• Sleep is a priority for the directors of Koala Mattress. (SBS Small Business Secrets)
These entrepreneurs say they owe their success to sleeping on the job.
SBS Small Business Secrets
12 Feb - 5:05 PM  UPDATED 14 Feb - 9:25 AM

"Busy bragging" has no place in the Sydney office of Koala Mattress, a start-up that skyrocketed to a $14 million turnover in its first year.

In its place, colleagues, including company founders Danny Milham and Mitch Taylor, compare their "sleep ratings" based on the quality and quantity of their sleep.

"I'm on a 9, and one girl in the office is on a 6.5 which is pretty poor. We compare every day and we get really into it - it's our thing and it makes us better all around," Danny said.

A caffeine-dependent Danny was inspired to create Koala Mattress, to address 'pain points' in the mainstream bedding market. In 2014, he'd been sleeping on a "dodgy" hand-me-down mattress, so the pain was both literal and conceptual.

"We were looking at what mattresses had and saw that not much had changed in the industry for a very long time," Mitch, Danny's former footy coach turned co-founder, said.

The Byron Bay natives spent a year horizontal: researching mattresses' feel, materials and accessibility.

"We identified things like, with memory foam, which goes really well on the market, it actually isn't great for the Australian regional climate; it pools sweat and is quite hot," Mitch said.

"Our mattresses have foam that doesn't sink so its still soft but it isn't that quicksand feel. The foam is vertically banded, too which means it doesn't dip when your partner rolls over."

Similarly, they took issue with the size and heft of a traditional mattress in a move.

Koala mattresses arrive within four hours of an online sale, compressed into a box that can be carried and fit into a sedan.

"We wanted to lower the barrier to entry for online customers.

Australian cricket captain Steve Smith was an early investor and championed the company from the start, and a strong social media campaign did much of the legwork, including a viral video demonstration of a wineglass test of the zero-disturbance technology.

Koala smashed its target of $1 million in 90 days, reaching it after 79 in early 2016.

These days, the company makes that amount every two to three weeks, selling 17,000 mattresses in 2016.

As an online business, customers have little opportunity to try before they buy - instead, Koala Mattress offers a 120 day return policy.

"This means instead of being in a display centre, with awkward lighting, sales reps looking over and that uncomfortable situation, you can actually test it properly."

It's a risk they were happy to wear; the company says it has few returns, and saves millions each year on retail space and overheads including staff and sales commissions.

"When you do something like this, you have to trust your product. If we were getting heaps of returns we would know there is a problem with the quality and it would have to be fixed," Danny said.

From the start, the sleepy koala has been more than a logo; for each mattress bought, the buyer sponsors a koala in the wild and receives a miniature, plush version of the Aussie icon.

The revenue raised contributes to habitat conservation, via a partnership with the World Wildlife Fund.

"The toys have been so important, I think we once ran out and we were inundated with emails and posts on our website, saying I want a guarantee I will get my koala or I will return my mattress."

As the founders extend their reach in New Zealand and enter global markets like China and Japan, they're also looking at new animals to champion, with the Kiwi and Giant Panda in their sights.

Next on the agenda is a segue into pillows, sheets and sleep technology.

"We spend a third of our lives sleeping, so we should make the most of it."

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