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AutorenbildJuan Diego Parra Castillo
20. Okt. 202121 Min. Lesezeit

Meet Emma — They Are on Their Way to Becoming the World’s No 1 Sleep Brand

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This blog post first appeared first on old medium publication (https://medium.com/startuprad-io), and was moved to this blog with the relaunch of our website in summer 2024.


Meet Emma — They are on their way to becoming the world’s No 1 Sleep Brand

We only raised just about 5 mn Euros … we grew to 405 mn Euro revenues in 2020Dennis Schmoltzi, CEO and Co-Founder Emma Sleep

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We were very capital efficient. We are profitable, most competitors are not.Dennis Schmoltzi, CEO and Co-Founder Emma Sleep

The Founder

This time we hear the impressive story from Dennis Schmoltzi (https://www.linkedin.com/in/dennis-schmoltzi-b61b21109), CEO and co-founder of Emma Sleep, Europe’s leading sleep tech startup. Before founding Emma, Dennis got his degree in business administration in Germany, an advanced diploma from New York University Law School, and his Ph.D. in finance. He spent more than 6 years with McKinsey, before starting out on his own.

Dennis was convinced by his friend Manuel to start Emma. Manuel has been in the business of selling medical matrasses, so he knew more about the business before.

We had to invest smartly: How do we get to a better marketing efficiency? How can we build better products, how can we reduce costs in the supply chain. Now we are profiting from this.Dennis Schmoltzi, CEO and Co-Founder Emma Sleep

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This recording was made possible by (Hessen Trade and Invest). Learn more about our enabler here:

Our interviews with Invest-in-Hessen are available as a dedicated sub-podcast here:

In 2016 Emma really started to grow and competitors like Caspar entered the market … but the competition was actually good. It helped us to educate the customer, that buying mattresses online is a thingDennis Schmoltzi, CEO and Co-Founder Emma Sleep

The Startup

Emma Sleep (https://team.emma-sleep.com/) is helping people to improve their sleep, starting out with matrasses. They are currently one of Europe’s leading sleep tech companies.

Emma sells their products (matrasses, pillows, …) online and increasingly with retail partners. Originally they did not start out with their own products, but selling products of other companies online.

In 2020, Emma sold 50,1% of their equity stake to German investment holding Haniel Group (https://en.wikipedia.org/wiki/Franz_Haniel_%26_Cie.).

We met Haniel and found we have a very similar view on how to build strong businesses. … eventually our friends and family sold their shares to them.Dennis Schmoltzi, CEO and Co-Founder Emma Sleep

The Video Interview is set to go live on Thursday, October 21st, 2021 at 17.00 CET




With Haniel we now have a very strong partner, if some opportunity like Dunlopillo comes around again.Dennis Schmoltzi, CEO and Co-Founder Emma Sleep

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We struggled to raise capital … we were too realistic in our projections, but we always kept our promises.Dennis Schmoltzi, CEO and Co-Founder Emma Sleep


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The Interviewer

This interview was conducted by Jörn “Joe” Menninger, startup scout, founder, and host of Startuprad.io. Reach out to him:


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Transcript


[0:00] Startup Red Dot IO.Your podcast and YouTube blog covering the German startups.With News interviews and Live Eventshello and welcome everybody this is Joe from Star operator oh your startup podcast and you to block from Germany as well as two words first internet radio station dedicated to startups and tech companies this time I do haveDennis here with me who is a little bitnot the usual startups that I interview for multiple reasons but first I would like to welcome you hey Dennis how you doing how you doing good how are you.


[0:48] I’m doing great thank you how is playing a little bit you’re not the usual start-up because you guys are dealing in good sleep you are,let’s say a competitor of Casper with Emma sleep you are building mattresses.


