I'm sad to say that last night I did not sleep on an Eight Sleep.
Yeah, I'm sad for you, too.
I know. But I was very comfortable, nevertheless.
[laughter] I'm staying at the Faena in Miami. Beautiful hotel, very comfortable beds, but still not an Eight Sleep.
Well, I actually don't even personally have an Eight Sleep. I stay at a friend's house often who has an Eight Sleep, and switching out of it when I leave his guest room back to my room, it's a tough switch.
Yeah. You know, the most requested feature product is a travel pod. Our technology is called the pod, the Eight Sleep, and our customers are obsessed and keep asking for a portable version. So, when they travel, they have it.
I mean, the travel part, if you're going between homes or properties that have pods, I guess it's just logging into your account.
Yeah, exactly. Yeah, you just literally go in the app, and you can switch between pod one to pod two.
I love it.
Around the world with your host, The Stod Guy, we welcome you back to The Stod Guy podcast, sharing stories of excellence with those in the know, for those who just know.
Well, thank you so much for being here today.
No, thank you for having me. I'm excited. I'm a big fan.
I'm very excited. I'm a big fan, as well.
Everybody at Eight Sleep is a big fan.
Uh yeah, my co-founder, she has been. That is how I discovered you years ago. Uh but also my team, when they saw you reach out, they say, 'Oh, yeah, that's really cool. You should definitely go on the podcast.'
Thank you so much. I appreciate it. I think lots of listeners today are customers, and if they're not, they're at least very curious about the category. Um a big sleeping fan. Especially over the past year, through the podcast, I've had the pleasure of talking to Bryan Johnson,
and Will Ahmed, the founder of Whoop, and now you, and such a big part of those conversations was the importance of sleep and the ways we can optimize sleep. So, very excited to talk to you today.
Yeah, and Brian uses the pod. So, he's the number one optimizer in the world and he sleeps on this sleep technology.
That's amazing. So, I know that you are from Italy.
And you came from a very different background originally. You were working as a lawyer.
I'd love to know more about the early days. I know you're a serious athlete.
You nearly went professional for many years and then you ended up becoming a founder. But I'd love to know about the early days and what inspired you to be so passionate about this category.
Well, I come from a very small city town in Italy called Ferrara. It's close to Bologna and Venice. And there is still a castle, in the Middle Ages castles are the walls around the city. So, it is a town that is not very into Silicon Valley technology. Um but yeah, I grew up playing sports because my dad, he was a lawyer, but he always did sports. He raced with cars. He was a ski racer at the competitive level, things like that. In my case, I raced with cars, go-karts when I was a kid and cars. But more than anything I played a lot of tennis at the competitive level. And so, I have always been obsessed with performance and recovery.
Then I became a lawyer. I worked at two very large law firms. And during those years, I didn't practice almost any sport. I was not really taking care of myself. I was just working, working, working. And then there was this opportunity in Italy with renewable energy. It has probably been the only opportunity to become an entrepreneur in Italy in 50 years if you don't come from money, because there was this feed-in tariff and a lot of private equity funds were coming to Italy looking for areas that they could transform into solar plants.
And at the time I was working at Allen & Overy, I understood project finance, I was able to speak English, but obviously I was speaking Italian, and I could find these lands and develop all the permits for these private equity funds and sell them the full package. And that is how I started becoming an entrepreneur. I was working until 10:00 p.m. at the law firm.
And then from 10:00 p.m. to 3:00 a.m. every night on my side project. And within a year, that side project was making enough money for me to quit my daily job and become an entrepreneur.
Um, so I did that company that did pretty well and it got acquired in 2 years by another company in Europe. Then I moved to the US, I replicated the same thing still in solar, so renewable energy. Um, and that company got acquired by Panasonic.
Yeah. And at that point is when I really started looking into Silicon Valley because I started investing as an angel investor. And that is when I combined two interests where, okay, I really love technology and everything that is being built in Silicon Valley in San Francisco with also my passion for recovery and wellness. And today I'm a fitness geek from training to sauna, cold plunge, everything you can think of, even I put my body in chambers, I'm looking at hyperbaric chambers and to install one at home to try to extend my lifespan and health span. Um, and so pretty lucky.
