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Support for this podcast and the following message come from the Glenn Lovett's new Caribbean Reserve expression, a new single malt with a bold tropical twist. Learn more at the Glenlivet dotcom 20-20 imported by the Glenlivet distilling company, New York, New York.

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Hey, it's Guy Raz here. You know, one of the hallmarks of economic crises like this one is that people actually start businesses slack betterment, even Airbnb. All companies we featured on this show were all founded during the last economic crisis.

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And a lot of people are talking about using this period now as a chance to reimagine what they do.

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And if that's you. Well, I've written a book that you might find helpful. It's called What Else? How I Built This.

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And I wrote it for anyone who is starting a business thinking about starting one or just looking for inspiration and ideas from the incredible stories in the book. The How I built this book is designed to be that voice in your head. Cheering you on when you're feeling like you just want to give up. The book is based on interviews with hundreds of leading entrepreneurs, and it traces how to start a business or pursue a big idea and how to avoid the big mistakes along that journey.

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Normally, I'd be leaving on a book tour at around this time where hopefully I'd get a chance to meet some of you and thank you for your support of our show. But of course, book tours are all going virtual right now.

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So I wanted to make sure that you and I are most devoted listeners, get a chance to get a signed copy. And if you preorder the book in the next few weeks before September 15th, I'll send you a free signed book place that fits right inside.

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You can order the book however you get your books or you can find all the information you need at Guy Raz Dotcom or how I built this dotcom.

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So how I built this team is taking a much needed and very short break this week, but we will definitely be back next Monday with a brand new episode. As for today's show, well, some of you may remember a time not too long ago when e-commerce was supposed to be dead like over. But today's episode is about two guys who never stopped believing in the Internet or in the many things that you can buy on it. This one first ran back in April of twenty eighteen.

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Enjoy. So, all right, I'm going to read some of the websites that you guys launched, hotplates, dotcom, assuming that sold hotplates. Yeah, yeah, yeah. OK, um, all bar stools, dotcom. So what do you think that's OK. Yeah, you're doing good. You're doing good. All right. My dinner plate dotcom dies. That's a classic. I love this one. Every grandfather clock dotcom, a very hot category online.

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Who knew people were searching for that? We did. From NPR, it's how I built this show about innovators, entrepreneurs, idealists and stories behind the movements they built. I'm Guy Raz. And on today's show, how an online search for birdhouses led to college roommates down an Internet rabbit hole that inspired what would become Wayfair, an e-commerce company that now sells almost five billion dollars worth of home goods each year. So pretty much everyone we've had on the show had a passion for a product that they needed to put out into the world, La American believe the world needed Laura Barres, Jenny Burton.

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Bauer was convinced that her ice cream was going to change how people thought about ice cream. Even Jimmy Wales, founder of Wikipedia, thought everyone should have access to free knowledge. But I'm here to tell you that that is not always the case. In fact, sometimes the product isn't what drives the founders. What really drives them is the challenge or rather solving the challenge. And that's basically the story behind Wayfair. Neither Steve KohnI nor Nereid shop felt that strongly about home furnishings, but they did feel like people should have choices no matter where they lived, because there was a time when if you lived in, say, Evansville, Indiana, you couldn't easily get the same type of cool coffee table or sofa that someone in San Francisco or New York could get.

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And today, Wayfair sells almost five billion dollars worth of this stuff every year. Wayfair was actually the third company Steve and Nereids started together. They met as teenagers at a summer camp for math and engineering nerds in the early 1990s. They quickly lost touch. But then almost a year later, as if fate herself was watching over these guys, they both ended up as first years at Cornell, assigned to dorm rooms on the same corridor. Did you know both of you?

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Did you know that the other one was going to Cornell? No, we hadn't really kept in touch. So I think it was a it was a surprise. Yeah, pretty much. I was like, hey, what's up, Ethan? This past year?

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So were you friends, like, right away? Yeah, we were part of it.

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You know, I think when your freshman year, you sort of have a small group of friends that you sort of connect with and spend a lot of your time with. And we were in that group together. And then junior year, Nirj and I started we got to be a lot closer and lived together that year, junior and senior year. We actually lived together as well with a few other people up at Cornell. Yeah.

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Did you guys near to you did you and Steve used to talk about starting a business when you were in college?

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I don't know that we ever talked about it, per say, but our last semester at Cornell, we took an entrepreneurship course is one of our elective courses. And in this entrepreneurship course, one of the things I had to do was create a business plan. And what really happened is through the process of doing the project, which is creating the business plan, we basically started our first business. Yeah, it was ninety five and it was are very early years of the Internet.

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The Netscape browser had kind of come out that year. Yeah. Our idea was actually to develop an Internet directory services and we would go downtown in Ithaca, New York and try to pitch companies on paying us five bucks out of a listing in our Internet directory. And of course, most would look at us like we're nuts. A few would say, hey, that's interesting. But, you know, I don't even have a home page. They called it the time.

