Real to Real: Real Entrepreneurs interviewing Real Entrepreneurs
SDEC: So, tell me about your background.
Dr. Loos: My name is Dr. Rick Loos, L-O-O-S, and I’ve been practicing chiropractic in San Diego for sixteen years. I had the great fortune in October 1999 to open up my own clinic, Torrey Pines Chiropractic. In my sixteen years of practice, there’s been a recurring question that’s been coming up with patients asking, “What is the Proper Pillow?” and there’s a lot of problems that people suffer from sleeping. When they sleep long, they sleep on an over support of pillow, or an under support of pillow and –
SDEC: So they would ask you, “What pillow should I get? What’s the right pillow for me?”
Dr. Loos: Exactly! So what kind of pillow should I be sleeping on? Like, literally, what is the Proper Pillow? My response was, it doesn’t exist. The Proper Pillow would be design so that it could support you when you’re on your back in optimum alignment, supporting the natural curve of your neck, which is called the Lordosis, as well as if you’re on your side that it would be supportive enough to where you’re not under supportive or your head is not getting support, or it would be over supportive. That’s basically the foundation of how I came up with the Proper Pillow. Meaning there was a need. Fortunately, for me, I happen to be an inventing type of person. I think of things a lot and I come up with different ideas and different solutions, problems. I literally had a dream one night where I saw the vision of the inner orthotic that’s inside the Proper Pillow. Now, fast forward five years in seventy seven prototypes, that’s what it took. It took five years and seventy seven different prototypes of just dabbling and tweaking and modifying and doing everything I could to get the right feel, the right density and the right ratio to make it the optimum or the Proper Pillow.
SDEC: So how does it work? How does it separate from other pillows?
Dr. Loos: The uniqueness of the Proper Pillow is that it has an inner orthotic inside which literally is composed of a load density of polyurethane foam. So, it’s a type of memory foam. It’s my own proprietary blend. I’ve learned a lot about foam through this process of the seventy seven prototypes and I have the formula of basically the plasticizers that are involve in making this polyurethane to my density. The orthotic, basically, is what gives the pillow the integrity, which would enable optimum alignment when you’re on your back and on your side. Then what I did is, in case that orthotic in what I call a “Cool comfort sleeve.” The cool comfort sleeve is, basically, a hollow polyester extra fiber. So I think of it is like an insulating barrier between the foam and you. What that does is that allows air flow so it keeps it just the right temperature. One of the great features about the Proper Pillow is this whole thing, the inner orthotic and the comfort sleeve slides inside of the outer covering, which is a quilted nice luxurious looking pillow. It’s got like a piping and a gusset. It looks like a very nice luxurious pillow. That’s another differentiating factor is it’s got an orthopedic benefit but you don’t see it. See you don’t really have to be embarrassed by it or hide it underneath all your other pillows because it doesn’t have this weird shape to it.
SDEC: So you’re not looking like a geriatric when you have your pillow. It looks like you have a normal [pillow].
Dr. Loos: Exactly. The other orthopedic pillows on the market, they tend to bother me as far as just the aesthetic of how they look on the bed. I don’t like their shape. They don’t look like a pillow. That was one of the reasons I design the Proper Pillow with the inner orthotic hidden inside of it, which definitely separates it from the market because nobody has done that.
SDEC: Right. So, do you have design patents on design?
Dr. Loos: Yep.
SDEC: Of the orthotic, or what’s the …
Dr. Loos: Yes. The intellectual property that I have, thus far, is I’ve submitted for a patent. I’m keeping it pending, currently. There’s a strategy there. It’s kind of pending worldwide. I’ve submitted this, basically, anywhere where there’s an economy. It’s a design pattern that protects the design of the orthotic that is inside the pillow, as well as the layers to it. So it’s the design of the orthotic with the comfort sleeve, with the quilted outer covering. But definitely, the uniqueness that I have a hole in the middle of the pillow, that’s one of the key features of the pattern. I’ve also gone ahead and trademarked the name Proper Pillow, as well as the logo, worldwide as well.
SDEC: Great. So I just want to talk about how you initially got financing for the idea for the Proper Pillow. Did you bootstrap yourself? Start to yourself and then the investors. What’s that kind of [?]?
