Consider what Purple has accomplished since the Alpine-based company started selling its innovative mattresses in late January 2016.
From nothing, Purple’s sales zoomed to $65.5 million in its first year. A clever marketing campaign propelled that surge, highlighted by a promotional video that went viral — it’s had 163 million YouTube views — of a hip Goldilocks doing raw egg tests on mattresses, with only Purple’s passing muster.
The pace picked up even more in 2017. Over the year’s first nine months, net revenue climbed to $134 million. And when Purple’s annual report comes out soon, income for all of 2017 is projected to reach $190 million, maybe even $194 million.
Brothers Tony and Terry Pearce, the company founders, have gone from having 50 employees to more than 900 today — 400 in Alpine, where company executives and a large marketing team are, and another 500 in rural Grantsville.
Last October, Purple opened a warehouse and manufacturing facility the size of 10 football fields in the Tooele County town to build mattresses with its trademarked hyperelastic polymer cushioning.
“Hiring 500 people in a year in a rural town like Grantsville is really important to our owners,” said company spokeswoman Savannah Turk. “One of their goals has been to create meaningful employment. To help the state they love has been very important to them.”
Unleashing the ‘gazelles’
That kind of payback is why state and local governments are well advised to do what they can to help “high-growth” companies, according to a recent analysis by the Brookings Institution, the century-old research group in Washington, D.C.
Policymakers, report author Ian Hathaway concluded, “should aim to develop a well-educated workforce, promote competitive high-tech and knowledge-intensive industries and recognize the relevance of entrepreneurial support [and] mentoring.”
He also recommended liberalizing immigration policies to help foreigners educated in the United States to stay here to start businesses.
Hathaway studied 25,000 companies that appeared on Inc. magazine’s list of high-growth companies between 2011 and 2017, firms defined as having annualized revenue growth of 20 percent or more over a three-year period.
He picked these companies because economists have known since the mid-1990s how important these “gazelles” are to job creation and the economy. In the late 1980s and early 1990s, he noted, 4 percent of high-growth companies accounted for 60 percent of all new jobs. On into the first decade of the 21st century, 2.4 percent of firms created 40 percent of new positions.
Examining these companies further, he found they tended to be relatively small (averaging 199 employees), populated by young owners and employees (ages 35 to 44) and concentrated in industries that require intensive knowledge of a specialized subject. Many were tech companies, but to Hathaway’s surprise, “the substantial majority are not.”
He also determined the Wasatch Front is as productive as any area in the country for incubating high-growth firms. Provo-Orem was second on the list of metropolitan areas for unleashing gazelles. Salt Lake County was sixth.
“If they could be seen as one single economic unit, it could have a positive effect,” Hathaway told The Salt Lake Tribune. “Long story short: A big collection of smart people creates great things, in excess of the sum of the parts.”
The results impressed Juliette Tennert, chief economist at the University of Utah’s Kem C. Gardner Policy Institute, applauding “Provo and Salt Lake [for] showing stronger postings than places like Silicon Valley and Seattle.”
“Our state is very much rising as a [center] for innovation,” she said. “We’ve got this virtual cycle going on — innovation begets innovation, growth begets growth.”
Metro areas with the most high-growth companies
1. Boulder, Colo. — 367.
2. Provo — 341.
3. Washington, D.C. — 329.
4. Huntsville, Ala. — 297.
5. Austin, Texas — 289.
6. Salt Lake City — 232.
7. San Francisco — 219.
8. Atlanta — 194.
9. Boston — 184.
10. Denver — 181.
Source: Brookings Institution
A royal idea
The Pearce brothers had pursued separate careers before they decided in 1989 to merge their complementary talents and go into business together. Tony Pearce had spent a dozen years working with advanced aerospace materials. Terry Pearce’s background was more in manufacturing, design and project management.
They started building high-tech, carbon fiber wheelchairs, learning over time that their wheelchair users really needed a better cushion to avoid developing painful pressure sores.
So the Pearces invented a lightweight cushioning fluid that has been used over the past 20 years in numerous products beyond their wheelchairs — Nike sports shoes, Dr. Scholl’s inserts, critical-care medical beds, angle and knee braces, golf bag straps, “nests” for premature babies in neonatal intensive care units, backpack straps and industrial knee pads.
Along the way, they also created the hyperelastic polymer and envisioned using it to make mattresses that will conform to a sleeping person’s body, sinking under pressure points such as shoulders and hips while rising elsewhere to provide back support.