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Could you help me, you know, build a website and, you know, maybe at least get present on the Internet and what would that cost me? And so the business turned into kind of an Internet consulting business that built sites for companies. And you kind of knew how to do the basics because you were engineering students. Exactly. So you'd go from project to project and companies were trying to move very quickly. You know, different people would ask other people they knew who could we hire, so and so forth.

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We were one of the few shops that actually done things.

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When you would meet, when you guys would go and meet with clients, did you ever get a feeling from any of them that they would look at you and think, wait, these guys are fired?

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Well, this is like a twenty two year old kid. What are you doing here? You know, we did.

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We're both we're both pretty good sales guys. So I don't I don't remember that being snacking me too hard. I mean, I think that, you know, the prices we're charging versus like what they would be looking at for consultancies. I think a lot of these bigger shops looked at it just like play money where they're kind of like, well, whatever. How bad can it go with a couple of college students who are doing this for us? If it works out phenomenal, if it doesn't work out, you know, whatever, we haven't really we haven't really lost a lot.

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So I guess by that summer you've graduated from Cornell and then you decide to move to Boston to to launch the company.

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Yeah. So we had what happened very quickly is it sort of was clear while Ithaca is not really the right place to be, New York in theory would be very logical as a place to be.

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But we both had more of an affinity for Boston and we thought from Boston we could easily work with New York clients, what have you. So we actually decided to move to Boston at the beginning of that summer.

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And how are you guys managing? I mean, if you were getting all these projects in coming in, presumably they wanted the two of you to do the work. How were you managing all that work?

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We were working pretty hard, working 100 hour weeks. I mean, we were basically we set up the living room, we got an apartment and we flipped coins on who got the bigger bedroom. And then I it yeah, he won it. And the living room was basically. The office, right, says just desks with a computer and we worked, which was fine because you're working from like 7:00 a.m. to midnight and then you're sleeping for a few hours and doing it again.

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Was it exciting or did it feel like you guys were building something really big? Yeah, yeah.

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This is our first year out of college, and it's a young full of energy. It's very there's all this hype around the Internet and everyone sort of got their eyes on it, looking at how, you know, the potential of it is, you know, it's an area when you first see new technology, you can envision the potential of it very quickly. And I think it was it was awesome to be in the middle of it. But what you guys call a company spinners because you spin the web now, it was the World Wide Web at the time were like, oh, spitters.

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You know, if you're a spider's web. Oh, I see. You spin the web like a spider. Oh, that's clever.

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Yeah, right. Oh, my God. You guys are super nerds. So how long did Spinner's last?

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About four years. So we started it in the summer of 1995. So I guess that's three years or the fall of 1998. So maybe a little over three years when we sold it. So a little over three years, we're about 40 people when we sold it. Wow. And the Internet, it heated up a lot. And so there were starting to be some much larger consultancies doing the type of work we were doing. And we didn't think we could scale as fast as these other ones.

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So we opted in the end to sell to one of them. Would you guys sell off or we sold it for a combination of cash and equity.

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I think it was 500000 cash that we just got like 250 cash. Does that sound right? I think it might have been a little more than that.

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I think we might have gotten like half a million cash and then and some stock we got equity that was worth a few million bucks that then kind of with the dotcom boom, kind of went up tremendously and then came all the way like all the way back down to zero.

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That's where you got to watch tens of millions erode.

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So you guys didn't really walk away with a whole lot of money from from that venture? No, no.

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I remember I this Merrill statement that says I was worth twenty seven million when I was probably like a 24 year old. I remember thinking, I'm all set, you know, six months later, it was basically zero.

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So at one point you were worth twenty seven million dollars when when you're in your mid 20s and then.

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Yeah but it was really was just on paper, it was just on paper. But boy, what a good lesson to learn as a young fellow.

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So this is like the early 2000s, 2000 I guess. And and the two of you I guess decided to start a new business together, right? We did, yeah.

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We'd had a lot of fun and success in the first one and thought, hey, this entrepreneurship thing is easy. Let's do something new and do it again. Yeah. Yeah.

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So that takes us so. So now we're at the beginning of 2001 and we're like thinking of different ideas and we're not sure what we want to do.

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Long story short, we came across this idea around mobile phones. So 2001 was still pretty early for mobile phones.

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Yeah, but we found that a lot of companies were starting to have a lot of mobile phones, but they weren't really managing them well because they'd effectively have, you know, thousands of phones.

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But they were each on different contracts and they were on the wrong ones are paying too much for some, too little for others.

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So our idea was we would build a software platform that would allow these companies to better manage all their phones and their contracts. And we thought over time we could build that in to basically being a virtual carrier focused on enterprises. What's a virtual carrier?

