How We Dreamed Up Sleepyhead
Our story is a rocky one. It's the quintessential start-up story (this time it's ok to fall asleep).
We started with humble beginnings. Over a drink one afternoon with my old college buddy, he casually suggested, "Man, I wish they had a drink that helps you sleep." Genius. I fired back, "Why can't WE be they?" My life hasn't been the same since.
We spent the next 2 years doing research. I was newly married, quit my day job, loaded up a mini-van full of our new product and hit the streets in search of retailers. The plan was simple. Drive to a store - speak with the manager - offer a free case and hope it sells.
Fast forward 6 months later, I single-handedly expanded our business to 160 stores across Chicago. It was time for us to find a distributor to continue our expansion.
The plan worked magnificently. We landed not only 1, but 6 distributors across 3 states. We were finally profitable and enjoyed a couple months of bliss.
Then it happened.
We sold our of our product (for the 5th time) and called up our suppliers to make more. Only this time, our bottling plant couldn't do it for us. Our product was too difficult to make. It came in a 5.5oz aluminum can, and required a special filling process. Our yields were too low, which meant they were losing money on us. No one could see this coming.
I called over 300 bottlers and couldn't find one to help us.
Our losses were staggering. $40k worth of purchase orders and another $30k in inventory. We had 161,000 empty cans that were never filled. The distribution chain we worked so hard to get, was gone. That was a tough blow to take for a small business. We nearly called it quits.
Lesson #1: Secure your sources. Don't rely heavily on a single supplier.
Then we had a far-flung idea. We developed a powdered formula of Sleepyhead - origanally intended for K-Cups. We pondered how it would sell if we used filled Sleepyhead powder in a packet.
Back to square one.
We conducted market research, which came back favorable. What's better, our shelf space situation. We used to be shelved in perhaps the MOST competitive shelf space in a store - up front by the register or in the beverage aisle. Both FIERCELY competitive areas.
The powder allowed us to be sold in the vitamin/supplement section or hot beverages. Retailers expect to sell much less in these areas. If we sold a fraction of what we sold before, we would look like rock stars.
It's been just over a year since we launched the powder. It's been selling at a clip 3 times faster than retail expectations. Whole Foods has asked to carry us. Finally, we'll have a chance to see what the powder is really made of.
Lesson #2: Evolve your product, but don't ever quit on it.
With all our up's and downs, Sleepyhead has been the most thrilling ride I could have ever imagined. I love the company and product we created from scratch. I feel deeply that our product improves people's lives. Our unwavering belief in our product and our mission has given us the strength and endurance to push on. It is the most rewarding job I've ever had.
So that's our story - and we're sticking to it.
- Chuck Hamman, Co-Founder & President