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How this entrepreneur went from a crack addict to a self-made multimillionaire

CNBC logo CNBC 20-09-2017 Jane Wells

© Provided by CNBC Mike Lindell says there aren't many crack addicts who've become successful, but he's one of them.

"It can be done, people," he laughed.

The self-made multimillionaire and infomercial superstar created the MyPillow empire from scratch in 2004. He did it while addicted to drugs. "People say all the time that's one of the biggest miracles ever."

He's been clean and sober for over eight years, but his path from rags to riches — and almost back to rags — is an amazing American success story.

It is also one long, strange trip.

From college dropout to aspiring entrepreneur

MyPillow is located in Lindell's hometown of Chaska, Minnesota, outside Minneapolis, a place he's always stayed close to. Back in 1979, "I went to the U of M (University of Minnesota) for one quarter, and I was working two jobs," he said. "I felt like I was just wasting my time."

He quit school and continued working both jobs, including one at a grocery store. "I actually got fired at the grocery store," Lindell said.

He clashed with the manager, but he believes the manager sparked his entrepreneurial spirit. "He says, 'Well, Mike, if you don't like it here, maybe get your own company someday.'"

Lindell did, but only after several failures.

In the '80s, Lindell tried to make money in a variety of ways. He started a carpet cleaning business after his sister's apartment became flooded. "I said, 'Wow, this would be a good business,' and I wasn't doing anything."

Then he tried to make money as a professional card counter in Las Vegas. It didn't always go well. "I remember being at one of the big casinos," Lindell recalled. He thought the dealer was cheating him.

Outraged, the then 22-year-old kid from Minnesota called over the pit bosses. "I said, 'He's second dealing me! He's second dealing me!' And I'm thinking this guy is in trouble." Lindell was wrong. "They came around the table and picked me up and literally threw me through the front door."

Lindell's other zany business ventures included trying to raise pigs. That went south when the pigs broke out of the pen he had set up in a residential area. Then "the hog market collapsed and I lost everything," he says.

That was followed by a lunch wagon business he started after hearing how successful they were in California. "We didn't have nothing like that on this side of the Twin Cities." Lindell bought a lunch wagon and went to the biggest business in town, forcing his way in to see the boss and promising free sandwiches for everyone during a one-week trial. The boss gave the go-ahead. "He liked that entrepreneurial spirit."

Eventually, though, Lindell started working as a bartender, and then buying a bar. "Probably wasn't a real good idea because I was an addict at the time, a pretty hard-core cocaine addict."

More on that in a minute.

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MyPillow appears in a dream

All his life, Lindell had trouble sleeping and never liked his pillow. "I was 16 years old at the Supervalu Store in Chaska, Minnesota, working as a bag boy, and with one of my checks I went out and bought a $70 pillow in 1977," he said. "Who does that as a teenager?"

In 2004 the idea for MyPillow, a pillow that would hold its shape, came to him in a dream. "I got up in the middle of the night — it was about 2 in the morning — and I had 'My Pillow' written everywhere in the kitchen and all over the house."

One of his daughters came upstairs to get a glass of water and asked, "What are you doing, Dad?" Lindell said he told her, "I've got this idea for this pillow. It's gonna be called MyPillow. What do you think about it?" Her reaction still makes him laugh. "She goes, 'That's really random,' and she went back downstairs."

Lindell dove in to the project, convinced the dream came from God. He and his son, Darren, spent hours cutting up foam and testing configurations before they came up with a pillow that would hold its shape. Lindell taught himself how to sew — "I didn't know how to thread the bobbin" — and he converted an old hammer mill to cut up the foam.

Eventually, Lindell had made several dozen pillows, and he went to the local Bed, Bath and Beyond. "I said, 'I have the best pillow in the world. How many would you like?' And they were like, 'OK, you need to leave.'"

A relative suggested Lindell set up a kiosk in the mall. "I said, 'What's a kiosk, and how do you spell that?'" He borrowed $15,000 to set up a kiosk during Christmas, but sold only 80 pillows. However, one buyer was a man who ran a local home show in Minneapolis. Lindell said the man was so impressed with the pillow, he invited Lindell to come to the next show.

That's when sales started to take off. "We sold out."