Dr. Loos: So what I did, I wanted to make sure that the Proper Pillow had legs. In psychology, they’re something called they called an [Aikeya 05:51] effect. It’s basically, if you build it, therefore you think it’s good. I want to make sure that I wasn’t being fooled by the Aikeya effect. So what I did is I committed my funding. It was roughly 155,000 to the seed money, the development and the initial intellectual property and all of those prototypes traveling to China and getting this thing to the market. What happened was I was able to get it made and I started selling it exclusively to my patients. We launched January 1st, 2013. After three months of selling it to my patients, the feedback was overwhelmingly positive, and I was like super excited basically, like this is awesome. I got a winner. So before I took other people’s money, I wanted to make sure that it wasn’t just my clients profiting me. I got a booth at the San Diego Home and Garden show, and it was a three day show, a Friday, Saturday, Sunday and I did phenomenal. I sold eighty nine pillows in three days. I was convinced that if I had a booth to the ten-by-ten Home and Garden show and I was able to get eighty nine people to not only come to my booth but convert in to buying the pillow, that I had a product that have legs.
SDEC: What was the selling?
Dr. Loos: I’m selling it at seventy nine retail.
Dr. Loos: Now, since then, I’ve raised the price to eighty nine in retail because I’m doing a national infomercial, and the national infomercial was kind of a trend to do multi-pay, which is twenty nine ninety five, so three payments of twenty nine ninety five. Also, there is a lot of media expenses. There’s a lot of expenses within doing an infomercial.
SDEC: Good. So, the leads us to the next kind of question. What are the outlets or the channels that you’re using to promote? Obviously, your own business and then you just mentioned that you’re going to do an infomercial. What are those channels that you’re looking at that this could go?
Dr. Loos: So, my initial phase, I’ve kind of broken down the business plan into five phases. So, initial phase is direct response. Meaning, we have television driving sales, which is the national infomercial. The second phase of that direct response would be web, basically driving sales via the web. So, second phase is web. Then I was thinking of targeting the boutique market, which I’ve opened up here in San Diego. Meaning, the boutique market being medical offices, acupunctures, spas, massage therapists, chiropractors, just basically health care providers that would understand the value of the Proper Pillow and they could sell it directly to their clients. Thus far, I have used San Diego as test city and I’ve got about forty five different offices that are selling it right now. It’s doing well. So, I’m excited about that. Then, what I was going to do is open up retail after that. Retail is a beast, as we all know. There’s terms that you have to deal with and you definitely need to have some funding behind you to be able to float that.
Then, really, the grand slam for me is potential hotel chain, like some type of a licensing agreement. It looks like the hotel chain.
SDEC: Great. So let’s just go over some of the current challenges that you’re facing as you grow. What phase are you in? Right now you’re in the … You’re almost the second phase, right? The second phase of the infomercial? Actually, you’re launching the infomercial?
Dr. Loos: Yeah.
SDEC: Okay. So just kind a go over some of that challenges that you’re facing right now.
Dr. Loos: So my current challenges are it’s definitely a lot of legal. What I mean by that is giving cleared with my legal team for protecting me so that I’m not making a false claim with the FTC because I am advertising on television and I’ll be doing radio as well as the web, as well as PR, basically, periodicals doing stories on it. So the idea is that I have to be able to back and substantiate any of my claims. That’s my current challenge. The good news is, just this morning I got cleared by the FTC attorney, my FTC attorney, not the FTC attorney, with my show. My show Passed Legal.
Dr. Loos: So, we are actually buttoning it up and final edits, and it actually goes live November 15th, 2013.
SDEC: That goes live here in the Southern California?
Dr. Loos: There will be air time here in Southern California, but I’m buying national airtimes. So, for example, I’ll be on CNBC. It’s either seven or eight o’clock in the morning on Saturday, which is the 17th, I believe, and different channels basically. I don’t have my media calendar in front of me.
SDEC: Then that’s going to drive people to buy it. They’re going to call and buy it?
Dr. Loos: Yeah. So, in my industry, about seventy percent of people who buy things on television will call the 800 number, and thirty percent will just go straight to the web and buy it. So it will be a combination of my call center, which will handle the calls and then that will get processed over to my fulfillment center and then shipped out to the client. Then, the other half or third, will go to my web center, which basically does the same thing. It’s linked up back at my fulfillment center, and then it gets distributed to my clients.
SDEC: Great. Okay. So, this is always a fun question. What do you wish you would have known before you started this business? What are some of the key, one or two, pitfalls that you’re like “Oh, I’ve learned it the hard way”?
Dr. Loos: I wish that I would have known how expensive it was going to be upfront. There are a lot of costs that you don’t think about or that I didn’t think about. Just legal being one of them. Like I happen to have a business attorney, I have a trademark attorney, I have a patent attorney, I have an FTC attorney, and there’s one other one. I’ll think about it. So I wasn’t aware of the legal costs that were going to be associated with it. So, that’s a big hurdle that I wasn’t aware of, as well as, the difficulty of getting manufacturing done. I spent over a year with one of the world’s largest pillow manufacturers, unsuccessfully, trying to get them to make me what I wanted. We both agreed that they weren’t going to be able to do it for the cost that I wanted it made at, and that was just a lot of, in my opinion, wasted time.
