Artificial intelligence’s latest frontier: studying UFOs 🛸

NASA said it will use AI, advanced satellites, and citizen reporting to study unidentified flying objects just as interest in space has grown drastically over the past few years. “NASA will do this transparently,” a NASA administrator said this week.

We’ll keep dreaming because today, we'll discuss the very big market for mattresses.

All this, and more, in just 4 minutes to read.

— Matthew

QUOTE OF THE DAY

"Sleep is a non-negotiable biological necessity. Sleep is the single most effective thing we can do to reset our brain and body health each day — Mother Nature’s best effort yet at contra-death."

— Matthew Walker

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WHAT ELSE WE’RE INTO

📺 WATCH: What will it take to control AI?

🎧 LISTEN: TIP mastermind with Tobias Carlisle and Hari Ramachandra

📖 READ: The never-ending then, from Nick Maggiulli

KNOWLEDGE TEST

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It’s that satisfying. Ace the quiz.

INSIDE THE BIG MATTRESS MARKET

From straw and hay to luxury

When was the last time you bought a mattress?

A mattress is one of the oldest and most personal household products. Everyone needs one, and we spend roughly one-third of our lives on them.

In ancient Egypt and Mesopotamia, people slept on raised surfaces made of various materials, including palm leaves, reeds, and straw. The raised surfaces provided some separation from the ground, helping keep people clean and more comfortable. The oldest known mattress was discovered in South Africa’s Border Cave in 2020 — it’s more than 200,000 years old and made from sheaves of grass.

In ancient Rome, mattresses were made of straw or wood on wooden frames. Wealthier Romans might have bad cushioning and fabric covers. But for thousands of years, poorer people slept on leaves or hay (without AC!).

Today, we’re much more fortunate. The mattress industry has become very large, with dozens of big brands. The U.S. alone accounts for nearly 40 million mattress sales annually. Prices range from $100 or $200 to thousands of dollars. For the super-rich, it’s not uncommon to spend more than $10,000 on a mattress.

We’ve come a long way from the days of palm leaves, straw, and hay. A rising demand for luxury and custom allows people to set their own firmness, flexibility, temperature, shape, and more, all with a few clicks.

A handful of big mattress companies eat up most of the market share:

A $60 billion market

Mattress sales soared during the pandemic as consumers upgraded their homes. The market has ballooned to about $60 billion. And while industry sales have since been under pressure amid inflated costs for materials, logistics, and labor, the industry is still known for its old-fashioned, brick-and-mortar presence.

Drive past American strip malls on a busy highway, and chances are you’ll see a couple of mattress stores, usually advertising some sort of promotion to get you in the door. It’s almost impossible to buy a mattress that’s not “on sale,” as many companies raise sticker prices and then mark them down to create a perception that the products are discounted.

One of the market leaders is Tempur Sealy, part of Tempur Sealy International, whose stock has risen about 230% over the past five years vs. 52% for the S&P 500. They know that once you buy a mattress, you might not buy another for several years, if not longer. So, they emphasize quality and a longer-lasting product, whereas competitors such as Amazon and IKEA sell mattresses for under $500. Some Amazon mattresses are as cheap as about $55.

Big brands have capitalized on consumers’ willingness to pay between $500 and $5,000 for a single mattress. Tempur-Sealy’s materials are more expensive than traditional mattresses, with features like “advanced pressure relief” and “cooling comfort.”

Over the past decade, new science and research have pointed to the benefits of quality sleep, including better mood, energy, and decision-making, plus longer-lasting benefits, such as lower risk of getting sick and developing serious health issues such as diabetes and heart disease.

You could, thus, liken the rise in luxury mattresses to the growth in healthy alternatives to soda and alcohol. Health-conscious consumers tend to follow science.

Cautionary tale

Not every mattress company has satisfied investors as much as Tempur Sealy.

For instance, Casper created a popular brand but went private for less than $300 million in 2021, about one-third of its pre-IPO, $1.1 billion valuation in 2019. Casper began online in 2014, then opened dozens of stores and sold its mattresses in chains like Target.

However, the marketplace has low barriers to entry and has been flooded by dozens of internet mattress sellers, driving up competition and keeping costs (somewhat) low. For many, it’s a game of who wins via online advertising. Consider that in 2010, less than 1% of U.S. mattresses were bought online. By 2018, it was about 45%, and now over 50%.

Meanwhile, competition has remained high after big brands like Tempur Sealy and Serta Simmons started selling bed-in-a-box concepts. Then Amazon started making its own mattresses at cheaper prices.

Yet much of the population won’t buy a mattress without seeing and feeling it at a store, the primary reason the industry still supports so many physical stores.

Like a bottle of wine

Buying a mattress can be complicated, as disruptors have offered gel capsules, ice fabric, green-tea memory foam, and copper-infused toppers. It can make some consumers feel they need a science background to understand which option is best for them.

Salespeople work on commission and entice consumers with discounts, while some don’t trust the quality of mattresses bought online.

As the population continues to rise, the demand for mattresses also increases. More people, more households, and bigger homes mean more mattresses. Americans generally don’t mind spending thousands on high-end mattresses if it means great sleep and better health.

One longtime industry analyst says the desire to create the perfect sleep routine “has caused some people to trade up to higher-quality beds in the belief it will help them get a better night’s sleep.” But he cautioned that sometimes, a decent but not-too-pricey mattress will suffice.

“Like wine, you can tell a $5 bottle from a $25 bottle, but get above $50 and a lot of people can’t tell the difference.”

Dive deeper

For more, check out this CNBC video on why mattresses can be so expensive.

See you next time!

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