[1:04] We are selling mattresses as one part but we see ourselves as helping people improving their sleep and with that improving their lives because sleep is super important that that’s that’s what we do.It totally is and we should all get more sleep little disclaimer here I may be a little bit biased because I’m sleeping on Emmamattress good decision good decision that said today’s interview is brought to you by hessen trade and invest with a brandinvest in hessen you can go down here in the show notes and check out the brand we will talk a little bit more about Heston and location Frankfurtlater on in the interview but first let’s talk a little bit about what you did Dennis because,I’ve been looking at your LinkedIn profile and as always there will be a link to your LinkedIn profile down here in the show notes in our blog andI’ve seen you studied in NYU,here in a local business school as well as did a PhD in financeokay let me get that straight you went to New York you study here you did a PhD in finance then you went to McKinsey and then you started a mattress companytake us along this journey this has to be fascinating.


[2:22] It’s a natural it’s a natural Journey isn’t it well well well let me guess you didn’t get enough sleep,at McKinsey so you had to make up for it could have been could have been the one reason and I actually the story is a little bit different but yeah maybe.Their relationship to what I do now to my work back then at the consultancy at Mackenzie.Maybe was yeah that we had long working hours no but this story’s this follows a did I ventured into Consulting after University and I was focusing on Banks and financial institutions mainly.This is something completely different but what happened eventually was that a close friend of mine already back then close friend of mine mono approached me.And said then is he I’ve got a business idea that is selling mattresses online and improving people’s sleep and making the whole process much more convenient.And then as I mean your consultant.Could you help me with that right I mean Consultants are good and Excel files and PowerPoint presentation Center like so I said yeah for sure I can help.


[3:24] But eventually it led to the fact that we started this whole journey together.


[3:30] It’s a little bit man was idea I must say and why is that maybe that’s interesting he had been in the area of medical mattresses before so he knew medical mattresses and sold those two.Elderly Homes in hospital so we had a bit of a natural connection there he had and yeah he just asked me for help initially.This is a fascinating fact because I actually did not know that there’s any other type than a mattress you can sleep on.


[4:00] I mean she favored with medical mattresses you need mattresses for people to hospitals to sleep on but they’re the tricky bit there is you want to make sure that they not only see well but also if they lie in bed very longlong time that you do not develop any any wounds right so there’s there’s even some help,Health implications are so that’s that’s his background out but overall it’s about sleeping well.


[4:25] Great so tell us a little bit about what you’re doing and of course I do believe you are not just a Casper copycat aren’t you.Definitely not I’m happy to share a little bit of of insights here so overall we see ourselves as I mentioned.As a company that wants to improve people’s sleep so that Yuri or wake up to your to the best of yourself essentially because sleep is so important,what does that technically mean I mean yes we’re selling mattresses were sending beds with selling pillows,mainly online but also through Retail Partners so we have actually an omni-channel approach nowadays.


[5:06] That being said yes there are competitors around the world actually and the whole story is that we even didn’t start with Emma initially we even started initially by selling other brands,through an online shop here in Germany but two years into this there wasn’t 2015 we realized well maybe there’s more potential to create impact for people by,developing our own products and our own brand and for sure there was inspiration around us I mean we weren’t the only ones coming up with that idea,but yeah So eventually in 2015 we started Emma and that has grown until today


[5:43] That is pretty fascinating I’m a ad for everybody who doesn’t know that people who are laying in bed longer what do youbeen referring to basically they lying on something more like an air mattress which is moving a tiny bit so that you did you don’t get like a skin skin damage skin leisure’s for sometime and that’s not the peopleare lazy but sometimes they’re really seek unconscious or stuff like this on pre thing automation or stuff us breathing Aid or something like this sothat is medically induced but we’re talking aboutfortunately today on the about the healthy sleep by the way I was wondering we talked about how important sleep is.How much sleep do you get every night at seven seven hoursthat’s it that’s a fact question I guess to follow to a van der well I’m lucky I’m the lucky position that I really get to almost eight hours almost every day not every day what helps me by the way small tiptoe to the audience here is.