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Just just think of Virgin Mobile in the UK where they use the Virgin brand name and they actually operate on top of British Telecom's network. So it's a branding on top of an existing network. Got to the consumer.

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It feels like they're buying Virgin Mobile. They don't think they're buying British Telecom.

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OK, what was the company called? Simplify Mobile. Simplify Mobile. Yes, but you would just call up companies, say, hey, can I talk to the person who handles your mobile phones?

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Yeah, I'm Steve Sandfly Mobile. I'm you know, I've got a really great offering. Help to save money, mobile phones. Would you be you know, I'd love to talk to whoever manages that for you. And occasionally you get someone, right? Yeah.

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We did have one key flagship customer that we had lined up who was very interested in doing it, which was Merrill Lynch, the customer. Yeah, yeah, yeah. They have big phone spend.

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And so that was looking quite good. And then unfortunately, what happened in 2001 was September 11th was a huge impact for everybody and particularly for financial services companies. And in the case of Merrill Lynch, they lost use of their headquarters in the World Financial Center and their priorities obviously had to dramatically change. So with that, we lost sort of the flagship customer that we had anchored around her. And so the combination of everything caused us to become much less bullish on the idea that the odds of it succeeding was just not high enough seats.

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Interesting, because many people that had been on the show have had similar experiences, but they've said, you know, and we just kept at it. The first year sucked and then the second year was less sucky. But we just kept at it and and eventually it took off like a rocket. Um, but you guys just kind of came to this conclusion that. Was not going to work. Yeah, I mean, we were in a it was a business where you look around and we were the only one doing it.

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And that's always kind of a scary spot to be as well. And I think we thought about the market potential and the odds. And, you know, what we what we learned in that intervening year. I mean, we spent probably the last three months of that business literally just pounding the yellow pages, like just coming in and just like taking rejection all day long and trying to see if we could how we tried just really hard to try to sell it.

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And as entrepreneurs, I think we've been a big fan of, say, like, well, lucky kid, he's got to start with a sale and he can't sell anything. You don't have an idea. And so, you know, after kind of validating that, I guess we sort of said it's time to walk away from this one.

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Was that rejection hard for you to handle? Was it humiliating? Just like eat away at you after a while? Not too bad.

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I mean, it's not a lot of fun. I remember my my dad gave me some advice. He was a he was a stockbroker for years. And he said, look, when you're when you're going into college, the Yellow Pages, he's like, the thing you have to do is set yourself a goal. And you're like your goal needs to be when you get 30 rejections, you can leave. He's like because that way, if you look at it, every rejection is a good thing because it'll get you closer to your goal.

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And so it keeps you motivated to working at it. You learn a lot more from when things are going bad and when things are going well. So I think we sort of we both like went out and started thinking about just getting a job. Like I remember interviewing a few places and sort of, you know, thinking, hey, maybe I should go. The more traditional career route did that for I think we both did that to some extent for a little while.

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And then and I would just love being entrepreneurs. So when Simplify Mobil kind of like fizzled out, you guys both were starting to approach your thirties, right? You're still pretty young. Yeah. Did you have a sense of what you were going to do next? Of course you're going to get into furniture. What I mean, first on the Internet, it's where it's all out. So what did you guys do? I mean, you win this business down, you're still presumably thinking, let's continue to work together.

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We went right back to the drawing board, so we started looking at that point. We got very. Were you living in my basement at this point? That's right. So in your downstairs bedroom? Yes, I was living there because we kind of brainstorm stuff. Right. And then my girlfriend at the time moved moved up from New York. And I'm like, honey, it's a great deal. We can just live here. And the deal was he bought the groceries and we bought the groceries.

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And that only lasted about two weeks, though, before she decided that we really should get our own place. That was the end of the free rent.

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But what happened after Simplify Mobile? What we decided we spent basically the first couple months of 2002, we ended up talking to a lot of different business owners. And there was this theme that emerged because if you let if you read The New York Times and if you believe what the journalist said, you would have been left believing that e-commerce was dead. That was what all the articles talked about, you know, because there were a bunch of companies that crashed.

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Oh, yeah, big time.

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But I think there was even at that time, there was a lot of skepticism that Amazon was going to succeed those you know, there were a lot of people talking about Amazon's imminent demise, you know. Yeah.

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And so we got fairly methodical. We said, well, OK, we should start looking at Internet ideas. We know we know Internet. We know Internet software should look at Internet ideas and we should look at other ideas that we think are just good business ideas. We're good operators. And so we started making lists of ideas. We started looking at businesses that were for sale, thinking that maybe there's something small that we could buy, we could really grow.

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And through that, we ended up tripping over these e-commerce websites that were for sale. And we would talk to the owner operator and they would, you know, tell us how they're growing 20 or 30 percent year over year.

