In this episode, I had Mateo Franceschetti on the pod, the CEO of Eight Sleep, a company revolutionizing sleep technology. We discuss how Eight Sleep achieved a billion-dollar valuation, using AI to enhance sleep quality, and reveal their innovative marketing strategies.
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Welcome to the Marketing School School group. Okay, so Marketing School Skool group, right, And so this is a free group that Neil and I are doing. And what I want to do with this free marketing community is I want to build a very strong group of people that are sharing the latest knowledge, the latest trends, the latest topics, and we'll share our content as well, and we just want people to engage with each other and build a strong community, right because people ultimately stay for community at the end of the day, people are longing for community. And we thought, with all the free content that we do well, what's been missing a free community where we can continue to help people level up in terms of their marketing and hopefully we can help people find jobs. In the group, we can even maybe even create a job board, but even offer a lot of our other content package it up for you just to help you get better at whatever it is that you do in the world of marketing and whatever it is that you do in the world of business. Right. So, Neil and myself, you know, we thought that you know, from a retention standpoint, we do a lot. We do very well with the acquisition on all the channels that we have all the audiences that we have, but from a retention standpoint, building something that's that we think we can be proud of for a very long time, why not do a free group, right, So we have a paid group obviously called the Agency Owners Associations for Agency Owners, and if you want to go to that, there'll be a link somewhere over over here to that. But this group will always be free, and as long as people are continuing to engage, this group's continuing to grow, then we'll continue to invest more resources into it. But we thought this was a long time coming. So you can sign up for free. You might have to fill out some information, or you might you will have to fill out some information just so we get a sense for where you are, and then we can start to help segment the group too, right, based on whatever it is that you're looking for, because we want to continue to add value and hopefully we'll have a very strong database of people and you just tell us what you're looking for, what you need, and hopefully we can make those connections. So go ahead and sign up somewhere over here and we'll see you inside. All right, Marketing School listeners, this is a twenty to thirty minute segment of a full interview I've done with an amazing founder, entrepreneur, career visionary. You're gonna get a ton of insights from this, and if you want to listen to the entire thing, go search for Leveling Up with Eric Sue. That's the entire podcast that you could to find. So you can get twenty to thirty minutes here, and if you want the whole thing, you can just search for Leveling Up with Eric Sue And without further Ado enjoyed the episode. This interview is with Matteo Francisketti. He is a CEO and co founder of eight Sleep. This is a sleep performance company and they're valued at over a billion dollars and they're growing very quickly. And eight Sleep, if you haven't heard of them, they are all over the top podcast. So doctor Andrew Huberman, Tim Ferriss everywhere. You're gonna learn about his operating principles for his company. You're gonna learn about how he goes about hiring. You're gonna learn about how to sleep better. Of course, you're gonna learn about what he has coming down from a product type pipeline standpoint. I should say for eight Sleep and you're gonna learn also about what he's excited about from a health and longevity standpoint, and also if they make money or not from their F one sponsorships, all sports sponsorships, and other podcast sponsorships. So there's a lot to cover here. I think you're gonna enjoy it without further ado. Let's check it out, all right, Mittel, how are you doing great?
Thank you for having me, super exciting.
Long time coming. It's great to finally meet you. So I'm going to jump straight into sleeps first. So a lot of people want to have the best sleep ever, and there's conventional things you hear about there. You need to take your magnesium, maybe you're taking some DNA and maybe some mapagena and all this stuff. You literally run eight Sleep. It's one of the top sleep companies in the world. In my opinion, I'm biased. So what are some unconventional things that people can do to improve their sleep and their health?
For sleep specifically, it's all about temperature, and temperature can be managed in a couple of different ways.
Obviously what a.
Product does that for you, but anything else you can do with temperature even before going to bed. So I just give you an example, Let's say you you are in an hotel and there is a sound nine and nice bath.
If you can do two.
Rounds of sound and nice bath after that, you will feel so relaxed that you can fall asleep immediately. If you don't have a sound and a nice but you can still try to do the same, which is with the shower, right, so you switch between very cold and very hot shower. For some other people even a hot bath. No, just doing a bathtub could be helpful. The other big thing is usually breath work could work really well.
