How I Built A Teddy Bear Business Helping Military Kids Sleep At Night
Hello! My name is Justin Baum and I’m the founder and ZZZEO of ZZZ Bears (like getting your zZZ’s). We make a line of teddy bears dressed in military uniforms named SGT SLEEPTIGHT that protect kids as they sleep from bad dreams, fear of the dark, monsters under the bed and more!
But SGT SLEEPTIGHT is much more than a bear in a military uniform. He’s part of a military grade sleep system that includes a door hang, sleeptight oath, and stickers shaped like military commendation medals awarded to kids who sleep through the night.
Our customers are primarily military families - both active duty and veterans - and we sell both online and on Marine, Coast Guard and Navy bases around the world. In the last two years, we were also carried by Target stores nationwide and appeared on ABC’s The View!
What's your backstory and how did you come up with the idea?
My full-time job is in advertising. (Think Don Draper with less Brylcreem,) And from 2005 to 2012, I worked at JWT, the United States Marine Corps’ longtime ad agency. As the Creative Director, I was in charge of recruitment advertising - writing the television commercials, print ads, billboards, etc - for the Marines during two of the most unpopular wars in our nation’s history.
Every time I’d go to a Marine base to film a commercial, I’d bring my then 5-year-old daughter back a small gift from the Marine Exchange. At the time, she was having trouble sleeping - bad dreams, fear of the dark, monsters under the bed - the usual fears of a young kid.
So I bought her a teddy bear and told her a story.
I said, “This is Marine bear, and for 200 years he’s protected our nation. And now he’s going to protect you while you sleep.”
“What if he falls asleep?” she asked.
“He’s a Marine. He would never fail his mission!”
That night, we put the Marine bear on duty and she slept like a bear in hibernation.
I realized that if this military teddy bear could help her, it could help others suffering from the same nighttime fears. Although I had a full-time job at the time, I began thinking about how to bring these bears to boys and girls everywhere.
I also realized that the bears could have an even bigger mission than simply helping kids sleep. During my time with the Marines, I learned the true meaning of selfless sacrifice - not just from those who put on the uniform, but the families as well. So I decided that our mission would be to give back to those military families who sacrifice so much for us.
Today, we donate ZZZ Bears monthly to children who have lost a parent in the line of duty through our partnership with TAPS (Tragedy Assistance Program for Survivors).
Take us through the process of designing, prototyping, and manufacturing your first product.
I had no idea how to get a teddy bear made. So I did what anyone in my position would do. I Googled it.
That led me into the abyss, AKA Alibaba. I quickly found a manufacturer in China who was willing to make a small quantity for a reasonable price. We traded emails, thoughts and sketches for a design and finally landed on something I was happy with.
I wired him the money not knowing if I’d actually ever see a bear. After all, I had no idea who this guy was. For all I knew, he was emailing me from his new yacht in Bali, paid in part by me!
But lo and behold the bears arrived! And they were… okay. The uniform looked good but the stitching on the embroidery was inconsistent and sometimes crooked. The bear’s fur looked a bit cheap. While not perfect, it was good enough for now.
Describe the process of launching the business.
My personal portfolio is hosted on Squarespace (JustinBaumCreative.com in case you’re interested) and I really liked how easy it was to build my site. So without much research, I decided to host my e-comm site with them as well.
I called in favors from my agency co-workers who were designers and wrote the copy myself. (Sometimes it pays to be a writer.) Then, I sent a mass email to friends and family assuming they would spread the word far and wide. After all, I had a genius idea that solved a universal problem for parents that I knew would spread like wildfire.
With a deep breath, I hit publish on the site.
And… crickets.
Besides a couple sales from friends (thanks Marcus and Andrew) and family (thanks mom), nothing.
I was desperate. And after two whole days, I declared ecommerce dead to me.
On a lark, I sent a DM to the Marines through their Facebook page. Despite my experience with the Marines, I had no contacts that could help me in getting the bear into the on-store bases called Exchanges. However, within 24 hours, the buyer from the Marine Corps Exchange emailed me. After several emails, we had a deal. The only catch? She wanted the bears to be wearing the unique camouflage pattern of the Marines. The problem was the bears I had in inventory were wearing a generic camo pattern.
Ugh.
This turned into a familiar theme. Soon after landing the Marines, I got into the Navy Exchanges which wanted bears in a Navy uniform and oh, by the way, they don’t have sergeants in the Navy so I had to trademark a new name - Sailor Sleeptight.
This story repeated itself when I got into the Coast Guard Exchanges and the bear’s name became Coastie Sleeptight.
The lesson? Adapt and go with the flow.
When I first got into the Marine Exchanges, they sent me a bunch of new vendor paperwork to fill out. And I panicked. The only questions I could answer were my business name and address. Everything else was greek. They asked about case packs, wholesale price, chargebacks and there were more acronyms than I could count. I had no idea what any of this meant. As the days turned into weeks, I thought for sure I would lose the account over my inability to answer basic questions.
Since launch, what has worked to attract and retain customers?