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When you say e-commerce, what were they selling? I remember there's one lady who is selling birdhouses. She was storing them in the garage every day. She was taking all the orders and collecting all the items out of the garage and packing them up and take him to the post office and selling them online.

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Yeah, I'll birdhouses dotcom. The theme we found was really simple. Consumers had realized they could go online and search for any product category they wanted. There were a lot of product categories like birdhouses that are just not really available locally with good selection. If you want to buy a birdhouse locally where you live today, where would you go?

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If you want a decent selection, you go to like a like a local store and then you find like two or three different birdhouses and then you have to pick one of them.

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Exactly right. And, you know, they're pretty basic styles, right? Because they're only going to have three or four. Right. And so all of a sudden, people start to realize, well, I don't have to be stuck with that.

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I can go online and find a hundred different options. Exactly. I can order whatever I want. I save the time of the trip to the store. It'll show up in the mail super easy.

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And so the about a month's worth of research kind of helped us figure that out. And so what we ended up doing is we ended up deciding that there was a big opportunity in buying these businesses. So the first website we ended up launching, we launched a site called Rax and Stand's Dotcom, the very end of August of that year, which was TV stands and speaker stands. So it was entertainment furniture. Did you have a particular passion for TV and speaker stands?

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I was a mechanical engineer at Cornell, I mean, these things are essential, but you know what you find there were in those days, Yahoo! And Yahoo! Search, you could type in terms and would tell you how many searches a month there were for that item. And on some of the product comparison sites, they would tell you their top hundred categories. And so both of those terms were in the top hundred search product terms. Wow.

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So so people were looking for TV and Speaker says, why wouldn't they just go to their local like you couldn't find anywhere that sells them the same thing about just selection of only two or three. And you can't find a good selection in the furniture stores. Want to focus on living room, bedroom, dining furniture. So where would you go? Yeah. So wait, so you're thinking, all right, our first one is going to be we're going to sell TV and speaker stands.

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Just out of curiosity, where did you get where did you even go to find Kersten's? Well, in the beginning, what you do is you'd go online and look for companies that made them. You'd also look at what the other online retailers were selling, what brands that they have, and you'd buy the audio file magazines and flip through and see what brands are advertising.

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And so did you just buy a bunch of TV and speaker stands and just have them shipped to your apartment in Boston?

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You know, so at the time, there was a bunch of electronics distributors that actually would stock small amounts of speaker stamps. And so we initially started off buying through them so we'd buy out of their inventory. So we had no inventory risk.

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So it was all dropped, shipped out of distributors and somebody would go to Yahoo! Or Google and type in speaker stands. And that was one of the things that would magically come up.

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Exactly. They'd click into it and it was the promised land if you're looking for speaker. So when did you launch the website? August twenty ninth, 2000 to 2002. And how long before you had your first order? Ours. Ours. Yeah, ours. When we come back, how rax and stand's dotcom, then all barstools, dotcom, then every grandfather, clock, dotcom and on and on eventually turned into Wayfair. I'm Guy Raz and you're listening to how I built this from NPR.

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Hey, everyone, just a quick thanks to our sponsors who helped make this podcast possible, first to Comcast business, Comcast business recognizes that your business needs to be nimble. Whether your customers want more than ever or your office is closed indefinitely. You can't just bounce back, bounce forward with Comcast business, bounce forward with Internet speeds of up to a gig. So the planning stage moves faster, update your bandwidth with a few clicks, giving you the room to execute and get a network that helps keep your connected devices protected.

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With civil unrest, the pandemic and the economic crisis, you want to know what's happening right when you wake up, and that's why there is up first, the news you need in about 10 minutes from NPR News. Listen. Every day. And just a reminder, you can preorder the how I built this book right now, and if you do, I'll send you a free signed book plate to go inside the book. The book is a collection of insights and wisdom from some of the most incredible and inspiring makers, inventors, builders and dreamers on Earth to preorder and to get your free signed book plate while supplies last.

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Please go to Guy Raz. Dotcom or how I built this dotcom.

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Hey, welcome back to how I built this from NPR. I'm Guy Raz. So it's 2002 and Steve Conine and Natasha are on their third business idea. They're selling TV stands on the Internet. It's a site called Rax and Stand's Dotcom.

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And this was a time when a lot of people thought e-commerce was dead. But Niraj and Steve, they thought it was very much alive. So they started to advertise. Google had just launched AdWords, which is, you know, keyword bidding for people where you pay money for. Yeah, you bet on it. Advertising dollar clacker. And you write your text ad and you basically pay per click. And we would track every time we got an order which advertising unit drove it so we'd either bid those up or bid them down if they were non-productive.

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And what kind of advertisements were they? What would they say they'd be? Texas's largest selection available TV state TV stands for less hundreds available Rack's instance dot com.