You just need to try. What words for you.
For me is usually know you inhale for four seconds, you wait four, you excel for four and then you wait another four. You do that six, seven, eight times, and then you will feel more relaxed. And then our whole movement we call it sleep fitness right, And the reason is we believe that sleep is like fitness is like going to the gym.
You need to be.
Intentional about what you're doing to then get the best night of sleep. And so one hour before going to bed you should start getting into the throne, which means relaxing. I still think you can use your phone. I'm not the type of guy who said, don't touch the phone. But what matters is what you're doing on the phone. If you're chatting with your best friend about an old memory or a great time together, this is perfectly fine. You don't want to be there fighting with your boss about the next board deck.
So there's all these different breathwork models. You do four four four, there's like four seven eight, all these things, But really what you're saying, it's whatever works for you at the end of.
The right very bunch. Try all of them, see what sticks with you.
Like.
There is another one that I usually do not for sleep, but I inhale for five seconds and I excel for five seconds, and I do it multiple times during the day, and that is supposed to help you increase your HIV.
Got it, you're speaking about the sauna. So I've been reading a lot about this recently, and it's there's a lot of stats. Now, if you do the sauna four times a week for at least twenty minutes, your all cosmetality goes on what forty percent or something. So, but most people it's not practical the set of a sauna, right, So what can those people do? Are there any solutions for that. Are you guys going to build something like that.
We're not going to build it, at least not in the short term. Is now what we are targeting. There are some companies working on that now. There is plenty of evidence that do in the sound, as you're saying, at least four times a week is really good parigori for your cardiovascular system. So I strongly recommend that. And the other big one is ice bath. So the cold plunge, that is another game changer that will increase your HIV yep.
And do you have a sauna at home a cold plunge at home?
Yeah?
So you're doing it.
Right, Yeah? I do every day?
And so what happened? What's the difference between like, let's say you're traveling, You're not doing it when you're traveling, obviously, how much of a difference do you feel?
So I do a lot of sports.
I work out a lot every single day, somewhere between at least an hour and a half. Sometimes during the weekend it can go up to three hours. And so I do cold plunge every single day just to cool down all the parts of my body. But the other thing I do is in the evening when I can, I do a sauna and then I do my cold plunge, and that.
Is a game change in terms of relaxation.
When I'm traveling. Usually you can sometimes you know tells you find the sauna. It's very rare you find the cold plunge. But if you have a shot to just try.
It so you feel a massive difference.
Massive massive difference.
And if you do only cold plunge after workout, it will just help your recovery. So if I work out a lot and I do a cold plunge.
I recover.
Call it twenty percent faster and better the following day. Well instead, the combination of the chew is perfect if you just want to relax and get ready for sleep. Even Peter Atia talks about that. I think Peter does twenty minutes twenty to thirty minutes of sun, a cold plunge, twenty three minutes of sound, a cold plunge, and he goes straight too bad.
Got it?
And because you run it sleep, I'm sure a lot of people that buy sleep, they're trying to defeat insomnia. Right, So what are some ways to debate in some And the reason I'm asking this is because four weeks ago, I heard a loud noise in my room, right, and I woke up, and then, for the first time in life, I got insomnia because I kept thinking about what if I can't sleep? And then I just stayed up the whole night. And then my doctor prescribed me something and all of a sudden, a week later, I realized my heart was pounding. I realized I had anxiety. Right then, I was talking to my coach online. He's like, there's something wrong with you. She's like, what are you taking? And we looked it up as a benzo Right, It's one of those things that can It's like a cousin to zanax, basically that I was taking. My doctor said, oh, yeah, take it every night before you go to sleep, and then you don't have insomnia anymore. I stopped taking it. Boom, couldn't sleep again right before that. Longevity is someone I was telling you about. So anyway, long winded way of asking you, how do people defeat insomnia?
Yeah, I mean, and something is really tricky. When we took to our customers, one of the things they always mention is I can't stop my mind from racing.
Right. That is a very typical problem. We are all high achievers, we all push it really hard.