Terry Pearce put his engineering skills to work inventing a sizable “Mattress Max” machine that can put out a hyperelastic polymer sheet that looks like a purple waffle the size of a king bed, in thicknesses of 2, 3 or 4 inches.
By the fall of 2015, the Pearces were ready to start selling mattresses. They were operating almost exclusively online, enhancing the attractiveness of their prices ($999 for a queen bed, $1,299 for a king) with free shipping and the right to a full refund if the mattress was returned within 100 days of purchase.
They conducted a Kickstarter campaign that raised enough money to get the business rolling at the start of 2016. That’s when they released the marketing video produced by the Provo-based Harmon Brothers (famous for similar videos for Squatty Potty and PooPourri toilet spray) that featured Goldilocks’ search for just the right bed. It was a hit.
They named their company Purple, in part because it mixes their allegiances — Terry wears University of Utah red while Tony is BYU blue.
“Purple is also a neutral color that no one really owned, so we made it our own,” said spokeswoman Turk. “It’s the color of royalty. We’re helping people feel like royalty using the bed’s quality products.”
Tapping into Utah’s talent pool
Because it’s only been around two years, Purple would not qualify for Hathaway’s study. But it was listed last fall on a similar list of fast-growing companies that Mountain West Capital Network puts out (placing third behind FireFly Automatix, a manufacturer of self-propelled turf harvesters and mowers in North Salt Lake, and PrinterLogic, a software company in St. George). Its revenue generation and job creation numbers also fit the high-growth definition used by Brookings.
Purple’s explosive growth also was influenced by many of the characteristics identified by Hathaway as conducive to stimulating the emergence of high-growth companies — “a well-educated workforce, a concentration of high-tech activity, a critical mass of midcareer professionals and an experience-based culture that is oriented toward entrepreneurship.”
The presence nearby of the U., BYU and Utah Valley University gave Purple access to an abundance of workers with college degrees. That translated, Turk said, into “Terry [Pearce] feeling lucky to find so many engineers to work on his machinery.” What’s more, Wasatch Front technical schools supplied numerous employees to keep machinery running and to experiment on ways to improve the manufacturing process.
Having other high-tech companies around also bolsters the talent pool, Hathaway said. Purple’s management ranks are thick with executives whose résumés include previous stints at companies like Traeger Grills, NuSkin, Overstock.com, Morinda and the venture capital firm Peak Ventures.
Purple received a postperformance tax-rebate incentive from Tooele County to develop the facility in Grantsville, County Commissioner Shawn Milne said. Worth up to $3.3 million, the incentive is based on the company meeting specified employment and investment goals.
Last December, the company also got a grant of up to $15,000 from World Trade Center Utah to help boost its export capabilities.
A couple of Hathaway’s findings struck a chord with Ivy Estabrooke, executive director of the Utah Science, Technology and Research Initiative (USTAR).
She was impressed with the variety of industries in which high-growth companies thrived, contending that diversity helps offset downturns in other high-growth business sectors, such as construction, that are subject to booms and busts.
But the importance of higher education also stood out to her, showcasing an important change in Utah’s ongoing employment situation.
“Having such a robust economy, growing these companies so quickly, provides lots of economic opportunities for individuals, so they can stay here in Utah,” Estabrooke said. “That’s a changing trend. Historically, there was a lot of brain drain in Utah as [college] graduates felt they needed to move to California or the East Coast to have good careers. But these high-growth companies are providing jobs here for these folks now.”
Purple is expecting to provide people with good jobs for years to come.
The Pearces opened doors to more investment by executing a reverse merger in February with a “special purpose acquisition company” called Global Partner Acquisition Corp. That earned the company a slightly new name, Purple Innovation Inc., and a seat on the Nasdaq exchange with the call letters PRPL.
The company also is exploring expansions in the bedding industry, which is valued at $24 billion annually.
Rather than relying almost entirely on online sales, Turk said it is looking to move more mattresses and related products into brick-and-mortar retail stores. Purple also wants to enter more urban markets, in cities such as Chicago, Phoenix and San Francisco. Europe is a possibility, too.
“It’s a big undertaking. We’re slowly working our way out into the world,” Turk said. “There’s huge potential in Europe, but we’re learning what needs to be done to get in there.”
What are the nation’s top high-growth industries?
Information and technology services — 3,474 companies.
Advertising and marketing — 2,472.
Business products and services — 2,253.
Health care — 2,051.
Software — 1,816.
Source: Brookings Institution