So while the bears were selling well in the military exchanges, my web sales were pathetic. That’s when I learned the power of Facebook. I’m not sure how it all happened exactly but I got a Facebook account and immediately joined a bunch of entrepreneur groups. There I met a bunch of people who would change the course of my business.
I met a generous Navy veteran named Juan who also had a plush business and who generously agreed to share the name of his manufacturer with me. Today, three years later, I still use that same manufacturer and probably will for the life of my business. He also told me about the power of Facebook ads. And then things started to get rolling.
I hired a Facebook ads guy, a friend of a friend, and we started running ads. At first, the idea of spending $20 a day for a product that costs $30 sounded crazy. But as the ads started to work, I kept upping the daily spend to as high as $100 a day with good success.
I started posting almost every day on Facebook and Instagram and figuring what people responded to. One of the best uses we’ve found for Facebook is seeking input from our followers. When I post a cute photo of a girl with SGT SLEEPTIGHT I might get 25 or 50 likes and 1 or 2 comments. If I show people two options for packaging or a tagline and ask their opinion, I’ll get hundreds of comments!
https://www.facebook.com/ZZZBears/posts/1403349023135824
This strategy works great for me on Facebook but doesn’t work at all on Instagram. To this day, I have a very hard time getting engagement on that platform and I no longer waste my time trying.
Another important relationship I made online was with another veteran and aspiring entrepreneur named Blake Wayman. Blake was just getting started with a plush product in the same category as mine. Although we knew we were going to be battling for the same customers, we became instant friends and I shared my manufacturing contact with him. But Blake taught me something even more valuable than a contact. Blake created a really emotional video for his Facebook page and with only a $50 boost, got over a million views and thousands of comments and shares. That not only taught me the power of video on Facebook, but also showed me what our audience responds best to. It wasn’t comedy or even a product centered approach. It was his personal story.
In an effort to break into retail beyond military exchanges, we attended the largest toy trade show in the world in New York. This turned out to be a waste of money. With a very small booth and unknown product, it was almost impossible to get any attention. The buyers from major retailers had pre-arranged appointments and walked right by. Some of the mom and pop stores showed interest but not enough to make it worth the time. Time to move on.
Someone on Facebook told me about ECRM - an organization that connects sellers with buyers from major retailers looking for products in their particular category in a hotel setting. Long story short, I got approval to meet with 3 Target buyers for 20 minutes in a Miami hotel room as part of one of their toy events (without actually attending or paying for the event itself). They loved my product as well as my genuine enthusiasm and belief in my product and after several follow up emails we had a deal. Fast forward 6 months and we were in 500 stores nationwide. Every day, I checked the numbers to see how we were doing. I also went to several stores to see how it was merchandised. Much to my dismay, there were some stores where the product was stuck in the back room. At this point, I hired several college students to call all 500 stores and ask for SGT SLEEPTIGHT. The majority of stores had them on the shelves but some didn’t. At the end of the test, we simply didn’t sell well enough to be carried in the future.
With all of the time and effort it took to get into Target, I changed course to shelve retail and focus on killing it online.
I think it’s common for new entrepreneurs to be obsessed with getting into big box. They think, if I can only get into Target or Walmart I’ll be set. But nothing could be further from the truth. The margins are slim and the rules are stacked against us. For example with Target, I had to agree to pay 100% of the markdown costs. So if sales were slow and they marked the bears down from $24.95 to $10, I was responsible for paying Target $14.95 per bear! You can see how that alone could bankrupt a small business.
How are you doing today and what does the future look like?
From the beginning, we’ve done most everything ourselves. The hard way. From assembling the bears into their boxes in our living room to shipping out a thousand bears to the military exchanges from our basement. While this saved us money, it took a lot of time which in hindsight could have been better spent developing new products, marketing, engaging with customers, etc.
To that end, we’ve recently hired a fulfillment house to handle all of our orders to the military exchanges. If that goes well, we’ll have them handle all of our shipping needs in the future.
In the last year, we also started selling a bear not wearing a military uniform. That bear, dressed in a police uniform, has become one of our top sellers. We’ve had a lot of requests for a fireman bear so that will likely be next. We always start by ordering a small quantity - we’re fortunate that our manufacturer has a very low MOQ - to test the market before committing to larger numbers and more cash.
With the exception of year one, we’ve turned a profit every year. That’s because we’ve learned what works (FB ads, for example) and what doesn’t (hiring so called “experts” and consultants).
Perhaps the most important lesson I’ve learned is that nothing happens as quickly as you’d like. I thought I’d put up a website and be a millionaire in year one. When that didn’t happen, I panicked and got desperate, making mistake after mistake. The fact is, building a business takes time. So I’ve learned to be patient, and enjoy the journey - both the ups and downs.
Here’s my top 6 mistakes I made that you don’t have to.
#1. Not having a mentor
As a small business owner, you’re going to be faced with lots of daily decisions. Micro ones. Medium ones. Massive ones. And the unfortunate fact is, you’re going to get a lot of them wrong. Some are unavoidable.