It's really hard to just decide to disconnect and fall asleep. And that is why I was talking about now getting into the zone, like if you were an athlete before going to bed. Temperature helps a lot because sometimes when you have insomnia, you start moving and tossing and turning, and so if the bed or your pillow bit they become really hot, they will just make everything difficult.
But more than anything, I think is mind control.
And so temperature meaning a relaxing hot bath, the cold plunge, with the sauna, breath work. You just need to start relaxing and zing down your mind.
Got it.
I want to I want to stay on sleep for a little bit that I want to talk about the business. I want to talk about the market because there's a lot of exciting stuff that you're doing right now. What what do you have in your sleep stack? Like what are you doing differently than other people? Or like what are you doing in general? You just help autimize your sleep. So cold room, right, you have an eight sleep obviously, the cold plunge, is there anything? Are you taking any supplements? What else are you doing?
Yeah, so across the board.
I don't want to say I'm a bioacre because biocres.
Are way more sophisticated.
But I have a very defined regimen for my health and for lip specifically, the lights at home the switch to orange a certain point in the evening because that will help melatonin if we are watching TV before going to bed, or podcast some content. I have a set of tools on the couch from one thing that massage is my feet, because it will help me reduce the risk of restless legs. Sometimes I have restless legs. I have massage guns, I have balls and rollers. I have compression devices. I also created a prototype with our technology to cool my knees, and so I use all this stuff before going to bed, and I use that time to start calming down. Sometimes per during the weekend, if I can, I do a sound and a nice bat around six thirty seven or right before dinner. Our bedroom is fairly cold. But one thing to pay attention is when you hear people saying, oh, you should sleep at sixty eight degrees the whole night. That's wrong, And the reason is your body temper changes during the night, and so sixty eight degrees could be right for one hour, but not for seven eight hours.
Right then there is.
The pod that so my bed gets prepared automatically by our technology. I get in perfect temperature, and then the temperature changes during the night. Another thing is, for years I tried a lot of different supplements. The reality is very few people, if any, knows what supplements really work out there. Everyone talks about A, B and C, the magnesium, the ashfaganda, but no one has ever run test at scale of what really works. And so we started doing that and now I'm developing my own formula that I'm taking every single night, and that is a game changer because it helps me fall a sleep faster, I get higher quality of sleep, and then I wake up perfectly refreshed.
Cut.
So are you gonna sell this pill?
Probably? Okay, Yeah, we're working on that.
Okay, Yeah, So first I want to develop something for myself, and then we tested at scale and the data seems extremely promising, and then we will give this elixir to everyone.
Got it. That's such a good point because I take all these supplements, but I don't remember once where It's like, I feel amazing.
Everyone takes magnesium, but did anyone prove that magnesium work one of the biggest problems in sleep and in health in general, but in sleep is even bigger. Sometimes you read all these clinical studies, says Abiency, and then you look at the study and it was a study with fifteen people.
For five nights.
Right, that's twenty five nights. We have hundreds of thousands of people sleeping on our product every single night. We collect fifteen twenty terabytes of health data per night, and so we reach a point where we can really start testing some of these things at scale with some of our beta users, thousands of people, and in a week, we're going to have ten thousand nights of sleep.
Got it? So I remember Harry Steppings asked you, because you're sitting on these mountains of data, right, So you just mentioned like you can come up with these different solutions, and what else are you how else are you planning to weaponize this data in a helpful way? Right from a business standpoint.
The biggest change in sleep and health and in healthy will be even bigger is because of our longitudinal data. Our device is not like a wearable. Once you install it, you keep using it just because the pain of removing is bigger than anything else. Well, instead, wearable is usually the drop after six months is pretty heavy, right, fifty percent of people stops.
Using the device.
And so we have the longitudinal data where we start having your sleep and health data, heart rate, heart rate, rest HIV.
For multiple years.
Some of our customers are crossing in the four five years, and first we see how your health is trending. Right during these five years, how much did your heart rate change? Are you developing any cardiovascular disease? But the biggest thing in the next years will be that we will be able to predict what can happen five years later. That will be the real game changer. Not even in the defying Oh you have a rhythmia today or you have a snoring or sleep happenia today. Is because of the trend of the past five years in twenty twenty nine, this is what might happen, and so start taking action today and course correct.
