Business Backwards 101

LoveSacThe history of LoveSac was suggested to me by Josh when I had told him that I was thinking about starting a business (circa 2005). One year down the road and I’m still figuring out what I want to do, yet the LoveSac story remains a great reference for those who are looking to venture out and start something for themselves. As a side note, the site layout, appearance, and experience has been vastly improved since I last came across it – check it out at

LoveSac Website The site still contains a History link that contains the story of LoveSac, a link to CEO Shawn D Nelson’s blog, and a video link to a presentation he gave at BYU. I really like the video because you get a feel for Shawn’s energy and enthusiasm, and his story is very insightful for aspiring entrepreneurs since it’s a different and unique point of view in starting a company. So as Josh suggested to me, “Grab some coffee, pull up a chair, and check out the video.”
Now keep in mind that the video is 40+ minutes long, so you also have the option of just reading the history on the website or for some footnotes, read my scribbles below:

My scribbles on Business Backwards 101
(*Disclaimer* I don’t suggest taking the drastic measures outlined below, it’s just something to offer a different point of view when starting a company.)

Traditionally, a business is started by 1) creating a business plan, 2) getting funding, 3) analyzing reports and striving for market share, and then 4) making, managing, selling, and doing.

Sean’s path to success was quite the opposite:

Step 1) “To do”

Shawn D Nelson started with a thought – make a huge beanbag – and that’s exactly what he did. He ran out, bought some pleather, sewed a huge bag together, and stuffed it with whatever he could find; he pretty much acted on it. He also states that Man’s greatest obstacle in life is inertia – objects at rest will remain at rest until acted upon.

After enough people begged for a “sac”, he thought up a name and started a business. Neighborhood homemakers sewed bags together (after Shawn burned up his Mom’s sewing machine), while he and his best friend/new business partner figured out ways to fill the bags and market them. The first year LoveSac saw $25K in revenue; a year and a half later brought in another $40K in revenue before Shawn left for an 8 month internship in China.

Step 2) “Be what you will be, not what you are”

As time draws near for Shawn to call it quits and look for a “real” job, LoveSac gets an order from Limited Too for 12,000 LoveSacs. After a few acts of God and some healthy credit card debt (check the history for details), LoveSac is up and running pumping out 30 LoveSacs a day in the hopes of hitting the October deadline given by Limited Too.

Step 3) “Embrace economic pressure” – “Work for free” and “There’s always a way”

According to Shawn, “Economic pressure spawns more creativity and ingenuity than anything on this Earth.” With $50K racked up in credit card debt for a manufacturing facility, a $10K farm loan for a tractor, and an $8K loan from his parents for a fork lift, a fire at the largest foam facility in the country erases any profit that was built into the budget. Add a production line that is behind schedule, and the only thing that can be done is to work for free. In the end, they were left with no money, no customers, and they were emotionally and physically exhausted.

His Cousin’s undying optimism led to another meeting with fate. After attempting to open up a store in the Gateway Mall and being laughed off the property, a need to fill the retail space in preparation for the Winter Olympics resulted in a phone call. The only stipulation was that the display be professional, so they max out his Cousin’s credit card and made the place look like a chain store. According to calculations, 1 sack per day pays rent and pays them $5 an hour. In one month, the LoveSac retail store is completely sold out and generates $120K in sales. Franchising opportunities spring up left and right and the rest is pretty much history.

Step 4) “Bold recognition and bold self-awareness”

According to Shawn, “The key to success is bold self awareness.” You have to figure out what you are, what you aren’t – what your company is, and what your company isn’t. According to Shawn, LoveSac is NOT a beanbag company, it is:

1) An experience – Loud music + a groovin’ environment = When you get people’s head bobbin’ – how can they say no?

2) It is a retail concept – After 6 months of opening, they own the lease to a space that only 400 retail stores (out of thousands) get an opportunity to lease. A retail concept with the right design and creativity can do anything.

3) It is a brand – People who like the product will actually pay LoveSac to market their brand.

4) It is a corporation – A group of people who know how to manage and run stores, understand law, understand accounting, and collectively can do whatever the CEO wants.

~ And to finish off the post, here’s a cool quote I came across during the video:

“I claim no genius in LoveSac – I only claim the willingness to be boldly self aware and capitalize on what I am… there is always a way” -Shawn D Nelson

The Closet Entrepreneur

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  1. Jgeez

    Um… why is LoveSac a great business story? They are on the brink of folding.

  2. TOMAS

    As I mentioned in the post, I do not advise that aspiring entrepreneurs take the drastic measures that Shawn Nelson did to start a company. If you watch the video, you will see that there were many times when he came close to losing it all and some twist of fate got him out of a pinch (apparently, it looks like it finally caught up to him).

    What I am saying is that his story might give someone a different point of view when starting a company. Sometimes individuals fall into the trap of analysis paralysis and never get off the ground – so those who just do it and make it happen are already in a better spot than those who hold off. Again, that’s not applicable to every situation or business venture; it’s just a different way of looking at things.

    So I will reiterate that the ‘history’ of LoveSac is a neat story – the management of LoveSac is a different story altogether.

  3. I bought a love sac and ended up giving it away because the foam was rock hard and there were leaves inside (at least thats what they sounded like) I later bought a Comfy Sack on Ebay and it was half the cost of my Piece of S$@# love sac. I would recommened this product over a love sac any day. Like the guy ealier said, they are bankrupt for gods sake. Shaun Nelson needs to go back to school and take business 101.

  4. kennedy

    It is true, lovesac did fall onto hard times. However the drive and Will that Shawn D Has is amazing. . . If your talking into consideration the amount of work that he has put into his company it is truly amazing. It is a great story, and a reality that LOVESAC isnt going anywhere for a great while! And for the gentleman who gave his sac away. . . all you needed to do was talk to customer service, or take it back and they would have replaced it free of charge and it would have saved you money.

  5. Porter

    Shawn Nelson is a self-absorbed fool and fraud.

  6. Nick Martin

    Shawn Nelson did not invent the lovesac. Shredded foam filled, fur covered giant bean bags where popular in the late 60’s, early 70’s. We had two “pillow chairs” that were exactly like lovesacs when I was a kid in the early 70’s made by the “Pillow Shoppe.” I’m happy that Shawn made pillow chairs popular again but he DIDN’T invent them!

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