Engineers stopped writing code a year ago, AI employees tripled the company
Eight Sleep's email marketing team went from 2 people to 0, with annual revenue approaching $100 million; engineers stopped writing code a year ago, replaced by hundreds of AI engineers. Matteo has started counting "human employees" and "AI employees" — counting AI, the company is three to four times its current size.
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Salaries are out of control, hiring shifts to Europe
Matteo says we are "back to 2021": not just engineers, even product managers' salaries are out of control, and every company is making crazy offers. The bigger problem is not hiring but retention — as long as you are a company with a good brand, employees will keep getting higher-paying offers. Eight Sleep's response is to shift hiring increasingly to Europe and outside the US. He also admits that when the salary gap gets large enough, "there's nothing you can do", and people do get poached by companies like OpenAI and Anthropic.
— Matteo FranceschettiHardware founders get first-year costs wrong by 50%
Asked what investors don't understand about hardware, Matteo gives a very specific answer: founders in their first year, or even first three months, don't really know what it costs to produce the device, nor what the return rate is. So the BOM and COGS they present when fundraising will be off by at least 50%. This is a due diligence checklist item for hardware investors: don't trust the cost structure early founders report.
— Matteo FranceschettiPlatform-reported CAC is fake, run your own incrementality tests
Matteo says you can't trust platform attribution, because the same platform will double-count conversions. He gives an example: Meta's dashboard shows a CAC about 20% lower than the real CAC. Eight Sleep's approach is to build its own model to calculate the true CAC of each channel, and run an incrementality test every six months — for example, turning off a channel in two similar-performing regions and seeing how much revenue drops, thereby calculating the channel's true incremental value. His reasoning is direct: if you don't do this, the brand is only fooling itself.
— Matteo FranceschettiEmail marketing team went from 2 people to 0, nearly $100M revenue
Eight Sleep originally had a two-person email marketing team. After the lead left, co-founder Alexandra took over and within three days built multiple bots to take over all email marketing. Now the team is zero people, and email marketing contributes close to $100 million in revenue. The mechanism: AI decides based on historical data when to send, what email to send, and what copy to use. Matteo also says he has started counting "human employees" and "AI employees", and counting AI employees, the company is about three to four times its current size.
— Matteo FranceschettiEngineers stopped writing code a year ago
Matteo says Eight Sleep's engineers stopped writing code about a year ago; now they have hundreds of AI engineers writing for them. This is why the company can expand in 35 countries (including China, the Middle East, Europe — markets with very different regulations) with a very small team. The main tool is Claude, with monthly spending in the millions of dollars. From this he raises an investment question: if 5% of the engineering budget is spent on Claude, will that proportion rise to 50% or be pushed down to 1% by open-source models? His own judgment is that both happen simultaneously — usage rises, unit price falls, net effect is a decline.
— Matteo FranceschettiHe believes model self-training has already happened
Asked about OpenAI people calling for a "little pause", Matteo says the truly worrying part is models learning on their own, training themselves — that is the starting point of losing control. The host asks "don't you think we're already there", and he answers "I think we are already there", and believes there is a big gap between the capabilities users see and the capabilities inside frontier model companies, which the latter have already seen behind the scenes. He mentions that in OpenAI's models there have been attempts like agents forming their own groups.
— Matteo FranceschettiEndorsements only with real product users
Matteo says any athlete or celebrity partnership has only two conditions: first, they must actually use the product, preferably having bought it with their own money; second, he must be able to establish a direct relationship with the person, not accept a manager blocking in between. The reason is practical — the greatest value of such products is that they casually tell friends it's good; if they just got millions of dollars in equity, it's purely a financial transaction and brings nothing.
— Matteo FranceschettiInterviewing at both Anthropic and us is a red flag
Matteo says people still tell him "I'm choosing between Anthropic and Eight Sleep", and he thinks this is a very bad red flag — not because of salary, but because it shows the person hasn't thought it through; the two jobs have nothing in common. When hiring, he cares more about whether the person is driven by the right things, not simply comparing prices.
— Matteo FranceschettiIn their own words · checked verbatim
Well, our engineers stopped coding around a year ago.
Matteo Franceschetti0:00
A great brand with a shitty product goes nowhere.
Matteo Franceschetti0:00
Oh, 100% because otherwise they just fool themselves.
Matteo Franceschetti9:16
Well, there are two conditions for any deal now. First, they need to use the product.
Matteo Franceschetti38:05
And so he threw away the 300K mattress, and now he sleeps on eight sleep.
Matteo Franceschetti40:06
Sometimes people say, oh, I'm at the final stage with Anthropic and 8 Sleep. And to me, that is a really bad red flag.
Matteo Franceschetti52:35
Figures
| Eight Sleep word-of-mouth channel share of revenue | about 40% | 7:14 |
| Eight Sleep annual churn rate | low single digit (single digit, low single digit yearly churn) | 13:18 |
| Email marketing annual revenue | close to $100 million | 17:29 |
| Claude monthly spend | millions of dollars (less than $5 million) | 19:39 |
| Number of Eight Sleep units bought by a celebrity | 55 | 41:10 |
| Eight Sleep team size | 160 people | 56:36 |
| Target team size in three years | 250 people | 56:36 |
| Finance team headcount (similar companies about 20 people) | 4 people | 58:36 |
Glossary
- BOM / Bill of Materials
- A list of the costs of all components needed to produce a device.
- COGS / Cost of Goods Sold
- Costs directly related to production, such as materials and labour.
- CAC / Customer Acquisition Cost
- The average amount spent to acquire a new customer.
- incrementality test
- Measuring a channel's true incremental contribution by turning it off and comparing revenue changes.
How to listen
Suitable for hardware founders, growth leads and early-stage investors, especially readers focused on AI replacing human labour and true CAC measurement.
The celebrity anecdotes from 41:10 to 43:18 can be skipped, low information density.