Starting a Startup After Business School - Reham Fagiri and Kalam Dennis of AptDeco

Alright guys, well thanks for inviting me to your amazing office. Thank you, so what do you guys make?

So we are App Deco. App Deco is a marketplace for buying and selling furniture based here in New York City. We take care of essentially like the whole process, from picking up and delivery to payments and everything in between.

Yeah, so basically we kind of took Craigslist and just, you know, said we get a trusted community of users. If you can make the pickup and delivery easy between two people and the payments between two people, you'd have something useful. And so that's essentially been the premise since we launched.

What made you convinced that this could be a fully fledged product? Because I've seen all kinds of blog posts about like, you know, the fragmentation of Craigslist, right? In some cases, it's succeeded as products and others haven't. What gave you the impression that this could be a thing?

Well, I mean, we started out of our own frustration. Just having a really bad experience trying to sell furniture on Craigslist. But realizing it's a big opportunity, we did a lot of market research to sort of test if this is something that people would be interested in, sort of the premise of the solution.

So for example, we would go on Craigslist initially and test, hey, with delivery, like we'll actually just copy somebody's listing and just add delivery and see how people react to it. And we saw that like, oh, there's definitely a big opportunity there because people seem to be a lot more responsible when you just add the delivery word to the listing.

How could you know that if you hadn't created the original listing?

You would do it both ways.

Yeah, you would do one with and one without. Exactly.

Okay, yeah. Well, I think when we did our research, we saw was the fifth most popular category on Craigslist for furniture. And then when we created like an MVP and when we actually launched the site, the first day that we had the Frankenstein of a site in 2014, you know, we had a transaction the day that we launched. And this is with no earthly idea of like really what we were doing. You know, I just think all those signs kind of pointed to it.

And then when we applied to YC and ultimately got into YC, I think that's when we were like, you know, this is real.

Were you pursuing other potential ideas?

Because yeah, like the market research thing is much more of the business school approach, and it's a less common approach within YC startups, right? So were there other ideas that you were considering?

There weren't any other ideas. And, you know, I just Muhammad, I don't want to work together for a long period of time.

Yeah, and you know, quite frankly, it wasn't really that scientific, and I don't think we were the traditional founders in the sense that, you know, we were in like serial entrepreneurs. We, you know, come from very traditional business backgrounds. But we were like, you know, we took a light inspiration from Airbnb and other companies. Right? This seems very obvious.

Yeah, and that we kind of just took it and ran with it.

Yeah, I mean, I think for us like our experience, like we were so frustrated with what happened to us when we were trying to sell our furniture on Craigslist. And we started kind of really frankly obsessing over like this just through is really, really bad.

That I frankly don't think either one of us was ready at the time to start a business, but we stumbled upon this idea when we were ending business school.

Ending business school. And Colum, it was sort of like happened all at the same time. I was finishing business school, coming back to the city to start a job at a startup, not start my own company.

And so I was trying to sell my furniture. I just had a really, really bad experience. And Colum at the same time was also trying to sell a piece of sofa and also had a bad experience. And so we were just like talking about it and just like, why is it so bad?

Everybody had just taken off. Uber had just taken off. Everyone is like now doing this sort of quote-unquote sharing economy. So why couldn't you do that with furniture? We just kept on talking about it all the time to the extent where like, hey, let's just do this.

Now, it's the time. We don't need more experience.

So, and that's really kind of how we happened though.

Say, yeah, how did you psychologically prepare yourself to like go off that ledge and not have the steady, you know, Goldman paycheck?

You also from business?

I think that we were just kind of at the point where, you know, I think when we had kind of gotten to the interview point of YC, and I, quite frankly, I was still kind of moonlighting. So I was still doing my job, and that was the only job I had ever had.

I never worked professionally anywhere else, so I, you know, I was very, quite frankly, very happy at L'Oreal. It wasn't like I was, you know, I'd always had like upward mobility, and I loved working there. I loved what I was doing. I was very happy in that corporate environment.

And, you know, I had a lot of experience and upward trajectory. But you know, I think that, you know, we just saw this as an opportunity. And then we said, you know, at the end of the day, like if we failed, you know, it's not like we couldn't go back to, you know, corporate America or go somewhere else.

And we always were kind of confident in our skills. But this is super interesting to me because I hundred percent agree with you, and I think that's true for most people at these super competitive jobs. They're talented enough to get the job; they could get it again.

Yeah, but how you flip that switch to get over the fear, you know?

I think when we got into Y Combinator, that's when we were just like, okay, so when we got to the interview point, yeah, then we were just like okay, we're going to, why Si. We got to do it.

I mean, he already quit before. He had already given his notice. Colum had given his notice before we even got to, we had received an interview request, but we hadn't been to YC yet for the interview.

So he were in, so we didn't know we were in, but I had already decided not to take the job that came to New York for and ended up just doing this full-time.

And Colum was moonlighting and essentially helped financing it. So while, you know, while he was working at L'Oreal and then doing this at night and weekends.

But you know, I think, I mean, I think like we just saw a problem that we became very intimate with, and also the solution for the problem we experienced at the same time.