Amazing.
So the Silicon Valley introduction for you was around 2014?
Yeah, 2013 is when I started investing.
Uh around that time. That is also how I met one of my co-founders because I wanted to invest in his company, but then he sold it right before I could invest.
And but then we became friends. He's Italian, too.
Um and then in 2014 is when we built the first prototype together in his garage that would then become Eight Sleep.
So, what was the thinking and reasoning to focus on sleep as a part of the recovery process and to bring technology to sleep? Cuz a lot of people, if they want to solve that problem, can go into bedding, they can go into even supplements. But you went right for the tech. I'd love to understand the why behind that.
So, first of all, in 2014, thinking about sleep optimization was fairly contrarian. At the time, there was Fitbit, which was about mainly step counting.
There were some IoT products like Nest, but no one was really looking at the technology to enhance your wellness, recovery, or longevity.
And sleep was not a super hot topic. But that is what you need to nail. You know, as Peter Thiel says, you need to be contrarian and right.
Then the basic first principle for me was, look, we have technology in every part of our life, but not in a third of our life. Elon Musk is taking us to Mars, but we still spend a third of our life on a piece of dumb foam. And so, I started talking to a bunch of mattress companies just for fun, and I realized that the latest innovation in this space was memory foam in 1966.
And so, we still spend 30 years of our life, assuming we live 100. Hopefully now with AI, we'll live 300, but whatever, on a piece of dumb foam that does nothing for us.
But the time, if you think it's really long, is the equivalent of a flight from New York to Milan every single day.
And you just pretend that you go to bed and you wake up 8 hours later and you're fully refreshed and ready to go and perform at peak level. That just didn't make sense to me.
At that point, I started looking at clinical studies, medical papers, and everything to really understand how you could improve sleep. And that is how I came up with the idea together with my co-founders.
And the initial desire started on the data collection point of view or was it already on building the hardware to actually cool the body down, which I know is the initial USP of the product.
Yeah. So, the first product was a mattress cover that you could install onto any bed, and it would track everything about your sleep and your heart rate at rest, HRV, and so on. But, since the early days, whenever we were doing customer discovery, everybody was saying, 'Oh, this sounds really cool. It's nice, but does it heat and cool?' And the reason is a lot of people, particularly in the US, they sleep really hot. In Asia, they tend to sleep really cold. But, more than anything, 80% of couples, they fight around temperature.
Then, when you look at the clinical studies and the medical papers, you also discover that there is not one single temperature that is correct for the whole night.
And that is why today we change your body temperature 30 to 100 times per night.
And so, if you really connect all these points, then you realize why we were able to find such a strong product market fit. But, in the early days, we didn't have the money to build that product. And so, we wanted to start with something simpler, which was the cover just with tracking.
That gave us enough validation to then raise the money from Khosla Ventures with Keith Rabois and Vinod Khosla leading our Series A. And with that amount of money, we were able to build the pod. And which we launched in mid-2019. And from there, we have been unstoppable.
Can you walk me through the temperature cycles that are necessary for someone to have the best sleep possible?
So, first of all, when you get in bed, it's really a matter of preference. You might like it cold or warm. The most important thing is as soon as you fall asleep, you want your body temperature to drop. In the first part of the night is when you will get the largest part of deep sleep. And to optimize deep sleep, you need a colder temperature. But everything is very personal, right? So, what is colder for me is different from what is colder for you. It varies based on gender, age, metabolism, many other factors. Even during the same day, it might change if you train at 7:00 p.m. versus 7:00 a.m.
Or for women, it changes during their pregnancy, during their cycle, and obviously during menopause. In the second part of the night is when you get the most REM. REM is more for your brain to reclassify the information collected during the day. And there you need a different temperature because your body will deactivate temperature control in the body. Because when you are in REM, REM is also when you're dreaming. And so, the brain deactivates the control of the body because you are dreaming. It doesn't want you to move. So, for example, when you are in REM, your body is not moving at all.
But your eyes are a lot, right?
Exactly. But so, there you need a neutral temperature because otherwise your brain would think that your body could die and it wouldn't let you get into REM.
