Managing Editor, Korn Ferry Briefings
In 2008, when Susan Walvius and Michelle Marciniak decided to give up Division 1 women’s basketball coaching careers to start a bedsheet company, they raised more than a few eyebrows. The road from sports to business is well-traveled, but this leap of faith was anything but a slam dunk.
Walvius, 47, a former All-American at Virginia Tech, had been head coach at the University of South Carolina, part of the most competitive women’s basketball conference in the nation, for 11 years. Having turned around a moribund program, Walvius was Coach of the Year in the Southeastern Conference in 2002 and took her team to the post-season tournament five times. Marciniak, 38, a tenacious point guard and team captain for the legendary coach Pat Summitt at the University of Tennessee and most valuable player of the Volunteers’ 1996 national championship team, played professionally for six years and went on to a coaching career of her own. She joined Walvius as an assistant at South Carolina in 2002.
The pair were lifelong basketball and fitness junkies, and careers in business had not flashed on the radar screen for either of them. The idea that they would suddenly end their coaching careers to become entrepreneurs was startling enough. But to make such a move in order to sell bedsheets seemed to border on sheer lunacy.
“My parents told me I was nuts,” said Walvius, who was a Division 1 head coach for 18 years. “They kept asking, ‘What coaching job are you going to get?’ Even after the first two years, they said, ‘You’re making bedsheets? Really?’ ”
Of course, these are not ordinary bedsheets. Sheex, the company they founded, is selling an entirely new kind of product with the hope of building a brand by turning innovation into a disruptive force.
What Walvius and Marciniak are betting on is that the world is ready for a new kind of “high performance” bedsheet, made not from cotton but from the same type of fabric used in athletic apparel by such brands as Under Armour. The synthetic poly-spandex fabric, now a de facto standard among serious athletes from high school to the pros, changed the sports fashion landscape. Unlike cotton, which becomes soaked with sweat and stays wet, this material wicks sweat, dries quickly, keeps an athlete cool in the summer and warm in the winter, and offers a high level of comfort. Under Armour, a hugely successful company founded in 1996 by Kevin Plank, a former University of Maryland football player, triggered an upheaval in athletic apparel fabrics. Competing against giants like Nike and Adidas, Under Armour has carved out a lucrative niche and has grown into a $1.5 billion global brand. The Sheex founders believe they have a similar opportunity.
Sheex is on track to sell $70 million worth of bedsheets in 2012 and double that next year through such national retail outlets as Bed Bath & Beyond, Macy’s and Brookstone. Numerous companies have been sniffing around with acquisition interest, and Walvius and Marciniak have enlisted a high-powered advisory board and investors with deep pockets who believe that their concept could well reshape a lucrative segment of the bed and bath industry.
“Michelle had been wearing a particular type of fabric (not Under Armour) she liked while training,” Walvius recounted. “She bought me an outfit with this material, and I was wearing it one day and I said to her, ‘I would love to have bedsheets made out of this stuff.’ ” The two women looked at each other and the proverbial light bulb popped on. Could this be a business opportunity?
After an extensive online search, they realized nobody was making such bedding. In a “nothing new under the sun” world, they had discovered an entrepreneur’s dream: a virgin opportunity. They paid a visit to the dean of the University of South Carolina’s International Business School and told him about their idea. The dean connected them to a group of students with whom they worked for two semesters to create a business plan and feasibility study.
“They came back with such unbelievable projections that Michelle and I decided to leave coaching and pursue this full-time,” Walvius said.
The concept was straightforward: In a world where a good night’s sleep is often as elusive as a no-hitter in baseball, a new kind of bedding — luxurious, comfortable, able to alleviate the heat that gets trapped in traditional cotton sheets — would be enticing for a wide audience. But coming up with an idea is one thing; executing successfully against that idea is another. The two women understood the odds. Neither had an iota of experience in business, especially in this industry. Knowing that the field was wide open provided incentive, but the process was sure to be daunting.
In fact, the birth and growth of Sheex has business school case study written all over it. Walvius and Marciniak were treading into unknown territory without much business savvy, but they brought something perhaps more important and pertinent to the effort: leadership skill born from their respective athletic experiences and successes.
As high-level players, they knew all about winning and holding their own against daunting competition. As successful coaches, they understood the nature and dynamics of a team culture and approaches that enable great teams to win against tough odds.
A widely held assumption that athletes make successful business executives has not always rung true. Putting a football or baseball star’s name on a chain of local restaurants or car dealerships is one thing; building a true corporate entity from the ground up is quite another. Tales of former athletes gone bust are legion. What worked on the field or diamond may simply not translate to a winning bottom line. But there is no doubt that the same traits that make top-level athletes into consistent winners are found in the makeup of successful entrepreneurs. When the N.B.A. superstar LeBron James began to create business enterprises at the outset of his pro basketball career, the famed financier Warren Buffett said, “If LeBron were an I.P.O., I’d buy it.”
Walvius and Marciniak knew that if they were going to make the commitment, they had to be all in. “If you are going to be a great athlete, you live it,” Walvius said. “It’s who you are. It is your passion. For us, this is a lifestyle. We do this 24/7, and it’s all consuming.”
Marciniak, in particular, brought invaluable credentials and learning from having played for Pat Summitt at Tennessee. Summitt, who recently stepped down as coach after being diagnosed with early-onset Alzheimer’s disease, was the winningest coach, men’s or women’s, in N.C.A.A. history. She was a brilliant strategist and stern taskmaster who recognized leadership potential in her recruits and drove them hard to achieve excellence.