So you know, when we had this really bad experience trying to sell our furniture on Craigslist, I was I moved back to New York, and I had my truck. And Colum borrowed my truck for that one day.

We listed it on Craigslist saying one day only free delivery in New York City. And that same day someone gave him the full amount and showed up immediately, did not cancel, did not flake, was not sketchy.

And so we're like, wow, this is how you do it. You have to offer a delivery. You have to take care of everything. You have to make it simple.

And so we saw the solution, and that like really helped us sort of it fast-forwarded, I guess our like process of deciding whether we should do this or not because we had the problem and the solution at the same time, and we're like okay we got to do it.

Right? So you have that kind of like positive feedback.

Yeah, yeah, I guess. And I guess we just felt it was a good kind of common-sense solution as well.

Yeah, I think it sounds like we're very, we’re probably more practical than most.

Yeah, and we're probably, you know, we're probably kind of one foot in front of the other type of founders versus, you know, like, you know, I don't know, like kind of in the clouds.

We're very, yeah, yeah, we're very, I think we're very practical in the sense.

And I think that we saw this as very, seeing with our own eyes and seeing the opportunity, we thought of it as a very practical kind of solution to something that, you know, everybody else—furniture is a kind of big problem.

So I a lot of those kinds of things were, you know, kind of fit. I think within our, if I have to think back about it now, fit within our wheelhouse. Like, this is very something very tangible and something that could be really useful and you could kind of model it out.

Yeah, oh, this works.

Yeah, this works. Absolutely. And had it—then how did you communicate that to your friends and family from these like prestigious jobs and schools?

So we're still figuring that out, yeah. You know, it's funny, like the first time I actually sat down with my father and, you know, we've been counting these conversations with investors recently.

So I showed them like our investor deck and I'm just kind of just done through the investor deck. And I'm like, you know, and it's such a strange thing to talk about, you know, raising a few million dollars or doing this and that.

It just, you know, it’s a lot of times, quite frankly, I think it's just like, you know, you're talking, I mean, it's very hard to make it very tangible, you know, we're saying we're practical, they're Uber practical, you know?

But I think that they understood it. I think when we first did this back in 2014, I think there was a lot of— I wouldn't say just skepticism. I think it was just like worried.

Just worried, you know?

Like, don't give up that good job.

And don’t, you know, a bird in the hand, a bird in the hand is definitely, I think, the philosophy that my parents have.

And then climb most people pilot that generation and I would guess and Rahama class speak on it, you know. They're, you know, we speak on that is that, you know, they're, you know, if you're having a meritorious, like you know, you're going to find a good job at a good company and you'd stay there.

And so this is, I think, was just so foreign. Yeah. They were skeptical and worried, but at the same time kind of supportive.

Yeah, I'm a parent, so I'm from Sudan. I came to the US for college. And so my parents still live in Sudan. So for them, the golden ticket is to have a job at Goldman and I not start a company and, you know, just work crazy hours.

And the whole thing has just kind of been crazy for them. So they're like finally wrapping their heads around it. But I mean, pretty much almost a referral all I have when my parents is like, so what is this going to be over?

Yeah, it's just, it's also they don't live here, so they don't see the impact we're making. You know, like they—it’s a completely different world, right, for them.

So they just don't really understand it, but they're supportive, which is the important part, you know?

So there's not a kind of an entrepreneurship narrative in Sudan?

Oh, it's huge. My dad has his own business; my entire family, yeah, all my family members have their own businesses because the way the economy is structured there is there's no large corporations now, I guess there's a couple, but most people are just small business owners.

You know, my dad has his own engineering firm, my aunts and uncles, most of them have you know either like their own medical practice or engineering firms or architecture firms or what have you. So that's the norm.

But I guess because probably, their business owners that they know is how hard it is to run a business. Like if you have a job that pays well and you don't have to worry about covering everybody else's salary, why are you doing this to yourself? So that's probably where it comes from.

I actually think, you know, my parents are probably, you know, even working at L'Oreal was like a kind of a leap for them, you know? They’re more like a good, stable government type of job.

Wait, where are you from?

I'm from California.

Oh, from the Bay Area. And so I think that, you know, they’re like uber focused on stability, you know? And so we’re even though that's, you know, I was never interested in those but you know, particular type of things, I was always interested in business and wanted to work in a company that was exciting and innovative.

It even for them, I think that kind of seemed like kind of like fluff. And so this was like even another level of generational thing.

Because you would assume that even like being from California at least says like, oh, you go work at HP or something.

Yeah, that's not—yeah. You know, didn't your dad work in the government?

Or he did, yeah, he did. He did.

And so— and my mom worked for like the railroad.

I've got some specifics.

I think, you know, super stable, scary stakes.

Exactly, super stable. So even a company like L'Oreal or Goldman Sachs that, that Goldman Sachs has a process where they laid all—I think tempered their bottom tempers in every year or something really right, you know?

So—and morals of extremely lean, you know, company or corporation. So it's not a company where you can like hide around and yeah, schema house. You can't get a host, you know?

And so what's that thing that has never been the type of thing that I was interested in anyway?

Okay, you know, and did you go to business school as well?

I didn't either. No, I went to undergrad at Clark Atlanta, okay, which is a historically black college in Atlanta, Georgia.