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So if you were a consumer, you click on this and if you were adventurous in 2002, you would put your credit card into the computer and then it would go to you guys. And then you guys would order it from one of these companies and then have that company directly shipped to that customer. Exactly correct. We launched at the very end of August. So September, October, November, December, the fourth month in business. In December of 2002, we did about two hundred and fifty thousand dollars in sales in the category racks and stands racks.

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And we grew to be one of the largest or the largest online seller in the category.

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And what happened is our suppliers started telling us, hey, you know, you've become my biggest online retailer of TV SANZAR speaker since what have you.

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But, you know, my other online guys sell more of my beds or my other online guys sell more of my desks. And so we started learning that, in fact, these other furniture categories that we hadn't focused on, but that they were doing quite well online as well.

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And I have to assume that just like getting this off the ground wasn't that expensive. Right? It didn't require a whole lot of capital.

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No, it didn't. I mean, some computers we'd pay, I don't know, fifteen dollars a month for hosting on a shared hosting platform. And we had a couple computers in our office, but it was very expensive. We didn't pay ourselves a dime for the first year and a half or two.

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That was the biggest leverage was that we didn't need to pay ourselves and that we knew how to also build the software and to do do that work. We didn't hire anyone to do that work.

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And and did you did you have like us a number on the website, like a customer service number that people would call? And, you know, I don't complain or we did.

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There's four phone lines in my house that it would ring there right near my bed. Q And you were like one hand. You were like programming the technology. The other hand you were picking up the phone.

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Yeah, well, this is the beauty of that setup. It was a nice little tiny table and we had four phone lines. We are kind of juggling four phones ringing. We take customer calls and a lot of times we get off a call with a customer and we change what we were working on that day. In my case, I'd probably change what I was programming. You know, he was the data entry guy. So like, we he'd be like he'd go line up new products and we'd be like, a customer is asking for this.

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He'd go figure out how to source and he'd add it to the site. And, you know, those two activities rapidly made the site a lot better. And it got to where we couldn't juggle four phone lines and that led to start to hire people.

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So once you start selling racks, it stands and you do pretty well. What's the next category? You go to Mount's, TV, Mount's, TV, Mount's, and we were surprised. So what happened in that time frame? Also, the 2002 time frame is two different things. TV, Mount's, we're not widely available. So if you had a gym and you want to hang some TV mount's like you didn't know where else to buy them, so and so forth.

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But the other thing that happened is flat screen TV started really becoming more popular. Yeah.

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And so people wanted to hang those on the wall. And so our timing on that was quite good. So we saw this huge sales sort of start, you know, kind of momentum. So then we built a site just for that to have every type, you know, what was it called? Mount's and more and more dotcom. But it didn't really matter what you called it. Right. Because you would be correct. The search, all these were brilliant branding.

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And the traffic was primarily driven by by the search, by the advertising. We would do the paid search and other forms of advertising that we would do so that the key to the name of the site wasn't so much that it was something someone would type in or that would memorable or that pick it over other items. It was more that it made sense as a place you would go for this item. All right. So TV Mount's and and then have that do that did phenomenally well.

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We were the Mount Kings, the Internet. My God. And so then what what came next? Then we I think we started kind of a new beachhead in outdoor furniture. And so we started to cycle quicker and more, which was basically outdoor furniture. I mean, it's so interesting because you didn't have to build a brick and mortar store and you didn't have to stand outside in front with a sandwich board saying, come on, ten percent off today, try our samples like you will.

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Just you just put this out on the Internet. You figured out the search, how search worked and people that was the sandwich board, that was the sandwich we paid Google to run the sandwich board for us. And you didn't have to take in any outside investment at that time because the revenue from each expanding website was fueling the business.

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It was I mean, this business is cool. It's from that day earlier. It runs a positive cash cycle. So, you know, customers would pay us right away and we didn't have to pay suppliers for 30 to 45 days. And so you had this kind of natural cash cushion. And so, yes, it was you know, it was we were able to fund it very well.

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Do you remember how much revenue you were doing in Arabi? Like tax free? Yes. Do you remember New York?

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Yes. So 2000 2002 is our first year. We did about seven hundred thousand. Two thousand three was our second year. I think we did about seven million. And then the following year, 2004, I think we did 27. Wow.

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I mean, you probably had to just hire tons of people, tons and tons of people fast. Yeah. So we started hiring as early as January 2003. We hired a couple people then we probably ended that year with, you know, 15 people or something like that. And then that became the model to grow. As you know, we would be reinvesting aggressively by hiring people so that we could keep expanding the selection and expanding the categories, which then give us more things to advertise, which then would get us more customers, you know, and that was a virtuous cycle.