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Hitting rock bottom

The pillow project kept Lindell's cocaine addiction at bay, but it never went away entirely. "And then I got into crack cocaine," he admits. During this time, Lindell's marriage broke up, he lost his house, and he almost lost his business.

In March 2008, Lindell said, he was awake for at least two weeks doing crack. He tells an incredible story about his dealer, Lee, who put the word out on the street that no one was to sell Lindell any more drugs until he got some sleep.

Still, Lindell tried to score that night after Lee fell asleep, but no one would sell him even a single rock. "One of the guys said, 'You're our only hope.'" When Lindell returned to his dealer's apartment, Lee was awake. "He goes, 'Give me your phone. I'm going to take a picture. You're going to need this for your book.'"

Lindell still has the picture. He looks haggard and disheveled. It will be on the cover of his upcoming autobiography.

Even after all that, it would take another 10 months for Lindell to really hit bottom. On Jan. 16, 2009, "I had one prayer that night," he said. "God, I want to wake up in the morning and never have the desire again."

Lindell was convinced that God had bigger plans for him, because his business was starting to do well. "I woke up the next day — and you've got to realize this is years of crack addiction — I go, 'Wow, something's different.'"

He said that was the beginning of his sobriety. His desire for any form of cocaine "was just gone."

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A new start in infomercials

By 2011, MyPillow was getting some media attention. A local newspaper profiled Lindell and the company. The day the story came out, he was back in Vegas making some money at the card table.

Lindell always had his phone set to ding every time an order came in. Suddenly, there was a ding, and the dealer asked him about it. "I said, 'My dream is to have (my phone) ding so much I'll have to turn it off.'"

At that moment, the phone started dinging like crazy. "I still get goose bumps when I talk about it," Lindell said. "I sold more pillows that day than I had in probably the whole half a year combined."

Soon Lindell started taking out print ads telling his story, and then he had another dream: Make an infomercial. But even that endeavor had its own strange path to success. The night before the first taping, the producers discovered Lindell wasn't good at reading a script. "So we just went live the next morning with no teleprompter ... and I just ad libbed it."

It apparently worked. "By the end of the year, we went from five employees to 500." The company now has close to 1,500 employees, many of whom have his personal cellphone number in case something goes wrong.

Over the last six years, Lindell estimates he's spent $100 million on infomercials. The results? He's sold 30 million pillows, and revenues have grown from around $100,000 a year to close to $300 million.

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Battling critics

Lindell's dream come true has had a couple of nightmares in the last year. First, California authorities sued the company for making unsubstantiated health claims. Lindell said he settled rather than go to court. "They would have run me out of money." The settlement has forced him to redo advertising, and it caused a pause in sales that led to layoffs in the spring. He insists business is back on track.

Then the Better Business Bureau revoked MyPillow's A+ grade, turning it into an F. The reason? The company's never-ending 2-for-1 price "deal," which goes against BBB standards because Lindell is manufacturing his own product and is therefore his own wholesaler. "Everyone thought it was political, which I still believe it is."

Political, perhaps, because Lindell was an early supporter of Donald Trump, and that support has not wavered. Trump asked to meet Lindell last summer, and the president highlighted MyPillow as a great example of manufacturing jobs in the United States. Lindell was even invited to the White House and sat next to Trump at a "Made in America" event. Lindell was impressed. "This guy is going to be the most amazing president in history."

Lessons learned

These days Lindell has expanded the MyPillow product line to include beds, linens and pet beds. He's focusing more on his foundation, which channels funds to inner-city programs. There's the upcoming book, and maybe a movie, with the help of his friend, actor Stephen Baldwin.

It's a crazy story. It's also a business story, and Lindell has a few pieces of advice for novice entrepreneurs.

First, if you invent something, get a patent. Even if it's a provisional patent, it will protect your idea. Lindell did so after a large pillow company rep suggested to him that someone might try to patent his same idea simply to keep such a product off the market.

Second, fight for better shipping rates. Lindell didn't realize for a long time that he could command better pricing based on volume. "I was probably $5 or $6 million in the hole" due to shipping costs in 2012. It's tough for entrepreneurs when they're small to get good prices on stuff."

Third, you have to have a passion for what you're selling, and you have to treat every customer like they are your only customer.

More than anything, Lindell hopes his story convinces other people struggling with addiction that things can get better.

"I look back now, and I go, 'The only way that we were able to do that was divine intervention.'"

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