And were crack our crew for L'Oreal right out of undergrad? And I was there for like 13 years.

No kidding.

Yeah, okay. And now how do you get in? Were you getting into startups in business school? Like how did this happen amongst your friends?

Because I know that that's been a pretty big shift from like, you know, 15 years ago. If you went to HBS, it was like private equity or like consulting, right?

But now it seems like more people are going to like, you know, like the Googles and the Facebook type companies, right? So when you were in school, was that coming up?

Oh, yes, yes. It was definitely coming up. Sort of there was definitely a shift where more—I went to Wharton and there were more—my class had more people talking about tech.

Yeah, versus going into banking and finance. So like the market had crashed a few years before. And you know, a lot of people are just sort of exhausted from the financial industry, and they were looking for something else.

It was actually interesting. When I started business school, I mean I knew I was always going to do something. Actually my one of my essays was about building a social enterprise, but I didn't know what kind of social enterprise.

I always thought it would be connected to Sudan or connect, I moved to Africa in a way, but I always knew that I was going to start something at some point.

But I didn't think straight out of business school, I'm ready. I needed more experience, and that's why I wanted to join a startup.

So when I was at business school, I saw this shift where a lot of people were asking me questions. People who came from finance about tech because I'm an engineer and everybody wanted to like, okay, well, you know, tell me more about tech and like, you know, how do you be a product manager?

How do you do this on the Queen? A minute all these people are active and I'm trying to get out of, you know, tech, something is wrong there. And so, you know, I really started digging deeper.

But I did definitely do a lot of startup sort of business plan competitions when I was in business school.

Okay, talked to a lot of people who started their own businesses and just sort of realized about all these people are, I mean, I feel like I'm smarter than as smart as them I should be able to do it.

And that really helped me. And I think at Bridgette, I was, you know, I think we were very fortunate for Mihama to kind of work on this work on that deco kind of at that time because she was being immersed in the startup world.

Where I think I was quite frankly very removed from it when I think about where we are now and I think about 3yc versus pulse YC, you know, and just this, the just the tech environment particularly in the Bay Area.

Sure, you know, we're like man, I was light years away from that particular world. And if it wasn't for Y Combinator kind of giving us like a significant immersion into kind of the startup world, I don't think that, you know, we wouldn't have, we would have had the progress that we've had, like definitely not.

Because there's so many things that, you know, I think when we started, as we said, unless we have a lot of business experience, yeah, we worked at great companies, we've worked at great companies, we can just apply that knowledge and start this company and this is the furthest thing from the truth.

I mean, we, you know, just what it takes to get from zero to ten, you know, is a totally different zero hundreds is a totally different skill set than what we had acquired during our professional years.

What were the outstanding learnings from a classical business education? Because I think there's like this common trope that like business school is a waste of time.

And even like business education in a lot of the startup culture, right? And so people fall back on, you know, whether it's like PJ's essays or kind of like Lean Startup things.

But I'd be willing to bet that there were super valuable courses that you guys took. And so if you were talking to other startup founders, well what would you pressure them to learn?

I mean one of the things that I always think, and I always joke up to the team about is financial modeling. Just being able, you know, I’ve become pretty crazy with, it's not even financial model, but just modeling.

How do you model? How do you build projections? How do you think about business scenarios? And, you know, sort of as you think about your next big project, yeah, like how do you map that out?

That was purely from business school. I think that's like probably the biggest thing that I still use every day here.

Yeah, I think for me, just analytical structure. So when you're, how to structure looking at numbers in a way that makes sense, you know?

I mean, that's all I did at L'Oreal. I did it in my whole, my whole entire preferable career. And so, you know, at first, yeah, it was not as applicable.

Like so, you know, when you're first giving—first a beginning start off on the ground. You just got to like just do it and go and see what sticks, and then do more of it and then, listen, you can analyze it like later down the line.

A lot, like at first it's just like you just got to do a whole bunch of stuff, not in a scalable, manageable way.

You're doing the delivery yourself?

Yeah, yeah, we were doing deliveries. We were going to people's homes buying furniture; like we were doing all kinds of crazy stuff, you know?

And, you know, had the instruction of other YC partners, and then you figure out how to take those kind of crazy zany ideas and to make them into kind of scalable practical models.

Yeah, things that are repeatable in a scalable way.

So, but after that once you do that, you know, you have to know how to view analytics, set up, you know, a strong foundation to really be able to look and say, did this work? Did that work?

How do I continue to repeat this? The other things too is, I think is, that people don't talk about enough is just establishing a business culture.

How to team management, people management, huge.

And that's a huge pitfall for first startups is that they don't know how to manage people. They have a lot, you know, they implode because they don't know how to, you know, create a conflation culture. They don’t, yeah, they don’t know how to talk to one another.

They don't know how to, you know, manage dynamics if there’s conflict one month, one another. And I think that’s why one of the biggest things that people don't talk about enough is just, you know, conflict management and in people management is something that I think that we've been able to deal with.

Hiring, firing, all those things are things that we've had experience with that are very tangible and very relatable to startup life.

And like even creating structure, I would say, so you know, early on, sure your tiny team, maybe you're like three or four people. And people sort of dismissed the idea, oh, we don't really need structure.

