7 stories to read this weekend

Om Malik — Sat, 28 Jan 2012 08:00:17 +0000

There is a lot of talk about data, 3D printing, innovation, design and user interaction and curation. So this week’s theme is a collection of writing that questions conventional wisdom about these aforementioned themes. Most of them are long — so better get a cup of tea now.

Data trumps opinion, especially when it comes to design, argues Adapative Path’s Brandon Schauer. He outlines four examples in his post.
The myth of the new brand new innovation myth: Is that headline giving you a headache? If you look beyond it, the article is a great treatise on innovation, the individual and the team dynamic.
There is a lot of optimism and hype around 3D printing these days. Christopher Mims over on Technology Review magazine isn’t buying it. He thinks it will go the way of virtual reality.
After a long break, Rohit Bhargava, one of my favorite writers on marketing, returns with the four principles of delusional economies.
I am neither an engineer or a designer. However, I do know a great primer when I read one. This is a great design primer for engineers from Michael Loop.
7 ways to organize your home office in 2012: Given how cluttered my home office gets, I found this list from Herman Miller’s Cerentha Harris quite helpful.
As you all know, I am obsessed with Pinterest these days. But here is a fresh and wonderful take from a non-techie, who describes the social aesthetic behind the fast-growing social sharing service.

PS: By the way, in addition to the Om Says newsletter, you can stay in touch with me via Twitter (@Om) or on Facebook (http://facebook.com/ommalik).

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How Wayfair quietly built a $500M a year web business

Colleen Taylor — Thu, 29 Dec 2011 00:30:41 +0000

In today’s crowded world of e-commerce, it’s not easy to make a name for yourself. New niche sites pop up constantly, while big players such as Amazon are work to undercut the growing competition by spreading into new territories and offering low prices and lots of perks. Meanwhile, the brick-and-mortar retail giants game such as Walmart are getting savvy to e-commerce and investing more and more in building strong online operations.

That’s why it’s particularly impressive that Wayfair, a relatively little known e-commerce company that deals in home furnishings and decor, is set to make more than $500 million in top-line sales for 2011. I talked recently with Wayfair’s CEO Niraj Shah to get details on how the company quietly built a half-billion-dollar-per-year business, and where it plans to go from here.

Start small and widespread, consolidate later

Wayfair as it stands today was founded by Shah and his business partner Steve Conine nine years ago as CSN Stores. At its inception in August 2002, CSN operated a single website, racksandstands.com, which sold storage and home entertainment furniture. Gradually CSN expanded its holdings to include number of individual sites that sold other kinds of home and lifestyle goods, with domain names such as strollers.com and cookware.com. By 2010, CSN had slowly but surely grown to more than 600 employees, and its family of more than 200 websites was bringing in $380 million in annual sales. All this time, CSN had not taken a dime of institutional capital.

It wasn’t until 2011 that Shah and Conine decided to consolidate CSN’s operations under one brand name of Wayfair and take the business to the next level by raising outside funding. In June 2011 Spark Capital, Battery Ventures, Great Hill Partners and HarbourVest Partners pitched into a $165 million funding round. Wayfair now operates under three brands: Wayfair.com, which sells a variety of mid-range home goods; AllModern, which sells higher-end brands such as Alessi and Herman Miller; and Joss & Main, a flash sales site for designer home goods.

Beating out brick and mortar

The consolidation and rebranding is serving Wayfair well. The company now has nearly 1000 staff and a catalog of more than 4.5 million items from 5000 brands. Now it’s closing out its best year ever, with 2011 holiday season sales 30 percent higher than they were in 2010. Cyber Monday 2011 was the best single day of sales in the history of CSN/Wayfair, with an average order size of $143 per customer.

So what’s next? According to Shah, the company is looking at some pretty big players as its competition. And the most pressing competitors are more traditional physical retailers, not other online companies. “We were really focused on online competitors when we started, but over time as we’ve grown we’ve found that our competitors really include Walmart, Target, and folks like that,” Shah said. “We tend to win if someone is looking at our site along with another site. But if people just go directly to a brand they already recognize, like Target, then we may not get the chance to win that business.” That’s exactly why Wayfair has decided to focus on building up its own brand recognition right now, Shah says:

“Right now the home market is a little over half a trillion dollars in the United States, but only about 5 to 6 percent of that is online, and it’s a highly fragmented market within that. That’s all starting to really come online, so we want Wayfair to emerge as a household name. We want to seize the opportunity to be the go-to brand for home decor online.”

The road to an IPO

Ultimately, Shah says that Wayfair plans to return its shareholders’ $165 million investment with an eventual initial public offering. But he also noted that Wayfair’s investors are quite patient, especially seeing that the company was operating with comfortable profits well before outside money was brought in.

“In general for tech companies it seems to be a good time in the market to go public. But part of why we never took investment capital early on is that we didn’t want any time pressure regarding an exit,” Shah said. “If your business is going well you still try to time an IPO well, but it’s not like you’re going to miss a ‘window.’ We could see being publicly traded in five years’ time, but it’s not a big priority now.” In the near-term, he says, Wayfair’s focus is on international expansion and boosting its brand worldwide.