Got it?
So is there a way you're able to say, hey, this is a potential risk and you should get this product over here and you guys get a cut from it.
Like there is where we are exactly going right. Maybe there are even symptoms of insomnia. Maybe there are symptoms of slipapenia, even they are not fully developed, and there is where we can really make a massive difference for humanity and millions of people.
Yeah, well, can't wait till your IPO. But so, because I was talking about with my other buddies, I was like, you know, someone needs to make a toilet that can scan you know everything right and then make recommendations for you based on what's coming. But like to your point, when I was listening to one of your other podcasts, you have something where you're collecting data for eight seven eight hours a day, right, how powerful is that? And to your point, I didn't realize said it. It's like absolutely, it's a pain in the butt to take it out. Because I was I talked to you about this. There were these sleep doctors that told me to remove the eight sleep because there's apparently what they said, there's there's there's EMF, that's titles, and they're like, first of all, like I'm just too lazy to take it off. The second thing is that I went to you immediately and I think you have some data around this, So I really wanted to set the fact straight here, like does the eight sleep have EMF issues?
No, it does not.
There is that we publish a blog post where people can go and just see all all the data.
But that is absolutely not true. So we run a test.
If you go on our blog post, you will see the number, and the number is so tiny that it makes absolutely no difference.
It don't make no change. Later, even when you guys upgrade the product, right, it's still gonna be correct.
Yeah, because substantially everything is in the habit that is far from from the bed, and here there are just very few tiny sensors that make absolutely no difference.
Got it.
So maybe we'll come back to sleep in a moment. But there's a lot of interesting things you guys do from a marketing standpoint. First of all, I mean you guys. I heard I was listening to Tim Ferris podcast. Yep, you guys sponsored that one, and then Andrew Huberman Okay, there's another. You guys are usually in slot one or two, so it's like the first thing that they hear. How do you guys think about podcast advertising and how well has it done for you guys?
Podcast advertising for us works really well.
There are a bunch of caveats.
The first one is I think it works well for products that are pricing I don't think this podcast usually move a lot of units, and so you need to be fairly expensive to be able to digest a higher cack. I mean a cack that works well for your price point, which is our case right now. Our cack is very low for our price point.
So that is one second.
The reason why usually they work certain some is because if there is a certain affinity between the audience, the host and the type of products, right they want the credibility of the whole before spending twenty five hundred dollars on a product like hours. You also need to be aware that you need to test many and it's almost.
A power law. That is what we have seen.
There are some that works incredibly well, but then you should assume that the largest majority will not. Particularly right now, I think a lot of podcasters everyone thinks that they can charge the same amount of the best podcast, and they don't realize that companies like us were really obsessed with the efficiency. We test you, We look at the numbers, and if the numbers don't make sense, we leave well. Instead, if you price your podcast in the proper way, we can be a partner for you for the next ten years.
All right, so welcome to the Agency Owners Association. My name is Eric Zuom. I do this group alongside my podcast co host Neopatel. We do a podcast called Marketing School. And both me and I we've been in a handful of groups. We're actually both in a group called YPO. I've been in a group called EO before, so Young Presidents Organization, Entrepreneurs Organization, and we thought it would be helpful to have a group, a peer group for agency owners where people can connect and they can all help each other elevate. Right, And we know a lot of agency owners. They're struggling to grow faster, they're struggling to get more clients, they're struggling with operational issues, hiring issues, and both Neil and I have been throughout all that, right, So in terms of covering getting an agency to six figures, seven figures, eight figures, Neil in his case got his agency to nine figures, right, maybe even ten figures one day. But we wanted to share those experiences with you to help you grow faster. And there's a lot of value in this group. You'll see below all the bullet points on the things that we currently have and we're going to continue to add value to this group over time. And the cool thing about this group is you can cancel any time, so there's no commitment. You can sign up right now for whatever price it says down there. It's going to continue to grow, grow and grow. I will tell you that this group initially started at one hundred and forty nine and it's going to continue to rise, right so now is going to be the best price to get in on it. You can cancel at any time, just that when you come back, it's going to be at the elevated price, and that's what we thought we'd do. And those of you that are doing seven to eight figures, once you join the group where actually you can even see it, there's an application to join a live mastermind. So this is a live mastermind that where you'll be able to hang out with Neil and myself and we'll have other agency owners at your level. But that's for agencies that are doing seven figures and above. I think once we have enough demand for maybe the six figure groups, we'll figure something out there. But for right now, seven and eight figures for an in person mastermind and then online community a bunch of other benefits if you're doing six figures and below, you'll see that right below, and then we'll continue to figure out and grow to sing as we as we continue on. So without further ado, go ahead and sign up below. If it's not for you, that's totally fine too, but no commitment. Why not if it helps you, If you think it can even help you ten x the price that you're paying for one month, then why not just give it a shot? Right, So that's it for this little intro over here, and then just go sign up somewhere over here and we'll catch you inside. And so how I think you, guys has in a really smart way. So can you explain your guys podcast testing mythology? Just to go a little deeper.