We can just talk to each other all the time. But having regular checkpoints like weekly meetings and you know those type of things actually make a big difference.

A big difference. Or even, you know, team meetings where everyone comes together and talk about so whatever's happening next week or what have you.

People dismissed that, and these are the things that come from business school, come from sort of our traditional work experience that do those things that we've done every day when we were there.

Right? And so we've been able to steal that from an early, early, early on in sort of our business. And I think it really helped, helped sort of calm things down, to some extent because it's crazy being in a startup anyway.

So if you can create a bit of sense of stability, it goes a long way for the rest of the team.

Yeah, how would you structure that? Say if I under approached you and like this is how you should structure your check-ins or whatever it might be, what's the framework you use?

We meet with our direct reports once a week and more if we need. If need be, but once a week to just to talk through just what are the kind of the strategic projects that they're working on.

We just have our project list sheet that's public for everyone to see. So we were present a project lead sheets in Google sheets, simple, stupid.

And we have all of our strategic projects that people are working on. We touch on those projects, and we have kind of tentative due dates.

Sometimes, you know, they'll finish ahead, sometimes it'll take longer. It's more than you expected, and we have those.

We also have daily stand-up meetings where we just have a quick kind of touch-base in regards to what we're working on to keep the team kind of engaged and collaborative.

And then we have a weekly KPI meeting or event where we review the overarching numbers for the company.

Okay, so that could be said, you know, sales dollar sales, refunds, returns, positive and negative Yelp reviews, you know, all those things.

So we have about once a week, and when it comes to conflict and well, actually, just dealing with conflict, not conflict avoidance.

Like how do you do is that through the one-on-ones?

Yeah, mm-hmm, that's through the one-on-ones. We've also done, we do performance reviews even in our state.

So we've been doing them for the last three, we've been around for almost five years, but we've been doing them for probably three. This is our third or fourth time.

It's very simple. Like we didn't use a software or anything. We just created some questions on, you know, time, which are what you know, how how do you rate this person's ability to deal with difficult situations or you know their problem-solving skills or team management skills or responsible responsiveness?

Things like that, like I think they're like 10 or 15 questions.

Is it quantitative?

Yeah, so it's a scale one to five, okay? And it's 360. So everybody reviews everyone.

No, no, so this is our HQ team, so ten people.

Yeah, exactly. And it doesn't take long.

Yeah, and then we review it. And then even Colum and I, ours are public so the whole team gets to see because we have to hold ourselves accountable as well.

So we find, you know, transparency is very important.

So we share with them. Now, are those anonymous?

Yes, very important.

Yeah, that's tricky.

Yes, yeah, that's tricky. And so we compile the feedback, you know, of course, like when you're writing written feedback, sometimes you can tell who's who, but B as the managers, we compile the feedback and try to anonymize it as much as possible.

But the form itself is definitely not anonymous as well.

But, you know, I think the one thing that I, you know, just to kind of harp on that again, that can’t be, I think it's important to stress, it’s just you know how we’re not afraid to in a very, you know, and obviously, you know in a way that's developmental, afraid to tell people when they're not meeting a particular expectation or falling below, but to be able to do it in a way that's very constructive.

And I know that's just I know that from working in corporate America where you have to be politically correct and you have to know how to kind of structure feedback in a way that works for a company of that scale.

And I see a lot of stunners struggle with that. I see a lot of them struggle with that, and they'll just let something fester on and on because they don't know the, you know, because they're not—they haven't had kind of a professional training in conflict management.

For sure, yeah. I mean have you guys had to let people go at this point?

Yeah, yes, yeah.

So what do you think founders get wrong in that department?

And I think we've fallen victim to this. They wait too long, yeah. They are not transparent in terms of like maybe they'll fire them without really giving them the opportunity to course-correct.

Yeah, so they'll bill as a manager, they'll bottle in like I'm so tired with this person doing XYZ, and they’ll just hold it in for six months and then they’ll just feel like, you know, five X?

Well, and this is, first of all, I didn't even know I was doing something wrong, yeah.

You know, so I think those are kind of things that, you know, I think those are some things that people definitely kind of miss.

Yeah, I mean, I think those are like definitely get to and we always, if it's performance-related, because sometimes you're firing because quote-unquote, you're downsizing or maybe the role no longer is needed, yeah.

I mean, even like if you're changing direction, engaging that person earlier on the conversation, yeah, so they understand like, hey.

And we've actually had to do that. Hey, like this is where the company's headed, it looks like we don’t need this role anymore.

Why don’t we put a plan together to see if there’s something else you can do? If there isn’t then, you know, start looking for something else. And we're giving them that opportunity and being that transparent actually, yeah, it’s very, really, it's very hard conversation to have, sure.

But it's an important conversation because these are you know, like people that we really care about. We want them to also be successful.

But in terms of firing, in terms of performance, we always talk about also, by the time you're fired, you should know that you're kind of getting from kids.

It's not—you know, it's coming, because we’ve had plenty of conversations about performance about expectations about you not meeting expectations.

If it's a shock, that means as a manager you're doing something wrong.

Yeah, if they're surprised, then that means you're doing something wrong.