[00:29:48]

And we would take the money that resulted and we would invest that into growing the team to keep driving. You just have to see when people asked you like, oh, what are you up to? What are you doing these days? Would you say, Oh, I'm I'm selling TV stands for like, how would you describe your business to people? I remember one time I was very uninterested in describing what we were doing. And a lot of Indians in the United States are doctors.

[00:30:10]

They assumed I was a doctor and, you know, like, oh, no, no, I'm so high dudgeon. No, no, I'm not a doctor. I just sell furniture. Because if you say you sell furniture, no one's interested. There's no no. It's almost like silence is the conversation. I see. Right. Yeah, that's a good way to wrap up the conversation. So so obviously when you were doing is, of course, what eventually would become wafer.

[00:30:34]

But at this point you you started calling it, I think six and stores, right? Yeah, I was with it. I think at the end of 2002, 2003, we adopted that. It's a great name. KSN stores. Forget where we're starting this all. Did you get a bunch of consultants to help you figure out that name? Now, we could get it for twelve bucks a year and there is no trademark issue. OK, I think Nirj came up with it.

[00:30:56]

It was our initials kind of conglomerate, said S.A. Conine Conine Steve Charnier Agassiz over. I got you. It was a generic name we we could use across any category, you know, and it helped with two key things, basically. One is we needed a company name that, you know, sort of implied. We had a lot of stores. Sounds right. Yes. And store.

[00:31:16]

You don't want to just name it after one of the names. That's right. The second is a lot of the suppliers are very traditional companies. And so when we would go to like the high point furniture market and approach suppliers, you want to be able to get into a conversation with them. And during this timeframe, 2002, 2003, 2004, there's there's still not very keen on e-commerce. They're not they're not dead set against it, but their experiences have been poor.

[00:31:39]

And so what happened is when your badge says sites and stores and where you based were in Boston. Oh, we're in Boston. Oh, we're right in Back Bay. Oh, we have an office on Newbury Street. Oh, great. Oh, what do you guys focus on? Oh, well, we're really focused on entertainment furniture. Nobody cares. Oh we carry brand. This brand. That brand. So the brand. Oh great. You get into a conversation and and they say, well what you what are you interested in.

[00:32:01]

Well what would really be interested in the selection. We think it would do well for these reasons that and they say, oh well, you know, how big is your store is at that point, you'd say, you know, you'd be honest. You say, well, we actually we sell online.

[00:32:14]

And if you had to discuss online too early in the conversation, you get kicked out of the show.

[00:32:17]

They didn't want you. They didn't want to be involved.

[00:32:20]

You came in calling stuff like shop dotcom. They knew right away. And it's an Internet guy. But now they've gotten into a twenty minute conversation with you. And you sound very rational and you're carrying a bunch of good brands.

[00:32:30]

So now they're like, well, you know, I don't really do much e-commerce business, but maybe maybe this does make sense. Let's have a little more of a conversation. So the generic name helped you get deep enough into a conversation for them to really consider and understand you, which was really important in those days.

[00:32:47]

So. All right, I'm I read some of the websites that you guys launched because I just think they're amazingly straightforward and hotplates.

[00:32:57]

Dotcom, I'm assuming that sold hotplates. Yeah, yeah, yeah. OK, all bar stools, dotcom.

[00:33:04]

I think that's all. Yeah. You're doing good. You're doing good. All right. My dinner plate. Dotcom plates. Yeah. Yeah. I love this one. Every grandfather clock dotcom. A very hot category, online date, painful to ship. Who knew people were searching for that? We did.

[00:33:22]

You can look up and see what people are looking like. Well, we definitely did. Yeah, that was I mean, you would find categories and then you would basically get these domain names and you started to build a huge business that way. Yeah. You got up to about 250 of these. How are you managing 250 different websites? How do you even get your head around that? I was very good. We had a very good tech platform that was built around the idea of building.

[00:33:46]

We had a centralized product catalog. And then when calls came in, our call system would tell you exactly where the call was coming in to see you, how to answer the phone.

[00:33:54]

Did you ever have a situation where somebody called the customer service number for, you know, rax and stand's dotcom and then and then said, oh, thanks you. I'm still looking around and then called the customer service number for, you know, Mount's Dotcom and then get got the same customer service rep on the phone. Oh yeah.

[00:34:11]

When it was just Neogen I work in Halbertal.

[00:34:13]

Did they say, hey, did they just talk to you, for instance, dot com.

[00:34:16]

They usually didn't put it together. It was, it was a money thing if you ever tried to hide it from them, but they just they wouldn't put it together.

[00:34:24]

I've heard that that by I think by 2010 you hit almost 400 million dollars in sales. You had almost five million customers.

[00:34:34]

And and you were like this this aggregation of 250 websites, like nobody would have known what KSN stores necessarily was. No one knew who you guys were.

[00:34:44]

I mean, people just knew all barstools, dotcom or my dinner plate. Dotcom.

