How Eight Sleep Co-Founder Alex Zatarain Built a Company That Pioneered the ‘Sleep Fitness’ Category
A practical guide on how to position your brand to build not just a business, but an entire movement.
This Q&A is the first installment of The Profile’s new series, ‘BUILT FROM SCRATCH: Conversations with founders who created something out of nothing.’ My goal is to make the Q&As as practical as possible. Any and all feedback is welcome.
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Over the last four years, my husband and I have become great friends with Alex Zatarain and Matteo Franceschetti, the co-founders of Eight Sleep. They are some of the most ambitious, determined, and interesting people we know. Our dinner conversations span topics from business to marriage to the future of AI.
Alex and Matteo, her husband and business partner, have built Eight Sleep from a crowdfunded idea into a health tech behemoth. As with any notable company, the path to success has been winding and all but guaranteed. It was oftentimes bumpy, and there were plenty of moments where they pulled Eight Sleep back from the brink of death.
Today, Eight Sleep is a “sleep fitness” company that develops smart mattress covers with personalized cooling, heating, and elevation technology. Its flagship product, the Pod, uses sensors and machine learning to monitor biometric data like heart rate, respiratory rate, and sleep stages.
This data allows the Pod to personalize and optimize the temperature for each side of the bed. (In other words, if you sleep hot but your partner sleeps cold, you never have to argue again.)
The company has raised more than $150 million in funding from investors including, Founders Fund, Khosla Ventures, Y Combinator, Craft Ventures, and 8VC. The company was last valued at $500 million in 2022.
In this Q&A, Zatarain delves into the process of discovering your brand identity, making decisions in times of uncertainty, and navigating the dynamics of starting a business with a significant other.
You never called Eight Sleep a mattress company. Instead, you pioneered a new category of ‘sleep fitness’ by positioning it as a ‘sleep fitness brand.’ Tell me about the decision-making and strategy behind this.
ZATARAIN: We were not intentional about our positioning for the first five years of the company because we didn't even know what brand positioning was. We were just building the business and doing whatever we thought would resonate with the market, so we were building that positioning from the outside in.
And then five years in, we got a suggestion from one of our investors to reposition the company. That's where the Eight Sleep of today was born.
How were you positioning the company before the shift?
It was basically anything that would make us fit in.
I always describe brand positioning like this: When you’re a teenager, you’re trying to fit in at high school, right? But deep down, you don't really feel like you're expressing yourself and that maybe you're in the wrong group, maybe you don't belong, but you still want to fit in.
And as a company, if you behave like a teenager, you'll never mature, you'll never grow. You'll be able to maybe get to a certain level of revenue or notoriety, but you're never going to become an iconic company because you're not being authentic with who you are. And if you're not authentic, then you can't flourish. You'll always be building things because you think that's what's going to make you earn respect and what's going to get people to spend money on your products — and that's not going to last. It becomes really exhausting as a founder, too.
So that’s what we were doing the first five years of the company. No one was talking about sleep, no one was talking about wellness, and the idea of using technology for sleep and for health and biohacking just didn't exist.
The only companies that were in the space that were becoming somewhat big businesses were mattresses in a box, Internet of Things companies, and wearables. So we were looking at those companies and getting inspiration from them because they were doing better than us.
We were building this idea of who we were through imitation — just like a teenager — and trying to fit in. And you try to fit in because you think that's what's going to make investors back you and consumers spend money with you.
It was a big challenge for us because we were building in a space that no one had built in before. So any entrepreneur that is building their own category can suffer from this ‘teenage syndrome,’ because you really feel sort of lonely. There's no reference point.
No one at the time was going on Google and searching for ‘a smart mattress cover that can help me sleep better through temperature.’ There was no category.
How did you come up with the phrase ‘sleep fitness?’
One of our investors told us, ‘You are being compared to mattress companies, and if you continue on that path, you're not going to be successful. So you have to reposition it.’
We went through this exercise of positioning. We were guided by the incredible Andy Cunningham, whose expertise is branding, communications and positioning. [Note: Andrea ‘Andy’ Cunningham is a strategic marketing and communications entrepreneur who helped Steve Jobs launch the Apple Macintosh in 1984.]
She led us through this exercise where her framework for finding your brand positioning is sort of DNA-based. It goes back to who you are as founders and why you started this company, and it uncovers the truth of who you are and builds your business positioning from that.
There's no focus groups, there's no testing in the market to see what works — it’s really an inside exercise that you do as a founder. She has a great book that I always recommend called, ‘Get to Aha!’ because she takes you through her framework to get to an ‘aha’ moment.