Mm-hmm, and when it came to modeling about your product in the early days in the beginning, did you ever have negative margins?

Yes, yeah, yeah, definitely.

I'm doing we, yeah.

I mean, we also did not really—we’ve had to learn what our margins did, like how do you actually compute your margins and what goes in all the different, you know, the nuances of the transaction?

It took us time to learn that.

Alright, so I mean even like, her fees was just so low we were charging, I think it was like ten to fifteen percent transaction fee versus now it's like nineteen to twenty-nine percent.

Yeah, and that's because we were not really thinking about margin at all at the time, which is I think like a lot of the issues are—yeah.

Or we just, you know, we weren't, we thought we knew the cost but then you don't. But once you get into it, you realize there are business costs here, costs there.

And so you know the model is just kind of the foundation and structure but for sure it’s gonna change.

And once you really get into it, that's why I think YC is so good just about like, I mean, you just gotta do it. Just do it because you're—there's so many things that I mean I look, how many amazing models you have, how much experience you have, there's when you do it for the first time there's gonna be some things that you're gonna uncover that you weren't expecting.

And you gotta be able to, you know, modify and change for that.

I think also like early on you can't like you have to—can't be optimizing just yet for margins.

Yeah, but you know, it doesn't mean that you offer your products for free because you still don't know what goes into it, like what are the different variables.

But once you've established that hey like, this is actually a product that works, people wanted and then come back, then you need to look to get into the data and figure out exactly what it takes to make a transaction, how much it costs to get a customer, all those things, and then adjust your fees and prices accordingly.

Yeah, yeah, because I was wondering you mentioned in another podcast about partnering up with another delivery provider early on, right?

So I assume this is you guys doing it in the very beginning, right? Because you're like, we're going to test if this is a product that anyone gives a about.

And then you're like, okay getting this, like going in the direction of product market fit. But how do you even figure out that pricing?

Like our, did you just guess that people weren't gonna be price sensitive and add an extra 10% on?

When we work with the moving company, we just negotiated the lowest price we could negotiate.

Yeah, and then it definitely did not work out because, you know, they ended up canceling a lot of our jobs because they get more expensive jobs, and our customers were getting upset.

So then we brought it in-house, and we were just, we probably kept it at the same price initially, yeah.

And I definitely at that point was negative margins then we actually ran A/B testing in terms of pricing to understand price sensitivity.

And that helped us determine like what is the reader to threshold for what people are willing to pay versus it.

It's kind of like a formula. You can sell more products and lower delivery fees, and maybe your fees will cover the difference, or you sell less products and higher delivery fees.

Right, and so like we finally understand what is the right mix to make it work.

And do you think that sweet spot is the same across cities?

No, I don't think it would be the same, but they'll have to wait and see.

Yeah, TPD, bad. New York is, I think, I think in New York because people don't have cars, yeah, it's much harder, right?

And so people are probably willing to pay, I would venture to guess, a bit more for delivery than in other cities.

And maybe in other cities people are willing to pick up things on their own more frequently.

But you, I mean, I remember when I lived here, very few—I mean like I could count on one hand my friends who had cars, let alone a truck.

And you know what you do, anyone, any friend with a car you're always like, oh, this is the friend, like when you're going to the Hamptons take me with you or if you’re going to IKEA, please let me know, right?

So yeah, those friends are always very, yeah.

And as you guys have aged now, do you have you gone upmarket? Or like who are your average customers at this point?

So, the average customer, the seller and the buyer side are different.

So we got kind of two different customer bases. So the seller is a little bit older, so let's say they're like 30 to 55.

And you know, maybe they're, you know, stereotypically, they're like married. Maybe they're like making room for a baby. They have higher disposable income.

And you know, for people listening work on in the New York area, let's just say they're like the Upper West Side couple if you can imagine that.

And then the buyer is Williamsburg, 25 to mid-30s, first or second job.

And so, you know, they are aspirational, so they're, you know, maybe they were buying IKEA, but App Deco's an outlet for them to now kind of get West Elm or Restoration Hardware or Crate and Barrel and get these really, really Design Within Reach is really kind of nice brands from these higher-end people and higher-end customer base.

And so we kind of have these two kind of parties that were kind of matching together I think quite nicely.

Yeah, and then in terms of your question about upmarket, we're starting to see a shift where people are like, sellers are becoming buyers for example, which is for us, it's a great indicator that we are also changing the way people shop used.

It is important for us so, you know, if you have a higher disposable income, you probably—you can afford to go you can buy the Restoration Hardware piece again.

But you're willing to come back to App Deco and shop for the same Restoration Hardware piece at 50% off because you're, you know, for us, that’s like a very big indicator.

We're definitely sort of raising, widening the age gap, I think for like the buyer side.

And the seller side is much easier because even if any buyer who sells buys through us ends up selling through us anyway when your time is right.

But seeing that shift from the seller side for them to become buyers is really big for us.

And what percentage of the sales are driven by like big brands? Like how much of the stuff is like, you know, Design Within Reach, Restoration Hardware type stuff as a percentage on your site?

Yeah, so around 65, 70 percent are the top seven brands here.