[00:34:49]

Yeah, they didn't know that. Well, yeah. I mean, was that was that crazy to you guys that that that much revenue was coming in or were you just too busy to even stop and think about it?

[00:34:59]

I mean, it's like watching your kid grow up a little bit, like it's just happening so incrementally and you're just following this playbook that you've got this working well that, you know, didn't I don't I mean, when you step back from it and think like, oh, wow, this is actually gotten huge, you know, you try to do to do that too much because it gets scary.

[00:35:16]

And how about your your your relationship with the two of you? I mean, it's it's just you guys are wired in such a way where you just you kind of chilled out and you get along and you don't have any tension.

[00:35:27]

I mean, it just it's it is it's crazy that you're still, after all these years from like high school, you're you're working together.

[00:35:35]

No, you gosh, it's interesting.

[00:35:37]

You know, when we were when we first started working together, I can remember having arguments where he was usually right and he was telling me something I needed to hear, but I really didn't want to hear it. And of course, my emotion would flare up. And I remember having to walk out of the room and just be like, I got to go walk on the block and, you know, just be cursing out of my breath out of me for half an hour.

[00:35:56]

When we got into this business, you know, we were a lot more mature as individuals that had been through a lot of that had had both gained and lost a lot of money together. And so I think, you know, greed is one of the things that can create a lot of tension in partnerships. I think we'd gotten past a lot of that and we'd also gotten to where we valued each other's advice and had gotten and gotten to the point where like, look, I trust what he's telling me because he cares and he actually is trying to make me better.

[00:36:20]

Make us better as a company. Yeah.

[00:36:23]

What do you think? I think the two key things that I think have always helped us, one is that we gravitate to different areas of the business. And the second is we definitely have always found each other to be very hard working and very committed to it. I think those are not to be taken for granted because I do think they those traits may not be as common as as you would think. Yeah.

[00:36:46]

In 2011, I guess it was when you decided that you needed to scale this even bigger.

[00:36:54]

And this is the first time you actually took in outside investment. Why did you allow venture capitalists to get involved in this in this company?

[00:37:03]

We're we're definitely ones who would rather just funded ourselves or self fund the business and have it fund itself. The challenge became in 2011, we believe the big opportunity to continue the trajectory and to really capture the big opportunity we needed to build a brand and the amount of capital we thought to go through that migration and to build a brand that it would take was not an amount we could sell because you did not have a brand season was not in a brand.

[00:37:30]

Right.

[00:37:31]

You know, consumers didn't know that brand. It wasn't. You want to brand that one, you know, you think, hey, I need to shop, I want to redo my living room. You want someone to think, oh, I go to Wayfair, you want it to be a top of mind brand for a category. Right. And that is not that's not easy to do. And even if you figure out how to do it, it's not inexpensive by any stretch.

[00:37:51]

Right. So we wanted to be able to do that. The other just modern dynamic, I think that happened is investors started to change their pitch to being, you know, purely from we want to invest and buy part of your company, too. Hey, we'll invest in buy part of your company, invest in it, but we'll let you guys take some cash off the table as well. And, you know, at that point in our lives, we both got married and had kids and kids as well be able to take.

[00:38:16]

A bit of money off the table as part of what was also appealing, and so there's, you know, those things kind of tied together at that time in our lives. So you had two hundred and fifty websites under KSN stores. How did you how did you come up with the idea for Wayfair?

[00:38:30]

Well, we knew we we knew we wanted a different name. The Christian name and store's name was difficult for people to remember. Recall, we've always been reluctant to use consultants, but we hired a branding agency and they came up with the name Wayfair. And it's you know, it's a made up word. The two words win fair. We like their positive kind of shop. Get the domain name was also available. And so you work out to go out and spend, you know, millions trying to buy domain names from people.

[00:38:57]

You can you can just register it and kind of be off to the races.

[00:39:01]

So it took about a year for all these sites to kind of consolidate under way for an end to the consumer. Wayfair seemed like a brand new thing, right? It did, yeah.

[00:39:12]

Yeah. It just kind of came out of nowhere. People were kind of like, wow, this is a cool place to shop for home.

[00:39:18]

And it's the fact that you guys got into HomeGoods. It had to do with, you know, with the fact that people were searching for these products. In other words, I mean, you could have ended up being a company that sold like personal grooming products, right? Yeah.

[00:39:32]

The one thing I would say, you know, home, the beauty of home, most categories, people want to all buy the same thing as each other.

[00:39:40]

Right. So, you know, double batteries, you buy Duracell or Energiser or the private label.

[00:39:46]

There's only a couple of categories where a huge selection is really a key piece where visual and aesthetic considerations are very paramount, where people want unique items and the two are really fashion and home. And we basically by focusing on home where the logistics are quite complicated and different, where there are no brands, where the visual merchandising is critical, where people have a very unique style, there's a lot of value you can add as a retailer if you're in any of these other categories.