[6:48] Use your alarm clock,not to just wake you up mean that’s helpful but in the long flock that had me at least was to know but to set an alarm clock when you want to go to bed.So my alarm clock at 11 tells me that I should go to bed then the next one hour because sometimes I just I don’t know I mean you know how it is I mean.Luckily not so often working that long hours anymore but maybe I don’t know watching Netflix series right and that can.That can’t be real sucked up so I can highly recommend an alarm clocktelling you when to go to bed yeah I know but I’m getting my eight hours so I’m doing good to be fair that wasn’t the case in the beginning I mean when we started small back then in 2013 it was like a 24-hour seven a day thingbut it was also fun right I mean that’s the intense phase over of a startup although to be fair I mean I think startup is always intense and never changes.


[7:39] When we had Alex from front and back the CEO of high-tech uniform in our interview back in December last year he talked about how Capital efficientyou guys were so basically you have not raised a lot of money right.No we only raised just about five million euros then I mean just to set this into perspective maybe that’s helpful for for the audience.Um we are we grew to 405 million euros last year.So with 5 billion Euro funding setting this into perspective for a foreign for a dye to Consumer online business.That was quite kept efficient yeah yeah I see I’m a few more things.


[8:28] Bouncing around in my head here because you guys have been raising moneyventure capital and how important their with that you could point to successful competitorslike Casper in the US for example in the interview we did with auto Nova with Roman the founder and CEO it was very important for him that he could pinpoint here in Germany and we see interviews look there someone in the u.s. who is doing it successfully was it also important for you.Yeah it’s a very interesting question because it comes down to a why did we only raised five million wellwe were very unsuccessful in raising with feces to be very high no that’s the true story so maybe we should have we should have done this more andpointed to competitors in overseas or wherever no but I mean it really we struggle so we had a list of almost 50 people real it’s people like family and friends that invested,in to us we had some additional ones like the few institution of ss we had was high-tech good enough on your just mentioned it so they were invested but also.


[9:35] The mintage definition of a title secession of tests and so they the state of Heston essentially were invested,those were the institutional investors but we strike out to convince Venture Capital companies why was that well by now I know we have been very let’s say realistic I’d rather,understating what we’re capable of and what we can achieve so two very honest my very first business plan that are presented to business angels back then and I got a lot of criticism for that was,10 million euros in revenues after five years.


[10:10] And for sure no VC is going to invest into such a tiny business right I mean we’ve had five years forward I mean we were.Already in the in the in the triple digits million so to speak 150 million and was six years into this but yeah it we were.We are often to risk-averse and how we communicated on AB side we can all say well we always kept our promises and actually outperformed doll plans continuously so that’s the that’s the nice thing afterwards but yeah back then.I’d like to the fact that we couldn’t convince anybody sees what would you now change,in terms of planning in terms of forecasting if you would ever have to start a company again it’s an interesting question I mean Richardactivity I can say I’m super happy then we couldn’t convince any PCs because we have been so Capital efficient because it couldn’t get any money right we had to focus on how do wehow do we invest very smartly how do we how do we get to a better marketing efficiency how can we build better products how can we build a leaner supply chain,how can we reduce cost within the supply chain we had to focus on this from kind of day one and with this,two things first of all now we are benefiting of the off from all of this because I mean you mentioned even competitors in the US who are struggling because they’re still unprofitable.


[11:36] We are profitable we broke even in 2017 during the year and then since then running running running profitably so that that helps us and on the other side I mean to be very fair.We didn’t dilute as much right I mean one thing I tell often Founders when they start a business I mean in the very beginning it’s very easy to delude yourself tremendously when you get your first capital so.


[12:00] Be a bit more restrictive if you cannot every business model allows this also to be clear but if you can.Do that so yeah because because of that we still own a large chunk of this business.


[12:14] That is awesome but now I know when you’ve been talking I imagined you guysbecause back in 2017 you’ve been already doing some some create revenues you became profitable and then your you ask competitor Casperenter to Market admittedly date they want down operations in 2020 again so they have not been successful it can youtake us a little bit along the journey what you felt first and looking back now what do you think you did right or dated wrong.It’s sometimes hard to talk about the strategy and what they did in and what away as a competitor but obviously what I can share definitely when we started,with Emma it started to grow tremendously in 2016 18 2016 then Casper for example came to Europe.And there were more competitors emerging like in the UK and France etcetera so.We saw that that there’s that there’s a lot happening in this atmosphere for sure we were concerned like will we be the one who can who can succeed in this competitive environment.And hens yeah we had to.Two studies and also wait and see what the competitors will do and how it will work out but one learning quite interesting the the competition was rather good and why is that.