Dr. Loos: It wasn’t wasted because I learned a lot, but it stalled. In my opinion, this product could have been launched a year ago, which would have been great, but that’s definitely … So, the difficulty in getting manufacturing, and figuring out the model of how I wanted to run this business.
SDEC: Great. So, that’s a great segway into what piece of advice would you give to someone, and entrepreneur with a product or service idea. What would you say to them, like, they came to you for some advice and said “Hey, I’ve got this great idea … Not idea to yours, but similar kind of product idea. There’s specials in that area as well.”
Dr. Loos: The first thing is, you really can’t tell anybody your idea. You have to keep it hush, hush until you submit for your patent. To ethically and legally get cleared with a patent, you have to disclose who you’ve told, and that was something I didn’t know. Luckily, I didn’t tell people about my idea. I went straight to a patent attorney, and patented the idea. But, I’ve had other business ideas in the past that I have spoken of, and now that I have been through this, you definitely just keep it quiet until you get your patent attorney getting a provisional patent on your idea. That’s definitely the first piece of advice. The second is you need money. You really need money. I mean, I would say it’s pretty hard to launch anything for under $500,000, as a base. When you do tap into the big markets, there’s a lot of money to be made. My business, for example, it’s almost a billion dollar industry per year.
SDEC: It’s just the pillow business? The padding industry?
Dr. Loos: Just the pillow business. It’s about $724 million annual sales. So, the upside is huge if you can tap into that potential. But you’re dealing with the big boys. The big boys usually have large companies where there’s lots of people working together, and it’s strong legal. But definitely get funding. I didn’t want to give away my company by raising money which is why I paid the initial $150 to produce the seed and get onto the market. So I was able to put a valuation of five million on my company with less than a thousand pillows sold. So, if I was on … I don’t want to say the name … But if I was on that TV show, it wouldn’t have worked.
SDEC: Right. Right. (laughs)
Dr. Loos: But my investors saw the potential and the upside of what I was doing, and they understood the model that I was getting into.
SDEC: How important do you think it was that you were a chiropractor, you’re a professional that you are in this space, as opposed to someone who wasn’t in this space that’s like, “You know what, I’ve got this idea.” How did that play in your raising capital?
Dr. Loos: It was easy. The fact that I am a professional and that I have actually a reason to invent a product that supports the neck, and that I’m basically an expert, that ended up being very beneficial to me because people basically were like, “Well, who else would invent the Proper Pillow? It’s going to be a doctor of some sort, somebody who understands anatomy.” On the flip side, as a marketer, me being a professional has potentially kind of tied me up because I’ve had to go to other experts in my field, or even the medical field to substantiate what I’m saying, because I am the marketer. So now that I’m advertising, I have to back it up. But in the beginning, being the creator, it was ingenious. It was a great opportunity.
SDEC: Right. Now it’s being legit.
Dr. Loos: Yeah.
Dr. Loos: So I had a very easy path as far as raising the money, because of my profession.
SDEC: Okay. Good to know. Then finally, you’ve been doing this for how long? Five years on the pillow?
Dr. Loos: Yep.
SDEC: Start to finish? So what inspired you to keep going and going through? You said your five phases that you’re going to go through? What inspires you to keep pumping in the time, energy, the money, to do it?
Dr. Loos: I think that deep down inside I’m just not a quitter. Like, once I commit to something, I’m going to fulfill. I’m going to go through it. I happen to be a surfer. That’s my alter ego, if you will. In surfing there’s a couple of rules. The first is basically how I really live my life, is “If you hesitate, you’re too late; and if you doubt, you’re out”. I’ve taken that and applied it to basically all aspects of my life. So once I decide to paddle for a wave, I don’t back off. You have to commit. It’s 100 percent. The second in surfing is if there’s a 1% chance of making it, you have to go, you’ve got to try. I think that just taking those basic laws of surfing and applying them to my life. It’s worked out really well as an entrepreneur because I saw the problem, and I saw the solution when I created the Proper Pillow. I think people are looking for the Proper Pillow. They’re not happy with their pillows that they have. Once I identified that I invented the solution, I was like, “Wow. This is great.” Really, in my space, which is the infomercial business, or what we call direct response television, it’s really problem-solution. Then another key factor, one of the best pieces of advice I can give, is the name, the name of your product. If you really want to name it well, it needs to say what it does. Then, hopefully you can nail the problem-solution in the name, as well. So, for example, Proper Pillow.
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Interview by Corey Zirlin
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