April 18, 2016
The Flat-Pack Strikes Back
In targeting the needs of young city dwellers, a new generation of entrepreneurs is building digitally driven businesses that could revolutionize residential design.
Greycork’s full living room set, which is sold out until May, consists of a bookshelf, a sofa, a coffee table, a chaise, and a side table, retailing together for $1,500.
Kyle Hoff and Alex O’Dell didn’t seem to have a lot in common. Hoff was an architect who comes from a family of steelworkers. O’Dell was a public policy major working as a photographer and filmmaker. Yet both were in their 20s. Both were interested in how people live in small urban spaces. And both had changed residences more times than they cared to count. When Hoff showed him the prototype of a portable, easy-to-assemble table frame he’d been fabricating in his Detroit apartment, O’Dell suggested they go into business together. They called their company Floyd and in January 2014 launched their first product on Kickstarter.
The Floyd Leg is a set of four solid-steel legs that attach to a host of surfaces to form a desk or a coffee or side table. No tools are required for assembly, and the legs wrap up smartly in their own carrying case. Hoff and O’Dell set their crowdfunding target at $18,000. They raised $256,000. “It was kind of crazy,” says O’Dell, now COO at Floyd, with Hoff as CEO. “We were just putting it out there to see what the traction would be.”
The Floyd Leg was hardly an outlier. Over the past four years, a slew of start-up companies have begun to cultivate new and underserved niche markets—with supply-chain, distribution, and branding strategies that defy traditional models. “We are seeing more and more businesses key into transparency when it comes to sourcing, production, and costs,” says Gene Wilson, director of manufacturing and vendor management at Room & Board. “This is a direct result of consumers caring more and more about where their stuff comes from.”
Often nicknamed the “IKEA killers,” these new companies have various cultures, targets, and tactics. Some, like Floyd, cater to young urban nomads. Others engineer couches and desks that fold into flat boxes for seamless, low-cost shipping. some short the circuit between supplier and end user, connecting customers with manufacturers of select luxury or design items. A few even feature apps that allow customers to design their own tables, chairs, and shelves. Yet all of these new brands share one essential trait: they were born and exist almost exclusively on the web. Every part of the customer experience—initial contact, marketing, ordering, service, and feedback—takes place online. And while that may be old news for many other industries, it’s breaking news here. “Our industry was very late to move to online distribution,” says Petrus Palmér, founder and CEO of Stockholm-based Hem. “Part of that is due to the sheer size of our product. It’s harder to ship a sofa than a CD. But the industry also has extremely well-defined sales chains, with distributors, wholesalers, and agents in a closed loop. You’re basically biting the hand that feeds you when you start retailing your own products.”
Palmér was one of the earliest to test the online-market waters when he helped launch furniture company One Nordic in 2012. The learning curve there was surprisingly steep. Designers were accustomed to creating for industry insiders, who then spread the word to their customers. Now, instead of preaching to the choir, Palmér and his peers had to bring their message directly to the masses. “We thought if we made a cool sofa and put it online, people would buy it,” he recalls. “We soon found out we knew very little about setting up a supply chain, or how much time and money it would take to build a brand and a loyal customer base.”
Hem’s latest releases, unveiled at this year’s Salone del Mobile in Milan, included the Zig Zag shelf by studio deForM.
We’re Our Own Customers
For Gen-X and millennial entrepreneurs, migrating to e-commerce feels natural. They’ve grown up viewing images on the internet and are used to purchasing things online that they’ve never touched or handled. They also have easy and instant access to reliable information. “This generation is much more willing to do its own research,” says Luke Sherwin, chief creative officer at Casper, a New York–based mattress and bedding manufacturer. “They don’t necessarily need a human to help them.”
Like their customers, the new entrepreneurs are also a bit more discerning than their parents, unwilling to cram their apartments with bulky, worn-out furnishings they inherited from relatives or bought in secondhand stores. “I was blown away when I tried to furnish my apartment in grad school,” says Brad Sewell, CEO and cofounder of seating company Campaign. “The waiting times were always too long. Anything half decent cost as much as a small car. I remember calling my father and telling him that since I couldn’t find the things I wanted, I was going to make them.”