And so, we keep adjusting the temperature based on the sleep stages. The key thing of sleep is that you repeat the same stages every 90 minutes for the whole night.
But in the first part of the night, the largest majority between REM and deep is deep. And in the second part is REM.
How does the optimization part work? How does Eight Sleep know what's best for me and what's best for my partner?
So, first, there is plenty of medical evidence. So, even what we do today is not something that, oh, it was just Eight Sleep discovering that temperature is so important for sleep. It has been known for 50 years. Just nobody was able to build a consumer device that was cool enough to be adopted in the early days and be discovered. Then what we do is we use all these medical studies that already existed. Then we have a clinical team in Boston. We run our own clinical studies. And now that we have hundreds of thousands of people across 34 countries, we are able to really become one of the largest sleep labs in the world. And based on the learnings, our AI models, they self-improve themselves.
I'm a big fan particularly because I don't like sleeping with the air conditioning on.
First of all, it doesn't regulate up or down, but also I just don't like the breeze and I hear it's also bad for you and bad for your breathing.
Yeah. We solve that problem completely.
And then if you and your partner have different preferences, that problem is solved as well.
I'd love to know more about the difference between the V1 product that you initially launched and the product you have today and what that development looked like.
I mean hardware is hard as they used to say, particularly as a startup because every time that there is something that is not going as expected, it's not like in software that you can easily fix it. You just literally need to reinvest money and readjust the hardware. The biggest change was with Pod 4. Now we are at generation 5, so we are at Pod 5. With Pod 4 is when we redesigned everything that was originally designed with Pod 1. So Pod 1, Pod 2, and Pod 3, they were very incremental. And then Pod 4 was a whole new generation, a totally redesigned product where we really translated all the learnings into new engineering techniques. And now it's the state of the art in terms of performance. It makes no noise, so you cannot even hear it. It's extremely comfortable. It completely disappears. That is really a key thing of what we do at Eight Sleep. Probably two things. One, the product is seamless. Nothing to wear. You do nothing. You just keep going to bed as you did the rest of your life. So, you don't have to change your habits. And second, compared to wearables, data is the beginning of our job. We're almost like a sleep butler, if you will, right? We prepare the bed for you before you go to bed and we'll make sure that while you're unconscious, you get the best sleep of your life.
I know that when I've spoken about Eight Sleep to friends, there's been a couple questions that have been reoccurring. Some I can answer, some I can't. So, I'm excited to talk about them with you. One is the noise. I know that with the Pod Pro, which is the one I've been lucky enough to sleep on, just complete dead silence. Can't hear a thing. Two is the sleep butler element. How do you prepare it? Open the app, tell it to turn on, or just time on a timer. It's fantastic. And the last question is, many people invest a lot in their mattresses. Let's say they get a beautiful Hastens mattress.
And they worried that the topper may affect the comfort of the mattress. How do you address that?
We call it invisible comfort. And that is the North Star I gave to the team. So, we do blind tests where we try to see if people even know if it's installed or not installed on their mattress.
And actually sometimes we also see some customers making jokes that they installed it without telling their partner because maybe the partner would start complaining. But the partner didn't even know that the product is installed.
I also love the fact that you optimize for two sides of the bed cuz that temperature you're saying between the partners is, it breaks couples, honestly.
Yeah. They always say that we save couples from the Eight Sleep divorce.
Yeah, it's true. Cuz some people sleep in separate bedrooms just because of this, you know?
And another thing we have seen is there are a couple of cases we didn't expect. The first one is, for example, when families have babies. So, particularly in the US, people like to keep the AC very strong and the temperature very cold. But sometimes when they have babies, they can't do that anymore.
And so we help them sleep in a very cold environment just by using the pod even if their temperature is slightly warmer because of the kid. Then we are seeing a lot of, we are able to help women going through menopause with hot flashes. And another one that was totally unexpected is people with cancer because while they're going through chemo, they have hot flashes as well.
And so we started seeing a lot of customers reaching out with cancer going through chemo saying, 'Oh, finally I'm able to sleep again. This is an amazing product. It's really helping me to recover while going through the treatments.'