“Playing for Pat was probably the best thing I’ve ever done in my life,” said Marciniak, who led Tennessee to two straight N.C.A.A. championship games, winning one. “She’s extremely tough to play for, and she absolutely lit me up every day I was there. She loved the fact that I was an extension of her on the court, and for that reason, she was relentlessly hard on me. She knew I could take it and she just kept giving it to me.”
Walvius saw those traits in Marciniak when she brought her on as an assistant coach at South Carolina. “Michelle’s very much like Pat in her per-sonality,” she said. “Pat pushed her hard, but the point was excellence. It was about getting up and being great every day, not selling yourself short but doing your absolute best job. With Sheex, we draw the parallel to our sports backgrounds almost every day. We are successful because we’ve done that. We know what we know, and we know what we don’t know. Michelle drives excellence with the people on our team, and she exudes an attitude of excellence, a passion for excellence and that is really a sports culture.”
Being pragmatists, the two women did their homework thoroughly. Before they gave up their credentials as coaches, the pair began seeking out needed business expertise. They asked for and took every meeting, every phone call, every opportunity to learn what they needed to know. After reading an article in BusinessWeek, in which Bob Damon, the president, North America, at Korn/Ferry International, was named one of the five top headhunters in the business, they made a cold call and asked for a meeting. They knew they needed a chief financial officer to handle the money side of the business, and they decided to start at the top in their search.
Intrigued, Damon offered a 15-minute meeting in his Los Angeles office but ended up spending well over an hour with the women. Damon was impressed with the concept but more impressed with the women. He made a series of significant business connections for the pair, including with investors, and was so impressed that he became an investor himself.
“When I met these two former athletes, I could see they were very competitive and I figured they will find a way to win,” Damon said. “And when I looked at the bedding industry, there had been no innovation in that space other than an increase in thread count in cotton sheets. Here was a disruptive technology, a big idea. I thought you’d have to be an idiot to think it wouldn’t work.”
The journey has not been without significant stress. Walvius and Marciniak are well aware that more than 50 percent of small businesses fail within the first five years. Disaster lurks around every corner, especially in a troubled economy. The women took second mortgages on their homes and still nearly ran out of cash on several occasions. “Sports teaches you that failures are part of the journey,” Marciniak said. “They help you grow.”
For example, finding the right fabric took six months. And figuring out how to manufacture the bedsheets became a global treasure hunt. Traditional bedsheet makers couldn’t do it, so Sheex formed a manufacturing partnership with Li & Fung, a $20 billion Hong Kong-based sourcing giant. They hired a top San Francisco-based law firm that specializes in patent litigation to protect their concept and met with buyers from Bed Bath & Beyond, the giant home furnishings chain with 1,000 stores in North America, to persuade them to carry the product line. At the time, the prospective product packaging was athletic and masculine with a price point of $300 for a set of sheets and pillow cases. The buyers at Bed Bath & Beyond convinced them to change the packaging and lower the price.
Though the two women are firmly entrenched as co-CEOs, an idea that was roundly discouraged by their advisers, they feel that the yin and yang of their personalities are perfectly suited to such an arrangement. That doesn’t mean there isn’t conflict. These are highly competitive athletes, after all. “We butt heads all the time,” Walvius said.
The package design, for example, was a flashpoint. Marciniak liked the original masculine, athletic design. Walvius believed it did not do justice to the product. “We really fought over that,” she said. “We also fought over our styles. I’d want to sit down and make a list every day and have a meeting every day and talk about the big issues we needed to address. Michelle didn’t. That’s not the way she processes or does things.”
In the end, the two thoroughly trust each other’s instincts on different aspects of the company and, thus far, sharing the final say has worked. “People told us this could never work, but I will tell you we are so much stronger because of it,” Walvius said. “Because we are very different and because we have so much trust and respect, it really works for us.”
Taking care to address every potential obstacle, the women had the product thoroughly tested at North Carolina State University. They determined that the fabric breathes twice as much as cotton and dries 50 percent faster. They even tested the REM levels of sleep on test subjects in search of proof that the sheets could actually help athletes recover faster because they are able to sleep better. They knew they had to be able to substantiate their claims because in the end, the bedsheet business is a marketing play.
To that end, they used Under Armour as a role model and enlisted Raphael Peck, a top executive at Under Armour who later became chief marketing officer for Oakley sunglasses, to join the Sheex advisory board.
“Kevin Plank was very smart in the way he positioned his product,” Walvius said. “He invested at the point of purchase so people would know how it works and what it does for you. Today, Under Armour makes a very strong statement about who the customer is and what the brand represents, which is someone who is an elite athlete.”
Today, Sheex has 13 full-time employees. Every day at 1 p.m., the entire team has a huddle, regardless of where they are, to make sure everyone is clear about the agenda and the end goal. Though the focus now is on executing against the game plan to grow the brand, Walvius and Marciniak are also focused on a potential exit strategy.
“We are competing,” Marciniak explained. “We’re training right now for a national championship. Whatever happens, we get back to the gym and get back to work. That’s an athlete’s reality. And a national championship in this case would be an acquisition, a sale, or we may go public. That would tell us we won.”
Glenn Rifkin has written for The New York Times, Fast Company, Strategy + Business, and many other publications.