[13:39] Competition in our segment helps educating the consumer that buying a mattress online is the thing


[13:47] So we all benefited from this that I mean it’s not only us being on TV but also a lot of our competitors were it drove the market share the online market share up and hence all our sales.So we see actually quite a structural difference between for example UK that’s the market we already every second mattress is sold online.


[14:07] These are via marketed like I don’t know insult in Europe for example Italy Spain where the market share the online Market is much much smaller.Because when you’re the only one who tries to educate the market that buying a mattress online is the thing and actually is the better decision because you could have a you have a hundred nitrile,and I’d really try the thing at home and really see how you sleep on it well.If there’s like yeah if the market is not as educated yeah you see.Yeah you have all these less potential in that market so that the competition in the end was quite helpful,by the way talking about competition you also took over one competitor back in 2016,how did you make this decision to do that and admittedly it was bought out of insolvency so I admitted I assumed it was just cheap but how did he learn about it and how did you make this decision to go for it.That was an interesting situation so I was not the direct competitor so we bought a little pillow that is one of the leading brands in Germany for sleep and they had as you just said they had to file for bankruptcy.


[15:26] And we were looking into this and found this interesting because we said like there’s a huge opportunity not just because it’s one of the leading Brands but also because retail is an untapped potential for us in most countries.The majority of mattresses still sold offline so let’s look into this and maybe we can build an omni-channel strategy herethat’s why we found it interesting and then for sure the other element was it was in insolvency so we bought just the brand so we didn’t buy anyany any plan for example I mean they own some plant in the past to produce mattresses it was just the brand but yes also the brand wasn’t wasn’t that cheap for us at least back in the in these days but we were,to a certain extent let’s say well lucky or let’s say we were more agile.So without getting into actually the details of this process but we thought re we were out of the process because some other bidder had actually a higher price that that he offered.But eventually got back into this because they got stuck and we were much much much more efficient much it more edges So within just three days and three weeks sorrywithin three weeks after they got back to us we could close this deal because we are,because of the speed of this agility of a start-up so sometimes being a start-up and being more pragmatic and sometimes also risk-taking can help you in those in those cases.


[16:46] I see and you actually been keeping being risk of worse at one point you agreed.To be bought out by a larger Company by corporate group that actually exists of multiple multiple businesses and then basically bye.


[17:07] Revenue-generating businesses.


[17:09] And basically let them do what they’re doing and how did they approach you how to define you and what was the process


[17:19] So by the way if I said risk-averse I’ve already meant as a start-up usually more risk-taking sorry if I said that wrongly so no I wouldn’t say that it was a risk-averse move to partner with honey that’s thethat’s the feminie equity company or you’re referring to so yeah indeed we sold some shares are actually ourinvestors sold shares mentioned like this list of your family and friends we had back then they sold their shares to hanyu.And that happened last year to just at the beginning of the of the corona crisis so we met with the city of chania Thomas.And learned that we have a very similar view on how to build strong businesses that how important also the organization the team the people.Are for success for an organization.


[18:08] So we felt like it has a good connection there’s quite a quite imagine and that mindset so maybe there’s something we can do together and,eventually it turned out the need that they have become a partner no for us holding half of the shares which for us is also a win,forget the company because we need to be very forgiving the size where we are now at if you want to sometimes Maybe.Boulder moves risk-taking moves and investing into product development or when you mention the donut pillow acquisition I mean it’s not there not that we would have anything on our radar here but,if there would be opportunities we now have a very strong partner for us that could alongside like help us taking those opportunities,hmm I see an interesting thing in the German blogosphere there is a little fight going on about the acquisition price some people say this some people say that can you shed some light on this.


