The standard direct-to-consumer playbook says to stay asset-light: Outsource the manufacturing, move fast, and let someone else worry about the factory. Vy Nguyen did the opposite. In 2010, he bought his father’s small mattress factory, and over the next decade he and his co-founders turned it into Avocado Green Brands—the largest organic mattress company in the US, with nearly 1,000 employees and more than 600 wholesale partners.
Along the way, they bought stakes in factories in India to secure organic wool and latex that didn’t yet exist at scale. Ten years on, many of the asset-light brands that launched alongside them are gone. Here, Vy explains why owning the hard, capital-intensive parts became Avocado’s moat—and the discipline it took to keep it.
On the opening he saw in a broken mattress market:
There were a few things going on at that time. More and more categories were moving online—people had gone past consumer electronics and were buying clothes, big-screen TVs, larger tickets. Consumers were starting to trust that they could buy the expensive stuff online. That shift was going to happen anyway.
The bigger thing I saw was these old legacy mattress brands. They couldn’t articulate their value proposition to the consumer, because over time they’d shifted all their messaging to depend on the retailer. They needed the retailer to tell the story for them.
And when you walk into a store with 50 mattresses, you’re stuck with one salesperson walking you through it—and they’re usually trying to upsell you, or sell you whatever gets them the most commission. Consumers felt frustrated. They didn’t know which brands to trust or what to believe from the salesperson. That was a wide opening for a brand that could build trust and talk to the consumer directly. That’s the genesis of making direct-to-consumer our main channel.
On building his own supply chain instead of outsourcing:
When the Avocado team came to us, they brought a real intensity to it. Maybe it took people from outside the industry to challenge it—they’d say, “There’s got to be a way to build this bed without foam. There’s got to be a way to get 100% organic cotton fabric.” A lot of that stuff just didn’t exist then.
Take our fire barrier. It’s 100% organic wool, and nobody was really doing that when we started. So we found a factory in India that was making wool felt for shoes, and we told them, “We need it 88 inches wide, for mattresses.” They said, “That doesn’t exist.” And we said, “How about we provide some capital and become partners with you?” So we bought into that business, helped them scale, and built a supply chain for the mattress industry. Now they supply all the wool that goes into our fiber and wool layers.
Same thing with latex. We wanted 100% organic certified latex, so we bought a big stake in a small latex factory in India, got them certified, got them to scale, and built out that product line. We still buy from that factory today.
On what the #1 Consumer Reports ranking did to operations:
We’d been rated the number-one quality mattress by Consumer Reports—though honestly, I don’t think we even knew we were number one until a few weeks into it. What we saw first was a big spike in business, and we were trying to figure out where it was coming from. We had a scoreboard back then that measured how many mattress units we were back-ordered every day, and it got up to 12, 13, then 14,000.
That was hard for us, because we were so vertically integrated. We couldn’t just call some factory and say, “Hey, send us more”—which is easier for people who buy from third parties. We had to actually scale production. We had to build a bigger factory and hire more people, so it was a process.
It got to the point where we had to send out emails apologizing and letting people know there’d be longer lead times. If you’re trying to be vertically integrated and you get that kind of influx, you just have to be ready to handle it. We scrambled.
On why the asset-light brands didn’t survive:
When we were scaling, a lot of other brands took a different approach. You started hearing, “We want a really asset-light business model. Get some third party to make it, and that way you don’t have to worry about scaling.” A lot of brands did exactly that. But look back 10 years on, and a lot of them are either in financial trouble or don’t really exist anymore.
When you rely on a third party, it’s very hard to differentiate yourself—because whatever that factory is selling you, they’ll be happy to put a different name on it and sell it to the next guy who comes along.
Building the whole supply chain was time-consuming, hard, and capital-intensive. But it’s given us a real ability to put our product in the market at a price that isn’t the cheapest, but has great value for what we put in it. It’s high quality and durable, it resonates with consumers, and it’s not the easiest thing for a competitor to emulate.
On resisting the faster, cheaper shortcut:
That commitment gets tested during every burst of growth. In those moments it’s so easy to think, “Maybe there’s a faster, cheaper, easier way to do this, because we really need to get more product out the door.” It’d be easy to take shortcuts then. We’ve had to fight that and stay true to what we want to present to the customer.
That’s also partly why it took us so long to expand our distribution. We only started our wholesale program two years ago, because we couldn’t support it before—everything we sold online was all we could produce. As we grew the supply chain and our manufacturing, we finally extended the distribution so people could find us in more places.
On the COVID scale-up that got messy:
During COVID, everybody sort of faced this. We scaled from maybe 300 employees and 300,000 square feet pre-COVID to about 1,000 employees and a million square feet, operating across five or six different buildings. It got a little messy. We were rushing to make product and rushing to scale, and we weren’t as focused on making sure the cost side of the business was managed well.
Then post-COVID hit us in the gut. All that demand had been pulled forward, and when it dropped, we were left with all this overhead to manage. We had to right-size—get to the right cost structure—and that’s a very painful process. We had to shrink and do layoffs. You do it for survival, as fast as you can, but it still took us the better part of two years.
Right-sizing never comes down as fast as you think it could. You’re stuck in things—leases, and even layoffs. You can’t just walk in and cut everything; it’s always these incremental steps. Coming out of it, I’ve had to learn to be a much more detailed operator. We brought in more skilled people and built real budgeting and expense-management processes. If I’d figured that out sooner—how to build the structure to manage growth without losing sight of the cost side—it would’ve helped a lot.
On why he never took outside money:
We’ve never taken outside funding, and that’s probably helped us. In the mattress space, you see the brands that went that route and never figured out the hard muscle of how to make money—they haven’t been able to make it. You’ve seen it across all kinds of industries. The D2C brands built on the idea that growth will solve all problems faced a real reckoning. There’s been a flushing out. At some point, the organization has to learn how to make a profit.
For us it comes back to something simple: no profits, no charity. There’s no mission without profits. All the charitable work, the B Corp initiatives, the 1% for the Planet, the employee programs—you can’t do any of that if you don’t make money. Our organization understands that a lot more now than it did a few years ago.
On the resilience he learned from his father:
My dad was a Vietnam War refugee. He fought with the Americans in the South, spent three years in a reeducation camp, and in ’79 he saved up enough to sneak the family out on a fishing boat. He came here with nothing, started as a delivery man in a friend’s furniture store, and eventually built his own mattress business. He put seven kids through college.
To see that kind of resilience—picking up a family, going to a new country, learning a language—that taught me perseverance. Every day you put your boots on and take one step forward. When you get knocked down, you get back up and keep moving. Seeing what he did makes my own journey seem a lot easier.
Hear Vy’s full conversation on Shopify Masters for more on the no-hover experience center he built with kombucha on tap, why he refuses to hide what’s inside the bed, and the extra-firm line that became a surprise hit with athletes.