Yeah, So by now we have a very specific So first we do a pre assessment. There is a scorecard that we do internally, and so we can look up your ratings on the Spotify or Apple and if you're on YouTube, you can see the number of use and so we immediately have a sense of what your CPM is and if you are not in the range, then usually what we have seen is we test you for one or two times and by then we look at the data and we know if you will be successful or not. And most of the times the ones that fail is because they charge too much for the number of visitors that they drive.
Correct, and what CPMs are you guys typically looking for.
Yeah, we can talk with my team about the exact number. It also depends because sometimes it could even be a brand exercise. Right then you might be open to accept a slightly higher CPM because there's an audience that doesn't know you yet. But yeah, there are define ranges.
You actually have competitors now popping up on doing podcast ads, So I don't know if they're direct competitors, but you know their their company name certainly starts with sleep, right, so I'm sure they're maybe getting a little clearly they're saying it's working for you guys, so they're trying to copy you guys at the end of the day. So what Well, before I ask that question, if you think about you guys do Mercedes? I look at there's an eight sleep thing, right, So you guys do a lot of Formula one sponsorships. What's your deal with Formula one? How has that panned out for you guys?
Yep?
So we do deals across many sports right, there is Formula one. We just entered into tennis, so we just signed Taylor Fritz, one of the best American players. I was just with him in Madrid last week. We're in CrossFit, we are in cycling, so we're sponsoring a team at the Tour de France. And the reason is, first, everything starts from my background.
I used to be an athlete.
I love sports, and I always hated because the fact that most of the sleep companies that are about, you know, a lazy sunday in bed with waffles. Well, instead, I'm all about performance recovery, and to me, sleep is just a tool to maximize your daily performance. And so we created this concept of Slip Fitness. We created a brand that is designed around performance, and at that point we decided to partner with athletes, almost what Nike would do, but we are in sleep right, and so Mercedes One was one of the first big moves, so we signed a deal with them. It was originally a deal for two years, and we were a sponsor of the whole team, and once you sponsored the team, you can also use the images of the drivers. And then before that we were in CrossFit, so we worked with Justin Maderos, multiple times World champion, CrossFit champion, he won the CrossFit Games. Now with Taylor, we are entering into in to tennis. And then there is also a bunch of athletes that maybe they are not formally eight Sleep athletes that we don't pay, but they sleep and use our product. And so if you look at tennis, probably we have sixty seven of the top tennis twenty tennis players, sixty seventy percent of Formula one drivers, they sleep on our product.
We have people now.
Players of the Lakers, players of the Miami Heats, the quarterback of the forty nine ers did they even know he was using our product? And so we have two hundred three hundred professional athletes and olympians.
Yeah, what's crazy. I was a couple months ago I was playing poker at the Win in Vegas, and so I saw a guy, he's in cross and he's ringing one of these rings, right, And then I was like, so what else do you do for see? He's like, well, you know, I have this thing eight Sleep And I was like, so how many do you have? He has five of them? He bought it for all his family, right, And I was like, so how did you How did you find out about it? The podcast ads? Right. But where I'm going with this is it's really hard to track the ROI of these things, and marketers try to track the r and I think you're pretty data driven too. I'm a marketer, but I'm kind of moving in the direction where it's like trying to track every single little thing is going to make you go crazy. So how do you think about ROI when it comes to the you know, the Formula one stuff, the tennis stuff, the podcast stuff.