[19:05] I don’t think that we have disclosed this so I can’t it’s too bad but I have to ask.But it did the company is just controlling fifty percent of your company and the other 50% are still owned by the founders.Exactly so.Yeah the 50% has handed and then 25% is Manuel 25% is what I still hope.What is the plan with you and the backing of the hanyu group conquer the world take over Europe where you currently active and what are the next steps.


[19:45] I like the first point you said conquer the world now I mean our whole goal is it’s only because I’m a big fan of Pinky and the Brainwhat we going to do yeah,love those in my my child was as well haven’t seen them for a while though no but I mean our goal as a company is to become the number one Global sleeper and and.We’re doing quite well I mean we are we sold 1.5 million mattresses last year and with that actually being already the biggest sea brand in Europe.And we have our you opened our also yourself some offices outside of Europe but also opened new markets,so we are now active from Mexico to Brazil to Australia to South Korea and Japan so a lot of a lot of countries where no active in.As the goal is to help people around the world sleep better with all products.So that is the plan that’s a long-term Plan and there’s also what’s so nice about our partner with higher.Honey also has a long-term view on things and is not for example sometimes if you have a very financially oriented investorsometimes their Horizon is more like let’s look at three years or something that’s not the case the good thing is really we can take the decisions as they make sense for us as a business for our consumers and yeah progress long-term.


[21:09] Well sometimes with very aggressive investors are I’ve more seen let’s talk about the nextwe month which we frame the start of also you often have rather three months perspective sometimes if any like if the banks ask me okay what’s your 12-month plan I mean I do have a 12 month plan but to be very fair if you’re really energized to start up,are you rather look into the next.Next three months that’s that’s what it is because who are you to know what the future will look like in 6 Months 8 months 10 months down the road that is already tricky sometimes right.Yes and if Corona has proven something that most long-term forecasts are just for the trash bin but do you have something like a Five-Year Plan.


[21:54] I mean we do have a long-term plan where you want to go to because also it helps I think that’s the benefit and it sets a Target sets the ambition level and helps.


[22:05] Helps with getting the organization.Aligned on this joint goal I think that’s important for example what we do every Tuesday we have our All Hands Where We everyone comes together nowadays virtually.And one part of this all hands is always what is our long-term plan where do we want to be in a few years from now and what are the pillars.That will get us there so that everyone understands what’s the strategy what’s the vision and that brings a lot of Lima so guess that exists but also we are.Agile enough and flexible enough to accept that sometimes things don’t work out and you have to change your plan.


[22:42] Uh-huh I see when you mentioned meeting virtually that’s also on my question list how did Corona impact you guys.


[22:54] I’m in Corona and the corona impact can be split into different ways right I mean one element is supply chain for example I mean supply chain luckily is.


[23:04] Very robust we have a very Diversified supply chain producing often even locally so that that has that that has worked very well.Um


[23:15] Maybe one mention I mean that’s something we see across the industries raw material prices are increasing not sure whether it’s due to Corona what’s exactly happening but across many Industries I’m hearing that raw material prices are increasing so that’s maybe one of the challenges but.I wouldn’t tie it directly to Corona what is obviously more important or was it was it was a direct impact is on.The on the sales with lockdowns as an online business people often online business have seen that this rather boosted sales,for sure when the lockdown was lifted you sometimes also saw a the reverse effect and then the third element is employees.And there although we have been a digital company back then already and we have a lot of digital natives in our company and we think average age in our company’s 28 years old to me we have 700 700 30 people just,give you a little feel for the size but the average age is still around 28 we had to adopt thenworking completely virtually and definitely what I can say Microsoft teams is a great tool for us so that’s helped us tremendously to to adopt thisdoes this virtual meetings and virtual brain stories and what else you do virtuallyin and within actually just a few days but I mean that was last last year now it’s more like okay how do we allow a doctor our hybrid working style how to hybrid meetings work where some people are in the office some people are in a video conference virtually.So those are now elements we need to look at


[24:44] Video also see changes of behavior on the client side that they hold back on purchases during the first wave of Corona are that they just say okay now everybody goes and buys mattresses online.Interestingly furniture and and home had been a huge topicwithin the corona Christ causes that people spend more time at home so when you look at statistics like where would people spend more than the year before it was often Home Furniture I cetera so there was a bit of a booster,um but also you see a set it can revert back when when lockdowns were lifted the the weather got better you cetera so you also saw like the reverse effect partially mhm.When you are physical in the office I was just wondering because your sleep company is there a power nap room.Indeed we do have three power nap stations whoa I must say though I must say are we opened a move to this office.