Rather than thinking outside the box, Campaign thinks inside the box—engineering home seating that fits into Fedex or UPS packages and ships directly to the customer’s home. Yet any millennial entrepreneur knows that convenience cannot come at the expense of performance and aesthetics. “Companies like IKEA have taught consumers that self-assembled furniture isn’t always of the highest quality,” says Sewell, who worked in product design at Apple, and, before that, as a crash-test-dummy engineer and automotive designer. “We decided to change that. For people who need to move from New York to San Francisco, it will be a treat to be able to fold their sofa up and stick it in the back of their Honda Civic.”
Rachel Cohen and Andres Modak were also their own customers when they founded Snowe, an online midrange housewares shop that streamlines the experience of stocking a new home. “We couldn’t find the things we wanted when we moved back to New York after grad school,” says Cohen, who, like her life partner Modak, earned an MBA at Wharton in Philadelphia. “Larger retailers had good prices, but their items weren’t design forward. the high-end boutiques had some beautiful things, but they were out of our price range. We both saw this as a broad opportunity.”
Cohen also discerns a difference in the nature of products that new urban dwellers seek today. “We want things that are beautiful, but are also practical and convenient,” she explains. “We still want to host dinner parties for ten from time to time. But no one wants to wash the crystal by hand afterward.”
Casper’s mattresses are home-delivered and can be tried out for 100 nights.
User Experience Counts
Part of the success of this new wave is due to symmetry. The entrepreneurs and designers aren’t designing products only for people like themselves. They’re pioneering a process for their peers—in an industry whose infrastructure has been largely unchanged since the Industrial Revolution. This “vanguard of the residential” isn’t necessarily reinventing the sofa. But it’s changing the context. “It takes a unique blend of skills and a certain level of audacity to pull this off,” says John Humphrey, CEO of Greycork, a furniture manufacturer located in Providence, Rhode Island. “It’s not just about making objects or building a brand. It’s about creating an ecosystem and learning from it.”
One lesson Humphrey and his partners soon gleaned is that experience matters—in particular, the customer experience. “All of our surveys and focus groups told us that it’s not the furniture that creates the idea of a home,” says Humphrey, who grew up working in his family’s millwork business. “It’s the experiences associated with that furniture. As a brand, we place a priority on quality, and on keeping prices low. But our highest priority is the customer experience—making our products accessible, offering a clean website that is easy to navigate and that reflects our culture.”
Tylko’s Hub table can all be customized using an app.
Courtesy Mikkel Mortensen/Tylko
We Can Have It Our Way
Another important element in the new residential furniture wave is customization. Many clients already empowered by the web also want to participate in the design process, choosing not just colors, materials, and finishes but also the proportions of the pieces they buy. “The truth is, it’s very hard to find furniture that fits perfectly with your work or home,” says Mikolaj Molenda, one of the founders of Tylko. Based in Warsaw, Tylko uses an online configurator to let customers dictate the height, width, and depth of their items. The configurator is intuitive and easy to use. But user autonomy is limited. “We would never allow a customer to make a piece that is unattractive or unstable,” says Molenda, a trained architect. “The designer of the piece creates a set of rules that are embedded in the configurator. The end user chooses a proper solution within that rule set.”
In addition to attracting customers, the Tylko configurator provides real-time feedback that the company can use to fine-tune its offerings and operations almost at warp speed. “In the standard furniture model, pieces sell a year or two after they are created,” Molenda explains. “At Tylko, our analytics give us actionable information on the choices our people make online. We can change our options and designs in months or even weeks.”
A New Era Begins
Too little time has passed to assess the impact of these new brands on an industry whose total annual revenues may top $300 billion. For the moment, these niche companies aren’t likely to put IKEA or other big-box stores out of business. Yet they do represent a shift, and one that will likely become tectonic as consumers born into the internet age displace their more Luddite, less discriminating elders. It may be too soon to call it a revolution. But to an industry still anchored in brick and mortar, it’s starting to feel like one.
Click through to the next page to see more of the “IKEA killers.”
The “IKEA Killers”
Location: Emeryville, California
Funding: The company recently raised just under $3 million from Blumberg Capital, Ludlow Ventures, and other investors.
