SALT LAKE CITY — Who doesn't love a comeback story?
Utah-born Lovesac, a company that made the Beehive State its launch pad for a novel, and wildly popular riff on the '70s bean bag — think bigger, softer and cushier — burned a bright path of retail success from its '90s launch until the mid-oughts when financial disaster hit. A franchise-based expansion strategy backfired and the company leveraged bankruptcy protection in 2006 to fundamentally restructure the business.
Any lingering doubts about the company's recovery from that low point were erased Wednesday when Lovesac's stock roared through its opening day on the Nasdaq exchange, starting the morning more than 50 percent over its initial public offering pricing of $16 a share and ending the market day still up almost 50 percent.
Company founder and CEO Shawn Nelson told the Deseret News Wednesday that, after riding the roller coaster of early success, then near-fatal declines, only to follow-up with a solid climb to join the top 100 furniture companies in the country with over $100 million in sales last year was, well, pretty satisfying.
"Nothing feels better," Nelson said. "Lovesac experienced this meteoric local growth back in the days when we were a startup, and I was on (Richard) Branson's show and got my 15 minutes of fame. Then things got pretty rough.
"You can win a lot of awards, but ultimately what matters is how people vote with their wallets and their feet."
Following the company's return from bankruptcy, Nelson moved the firm to Stamford, Connecticut, and expanded the Sacs products with a novel, new modular furniture system called "Sactionals." The now wholly owned company pivoted from its success with the Sacs to the new modular line that Nelson said comes with a lifetime guarantee, and is built to last that long.
The system is comprised of seats and sides that can be configured in numerous ways to suit a particular room as well as grow and evolve with a customer's needs. They're also washable, repairable and, Nelson noted, the first couch for the digital age.
"We first invented Sactionals because we were selling Sacs in these tiny stores and there just wasn't room for full-blown couches," Nelson said. "They took years to invent and years to sell. And we woke up in 2015 and realized we invented the only couch for the internet."
While Lovesac has some 70 outlets across the country that carry the Sacs and Sactionals, Nelson said the network is really just "an amplifier to drive our e-commerce model."
And online sales will be a heavy focus for the company, which raised some $56 million in its IPO and, if options granted to underwriters are exercised, those earnings could rise to north of $64 million.
Those are big numbers, especially for a guy who got his start in the business sewing Sacs together in the basement of his parents' house and selling them at events on the University of Utah campus when he was a student there.
"Lovesac is a quintessential Utah story," Nelson said. "The first Sacs were literally sold from the lawn at the U. during Oktoberfest to friends and classmates while I was attending school there. It was a side hustle until we made it to graduation and opened our first store at Gateway for the Olympics. We financed the whole thing on our credit cards."
A few years later, Nelson scored $1 million worth of financing in a decidedly alternative fashion. He famously won the funding via an appearance on the short-lived reality television show, "The Rebel Billionaire: Branson’s Quest for the Best," hosted by British business magnate and founder of the Virgin Group, Richard Branson.
U. Lassonde Entrepreneur Institute Executive Director Troy D'Ambrosio told the Deseret News Nelson participated as a student in an early entrepreneur challenge competition, hosted by the school. D'Ambrosio said Nelson didn't win the contest, but he's been a longtime supporter of the school and has returned on multiple occasions to give talks to budding entrepreneurs on the realities, both positive and negative, of entering the startup world and was part of the inspiration behind the new Lassonde live/work space that launched a couple of years ago.
"He's been incredibly generous with his time and coming back to speak with our students," D'Ambrosio said. "He was one of the early entrepreneurs in our program and really showed us, and a generation of students, what the possibilities were. And he's always very frank about the challenges of navigating his company through an amazing launch, then some really difficult times.
"He was also one of the inspirations for Lassonde Studios. He worked tirelessly sewing those early Lovesacs and we spoke about how much easier it would have been for him, at the time, to have been able to move the work out of his parents' basement."
While those basement work days, and the company's heady start in Utah are far behind Nelson, they aren't even remotely forgotten. He noted the state has always played a big role for the company, even as it has become a global concern.
"We have always considered Utah home," Nelson said. "Fashion Place mall is one of our oldest, and most effective locations."
And, Nelson is once again a Utah resident. He, his wife and four children make their home in St. George, where the company opened their "HQ2" in January of this year. Nelson said the company's product development team is doing work at a facility that also hosts their design center staff.
Nelson laughed when asked about the local impression that Lovesac, after being such a big "thing" in Utah, seemed to have disappeared from the map.
"Rumors of Lovesac's demise have been greatly exaggerated," Nelson said. "We have every intention of becoming the most sustainable, meaningful and interesting consumer brand on the planet."
Correction: An earlier version incorrectly stated the amount Lovesac's IPO raised as $54 million. The actual figure is $56 million.