After all, small business isn’t a science (it’s more like a toddler’s messy art project.) So, find a mentor. Someone who’s been there, done that. Someone who’s willing to share their time and their wisdom. Someone who has no financial interest in your company. Here are a couple of good starting points to find your perfect mentor:
- LinkedIn is a professional networking site that makes it easy to connect with buyers and businessmen alike.
- Reach out to an organization affiliated with your category. For example, if you’re in the toy industry you might contact the American Specialty Toy Retailing Association (ASTRA).
- SCORE is a mentoring organization over 10000 free business mentors in 300 local chapters across the county
#2. Trying to do it all yourself
Growing up, my mom used to tell me how good I was at everything – from drawing to baseball to brushing my teeth. I now realize it was a well-meaning lie. Nobody is good at everything, and nobody can do it all. So be brutally honest in assessing your strengths and weaknesses. Then get help.
For example, you might be really good with numbers but not so good at digital marketing. No problem. Go to Fiverr and find someone to write a blog post, handle your SEO or color correct an image in Photoshop. There are plenty of subject matter experts out there. Find the ones you need, put them to work and stayed focused on what you do best. PS, I love you mom.
#3. Not requiring references from new vendors
I learned this one the hard way. In fact, I almost lost the business in year two because of a dishonest manufacturer. (Ask me about it over a beer.) Now when I hire someone to do a job, I require at least three references from someone who has used their services in the past. And I speak to every single one. If a vendor refuses to provide references for any reason, including customer privacy, I thank them politely and move on to someone who will.
#4. Assuming you know what your customers want
It’s amazing to me how many people start a business or continue to operate a business without seeking feedback from their customers and potential customers. For us, Facebook has been a great platform to ask questions and get real time responses. And our fans love it. If I post a photo of a bear and a child, I’ll get 50 likes with a couple of comments and shares. If I post a question asking if they’d prefer the bear come with a pillow case or a drawstring bag, I’ll get literally hundreds of comments. And the best part is, this kind of interaction builds a connection between our customers and our company. Customers feel invested in our success because they’re contributing to it. This type of research used to cost thousands. Now it’s practically free.
#5. Having tunnel vision
You know that thing that you’re absolutely, positively certain is a home run? I hate to break it to you, but it probably won’t be. Believe me I know. I thought getting ZZZ Bears into a big box retailer would be the holy grail. So when Target decided to do a 500 store test in our second year, I thought, WE’D MADE IT! Wrong.
Ultimately, we didn’t have a high enough sell-through rate to get picked up. So what did we do? We pivoted. (After a good cry of course.) We decided to refocus on boutiques where owners or sales staff would always be on hand to tell the story of the bear to moms and dads. It’s not easy. The orders are smaller, and the logistics are more complex. But the upside is huge.
#6. Being in it solely for the money
A warm fuzzy feeling isn’t the only reason to adopt a social mission. In fact, research shows purpose fuels profits. Which, if you think about it, makes sense. After all, employees who drive meaning from their work are happier and more engaged. Plus, having a purpose makes you stand out to customers, creating a loyal, passionate following. The key is choosing a mission that naturally aligns with your company.
For example, because we make a teddy bear dressed like a soldier, we give back to children who have lost a parent in the line of duty. Mark Twain said it best. “The two most important days of your life are the day you were born and the day you find out why.” Find your company’s “why” and success will follow.
What platform/tools do you use for your business?
Our favorite tools and platforms:
Our first site was created on Squarespace which makes web design super simple but didn’t have the apps to scale our business. We now use Shopify which is awesome. Their app store has almost anything you’ll ever need and we use ones that increase average order size with upsells and enables people to personalize their bear.
Sounds obvious but Facebook ads account for an overwhelming percentage of our online sales. Plus, the feedback we get from our followers on our page is invaluable.
To collect emails, we use pops by Privy . It’s free and couldn’t be simpler to set up and use. We’ve also experimented with some of their other features including abandoned cart emails with great success. So while we currently use Klaviyo** as our email platform, we may completely switch to Privy in the near future for all our email needs.
Although we struggled on Amazon at first, it's now one of our strongest channels. For that, I give credit to our amazing partners at Boutique Sellers. These guys do an unbelievable job of optimizing our listing and maximizing our sales.
What have been the most influential books, podcasts, or other resources?
Some of my favorite podcasts are How I Built This and Without Fail. They both feature founders and their story of growing a business from nothing to something big with all the ugly parts in between.
I also like The Pitch which features founders pitching their ideas to investors looking to get in early on the next big thing. All of these are inspiring and also make me feel less alone in this crazy rollercoaster ride.
Are you looking to hire for certain positions right now?
I still hold a full-time job and ZZZ Bears is purely a side hustle. With that in mind, we are not looking for full-time employees at this time. Instead, we pull specialists from Upwork and Fiverr as needed for everything from graphic designers to developers.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
Hey! 👋 I'm Pat Walls, the founder of Starter Story.
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