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•Case Study: LoveSac

When then-teenager Shawn Nelson made a huge (approximately 7 feet wide) beanbag-like piece of furniture in 1995, he had no idea it would be the start of a multimillion dollar business called LoveSac. Several years later, when he turned 24 with $55,000 in credit card debt, it's likely that he still wasn't aware of the company's looming popularity. Now 29, Nelson is the CEO of a progressive 80-store multichannel retail company, and he's probably taken offense at the first sentence of this story. The company's Web site boldly states that a LoveSac is "not a damn beanbag." Nelson goes to great lengths to differentiate both the product and the company from the 1970s-era foam-filled "furniture" that had a propensity to tear open, spilling its filling.

"LoveSacs aren't beanbags at all," Nelson explains. "They're high-end furniture, filled with a shredded Durafoam that lasts forever. The products are guaranteed for two lifetimes." Neither, he says, is LoveSac a beanbag company. Indeed, the retailer has branched its product line into comfortable, funky, modular furniture aimed at a hip audience with disposable income. The self-titled "hardcore leisure" products come with equally hardcore price tags, a middle-of-the-line Sac ringing up at around $200. But the products are selling, and LoveSac stores continue to open, despite the fact that direct-to-consumer retailing was not in Nelson's original plan. "We fell into becoming our own retailer because none of the furniture stores thought they could sell our product. So, we started a Web site, then began operating both corporate stores and a franchise network," he says.

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•Case Study: LoveSac