One of the first things she has you realize is whether your business is mission-driven, product-driven, or customer-driven. It became really evident that we are mission-driven, and from there, everything started falling into place.
We started asking what we believed about sleep, how sleep is about performance, and how sleep gives you energy, and all these phrases started coming up. Andy and her team would interview us separately, and then they would show us all these things we were saying and how they were connecting. She showed us that we actually knew who we were, we were just not expressing it.
Just like a teenager realizing, ‘Hey, I actually like this type of music, and maybe I just need to express that and find people like me who also like that music.’
What she taught us is that you shouldn't be afraid as an entrepreneur to embody your true values because you'll be able to find other people who will connect with those values as well.
And from there, you realized you should create a new category that better fit your values?
Andy told us, ‘If you're a mission-driven company and you also have something so unique where your space doesn't really exist, then you guys should not be afraid to create your own category.’
And we were like, ‘Oh, shit. That sounds really daunting. Like, what does this mean?’ And she said, ‘Well, it's simple. You just have to come up with what this category is called, and then you build it.’
It's not that complex, other than you have to be very consistent with it. Your goal as a brand builder becomes to make that category a thing. You're building a movement.
Because you're mission-driven, that category is just sort of a name that you put to this movement. And then you're finding people to bring on board. Like you're bringing people into your church of ‘sleep fitness,’ and you're evangelizing this lifestyle ahead of evangelizing for your products.
“Your goal as a brand builder becomes to make that category a thing. You're building a movement.”
Would you say this was one of the most valuable things you did from a marketing perspective?
It was the most valuable. Because now what happens is we know what to say ‘yes’ to and what to say ‘no’ to. Our team understands what is aligned with who we are and what is not. It just makes making decisions so much easier.
You just launched a new product, a sleep supplement that you developed with Dr. Peter Attia. How does it fit into the ‘sleep fitness’ category?
As a sleep fitness company, we create products to help people achieve sleep fitness, which is the ultimate state of being healthy through sleep. So then we think, ‘What are all the products that we can create?’
Of course, there are so many products you can use for sleep improvement, we want to focus on products that can be proven to work. They may not work for everyone, but it's important for us that we have proof that they're actually helping people sleep better.
So when we created the Pod, that was pretty obvious. The Pod is a platform. It gives you the data. It shows you very clearly, over time, if people are sleeping better.
What we started learning with hundreds of thousands of people that sleep on the Pod is that even though we were delivering better sleep through the micro-climate and the temperature regulation, there are still some areas about sleep that we were not able to help with. Two of those were ability to fall asleep and ability to stay asleep. People still struggle with those for different reasons.
Then, we thought, ‘What are the things that we can do to help them?’ So we go back to the same mission: We want to help people sleep better, so let's figure out the solution.
We realized that there is an opportunity to provide people with supplementation that was developed scientifically — supplementation that we could test and see in the data if it’s actually working for some people. So that's where it came from.
Isn’t there risk around creating a product that people are ingesting and putting into their bodies? How did you think about that?
Yes. We thought a lot about it.
We hired people that came from that space who knew it. The person that leads that line of the business is the person who knows that space.
Second, it’s about who you work with to create these products. Who are your partners? Who are your manufacturers? Where are you sourcing all the ingredients?
Because without that very tight partnership and having great qualified partners, you can still fail as a business if you try to cut corners and cut costs. So for anyone thinking of entering that space of ingestibles and consumables, you have to pay even more attention to who those partners are and finding the best. You don't want to start skimping on any of that.
It’s not just what you're selling, but how you are communicating the value of what you're selling.
Was there a moment where you had to really pull the company back from the brink of death?
There have been a lot of them, and it usually involves getting close to running out of money.
This is why I think the most valuable thing you have to do as an entrepreneur is know your business economics, understand the levers that you can pull to save as much money as possible to extend your runway, and to make as much money as possible with good margins, which in a hardware business is even more difficult.
Sometimes, as a founder, you can do all the right things, but then there are always freak events. How can you prepare for the unexpected?
It’s funny because the things that happen to you don't feel as difficult as the things that feel like your own doing.
When you have these catastrophic moments like COVID, no one knew what was happening. It was a very, very uncertain time.
Those moments don't feel as difficult because for one, they are shared — there's other companies or businesses going through it. So to prepare for those, you have to have a strong network.
What has saved us in those moments is the network — Who can you reach out to? Who's on your bench that you can call and say, ‘Hey, what are you seeing? What do you know? What are you doing for your business? What can I do? What do you recommend?’
Strengthen your bench. That's the best investment you can make.
Then the things that are your own doing are much harder, because sometimes, you have tunnel vision and you don't realize what's going on. And those are generally the ones where the business isn't growing as much as it could, but it's not necessarily flat.
