’s not about you, it’s about the other 2000 people that work here. Like don’t let somebody’s bad behavior, know, inability to be coached or, or to, you know, show up and perform ruin it for everyone. There’s just too many lives at stake, you know, for that’s on the people side, let alone the, of course, investor side. There’s a lot of investors who expect you as a leader and a manager to make the tough calls. And by the way, just because they’re tough calls doesn’t mean you have to be inhumane. You can treat people very humanely, but it still makes it, it still is difficult. And I respect it. I’ve lived, have, I can think of times in my early career where I was like just a crybaby having had to part ways with a business partner at times, this or that. And I felt so terrible. I mean, it’s made me really emotional.
but that’s why they pay you the big bucks, right? Like that’s what comes with the title, the responsibility and the opportunity.
Greg Kihlstrom (13:11)
I really like the point that you made as far as when you make tough decisions like that, it’s also about everyone else in the company. know, because chances are if someone is, whether they’re problematic or whatever the challenge is, it’s affecting everyone else in the company. It’s not just that one individual. You know, I think there’s probably plenty of opportunities for that person to find something else in their career or whatever. But I think it’s also, it’s not a selfish thing. It’s a thing for everyone in the organization to have a better job and better experience in their in their in their work so that the company benefits, right?
Shawn Nelson (13:48)
Absolutely. And by the way, just because someone maybe didn’t work out in your organization ultimately, or you made the determination that that’s the case, doesn’t mean that they can’t have wild success somewhere else. Maybe even more. I’ve seen this happen many times. There are so many factors that are pulling on success, whether you’re talking about the company, the brand, or even just an individual contributor.
chemistry, personality, its timing, its industry, its outside forces, its inside culture. And so just because that concoction ended, you know, poorly for someone, let’s say in your org, doesn’t mean in a different concoction, they can’t totally thrive. And, ⁓ and so you just have to remember that. And in fact, usually, usually when I’ve had to make those tough decisions,
It’s of course worked out for the org, but it’s also worked out for that person. And it was almost like sad that it didn’t come sooner sometimes for them.
Greg Kihlstrom (14:51)
Yeah, yeah, it’s like, yeah, it’s like you’re you’re wanting to do the right thing, but the right thing sometimes is is letting everyone go their their their way or whatever. Yeah. So I feel like we’ve talked a lot about challenges here and stuff, and I appreciate your your insights and, from from your leadership. Now I’ll talk a little bit more about opportunities. You know, where do you see the biggest opportunities for for a company like Lovesac and how are you?
preparing the company to navigate them.
Shawn Nelson (15:23)
Yeah. Look, our ultimate goal as a business is to build the most loved brand in America. And it’s on the backs of products that could be with you the rest of your life if you want them to. And that’s kind of the DNA for our brand, right? We call it Designed for Life. It means we make things that are built to last a lifetime and designed to evolve as your life changes. We’re proud of that. Customers love it. They can come back in a few years, add to it, grow it, change it, improve it, recover it, rearrange it.
change the shape, know, pare it down. It’s great in a divorce. know, I’m teasing. Like, it’s just so flexible. You know, you talk about agility, our product by definition is rooted in agility and the business model around it is too. You know, we ship in days, we never drop our fabrics so that you can come back in six years and add on. that’s, none of my competitors can do that because it’s such a, beyond even the product, it’s such like a commitment to a business model that’s unique. But with any kind of uniqueness comes the spark of a brand. You the reason you can love or hate, you know, pick someone polarizing, you love or hate Elon Musk. You can love or hate Trump, but you know who I’m talking about because they have a brand and that brand for better or for worse is a personality. And I think the same is true for brands in general and brands matter.
It’s easy to, in the day of AI, in the day of Amazon, all the copycats, all the knockoffs to really get cynical about, you know, everything’s been done and everything’s been made cheap and how, you know, people still resonate kind of at the sole level with brands, just like they resonate or don’t with people, as I just described. And if you can resonate, you have a shot at capturing their attention, their investment. And so you have to have something sharp. have to have something differentiated. You have to dare to be bold and different, just like the most polarizing people so that you can have a shot at resonating with someone. Otherwise you’re just lost in the AI menagerie of sameness and vastness.
