The Billion Dollar Business of Sleep
In our always-on society, sleep has become a luxury. For some, burning the midnight oil is worn like a badge of honor. But increasingly, the pendulum is swinging from staying up to shutting down.
- One-third of US adults don’t get enough sleep.
- Sleeping 6 hours or fewer results in a 13% higher mortality rate.
- Lack of sleep costs US businesses $411B each year.
Mattress startups and meditation apps have something in common: they’re both selling sleep.
While bed-in-a-box companies started with mattresses before expanding into pillows, night lights, and CBD gummies, mindfulness upstarts like Calm are now attempting to corner the market on bedtime stories.
Whether or not you meditate or get a mattress delivered to your front door, the growth of these verticals has validated and broadened the burgeoning sleep economy.
The Sleep Economy
From bedtime elixirs and sleep tracking tech to comfy bedding, sleep aids generated $69.5B in 2017. By 2023, that number is expected to hit $101B.
Surveying the landscape, the sleep economy breaks out across three categories: ambience modification (bedding, lighting, and temperature control), routine modification (think sleep monitors or meditation apps), and therapeutic treatment (like prescription or over-the-counter pills and sleep apnea devices).
In 2017, TechCrunch reported north of $700M in investment flowing to sleep-related startups. In the time since, interest in and investments into the space have produced products intended to help us fall asleep, stay asleep, or improve the quality of sleep.
The Sleep Stack
Going beyond DTC mattresses, and Casper’s less-than-stellar IPO, sleep-focused companies and products are revolutionizing the sleep stack.
Smart beds: Eight Sleep’s smart mattress ($70M in funding), chiliPAD’s temperature-controlled mattress cover, and Beddit’s under-the-mattress sleep monitor (acquired by Apple) are upgrading the regular old bed.
Wearables: WHOOP’s wrist-worn tracker ($100M in funding), the ŌURA ring ($20M), the Dreem headband ($57M), and upstarts like Beddr ($5.6M) are taking a data-driven approach to sleep improvement.
Bedding: Boll & Branch raised $100M for sustainably sourced sheets. Parachute raked in $45M for bedding essentials. And sleep accessories like weighted blankets and the OSTRICHPILLOW have done millions in sales.
Consumables: Melatonin will be a $2B market by 2024. Recently, Remrise raised $8M for plant-based sleep aids. And supplement manufacturers like Vital Proteins, The Nue Co., and Moon Juice are using functional ingredients in concoctions to enhance sleep.
Apps: Calm and Headspace want to corner the market, but Sleep Cycle, Pzizz, and Pillow are giving chase. Of note, searches for “sleep app” exceed those for “meditation app”, so expect the competition to intensify.
Therapeutics: Medical devices are booming alongside the consumer sleep market. By 2025, the sleep apnea device market will reach $9.5B. Count Philips Respironics and ResMed among other billion-dollar companies in the space.
When it comes to wearables, Fitbit tracks sleep stages and duration. Meanwhile, Motiv and Oura have introduced rings that track robust health data, with Oura offering a more expansive look at sleep — including total sleep, sleep efficiency, latency, heart rate variability, and more. But it’s WHOOP, a wrist-worn tracker, that has done the most to shape the sleep narrative and reframe recovery in popular culture.
Instead of simply tracking activity, WHOOP measures Recovery, Strain, and Sleep to determine “personal readiness to perform each day.” More specifically, by analyzing heart rate variability, resting heart rate, and sleep, WHOOP provides users with a green, yellow, or red recovery score each day. And here’s where things get interesting.
Whether it’s professional athletes, venture capitalists, or weekend warriors, WHOOP users are sharing screenshots of their personalized recovery score across social media. The goal is to stay in the optimal green zone, and posting your recovery score is a humblebrag that you slept eight or nine hours last night.
That anecdote explains why WHOOP is winning, at least among a highly competitive class. They’re replacing bragging about pulling an all-nighter with sharing social proof that you’re actually sleeping. It’s a shift that’s representative of the broader trend and the same one that explains why we’re spending billions: sleep has become a competitive advantage in everyday life and, damn, do we want to win.
The Future of Sleep
According to Eight Sleep CEO Matteo Franceschetti, who is set to appear on an upcoming episode of the Fitt Insider podcast, his company is the “Peloton of sleep”.
With $70M in funding, Eight Sleep has created a smart mattress known as The Pod, featuring dynamic cooling and heating, detailed sleep tracking, and sleep coaching. While the queen size model sells for $2,495 and the king commands $2,795, there’s also a $240/year digital subscription for in-depth analytics, meditation content, and more.
Taking the Peloton reference a step further, Franceschetti told TechCrunch that his smart mattress startup could actually be bigger than the connected fitness company: “Our total addressable market is by definition bigger… everyone sleeps, right?”
Not sleeping is not an option. And now that the mental, physical, and economic costs of not sleeping are clear, getting some shut-eye is finally getting the attention it deserves.
As consumers seek out solutions for optimizing and enhancing sleep, the creation of new products, technologies, and companies will fuel the billion-dollar sleep economy. At the same time, and perhaps more interestingly, the cultural shift away from hustle culture and toward a sense of work-life balance could help foster a culture of sleep.
While employers have long paid lip service to corporate wellness, concerns around mental health have made Corporate America ground zero for addressing stress, burnout, and depression. Similarly, as a lack of sleep proves to be detrimental to the bottom line, creating a sleep-first culture will prove to be a worthwhile investment.
Two things: One, expect to hear more about sleep as a business issue. And two, whether you start, invest in, or pivot to sleep-as-a-service for employers, the iron is hot.