October 1, 2007
A Council of Five
A new San Francisco–based furniture company looks to Europe for inspiration and business models.
When founding Council, his new San Francisco–based furniture company, Derek Chen tried to think like an Italian. A former management consultant, he spent 12 years working and traveling internationally, as well as regularly attending the New York and Milan furniture fairs. During that time it struck him that few small domestic furniture companies had adopted the model used by their European counterparts, many of whom work with a cadre of independent designers rather than retaining an in-house crew. “I thought it would be nice to try to bring that to the States, not so much to imitate a European company but to try to tweak it a little for the U.S. market,” Chen explains. “Year to year they may or may not use the same designer, and the virtues of the designs stand out a little bit better.”
Council’s first collection, Optimism, debuted to acclaim at the International Contemporary Furniture Fair this past May, a mere seven months after Chen founded his company. “It all happened very quickly, and I was conveniently, maybe, naive about it but somehow managed to get in there,” he says. In the short period between the business’s launch and the fair, Chen assembled an international slate of designers that includes both es-tablished names (Arik Levy and Khodi Feiz) and up-and-comers (Mike and Maaike). The designers are paid in royalties and, Chen says, afforded more creative freedom than if they were all working together toward one overarching aesthetic aim. “The designers often focus more on what they’d like to design, so they’re not really bending over backward to meet a restrictive creative breed,” he says.
The range of talent represented (including Chen himself, who designed the geometric-shaped indoor-outdoor Section bench) should serve Council well, says Emmanuel Plat, vice president of the Conran Shop, in New York. “I think they are quite clever because there’s a mix of designers: like Mike and Maaike, I don’t know who they are, but they also introduced pieces by Levy and Feiz, whose names are more out there in the design community,” he says. “You can say, Well, if these people are all in a catalog together, there must be some reason.”
For Chen the timing of his venture was right both personally and globally. The dot-com where he had served as chief technology officer (and oversaw the creative team) had gone belly-up a few years prior, and the home-decor design firm he’d started in his garage had not fared much better. (“I did that and proved pretty irrefutably that it’s impossible to make a living that way,” he says.) With many Americans’ design savvy growing along with their disposable incomes, Chen saw an opening for a small firm exhibiting an international design sense. Thinking of the customer who wants modern-influenced pieces a step (or two) up from IKEA, he explains, “Right now you only have two choices. You can buy European or you can get the design classics from Knoll and Herman Miller. That’s great design, and I have them in my home, but maybe there is somebody out there who wants something a little bit fresher but still with European quality.”
The falling U.S. dollar influenced Chen’s decision as well. “It’s fallen maybe thirty percent against the euro over the past four or five years, which essentially means European furniture is that much more expensive than it was in 2003 or 2002,” he says. “A lot of the challenge of a small company is to get in there and find enough margin. We’ve got thirty percent more to play with than we had.”
Items in the Optimism collection, for which Chen started taking orders in August, include lounge pieces, storage units, stools, and tables. Prices range from $650 for One & Co.’s narrow, wiry Chrysalis stool to $5,700 for Feiz’s bold, boxy Peel sofa. One & Co.’s luminous, silver-coated wood-block Periodic Table is the collection’s marquee piece, with a price point upward of $40,000. “That’s our outlier,” Chen explains with a smile. “It’s not for everybody, but, hopefully, it establishes a context for the thousand-dollar table.”
Jeffrey Bernett, principal of Consultants for Design Strategy, who has worked with most of the major European and American design firms, says there is room for a niche company like Council and Chen’s model has many advantages. “It’s a great way to create visibility, to have direct communication with the marketplace, from the press to the retailers, and even to the end-consumers, trade shows in particular, and the dialogue back to the retailers,” he says. “The opportunity is certainly there in America for a couple of midrange design companies.”
Plat predicts Council’s appeal will be limited to smaller boutiques but might extend to a more well-known venue like Design Within Reach. “There are some pieces that could be successful for this market but still limited to very specific showrooms,” he says. “To me, it’s not so different to compare it to Dune in New York. They’re good quality, and there’s a market for it, but they are not collections we are considering for our showroom.”
Chen agrees that there are similarities between Council and companies like Dune and Bernhardt Design, which also work with outside designers, though he notes that Council will be less centered initially on the contract market than Dune. Likewise Council will focus more on partnering with “a couple of the right retailers,” while Dune sells primarily directly through its Tribeca showroom. “Our gamble is that a retailer network can improve our manufacturing quantities, which can help somewhat with our margin. Plus we think that this broader exposure could indirectly increase our direct sales as well,” Chen says.
He feels the closest affinity with Bernhardt, whose collections appear “curated” with an eye for iconic pieces. “I want our brand to be identified as diverse and tasteful and occasionally surprising, a company that sells exemplary ‘pieces,’ no ‘sets,’” Chen says, adding that he welcomes the presence of these other domestic companies. “It’s nice to have them in the U.S. market. As an American, or even just a non-European company, it’s a bit of a hurdle to be taken seriously in comparison with the Established & Sons and Driades of the world. Some critical mass can only help all of us.”
Competing with U.S. mass producers may be another matter. “America is sometimes challenging to make things in,” Bernett says. “We like to make fifty thousand of something. We don’t really like to make ten of anything.” But knowing that he’ll only be making tens of things, at least for starters, helped determine his market, Chen says. “It’s often easier to break into the high end than the low end because we know that we’ll be challenged on quantity, and it’s a lot easier to make a few things and really focus on making them well than to focus suddenly on competing with the biggest companies in the world.”
Moving units on a grand scale, on the other hand, is not even a long-term priority. A college engineering major who was temporarily swayed from his childhood dream of making furniture only by the prospect of building robots, Chen has a different vision for Council. “Five or ten years down the road I wouldn’t mind being more or less the same,” he says. “We want to be introducing great design in the United States. There are European companies that have done that for years—your Morosos, your Cappellinis—and we’d like to be one of them. There’s a point where some companies decide to become the next Herman Miller or Steelcase, and maybe change and probably become, in a lot of measures, much more successful companies. But that’s not what makes it fun.”