RESIDENT (formerly DreamCloud Holdings, LLC)
DreamCloud Holdings, LLC (DCH) is the corporate umbrella for Nectar Sleep, DreamCloud Sleep, Level Sleep, and AWARA. Its business model is online sales of beds, bedding, and related home products under multiple brands, each with its own website.
On May 21, 2019, DreamCloud Holdings, LLC introduced “Resident” as the new corporate umbrella as they expanded into home furnishings. The previous December they launched Wovenly, a brand of rugs. Then in early 2019 they introduced Awara Sleep latex mattresses. With the launch of Resident was the introduction of the Bundle brand of upholstered seating, such as sectional sofas.
The Founders
DreamCloud was founded in 2016 by Eric Hutchinson, Craig Schmeizer, and Ran Reske. All three were experienced in finance, investment management, and marketing. They organized the corporate structure and found people to design mattresses and the resources needed to enter the mattress marketplace. According TM Capital, “[T]he Company entered into an innovative strategic partnership with one of North America’s largest mattress supply and distribution resources.”(1)
The First Products
In September 2017, DreamCloud Holdings released the Nectar Mattress, an online-only, low-cost memory foam mattress. This new product took off rapidly, as Casper and Yogabed did three years before. Then in January 2018, DCH launched its namesake product, the DreamCloud Mattress. This is a luxury hybrid mattress, also online-only, selling for much less than luxury mattresses in retail stores.
Acquisition
In July of 2018, DCH acquired an already successful online mattress brand, Level Sleep.(2) (3) This filled the middle between Nectar and DreamCloud with a moderately-priced memory foam mattress.
Product Lineup
The signature sleep products of the business units of DreamCloud Holding (Nectar Sleep, Level Sleep, DreamCloud Sleep, AWARA) are mattresses. Nectar is a low-priced memory foam mattress ($399 to $899). Level Sleep is a moderately-priced all-foam mattress with three zones (Soft, Firm, Medium) for the head & shoulders, torso, and hips & legs/feet. The DreamCloud is an 8-layer luxury hybrid mattress with memory foam, latex foam, and pocket coils.
Besides mattresses, DCH businesses also sell bed frames, platform beds, adjustable bases, pillows, and sheets. Other bedroom accessories have been or are being considered, such as bedroom furniture (other than beds) and rugs.
Marketing
All DreamCloud products are sold online. Additionally the Nectar mattress is available in and/or through several stores across the country. Level Sleep has a showroom in Sonoma, and Nectar Sleep has a store at a mall in Tyson’s Corner, VA. Nectar is the only DCH mattress sold on another website. The Nectar mattress and pillows are listed on Amazon, along with the Level Sleep Restore Pillow.
Legal Issues
In November 2018, Casper Sleep filed suit against DreamCloud LLC d.b.a. Level Sleep, alleging unfair competition through unsubstantiated health benefits.(4)
Casper Sleep’s primary basis of the allegations is the date of the research on the mattress being six years before the company was started. However, the instigator of the research was the lead designer of the mattress. He is also a co-founder of Level, which was created to market the mattress which was the subject of the research.
It is fair to note that DCH/Level Sleep might not have been the target of this suit had they not so quickly taken such a large share of the Direct-to-Customer mattress market. Apparently Casper Sleep saw this as a threat to their market share.
Outlook
The rapid rise of two new brands and their adding other successful brand to their family has caught the attention of the bedding industry. This is attributed to careful planning by DreamCloud’s founders, who are experienced and savvy in marketing and corporate finance. The real question is how long before their rise levels off. If the record of other boxed bed brands is any guide, DreamCloud Holding brands will continue to upgrade and diversify their product lines.
Footnotes
1. “Nectar Completes Growth Equity Financing,” TM Capital, n/d.
2. “DreamCloud Holdings Adds Level Sleep To Its Fast-Growing Family Of Mattresses,” press release by DreamCloud Holdings LLC, July 19, 2018, on Cision PR Newswire.
3. Lorna Sheridan, “Sonoma’s Level Sleep acquired by DreamCloud,” Index-Tribune (Sonoma, Calif.), July 23, 2018.
4. Andrew Keshner, “Mattress maker misleads customers about how beds improve sleep, rival claims,” MarketWatch, Published: Nov 22, 2018 9:13 a.m. ET.