Greg Kihlstrom (17:37)
Yeah, yeah, mean, I agree. mean, I think people want they want a brand. also want a story, right? They want something. And maybe some of that is that idea of something that someone can carry with them through various stages of their life or things as well. How do you how do you look at like building the story of of the brand and as something that people can really relate to and bring with them again throughout their their journey?
Shawn Nelson (18:03)
Well, the first step was identifying what that is, right? And it took us, sadly, a better part of a decade or two to figure it out. This design for life philosophy that I described, you we were always doing the thing. We were making good products. We were making products that people could keep a long time because that’s just, I don’t know, we’re just following our instincts. But by the time we articulated it and memorialized it and really sought to understand it ourselves and then intentionally build our brand around it around maybe 2015. That’s when Lovesac really exploded, you know, and we paired it with an advertising model and but what it’s like once you have a message and you can pour some fuel on top of it, if that message is a good message, if it’s a message that can resonate with people, then it’s going to work. And now the task so we understand what our message is. understand, and it took us a long time. And that’s the thing. People sometimes want to have it out of the gate. You might not. You might have to just kind of follow your instincts for a while and just kind of keep doing things and let it emerge as long as you’re looking for it. There were a lot of years there where I don’t think I was really looking for it as sharply as I should have been. I wasted some time not being more intentional about trying to nail down what that ethos is, what that brand is, what is our
you know, positioning that really sets us apart. But once you have that, now the chance is to protect it, to do nothing outside of it and to expand it simultaneously, to look for other opportunities, to let’s say, look around your home and make things that are built to last a lifetime, but can evolve with you as your life changes. And if we do that thing, I think we can have great confidence that, that thing is going to resonate with people. Some of the same people who bought into our products from the outset. Because they clearly, whether they understood it explicitly or not, and most don’t, I don’t think most people stop to think about design for life. Right. Well, but it resonated with their soul. It resonated with their brain. They felt something. OK, so now do that again across other categories and with other business opportunities, whether it be in the home or whether it be in services in other realms. And so look, as a business, my goal is to build the most loved brand in America.
And I think we can build into the billions. And I think we can not just play with furniture and products in home, but other ways that are less intuitive about how one might grow this unique brand. And I’m not going to get specific because we’re kind of secretive about it. course. But that’s, and that’s what I’m here on Earth to do now. It’s like, I’ll go as long as it takes, as long as they’ll have me. You know, I’m the CEO of a public company. You know, they could rally around me and fire me tomorrow. But that’s, I love that.
I gotta be good. We gotta be good. We gotta perform. We gotta put up earnings. We gotta put up profits. I love the transparency of the public company. It’s hard and it’s exhausting and sometimes frustrating, but I’m okay with that, right? And that will only make me and my whole team sharper by having to live up to that. So there’s a lot of things about the way that Love, Sex, Evolved, even though it’s been twisted and ugly and difficult and meandering, I’m really grateful to be here with this opportunity, because I actually think we can do it. I think we can create a…
a Nike or a Apple or a Disney or something out of this little company that no one’s taking seriously because we started with giant beanbags and that’s okay. That’s all right. I’d rather let them dismiss us at the outset versus coming at us.
Greg Kihlstrom (21:32)
Yeah, I love it. Well, Sean, thanks so much for joining today. Really appreciate your insights and hearing about your story and leadership ideas. One last question before we wrap up. I know you’ve you’ve hit on this probably throughout the entire interview, but I like to ask this to everybody. What do do to stay agile in your role and how do you find a way to do it consistently?
Shawn Nelson (21:53)
I constantly challenge. I challenge everyone around me. I challenge all of our thinking, challenge my own thinking. I try to create a culture that encourages people to debate, that encourages people that come at me and help me get to a better solution. And that’s not easy. It’s tough as a CEO. People tend naturally to capitulate or to agree, but it’s all about creating a culture of openness, honesty.
And basically insatiability, know, just never, never satisfied. is like, we’ll give you the awards, we’ll pat you on the back, we’ll give you bonuses, but like, what’s next?