Louis so huge, IKEA, what's down, CB2, Crate and Barrel, Room & Board in New York, ABC Carpet & Home.

You see the agency carpet at home?

So, you know, for us, like that was this—that would know that this whole kind of understanding of brands was a big aha moment for us.

Yeah, you know from an acquisition perspective from a merchant and you know site merchandising perspective.

That, you know, these are the things that—the levers that drive acquisition and drive how we should be presenting and speaking to the site.

Because, you know, these are things that kind of speak to—it's the easiest way to derive quality is through brand, right?

Well, and I would also imagine that's like a ton of organic search. Like people are looking for Restoration Hardware couch.

Exactly and like that's exactly.

Yeah, exactly. And how, how are you guys acquiring customers at this point?

So we acquire customers through Facebook, Instagram, Google. Our original channel, we kind of did this backwards.

Our first channel that we're able to figure out how was actually out of home civil advertising here in New York City.

So, which is totally backwards. And so, you know, definitely not the traditional I think advertising would first start us.

But I think, you know, my experience with kind of out of out of home or TV advertising, all those things, I think it kind of lends ourselves to kind of go there and then we have to figure out the digital part after.

So actually, I think speaks to kind of I think quite frankly our shortcomings from an acquisition perspective—the things that we have to kind of learn as we went along.

But now we've had the time to kind of really figure these things out.

But yeah, so now we have a really diverse group with the majority of our customers now they're through referral, not only 45 to 50 percent of our customers are through word of mouth, friends and family type stuff.

And so, which is, you know, something we're very excited about.

That's huge, yeah.

How do you track our subway ID? Did you have a unique URL? Like I can't imagine people remember that.

We also asked people how they've heard about us at checkout, ordering.

Okay, yeah.

It wasn't, it wasn’t the coupon because no one, you know, nobody used it. It was just when we launched it to support it.

I mean, our— I'm Eric Triple, yeah, after we get to see it because that was the only channel.

This is the only channel, very—and then we'd asked, you know, when people were either listening to a piece of furniture or buying a piece of furniture, like Rohan mentioned how do you hear about us?

And I mean, it was very extremely obvious, and it also, this is like a shot offer African Subway advertising, but it also had a nice halo effect for our other channels as well.

So that's like a validator, yeah.

All this comfort, like people have always assumed that were much larger than we are because of subway advertising, no doubt.

Did you do that with a YC money?

Like how much did you have in the bank when you spent all that on subway advertising?

It was a risk. It was a risk, yeah.

Definitely less than 500 K.

Yeah, yeah, that’s a big chunk.

Yeah, 50 K for just one, you know, one month of how many cars?

One, there's 6,000 subway cars in New York City and we were in one in six.

So wanted to say with one ad in those subway?

Yes.

So now, oh you can’t even like A/B and you can't print a bunch of random ones.

One, and, you know, at the time I was very confident, and I was like, I was crazy.

We were, I hired them, we hired a guy that a creative executive L'Oreal that I used to work with and had a great rapport with, and we hired him and we still work with him.

I’m like, yeah, no, can be testing. Did it?

We came up with a concept, and then he makes it look amazing.

Yeah, we were literally, I kind of bursting at the seams from the response because we didn’t have, we didn’t have the, you know, back in kind of we didn’t have the delivery operation to some work on them.

Yeah, kind of the growth that we had at that time.

So that's what I also wanted to ask you about because that delivery operation seems daunting for a lot of people.

So did you hire someone with experience in that or you just like wing it?

We definitely winged it, yeah.

Yeah, so that was quite a lesson learned, and I think we probably could have benefited from hiring someone with experience earlier on, I would say.

Yeah, but we, yeah, we didn't know what we were doing. Frankly, we didn't know what we were doing.

We were just, we were, you know, it was like 2014, 15, we’re bursting at the seams. We just needed to fulfill orders, and we were just renting vans.

We were not thinking about margins. We were not thinking about how much it's costing to do any of that.

We ended up leasing long-term leases, I think what eight or nine vans at the time was definitely premature because our business is cyclical, seasonal.

Excuse me. So we didn't really think about what happens during the low season. And then all these vans were just parked in the Train in the parking lot.

But we've learned a ton since then, and we now have our head operations who actually comes from furniture manufacturing supply chain.

She's done a lot of this type of operation, so she's helped us a lot together.

At the same time, I think that, I mean it’s from a text from a text, acker from an intellectual property standpoint, you know, what we've built on the operation side—the way that our model works is so we don't warehouse anything.

So we only—we pick it up and deliver it at the same time doing hundreds of pickups and deliveries across three states.

And so, the scheduling of these two people across, you know, across, you know, all these variables is very complex, and I think that that required some kind of, you know, a little bit of outside-of-the-box thinking in order to be able to do that.

So, you know, what we've built is really unique and I imagine that building it from scratch and not having any preconceived notions in regards to how delivery and logistics works in some ways was helpful because it allowed us to kind of imagine something that I think is really different than what anybody else is doing.

Yeah, and that's why, you know, our model is, you know, it's one that's as compared to other kind of furniture consignment models is a lot more lightweight and a lot has the ability to kind of scale because we don't have these type of costs.

Because we would imagine something really interesting from a delivery sample.