Amazing.
And how many degrees cooler is the ideal amount to get someone in those early parts of the night to get the deepest sleep possible?
So, the device obviously has very strong extremes. It can go from 55 to 110 degrees, more or less in that range. Um usually for people we use notches. So, you can go in cooling from minus one to minus ten and if you want it warm from plus one to plus ten.
And usually a couple of notches is in that range because even if you think when you have fever, right? From say in Celsius degrees, you go from a 36.5 to 37, 37.2, and you feel it, right? So, you don't need big swings.
Yeah, that makes a lot of sense.
Yeah. So, a couple of notches.
I know that on the data side you're capturing thousands of data points, maybe even millions. But the only one that you are countering is the temperature. Are there any other things that you would like to control or wish you could control that's such a big part of the data capture?
Yeah. So, now we cross billions of hours of sleep. That is why I was saying we're becoming one of the largest sleep labs in the world. It's incredible what we are achieving at scale.
And I think this will really be able to make a difference for humanity, particularly with AI the things we are able to achieve now through AI and the speed at which we can achieve them is incredible. And we can talk about that. Then in terms of things that we do for people now we also control elevation. So, for what is called the Pod Ultra, which is the most premium device, we're also able to raise your head if you're snoring in real time.
And each side of the bed can move independently. Then we have sound. There are some clinical studies and medical studies showing that if you play certain sounds with certain frequencies while you're in a certain sleep phase, that can increase the depth of that sleep phase.
And so, we are experimenting with that. But the vision is, and this is public, I have this vision since 2017 of creating what we call Hyper Pod, which is substantially a canopy bed, which is the Tesla of sleep. That is how we describe it publicly. And there we will control also oxygen levels like if you were in an altitude tent or hyperbaric chamber, air quality, air temperature, noise, light. The idea is to literally be like a butler that controls everything for you to make sure you maximize your sleep performance and you wake up fully refreshed.
I mean, this sounds perfect for travel.
Like having that on a plane is the dream.
You know, you just basically, it's like in the space travel movies where people go into these, like in Interstellar.
One of my favorite movies. And you go into the sleep pod and then you wake up and time hasn't moved.
What are some interesting patterns that you've learned about with all these millions of hours of data you've captured?
Well, first, we published the results of what places people sleep the best versus the worst.
And I think the best place is a town in Australia on the coast, which is pretty interesting. The other interesting thing is to see sleep patterns also during specific events. It could be football events. It could be presidential elections. Um we saw major changes after COVID in how people sleep. They tend to sleep longer, probably because they commute less.
And obviously pretty obvious is big swings during the weekends compared to the weekdays.
Um I think probably the Middle East as average is probably one of the, they tend to go to sleep later.
More than anything. Um and Australia was one of the best.
Okay. So, the hour you go to bed is, I know I spoke about this with Will Ahmed in the podcast, but I know the hour you go to bed is sometimes even more important than the number of hours slept.
Yeah, I would say the consistency more than anything. There is also a timing, meaning the best time usually is around 10:00 p.m.
Uh for your body. But the number one thing I always tell people is consistency.
Because if you wake up every day at let's say 7:00 a.m., but then during the weekend you wake up at 11:00 a.m., you are substantially jet lagging your own body because the body doesn't understand that you're in the same place, but you're just waking up 3 hours later. You will think of being on the West Coast versus the East Coast. So, as long as you can keep the same consistency, that is one of the most important things. Then, the second is the amount of hours. I always tell people, 'Okay, if you don't have the time to go on a true vacation, the only thing you should do is sleep 1 hour longer per day for a week. That will give you 7 hours of sleep, which is the equivalent of an extra night of sleep. And at the end of the week, you will feel great.'
That's a good point. Very well said.
Never thought about that.
I like that you're touching on this consistency element, because as part of The Stod Guy and the people I cross paths with through this world that I find myself in, I engage a lot with people who have tremendous privilege and tremendous access to wealth, and the biggest thing they're optimizing for in their very global setups is consistency. They have many homes, they have boats, planes, and they want the same wardrobe in every city.