Yeah, so you're absolutely right. At the end of the day, the simplest way to look at everything is a portfolio strategy, right, because then you have all the different channels, And yeah, you can have the attribution for Facebook and Google, but they will be impacted by the podcast, right, And so the true cack of podcast is lower than what you see. But you just want to have proxies. And at the end of the day to my team, I just give the end cock and I say this must be our cock at the end of the month, and we cannot nego through that. Then, going back to your point is usually it's very hard to give an ROI to some of these investments.
And so that is the hardest part with the board.
But sometimes we think of these moves in terms of brand elevation, and so working with Mercedes one or with some of these athletes just elevates the brand and gives you credibility. So what we do is we put the money that we invest in some of these deals into the cock and so the blended cock, the portfolio strategy, absorbs that and the board is fine with that because they say, Okay, I don't care where you put the money, if you put it on Facebook, if you put it on podcasts, or you do a deal with tailor freez. Right at the end of the day, the end cock needs to be ex.
Correct, so they're not going to scrutinize every little thing.
They don't have an idea either.
I mean then they want or we like to present data about a certain channel, but they know that there is a ten to twenty percent of the role marketing budget that is invested on things that you cannot track perfectly, got it, and.
You're but sorry. For example, for a deal like Mercedes.
Then we had the really big event in UK at the factory where a lot of journalists came. They saw the car they spoke with the doctors of the Mercedes of One team and then they've wrote a lot of articles about us and the fact that Louise Hamilton sleeps on the product and George Russo right, and so sometimes you can have even these I would say second order effects, like a.
Lot of pr and media and you're.
Connected to visitors to the website maybe the following day.
Yeah, I think it's just impossible to track, right, But the some marketers get lazy and they call it dark social, don't try to track anything. I think it's somewhere in between. There's something that you talked about too, that decreased your CAC from seventy five eighty percent or so. And I think this is heavily underrated and to some people might not be new, but I think it's worth talking about. Do you want to talk about what that is?
So in general, our cock is four years in a row, four years and a half in a row that.
Keeps going down. So since when we launched that pot, and I can tell.
You it grew a lot five, six, seven x in these four or five years, and the cat keeps going down. For us, obviously, the holy grail is word of mouth. That is a very large part of our revenue and it keeps growing, right, So the incredible thing it keeps compounding because the number of people using the pod is larger. And then if each of them can impact five people, as you were saying right between your relatives and friends, one thing is one thousand people. Once you have a million, then it becomes five millions. It compounds really fast. And so we see all our digital channels becoming more and more efficient.
And Facebook right now is that the lowest has ever been?
Interesting? And how do you think about the This goes into the business a little bit, but how do you think about competitors, because what is the moat behind your business at the end of the day, Like, how do you think about defending against them?
In full? Honestly, we don't really care about competitors.
All my obsession is product and then the rest is human growth. But our focus is just you just want to build the greatest product ever and if we do it well and we do it fast, there is no way anyone can can catch up. Then we think a lot about our mode in general, and we are one of those I would call them verticalized companies, right, because first you have hardware.
It's really hard to build our hardware. You need a lot of money. It's painful right now, very few investors would give the money.
Then once you build that hardware, you need the scale and then there is all the Algos and AI that goes behind the data, right because even if I give you a billion dollar and tomorrow you build an equivalent of our product from an ardor standpoint, it will take you at least a couple of years to reach the level of accuracy we have reached with our Algos that you can buy it right now. We are ninety nine percent as accurate as a medical grade KG attracting your heart rate right, which is pretty mind blowing if you think that you just go to bed and this device is tracking your heart rate with the same accuracy of a hospital ninety seven percent, around ninety seven with HRV, and I think around ninety seven percent for respiratory rate. And so these are the areas where we build the strongest mode