Named after the lavish folding furniture that British soldiers transported on camelback from tent to tent during military operations in India and Africa, Campaign makes sofas, chairs, and love seats that can be assembled, according to the company slogan, with “two hands” in “three minutes.” With a staff of outsiders—none of the full-time staff hail from the furniture industry—CEO Brad Sewell brings a fresh ethos to his three-year-old company. Future plans include easy-to-install replacement upholstery kits for Campaign sofa frames and permanent pop-up product installations in coffee shops, hotel lobbies, and other retail spaces.
Location: New York City
Funding: In 2015 it raised $55 million in Series B venture funding.
According to company legend, Casper was born of the selfies that the aspiring entrepreneurs brought into their shared New York City workspace after pulling all-nighters. “We started thinking about a lifestyle sleep brand,” says Luke Sherwin, one of those aspiring entrepreneurs, and one of Casper’s five cofounders. “We thought that sleep might be the last lifestyle frontier.” Launched in 2014, Casper ships mattresses in mini-refrigerator-size boxes by UPS ground; on opening, the mattress inhales, unfurling, in Sherwin’s words, “like a big burrito.”
Funding: It raised $123,252 on Kickstarter for its most recent product, the Floyd Bed Frame.
“We’re not here just to give work to the area,” says Floyd CEO Kyle Hoff about his Detroit-based start-up. All of Floyd’s products are manufactured by facilities in the Great Lakes region. Since the triumphant 2014 Kickstarter launch of the Floyd Leg, the company has expanded its product line to include a coatrack, a bench, a bed, and several table and desk items. Hoff is clear that he’s not trying to compete with Amazon. “Quality and accessibility are important,” says Hoff, “but our real advantage is simplicity. People today tend to want fewer things. But they want the things they have to make sense, and to last.”
Location: Providence, Rhode Island
Funding: An Indiegogo campaign in September 2015 raised $270,313.
All of Greycork’s sofas, chairs, tables, and shelves are easy to put together and dismantle, and ship by courier in flat cardboard boxes. Yet convenience is only one feature of this Providence, Rhode Island, manufacturer’s offerings. “We want to be the brand leader for young people who live in urban settings,” says CEO John Humphrey. “There’s a huge opportunity to connect with that market now. And the opportunity can only grow as our target group gets older.” Greycork sold out its first collection in February and is now preparing to present a refined product line at ICFF in May.
Funding: On February 3, the brand was acquired by a private investment company.
Founded in 2014 after online retailer Fab purchased Finland’s One Nordic design brand, Hem ships designer items to customers in 35 countries. With a stable of designers that includes Luca Nichetto, Nendo, Form Us With Love, and GamFratesi, Hem is very popular in Silicon Valley. “The biggest change today is that people expect brands to communicate what they are about,” says CEO Petrus Palmér. “But our customers are buying the same types of furniture they’ve always bought. Yes, shipping and mobility can matter. But I’ve never seen people choose either of these over aesthetics when they choose furniture.”
Location: New York City
Funding: Snowe is backed by angels and seed funds such as Box Group and MI Ventures, as well as leading retailers.
Snowe creates value in online housewares retailing with a rejiggered supply chain and direct-to-consumer marketing. Its streamlined Web interface offers easy passage through the choice, select items in the company catalogue. Rather than touting its exclusivity, the site’s imagery and messaging speak more of elegance and casual comfort. Explains Rachel Cohen, who launched the Brooklyn-based company with her life partner Andres Modak last June, “We noticed that most traditional houseware images showed sweeping mansions or staged, pristine interiors—places where people may aspire to live, but never end up living. We wanted to communicate something more playful—images of tables with food on them, or of ruffled beds.”
Courtesy Mikkel Mortensen/Tylko
Funding: Designer Yves Béhar is an investor.
DIY means “design it yourself” at Tylko. Catapulted into orbit after a wildly successful presentation at the 2014 Launch Conference in San Francisco—an annual event that has christened tech start-ups like Yammer, Dropbox, and Fitbit—the Warsaw-based company offers customers an easy-to-use online configurator so they can have it their way. “We chose products that were already available elsewhere for customization,” says Mikolaj Molenda, head of design and one of Tylko’s five founding partners, “so we didn’t have to educate our customers about the concept of customization. Instead, we gave them completely new tools, and an environment where there is always a designer behind them.”