[25:49] In April last year so just when the lockdowns happened and.So we are just getting back more and more people into the office I have not seen them being used actually so.And as we need more and more space for like those virtual meetings we now actually thinking of converting them.To normally rooms that it’s a bit boring unfortunately but yeah they do exist so if you want come over I mean we here in Frankfort ready come over I can show you those those little booth buddy let’s see whether we will have them for long.


[26:21] You talked about the office let’s talk a little bit about because this is sponsored by investing husbandtalk a little bit about the advantages and disadvantages of being located here in Frankfort for you but I doI do believe from a logistics standpoint meaning shipping out a you mattresses it actually makes sense right.


[26:45] When maybe it would make sense to ship them from Frankfurt in terms of logistics but to be very honest we are not shipping from Franklin we have.We have production part as I mentioned before so the supply chain is very International and we do not produce here in Frankfurt so,that that’s that’s that’s not the reason we are here I mean the reason why we’re here initially was because not only were here.But also to say this very clearly we’re super happy that we’re here I meanmany founders believed they need to move to Berlin because that’s where all the talent is where the whole startup scene is he cetera like I think the opposite is true and when sometimes I don’t know that’s not thethe most how to say.It’s not a widespread opinion I might be along with that but I actually tell Founders to rather not start in Berlin but rather I mean I’m not necessarily saying he’s via Frankfurt and tell you though I’m very happy with Frankfort,how about it could be any other City because in Berlin you often have the issue because there’s so many opportunities for talent.You see often that people don’t stay that long in a company and if you want to build a strong team.You need also that they stay for a couple of years and that’s very tricky so while it might be easier to attract talent in Berlin.


[28:00] They often don’t stay as long so we have people I know someone just left who started with our seven years ago,so we have this law and it was a developer by the way maybe maybe to add this so usually I think developers are people who arewho are who are very prone to being hunted by other companies so you can build a strong team for example here Frankfurt also we have tons of great universities in the region so the talent pool is really strong.For sure you might not find someone who’s done I don’t know Performance Marketing for five ten years but that’s something you can learn so we are super happy with this and I think yeah.I know also that we have grown a little bit there’s there’s how to say it’s.They’re not so many larger startups so if someone wants to join a larger start up in Frankfort in the region we are one of the few that they can look at so it is actually an advantage.So when it gets to tenant I think it is super helpful and hence the I think it is rather helpful to start it outside of Berlin maybe even in Frankfort.


[29:06] We have great other startups in Frankfort right I mean solike Clark Lily do ecetera yeah Christopher comes to mind we had him in the interview for the funding round of more than 80 million u.s. dollars and many othersyes they know how to do it right I should have asked him he’s still kind,and now we break even like we’re profitable so not needed at the moment but yeah maybe I should once I once once once fed would change.My last question was a we are going to play Make A Wish and you could make a wish what do you want to see changed,in the Frankfurt a landscape from the political side meaning this is listen to also in the ministry of Economics at hasn’t tried to invest what do you wish for from those guys to change or to improve.I think what will help us is connecting the people I know that there’s also initiatives already happening so that’s good to see but.What felt help us a lot.What’s getting to know people talking to them learning how things work learning who’s an expert for example in Performance Marketing and building this this network,I think that that is one of the key elements and I think that’s something politics can support well.


[30:32] Great closing words and admittedly there’s nothing I have to add only thing left for me to say thank you very much it was a pleasure talking to you it was fun though thank you very much and have a good day you too bye bye.


[30:50] Music.


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