You can spend so many years in that space, and you can think that you have product market fit, you have these false positives, and you just keep going at that rate forever and ever, but you don't realize that you're just wasting your time. You either have to change something dramatically or this is not going to go to be the multi-billion-dollar business that you should be aiming for, particularly if you’re venture-backed.
What can you do to change in those moments? I think it does go back to who you're exposing yourself to. It starts with who you have on your team, and that's why they usually say co-founders help, and having co-founders that will be very honest with each other and be able to challenge each other and raise the first alarms and say, ‘Hey, something's not working.’
And the second is to have great investors or friends who can also raise those alarms. And we've definitely had those moments in the earlier years where there would be difficult moments of feedback — maybe at a board meeting — and we would take that, and we would take action on it.
Maybe they would completely shit on our unit economics, and they would tell us that we need to drastically change things. And we're like, ‘Okay, we're going to go do it. We're gonna prove that we can change this.’
So that adaptability and mindset that you’re always learning and you're always growing is what ultimately can save you.
“The things that happen to you don't feel as difficult as the things that feel like your own doing.”
Your co-founder Matteo also happens to be your husband. How do you make decisions, and what happens when you guys disagree?
You make a lot of decisions in life, but when you're running a business together, you make even more. You realize that you're making decisions all day, every day.
We’re both very decisive, but I'm extremely decisive. Matteo is very decisive, but as the CEO, he does seek advice. Especially for the bigger decisions, he’ll go to a few people on his “bench” and ask what they think. As a result, he might change his mind or formulate a better approach, and then he'll decide.
On Saturday mornings, we'll go have breakfast, and he has free range to pick my brain on anything that he's going through as a CEO. I'll give my opinion, and then he'll decide. And because he is the CEO, then it is, ultimately, his decision.
It helps because it’s not this family business dynamic where we fight all the time, you know? At the business, he’s my boss, so he makes the final call.
Then, when we disagree: Even if I disagree, I always entertain his ideas.
Matteo has been behind many of the inventions at Eight Sleep, and a lot of times, the first person to hear these ideas for inventions is me.
An example of that is the Pod 4 that we introduced in May of 2024. It comes built with a feature called ‘tap to control.’
And ‘tap to control’ came up because users would say, ‘We want a remote control. We want a way to control the Pod without opening my phone in the middle of the night.’ And for years, we would hear this feedback, and Matteo was pretty adamant about not creating a remote control that would just sit on the nightstand, need batteries. and get dusty.
So one day, he came up with this idea of, ‘What if there was a tappable area on the side of the Pod, and you could just tap it and it would change the temperature and take your commands?’ You wouldn't have to open your phone. You would just do everything there.
The first time he told me this, I disagreed that this was a good idea. But I didn't say I disagree. I entertained his idea. I think this is so important, even just in your personal life or your marriage, where I don't believe in the answer ever being ‘no’ at first.
In life, you have to be open. You have to entertain it. And then you have to continue to develop that idea through a conversation.
So I heard this, and I thought, ‘This is freaking ridiculous, and this is going to be crazy to build. My mind just goes to the practicality of it. But I didn't say that. And we kept talking about how it would work. And just by entertaining it, it turned from me disagreeing that this was a good idea to this becoming a prototype that we tried. Now, it's a feature that people love and that we ourselves use every night when we're in bed.
“Even if I disagree, I always entertain his ideas.”
What’s one question about sleep or performance you still don’t have a satisfying answer to?
If we actually need as much sleep as science recommends today. There is this big question of, ‘Does everyone in the world really need this many hours of sleep, or is it because our sleep is inefficient?’ What would happen if we made the hours you're sleeping more efficient or effective, so then you could just compress them and sleep fewer hours and live more hours awake?
Key takeaways:
Discover your voice: You can’t imitate your way to originality. Reflect on your company’s core mission to craft a unique identity that resonates with your audience. Authenticity drives long-term growth.
Create your own category: If your product doesn’t fit neatly into an existing market, define a new category. Focus on building a movement rather than just selling a product.
Build your ‘bench’ to get through moments of chaos: In moments of uncertainty, go to your ‘bench’ (your network of trusted advisers). Welcome honest feedback, and be thoughtful and decisive about making changes.
Set clear decision-making roles: If working with a spouse or partner, establish clear roles and decision-making authority. One person should have the final say to avoid conflicts.
Entertain bold ideas: Entertain bold ideas, even if they seem improbable at first. Remember, innovation often starts with a “crazy” idea.
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GREAT interview!
I never heard about that Get to Aha! book. Seems good!