Almost every startup can point to the lightbulb moment from which a successful business concept emerged, but Kacie and Sam Malouf may have the most humble origin story of all time.
And it’s one that began with a set of secondhand sheets.
Back in 2003, Sam was working toward a masters degree in accounting at Utah State University and Kacie was working at a Logan buffet restaurant. The newlyweds were setting up their first shared household and Kacie, according to Sam, was appalled to learn that her new husband had a bed outfitted with sheets purchased at a garage sale in Mexico.
Recognizing a ground-up revamp of the sleeping equipment was in order, the budget conscious young couple scored a new king-size bed for $75 at a tent sale and then went shopping for a set of sheets — that did not have a previous owner.
“We quickly found out how expensive king-size sheets were,” Kacie Malouf said. “And we couldn’t believe it.”
And not only was the bedding exorbitantly pricey, the Maloufs were pointedly unimpressed with how the products were packaged and sold. The experience resonated with Kacie and Sam and kindled the first sparks of an idea that, perhaps, they’d stumbled across a market opportunity.
Sam and Kacie Malouf stop to talk with Linden Baker, founder of Fairkind, in the photo studio as they show the different sections of their business in Nibley, Cache County, on Tuesday, Jan. 18, 2022.
Scott G Winterton, Deseret News
The Maloufs said Egyptian cotton was all the rage at that time when it came to high quality bedding and they decided that was the product that might be worth pursuing. But where to begin?
“We started a sleuthing process that was, really, based on no background at all,” Sam Malouf said. “As much as I revered my accounting education, it didn’t help inform how to investigate a supply chain.
“All we had were questions. Where did this come from? Where was it actually made? The tracing process was a huge learning experience for a couple of 20-somethings.”
Thanks to a combination of creativity and tenacity, the investigative challenges were met and overcome, and it didn’t take long for the Maloufs to find and secure a wholesale supplier and jump into what was then the still nascent days of online retailing. The dot-com bubble had burst just a few years earlier and, when it came to online retailing, there were far more cautionary tales than success stories when the first Malouf Egyptian cotton sheet sets went on sale in 2004.
There was an instant thrill for Kacie and Sam when they shipped that first set of sheets to a paying customer. And it stayed exciting as sales slowly grew. But along with the burgeoning success of their little startup came fresh obstacles to overcome and the need for more creative solution-making.
Their newlywed apartment was doing double duty as both abode and warehouse with stacks of product slowly overtaking living space. The couple also discovered a workaround on packaging for shipping after discovering that many of the boxes discarded by their local liquor stores perfectly accommodated sheet sets. While they were making money on every set that sold, it became clear as customer volume mounted that capital to build inventory was becoming a critical issue.
“Figuring out financing quickly became our biggest challenge,” Kacie Malouf said. “And, I would never recommend this to any business startup, but we turned to credit cards.”
Kacie Malouf explained that, at the time, you could obtain 0% interest credit cards fairly easily and the couple relied heavily on that method to help move their business to the next level. How heavily? The Maloufs were able to assemble some $2 million in financing over the next few years and still keep a scrapbook containing the over 100 cards they successfully secured to do it.
Sam and Kacie Malouf laugh and talk with employees in the area of their headquarters dedicated to the brand Downeast as they show the different sections of their business in Nibley, Cache County, on Tuesday, Jan. 18, 2022.
Scott G Winterton, Deseret News
While the business steadily grew and Kacie and Sam ran the whole show by themselves for seven years, they reached a nexus. Should they keep plugging along with this successful, but still relatively modest entrepreneurial “project” or was it time to turn it into a bigger business?
There were plenty of signs leading the way forward. While still an operation Kacie and Sam could run as a couple, the company was making waves as an online disruptor, finding a niche in the broader market as the provider of high-quality bedding products at prices that were beating their bigger competitors. And the Maloufs believed there was room to build their customer base through expanding product offerings and perhaps even branching into new areas.
So, they took the plunge and began hiring staff, a move that turned out to be a revelation.
“Their expertise created space for Kacie and me to think of new ideas and research those other gaps in the market that needed to be filled,” Sam Malouf wrote in a January story he penned for Utah Business Magazine. “Soon after expanding our team for the first time, we were able to add to our lineup of bedding products with mattress protectors, comforters, duvet covers, and the big-ticket item that found a huge audience: rolled and compressed mattresses in a box that could ship straight to customers’ doors.”
The success of the product expansion helped propel Kacie and Sam’s little bedding company upward and outward, eventually leading to even bigger opportunities across a number of new product and service categories. And they found ways to give back to the community that helped support their success along the way.
In 2012, the Maloufs moved into their first corporate office and just four years later were able to build a sprawling new headquarters facility just outside of Logan. That same year, in 2016, they launched the Malouf Foundation, a nonprofit dedicated to confronting child sexual exploitation, targeting sex trafficking and online abuse.
In 2017, the company manufactured its first furniture items, marking a move into the home furnishing market. And 2019 saw a decision to bolster their commitment to making wider, positive impacts to the world around them when the Malouf operations earned Certified B Corporation status. The designation embraces a “triple bottom line” mission of profit, people and planet and requires a rigorous certification process that assesses social and environmental performance metrics alongside business operations.
Sam and Kacie Malouf, co-chairs and founders of the Malouf Foundation, welcome people to the Human Trafficking Policy and Education Summit at the Malouf Foundation in Logan on Saturday, April 17, 2021.
Spenser Heaps, Deseret News
The Maloufs navigated a flurry of activity in 2020 amid the worst impacts of the COVID-19 pandemic, acquiring Downeast Home and Clothing and boutique women’s clothing retailer Hope Avenue. Kacie and Sam also became partners at Tamarak Capital, a Springville, Utah venture capital firm.
Through their involvement with Tamarak, the Maloufs said they’ve had opportunities to not only back exciting new companies from a variety of business sectors but also confer lessons learned from their years of business success.
“Becoming partners at Tamarak has been exciting for Kacie and me because we still have the spirit of entrepreneurs,” Sam Malouf said. “We love good ideas.”
“One of the companies they mentioned at (our) first meeting was (Orem-based) Pura. Pura was already in their portfolio, and the fact that Tamarak had found what promised to be a unicorn was definitely a reason to get involved on a deeper level.
“We’ve been able to use our company history to advise Pura’s leadership on some mistakes we made early on, and how to avoid them, and provide insight on areas that may help them scale faster — even though they’re already one of the fastest growing companies in Utah.”
While the Maloufs’ core business remains focused on goods for the home, the company has now evolved into six key categories that include consumer products, services, technology, retail, logistics and venture investment. They’ve also established a nationwide distribution network with shipping centers in Utah, California, Ohio, Texas, North Carolina, and South Carolina.
The company reports the network supports daily sales of over 30,000 products — more than two a second — and is operating both online and in major stores in 58 different countries. They’re also leveraging the asset as an additional source of business revenue, handling shipping duties for other retailers.
In his piece for Utah Business Magazine, Sam Malouf mused about the future of the expansive operations he and Kacie now oversee that include an employee roster now exceeding 1,600.
“I’ll keep the predictions high-level in case someone quotes this in 2040,” he wrote. “We know we’ll keep taking calculated risks and making mistakes. We know for a fact that we will keep investing in people, both through the business and the Malouf Foundation. And, we hope that we learn just as much as we did in our first 18 years as founders.”
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