[00:40:15]

Certainly there's a big business there, but that's effectively the business that the Wal-Mart's and the Amazons and the targets and the Costco's that they're all in that business selling the same exact items to everybody. And you can fight that out and try to find an advantage. But typically the advantage is either in price or speed, there's really no other way to do it. And so the beauty in home is that it's more multifaceted and it doesn't. What if someone's a winner in these other categories?

[00:40:43]

It doesn't automatically make you a winner and home. You're a public company, you are listed on the stock exchange, right? Yep, yep, New York Stock Exchange. And the company, I believe is today is valued at more than three billion with a B billion dollars. I mean, could you imagine obviously both of you guys are still pretty young. You're in the mid 40s. And I mean, you know, other things you could do conceivably do with your lives.

[00:41:11]

You could start you guys could start another company. Could you imagine. I know like an Amazon or a Wal-Mart, you know, coming to you and saying, hey, guys, we want to buy your company, we're going to give you X billion dollars. Could you ever imagine accepting that or agreeing to that?

[00:41:28]

You need to be prudent, right? So we know all those folks who, of course, would have conversations with anyone who wants to have a conversation. Last year, we grew 40 percent from the year prior. You know, the company is getting bigger at a faster rate. And if you believe you can do a lot for the customer, that is more than anyone else can do. Well, why wouldn't that continue to grow at a fast rate?

[00:41:49]

So it's really super early days if, in fact we can be the best.

[00:41:52]

So it would be very premature to think about selling it if we think we can win.

[00:41:57]

How much of of the success of your partnership and the businesses you built is because of your intelligence and your skills and how much? Because it's just luck and serendipity.

[00:42:12]

It's all Neerja skill. I just showed up to the office daily.

[00:42:17]

You know, it's obviously a bit of both. I don't I don't know that there are dramatic intellectual scale differences in humans in general. So I think it tends to be, you know, your ability to focus and keep doubling down on your own, it believing in yourself and your work ethic and continue to focus on a narrow enough set of things that you can win in. And we've been good at kind of staying focused on that and not listening to the other people who tell you, go try and do other things.

[00:42:46]

You know, serendipity and luck always play a little bit of a role.

[00:42:49]

Right. So I think that definitely is a PC thing about it. We happen to be in college at the last semester of college, happened to be the beginning of the commercial Internet. The commercial Internet has created a huge amount of opportunity.

[00:43:00]

Well, it was a different point in time where there have been no opportunity.

[00:43:02]

No, but there would be opportunities. Would it be as big? Maybe, maybe not. Would have been different possibly. Would it have been as well suited to us? I don't know. You know, so I think there's a mix in there. I do think a lot of it is, is how hard you go after something and how pragmatic you are about. With all this this stuff in home furnishings that you've done, are either of you any good at interior design nerds?

[00:43:25]

Likes to think he has a design eye. He likes to comment on design.

[00:43:31]

Let's say that. And what about you, Steve?

[00:43:33]

I have a very clean, modern aesthetic in in my home. And Nereids, he is a much more traditional look.

[00:43:39]

Your wife would probably kill me when she hears me say that. Exactly. That's near John and Steve Conine, founders of Wayfair. I talked to them back in April of twenty eighteen. And today, in the midst of a pandemic, the company is actually doing incredibly well because so many more people are now shopping from home. In the last quarter, revenue at Wayfair jumped to four billion dollars and the company just announced that it's profitable for the first time since going public.

[00:44:12]

And by the way, one last question for you guys. What's the weirdest domain name that you that you ever registered? Was the rooster to call one aisle rooster roosted court outcome? That's that's the best one that people want.

[00:44:24]

Rooster decor, rooster vases, pictures, planters, pots, you name it. If it's got a rooster, we're going to try to find it in source and sell it to.

[00:44:33]

I just cannot imagine having a bunch of rooster decor in my house. But that's just maybe I'm weird. Someday you'll visit someone who's got a lot. And thanks so much for listening to the show this week, you can subscribe wherever you get your podcasts. You can also write to us at IBT at UNPEG. And if you want to send a tweet, it's at how I built this or add Guy Raz. This episode was produced by Rachel Falkner with music composed by Ramtane Arab Louis.

[00:45:02]

Thanks also to Candice Lim, Derek Gael's J.C. Howard, Julia Carney, Neva Grant and Jeff Rogers. I'm Guy Raz. And you've been listening to how I built this. This is NPR. Good question. That's a really good question. It's a great question. This is free therapy. Thank you for asking me that. God, that's such a good question.

[00:45:33]

That's an interesting question. But what fresh air interviews are really about are the interesting answers. Listen and subscribe to Fresh Air from NPR.