They want the same food in every pantry. They want staff that's fully aligned. So, even though they're in Miami and then in The Stod Guy, it feels like the same house. And more than anything, they want their sleep quality to remain consistent. So, they have Eight Sleeps in all the beds in all their homes. And it's all synchronized in this beautiful way. And I know that all those, thanks to you and the Pod Four, they're fully optimized in their homes. I know that they would love the movement between their homes, the boats and the planes, to be equally optimized. Is that something that you've considered?
Yeah. And more than anything for passion, I think from a brand perspective, it would be really cool for us to be able to have a version that can work really well for private jets and yachts.
It's not one of the things that is going to move millions of units, but I just think from a brand positioning standpoint, it would just be a cool engineering challenge.
Yeah. Particularly on a plane, I would just be interested in how can you optimize the sleep of people on the plane and what can we design and install for them?
And then on the boat is a no-brainer that should be fairly simple.
I'd love to see one of the great airlines like Qatar Airways or Emirates try to do this for their business and first-class passengers. They're doing everything they can to optimize rest and sleep. This seems like a no-brainer to me.
Particularly in the special suites that are enclosed.
There is where we should have an Eight Sleep solution.
Before we turn on the cameras, you were telling me how much you travel between your different offices. So, I know you have a very big team with five offices around the world.
Can you tell me more about what each office does and why you chose those cities to expand into?
Yeah, so New York is the headquarters. Um ours is the financial capital here in the US and we have most of the product, marketing, growth team and some business ops people.
San Francisco is where we have all our AI and hardcore engineering, but also the hardware engineering.
Boston is where we run all the clinical studies. We have a great team there.
China we have a very large team there because is where we do all the manufacturing, part of the QA and production and supply chain. And then we started expanding into Europe for a couple of reasons. First, I think there is a lot of talent in Europe and I think having access to the talent there gives us an arbitrage particularly with me being Italian and understanding the European recruiting market.
And second, now that we sell in 34 countries, having a presence there also makes things easier for us in Europe, but also in the Middle East and over time in Asia, as well.
So, I know that although it is a hardware product, it really is a technology business.
Why is the framing to you very important that it is technology first as a business?
Well, because all our engineers, first of all, they come from the top technology companies. You can name them. If it's Apple or some of the other big companies. Second is our DNA. At the end of the day, the hardware is the tool to be able to deliver a technology that is driven by AI and software. But without that intelligence, we wouldn't be achieving most of the value that we are delivering today. And so, our passion, our DNA, the way we approach things, everything is, I mean, at the end of the day, we are a Silicon Valley company. I moved to San Francisco. That is where we started and then as the company grew, we opened up other five offices, but all our top investors are Silicon Valley investors that are betting on what AI can unlock with the amount of data that we can collect about you to then make sure that we can extend your life and compress your sleep.
You've captured thousands of hours of data. You have the infrastructure for the AI. What are you hoping the AI does for you and does with all the data that you've captured?
There are a couple of things. Since when we really started Eight Sleep, I always say I think there are two things that can be achieved. One is we can compress your sleep, and I'll tell you more about that. And second, we can save your life. This is literally how I think of Eight Sleep. Compressing your sleep to me means that sleep is unoptimized and around 50% of your time is in light sleep which is not extremely valuable for your body. The other 50% is deep and REM which is extremely valuable. And so I think there are a couple of ways to compress your sleep. The most logical is the sleep butler, so we'll keep doing more things for you optimizing your sleep performance. You will fall asleep faster, less interruptions, less toss and turns. You will wake up more refreshed. And maybe there we gain, I don't know, an hour, 30 minutes. But in the AI world you shouldn't be surprised if at a certain point Eight Sleep will start even potentially developing the GLP-1 of sleep. We have billions of hours of sleep so there are very few other companies that have that amount of data also with the retention that we have because a lot of wearables they can move more units because they're much cheaper products but they also have a retention problem. The churn is much bigger. Well, instead for us our customers they don't churn. It's almost a lifetime relationship with our customers. And so with AI we'll start exploring some crazy patterns meaning for the business level of what we can do to maximize your sleep.
