Pulling Back the Covers on Boll & Branch
Scott Tannen had promised himself and his family some time off. He had recently sold his online gaming business to Publishers Clearing House when tragedy had struck. He was in the middle of the transition, and his mother was diagnosed with pancreatic cancer. She passed away just as he wound down his commitment to PCH, and he felt blessed to have had just a little more time with her. Scott didn’t think he was going to head into the business world again.
But he couldn’t stay away. In the summer of 2012, Scott was making private investments and started to take a closer look at social impact investing – companies like Toms. The urge toward entrepreneurship started to rekindle inside him. It was at the same time that his wife, Missy, was searching for bed sheets for their remodeled master suite. Scott spent four hours researching the options his wife gave him and concluded they were going to start a linens business.
It turns out buying bed sheets is a miserable, opaque, and conflicted experience. Some 60% of consumers can’t name a brand. They name a retail store, instead. Conceits like thread-count are just that – meaningless. In fact, higher thread-count sheets can actually result in heavier, rougher sheets. Once you start to peel away the layers of complexity and counterparties in the cultivation, spinning, weaving, cutting, sewing, and shipping of the sheets, it will make you never want to buy sheets again.
Scott picked one brand to put under the microscope. He spent a month picking apart its supply chain, so he could find the actual fields from which the cotton came. They touted a unique, luxurious high-thread-count weave of fine Egyptian Cotton, made in Italy. It turns out, it was anything but the case. The Egyptian Cotton was grown and spun in China. The thread was then sent to Bangladesh and woven into sheets, and the final stitching was applied in Italy. So much for high thread-count, Egyptian Cotton sheets, made in Italy.
The linens industry has been dominated by concentrated suppliers with no transparency and shaky claims, but these belied the social cost of the supply chain. The disaster at Rana Plaza in Bangladesh would shine a bright light on the manifold human cost of the textiles business. More than 100 people died and scores more were injured in Dhaka as the overloaded building collapsed. But as he looked closer, he found the disaster to be commonplace. Traditional cotton farmers in India have a life expectancy of 35 years. They live in grinding, dangerous conditions, unable to make a living wage and soaked in poisonous chemicals. The Egyptian Cotton sheets, made in Italy, were the source of pervasive misery.
Scott had found the social impact angle. He and his wife, Missy Tannen, would found Boll & Branch as a luxury linens business with a focus on fair trade and providing a safe, living wage for everyone in the supply chain. Scott took the helm as CEO, and Missy took charge of all product development and specifications. He teamed with Chetna, a farming cooperative in India that negotiates for living wages for small-holders. He worked with a third-party manufacturer in India to bring those practices to the factory floor. Every sheet, pillowcase and linen would be of the highest quality and could be directly traced back to the field and factory where it originated. When the summer of 2013 came around, he wired his life savings to the manufacturer in the hopes that his first round of sheets would arrive in January 2014.
Through careful planning, execution and innovation, Boll & Branch reinvented the linens supply chain. Investing in quality, transparency, and relieving the social cost of linens not only led to the highest quality product, it led to strong unit economics. More transparency not only counterbalanced the dubious marketing of thread-count and other claims, it actually corresponded with important changes to the supply chain. Boll and Branch came out of the gate with strong economics and winning on quality.
But there were still so many questions. Would people change their behavior and buy sheets online, from an unestablished retailer with no brand advantage? Would they pay premium prices for those sheets - more than $200 a set? Would Missy & Scott’s disdain for established marks of quality, such as Egyptian Cotton and high thread-counts backfire on them? Or would Missy’s meticulous product designs, distinctive aesthetic, and exacting standards come through and reach an audience of consumers so fatigued with the miserable, opaque and conflicted experience of buying sheets from established brands?
The Wall Street Journal caught wind of Boll and Branch in January 2014 and wrote up a piece on the company. What Scott and Missy thought was 18-months of inventory was actually only six hours of inventory and a five month waiting list. Scott and Missy had convinced shoppers to change their behavior and buy sheets online. They had beaten back established brands and retailers and established a fledgling, trusted, desirable brand of their own.
Fortunately, Scott’s direct relationship and close collaboration with the farmers and the manufacturers meant they were prepared and eager to respond. Boll & Branch actually consumes almost all of their capacity, so they must work closely, as though part of the same company, to make the appropriate investments in growth. Sheets would arrive and sell out, again and again, throughout 2014. Scott & Missy finished the year with a three month waiting list.
Boll & Branch and its partners, however, had invested throughout the year to scale up and support their growing popularity. They retooled the lines, retrained the workers and increased capacity from 180 sets a day to 900 sets a day. Meanwhile, the factory workers, many of whom Scott knows by name, were paid 50% more, on average, had health insurance for themselves, their family and their parents, and a bonus, per piece that they produce. Overtime is optional, and when they take it, the overtime rate is three times their wages. It’s more than a living wage, and the increased commitment from Boll & Branch was more than reciprocated on the factory floor. Nonetheless, they maintained their strong unit economics.
Steve Jobs famously said, if he were designing a dresser, he would make sure the back of the dresser looked perfect, as well. Scott takes these to heart as he leads and grows his team. To that end, he’s led a team founded on a mutual commitment to the Boll & Branch social mission. He spends his time ensuring each team member has what they need and the relationships, internal & external, to move the ball forward. He’s not afraid to roll up his sleeves and jump on customer service calls, and the team thrives on it – including the extended team in India.
Scott and Missy were ready for 2015. They made short work of the waitlist and decided it was finally time to advertise. Advertising unlocked surging demand. They crested $12m for the year – their second year of production, with only five employees.
When 2016 rolled around, Scott decided it was time to be profitable. He had material advantages over the competition and an increasingly influential brand, but logistical costs had eaten into his profits throughout 2015. He expanded the team to 23 people over the course of the year, invested in logistics, changed his warehouses, and launched new product lines, including flannel sheets. He closed 2016 profitable with $30m in sales.
Scott & Missy entered 2017 with an eighteen-month pipeline of new product launches, designed, tooled, and underway, which they would begin launching starting that August. They invested more in cultivation, logistics and manufacturing. The result would dramatically increase capacity, improve unit economics, and do so while meeting their rigorous quality, social and environmental standards.
The social mission, however, does not end with Boll & Branch’s business practices. Scott & Missy focus their philanthropy on Not For Sale, a charity focused on human trafficking and slavery. Founded by David Batstone, who discovered that all of the servers at his local restaurant were in fact enslaved by the owner, the charity helps channel formerly trafficked individuals to opportunities that wouldn’t otherwise be available to them and can help them get on their feet. Scott & Missy have been deeply involved for the past seven years.
The innovations that drove Scott & Missy to integrate the supply chain, make every step transparent and rigorously tackle the social cost of linens manufacturing and merchandising are winning. They have a material competitive advantage, a rising brand, and surging demand. After a successful test of a 1,950 square foot physical store in 2017, Boll & Branch opened its flagship store in the Mall at Short Hills in September 2018. It’s been just shy of five years since Scott & Missy made the nerve-wracking decision to wire their life’s-savings to India in January 2014, and they’ve never slept better.