Yeah, so there's no like kind of open-source routing software that you're using, you just kind of rolled your own for it?

We definitely looked, yeah. No, we ended up building everything ourselves.

So, okay. And so, are you a CS engineer?

Colum is.

So how are you vetting these engineers in the early days?

I mean, in the early days our team was still very small, so—but I mean I did a lot of software development at Goldman.

So when I was at Goldman in the beginning, that's what I was doing. Then I moved to product management and I ran a team of engineers.

So, I knew how to do that part.

Yeah.

Yeah, that was possible, yeah.

Alright, and then what about the choice to actually not warehouse? Was that obvious from the beginning?

It was always the plan. We never considered warehousing.

It was not—warehousing was not the obvious solution for us because we always thought that you're gonna be capped by this space.

It's kind of like, like if you use the Airbnb example, like building hotels versus making everybody's apartment a hotel.

And so, you know, we always— not that we knew that, like we didn’t think about it like that at that time though our model essentially is you can make every person's home your house pretty much.

And so, but from the beginning, we, you know, we were essentially trying to solve the Craigslist issue, which is you go to somebody's house and you pick it up from them and you pay them in cash and then so why don't you just do that by paying them online and then somebody else picks it up for you?

Yeah. And so, the warehousing parties never point of consideration.

It was not apparent, yeah.

Now, for other reasons realize, you know, it's just cost prohibitive, yeah, you can't—you can't in our opinion build a business model, a sustainable business model, by having—by warehousing everything.

Because you're always gonna be capped by the space, the cost to cover it, someone is going to have to pay for it, and ultimately to either be the buyer that selling the platform, who was already relatively price sensitive, is a million reasons why in our opinion it doesn't work.

And there have been a lot of startups that have come and gone that have tried to do it that way and weren't successful.

Were there other ideas that you thought might work and then just absolutely failed that you've tried out at Deco itself?

Yeah, you're like features?

Oh yes, plenty.

What did we try? There's so many. The road of any startup is lined with a gazillion failures.

So we actually did so, you know, simple things that intuitively would actually should work, offering photography for customers, yeah, nobody wants to do that.

So funny, so yeah, if you took the Airbnb advice and you're like this was a huge growth thing for you.

Yeah, this is obviously gonna work for us?

Nope, doesn't work.

Did not work, offering cleaning services and all that type of stuff, nope, did not work.

People don’t care.

People don’t care; they don’t wanna pay for it.

I mean, yeah, but if they don’t want to pay for it, it’s also super really discounted.

So if you go to the same company to do the cleaning, they’ll pay—they’ll charge double.

We were—we negotiated very good con, like very good deals and people were not buying them.

So we couldn't even keep the deals because we, you know, promised a certain number of cleaning jobs.

So, you know, stuff like that, there's kind of this stuff, stuff that you think should work, did not.

People were not budging, okay.

You know, there’s an interesting thing too is that, you know, there are things that you think they’d work and they don’t work, and then you do them again and they do work.

So for example, you know, we were mentioning the acquisition channels.

And now we’re doing Facebook and Instagram advertising. Today it is one of our biggest channel advertising channels.

And we trot—we hired an agency to manage our campaigns before, and they were not successful when we hired this agency to do it.

Well, we tried, we—yeah, we were nice as women, we have the evidence, we do it.

And so then a year later or so, we’re doing any advertising on Adderall.

A year later, we dust it off and we’re like, let's just like look through this and see if there’s something to be learned from what happened when we tried to do these that we—you used these acquisition channels.

And then we saw one campaign, that campaign did really well.

Out of its 15 campaigns, there was one that did really well, let’s just turn back on that campaign.

Let’s just see what happens and then back, we turn it back on, it continued to do well.

Why did this? And then that just kind of spurred us really understanding our digital advertising channels that was really the birth of it.

Yeah, torture.

Now it's—it’s our most profitable best channel, and you know, it's something that it took us, quite frankly, three, four years to kind of really figure out how to do it, you know.

And sometimes I'm like kicking myself, like how I wish I know what I know now.

And I know now, and you know, but it takes that I think a difficult thing was startups is, you know, just takes some time to take some time to figure things out.

You know, some things you have to figure out quicker, faster, or some things, you know, you really got a—you know, have some patience.

And one of our models now is, you know, particularly from a marketing perspective, is I just rather do a few things really, really exhaustively well than just try to do a whole bunch of things to where I can't really understand the nuance and the detail of it to understand if it works or not.

And yeah, I think that's kind of a big shift that's really paid off.

It's also so hard with algorithms anyway to figure out what you're doing well.

Yeah, I do, do you know what was it about that particular campaign?

Was it the audience? Was it the content?

It was the content. It was—it was an ad that was testimonial.

And you know when I look back, actually in all most campaigns, I'm a little embarrassed by this, but this one was kind of testimonial.

So I just spoke at it, just like had quotes from customers if I'm remembering correctly, and that did really well.

And the other ones were really off based when I think about them now in terms of their performance and the things we were throwing.

But you throw things up to have them stick. But then we start doing things that focus on brands and doing things like that.

We start really looking at our kind of maternal numbers, yeah, internal search terms and once you start becoming really understanding your digital channels, understanding your search volume, your landing pages, your click-through rates.