Then there was a study that has been published recently where a couple of PhD students, and one of those joined us, were able to detect with somewhere between 85 and 95% accuracy in that range the likelihood that you will develop 130 diseases with just the data of one night of sleep.
And so the way I see it is we are transforming your bed into the most advanced medical grade device ever built and you will use it by default as long as you're not traveling unless you have the same device in another place. But we're really becoming a medical grade platform that will be able to know everything about you and your health before you can even imagine and that will nudge you to then course correct certain behaviors or do certain type of analysis that will save your life or extend your life.
So how preventative do you find you've been able to be because of all the data you've already gathered?
Well, first I already received emails from customers where maybe you remember a few months ago a customer wrote us and said, 'Guys, I just wanted to say thank you. You saved my life. My metrics were upside down. I went straight to ER and that saved my life.'
And so this is an email we got actually a year or two ago. And that really meant so much to me because I think part of what we do is, there is this, when I was a kid, I wanted to become a doctor at a certain point. I had a big accident skiing preparing for the race and after that there was a doctor and a neurologist who really saved me. And so since then I had this admiration for him and for doctors. And so using technology to be as close as possible to a doctor without obviously replacing doctors just makes me proud.
But the other big thing is you can start seeing the likelihood that you will get a cardiovascular disease, potentially strokes, hypertension, and many other forms of diseases. And all this just happens with you going to bed as you did for the rest of your life. We believe at a certain point with your metrics we'll be able to know probably if you're a pregnant woman even before you know. So, the idea is just to leverage AI and connect all these different data points to provide as much value as possible. The other big thing we did, we filed for FDA approval here in the US to become a medical grade device for sleep apnea.
Sleep apnea is another major disease across the world and in the US is a pretty big deal. And the largest majority of people, they don't even know they have it. And sleep apnea is this behavior where you substantially stop breathing or oxygen doesn't go to the brain because of how you're breathing while you're asleep.
And we invented a technology that doesn't only detect that, but also mitigates sleep apnea without you wearing any device. And this is under the process to get the FDA approval.
Can I ask you how you do that for the sleep apnea?
Uh we still leverage our current technology, but substantially we found a way where we nudge you to change position and this is designed for a specific type of sleep apnea.
Wow. I mean, what I love about your product is that there's so much value and so much long-term value from effectively a passive act. Like every other style of optimization is being discussed right now takes lots of reoccurring active efforts and this is probably one of the most impactful decisions people can make to really prioritize sleeping and sleeping better. And except for that first effort to buy Eight Sleep and set it up at home and set up your account,
Yeah, set it and forget it. That's how we describe it.
Yeah. And that is why we have this incredible retention with our customers. Because there is almost a dichotomy where on one side is set it and forget it, so you don't have to charge it, wear it, nothing. But every night when you go to bed, you feel it. Because you feel the temperature. And so even from a marketing or psychological standpoint, there is this daily relationship with the user, but it's very passive. It's very respectful.
And that is why it translates into this incredible word of mouth that 40-50% of our revenue still comes even at our scale from word of mouth.
That's amazing. I know one of your early products was a full mattress versus a mattress topper.
Was that because you don't want to compete with the Hastens of the world and you want to let people get the best bed for them and you just want to be the final layer? Is that...
So, it is actually a very interesting point. So, when we started, we said, 'Look, we want to be vertically integrated, fully integrated, so you just buy the greatest bed ever.' Then what we discovered from customers is that we were actually introducing a friction.
Because first, okay, is your mattress really comfortable? We don't play comfort. There is no comfort person at Eight Sleep. We are a technology company. But second, they had to convince the partner to change the mattress and that was a really big deal. And so then I came up with an idea to launch what is now the cover in just 3 days with what we had. And it became 20% of the revenue overnight and within 6 months it became 90% of the revenue and now it's 100% of the revenue.
Incredible. It's just consumer psychology.
So, people don't expect a mattress from us and we don't care about delivering a mattress. Foam is just a commodity that you can buy at a certain price.
And so by creating an invisible topper, invisible comfort that can work with any mattress, that works perfectly. It doesn't matter if you have a Hastens or Tempur-Pedic or any mattress you want.
