When Matt Byrd won $1,500 after a lucky pull of a Las Vegas slot machine in February, the 21-year-old didn't put it toward his tuition at the University of Miami.
He wasn't thinking about a new computer or paying his rent. He had his mind set on mattresses. He put it all into starting Select Foam, an online business selling high-end memory foam mattresses.
The business student said he couldn't resist the opportunity to start his own business. He shared his vision with his Web-savvy friend, Chris Nelson, 20. They met after living on the same dorm floor and connected since they both hail from Ohio.
"We were both looking for something that we can do while in school, " Byrd said. "Something that we can pour our hearts into and really create a quality product."
After his freshman year at UM, Byrd worked an internship at a Kendall City Furniture. A conversation with a colleague about the profitability of mattresses stuck in his memory.
He researched prices for memory foam mattresses online and found that there were many variations of prices. That's when he got the idea to sell luxury mattresses at discount prices.
Nelson, a freshman at the time, wasn't exactly enthusiastic when Byrd first shared his mattress business vision.
"But the more I thought about it, it was more of a thing like, why not? What do I have to lose?" Nelson said.
Byrd put all his Las Vegas winnings into creating Select Foam, and Nelson added $1,000. Nelson designed their first website, selectfoam.com, and both of them split the daily responsibilities of filling orders out of their dorm rooms.
So far all profits have gone right back into the company.
"We're both business students in college, and we both realize business is a very general degree, " Nelson said. "The only way you can make a name for yourself is to get involved. And we thought, 'What better way to do that than to start our own business?' "
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When they started their business in February, they said they were lucky to get two orders in a month. But after launching an advertising campaign and improving the website design, they average five orders a week.
The two entrepreneurs said they didn't want to disclose advertising spending or long-term profit and revenue numbers for competitive reasons, but they did reveal that in the past week Select Foam took in about $3,500 in revenue.
Byrd said that they have talked about bringing in investors, but they aren't planning on seeking any for the time being.
But he said they probably will need investors in the future to help establish themselves as a top name for mattresses.
The mattresses range in price depending on the size and thickness of the memory foam, and the pair has also expanded their product line to include memory foam bed toppers and pillows. Memory foam molds to the shape of the body, designed to relieve pressure and back pain.
When customers place the order, the mattresses are shipped from the manufacturers in Massachusetts and California.
CHEAPER ALTERNATIVE
The idea was to undercut the competition by selling them cheaper since they don't have to pay salaries or for extensive advertising. Many of their products are half the price of Tempur-Pedic, a highly advertised competitor.
But their biggest challenge is developing trust with consumers as an online company.
"We have lost customers because they like to see it before they purchase it, " Byrd said.
TEST PERIOD
To cushion that problem, they offer a 90-day period where customers can get a full refund if they don't like anything about the mattress. The warranty is part of the company's major goal to establish a trustworthy reputation.
Byrd said they are also in talks with a few furniture stores to have customers see the mattresses for themselves. One such store is the Italian Pavilion in Miami's Design District, where they plan on displaying the mattresses in a few weeks.
"It's kind of hard to distinguish yourself in this kind of industry, " Nelson said.
To do that, they've used online advertising, including ads on Google and on the social networking website Facebook.com to target college students.
They also organized for more than 20,000 fliers to be handed out in 20 major cities around the nation.
BALANCING ACT
Making the business a success came with making sacrifices in their social lives, but they say their grades have not suffered in the balancing act. And with the company blossoming, Byrd and Nelson have to stay focused. They plan on expanding to Canada and English-speaking countries in Europe and have registered a British website.
"I worry about him overextending himself, " said Byrd's mother, Ann Byrd. But she added that she has confidence in him because "he's really focused. He'll go on vacation with us and bring his laptop."
But the sacrifices have been worth it, Nelson said.
"How many students come home from college their freshman year and already own their own business?" Nelson said.