And if you understand those things to say, whether it's for your website, you can just kind of flip it on this header, your advertising and acquisition channels.

But it took us some time to really kind of understand that type of detail.

Mhm, yeah. So, what kind of analytics are you running on your site now in terms of like tracking?

Yeah, yeah, so we track everything from like clicks to even usability.

We record videos like in the background. We track all our data, customer data, all of that.

And we have visualization tools that we use to visualize it and be able to manipulate it, and they've been—it’s been incredible, like since we invested we’ve invested in like one platform specifically.

And that has completely like transformed the way we do things because before we were running sequel queries, right?

And so like that takes time.

So not everybody actually at some point, everybody in our team knew how to do sequel.

But it takes time, you pull it and then you have to manipulate it, you have to analyze it, and then being able to just use a tool would be expensive.

It made a big, big difference.

Mmhmm, yeah. This is a reason why—not much, man, I don't want to like advertise it, I guess.

Okay, no free shoutouts, yeah.

Let's just say it was his tool is called Looker.

Okay, yeah. And it’s a—I mean, that was a super helpful, that was great.

It was a big—it was a big change.

I mean, I think that that kind of opened, I think kind of opened our—up to more analytics in other ways.

Yeah, it made a moment for analytical company kind of brought us home to our experience, our professional experience before starting at App Deco.

To be quite honest with you, this for me—it just opened up to be able to dig into a lot of detail that it was hard to catch when you were just manipulating Excel documents before.

So, you know, like getting to like do neurons have brands by category and the time it takes to sell and who are these people who ordered and people are dropping off and why and what did they have in their cart and yeah.

And you visualize it all together. So like you have these crazy dashboards that can be super detailed then you can actually look at this data and be able to make some sort of, look at trends and make some conclusions and actually be able to use it for marketing purposes or for updating the product or operations.

Even the operations, we've become a lot smarter even from our unique, you know, from an IMAX perspective because we're able to like look at all the nuance that goes into making a transaction.

Right? So, oh okay, this is the revenue, but here's all the costs associated with it.

And like you can see that all together, it makes a big difference especially for product people.

Now, did you guys do the New York City back and forth during YC?

Yes, you did. Well, yes, definitely was worth it.

So we didn't know that this is what we were supposed to do. So we had like rented out our apartments here and subletted apartments, and we should—we went to Mountain View, and I think I came over, it was like PG or in speech.

It was PG, he’s like what do you, first day, he’s like what are you guys doing here? You need to be in New York.

So, and so we're like okay. And so we started flying back and forth every week for the three months, yeah.

It was pretty, it was flying Tuesday morning and then out Wednesday, yeah.

Wednesday hoot every, we ever ate at Laughter Doubleday.

We like crash for like two, three days, like we really like—

Yeah, after then, then one day we wrote because in a day during YC they attempted talking about talk to your customers, talk to your customers, and we're like what does that mean?

Like what does it mean to talk to our customers? Customer service?

Yeah, like no, it's not customer service, you need to somehow figure out a way to get in front of your customers.

And I mean still, it was exhausting too.

What else was helpful?

Yeah, just kind of wrapping up, I'm curious, we're about to start another batch.

If you could give some advice to people about to go into the batch, what would you tell them?

I would say all the suggestions and all the ideas matter how crazy or off base or non-scalable or hard that they may seem, you just do it at a hundred percent and do it in an exhaustive way.

That's what I would say. And I think the one thing, I think that that was, I think, the key for us really getting a lot out of YC is that every week—we were partners, Kevin Hale. Those were our main partners at the time, and you know, they would have, you know, so you would sit in the team, in the group, the group office hours with all the other companies.

You will see that you'll learn that you guys are all in the same boat, all have the same problems and to some level or extent.

And you know, and then they would give you this feedback or ideas, and then by that following week, you know, we were very diligent about having some legitimate responses to everything that they had said we should do.

And we just really took that to heart, so we just like, we like just ate it all up, but you know, we really dove in a hundred percent.

And we weren't not above anything, and I think that that was really to our benefit.

What would you say?

Yeah, I think like we took our learnings from corporate in that way, and so, you know, we had our one-on-ones with the partners, and we created structure so like made sure we set up the meetings every week because it's up to you, you don't have to set up meetings, right, every week.

So we made sure we had like reoccurring meetings for the duration of the program and we had goals or you know, like here’s our agenda, here’s what we have questions with and here’s what we’re looking to get done.

Yeah, and they would have suggestions and then the next week would be like well here's the list of things we got done and here's, you know, we held ourselves accountable and made those meetings become to some extent like the reason we're to hold us accountable for them.

Manage them. Exactly, managed up to some extent, yeah.

And you know, and like the advisor would give—sometimes it’s very specific, like you try, you know, I think there was one like you need to have a blog for SEO.

But sometimes it's just like you need to talk to your customers, and it’s like okay, what does that mean?

And try to like figure that and distill it is is also a big part of part of that as well.

Awesome, well if people wanna try out App Deco, what do they do?

Go to appdeco.com.

App Deco, right?

Thanks, guys.

Thank you! Thank you so much.