Alex started Apt2B in 2010. He sold couches online before IKEA did. It took him over 3 years to make as much money as he used to as a furniture salesperson. But it paid off. After growing the business to $6M in revenue, he sold the company.
Post-acquisition he grew the company to $40M in sales. In this episode, we dive deep into what Alex did to get started, how he closed his first few customers and what he did to grow to $1M in revenue.
From landing a Super Bowl ad to selling couches at Costco, this episode is full of sales and marketing anecdotes you can steal. You don't want to miss it.
Following the sale, Alex is now back at it as the founder and CEO of couch.com, a platform to help people find great furniture.
Alex started Apt2B in 2010. He sold couches online before IKEA did. It took him over 3 years to make as much money as he used to as a furniture salesperson. But it paid off. After growing the business to $6M in revenue, he sold the company.
Post-acquisition he grew the company to $40M in sales. In this episode, we dive deep into what Alex did to get started, how he closed his first few customers and what he did to grow to $1M in revenue.
From landing a Super Bowl ad to selling couches at Costco, this episode is full of sales and marketing anecdotes you can steal. You don't want to miss it.
Following the sale, Alex is now back at it as the founder and CEO of couch.com, a platform to help people find great furniture.
My best anecdote about this is we got into the Super Bowl pre-game, the pre-game show leading up to the Super Bowl. We're like, what? We had our crappy commercial that we made in my buddy's apartment showing on this.
Pablo:Oh my God. They still charge you but just some reduced rate or how does that work?
Alex:Each play paid our normal rate of 80 cents a spot or something.
Pablo:Welcome to the Product Market Fit Show, brought to you by Mistral, a seed-stage firm based in Canada. I'm Pablo. I'm a founder turned VC. My goal is to help early stage founders like you find product market fit. Alex, welcome to the show.
Alex:Thank you so much.
Pablo:I'm excited. I'm particularly excited for this episode because in this podcast, we talk to mainly tech founders and most of the times the sort of things that their startups are doing are esoteric. It's niche, it's a vertical, nobody has heard of it. While the episodes are still interesting because things still repeat across different verticals and so on, I find it's hard for people to understand what the company really does. In your case, you were selling couches online. It can't get any simpler than that. I think everybody's going to get it. You bootstrapped it to about six million in revenue, you exited and then you kept growing to 40 million pushing furniture. I mean, I think it's going to be an incredible story. I'm excited to jump in. I guess for my first question, if you could just set some context. I think you started about 2010. What did the landscape look like back then when it came to online for online selling and especially e-commerce for furniture?
Alex:Great question. The landscape for online furniture sales at that time was like, you ever see Mad Max? It's just like – well, I picture low, like desert planes where there's literally nothing. It was a very interesting time because there was really no big ticket items being sold online at that time, as crazy as that sounds because 2010 feels like it was just yesterday in some ways. There were no independent furniture brands really to speak of. There were a few that were popping up here and there, and I'll tell you in a second our first foray into understanding that this was something that could be big. At the time, Ikea for instance, the biggest furniture retailer in the world, they weren't even transacting business online. There was no online payment gateway. It was just like a store finder, essentially an online catalog. That frames the conversation. Back, a few years before that, there were some early players in the online furniture space. Now furniture was super-hot in 2005, '06 and '07. This is when the housing market was going insane. Obviously in 2008 and '09, it was terrible because the furniture market generally follows the housing market. My best buddy at the time was a sales rep. He was pushing big bubba recliners, the type of couches that you know exist and they sell extremely well in this country, but you don't really see them that often in modern homes but there's a lot of business going on. It's an old traditional Mississippi manufacturer that sold these reclining couches. His territory as a sales rep was coastal California where we live; southern California mid-coast, between LA and San Francisco. He's going into these stores and I worked with him and we're selling containers of these huge bubba recliners to these stores. All of a sudden he gets an email out of nowhere from someone who wants to open up an online account. He calls a sales manager in Mississippi. I'm not going to do the accent, but you could picture what this guy might sound like. He's basically like, no, we don't have any online accounts right now. My friend is like, hey, can I open them up? Can I bring them onto the – he's like, yeah, let's see what happens. What do they need? They just need a spreadsheet of all the information and images and they'll do the rest. Okay, so he supplied them with this and the next day he wakes up to an order immediately. Two days later there was five orders. 10 days later there was 20 orders, every single day going to different parts of the country one at a time. This is a company that was used to selling a hundred at a time in a shipping container coming over from Asia. Now they're selling from their domestic inventory one here, one there, one there. They grew so fast. My friend made a lot of money and so much so that they took the account away from him and made it a house account because he was just literally making too much money off of this.
Pablo:Was this dropshipping in terms of how that worked at that point?
Alex:Yeah, it was early dropshipping. This company had never even done that before. They were going through the process of figuring out how do we even palletize single shipments to go to one place like that? That's something they had to adapt to as well. The retailer that was buying all this furniture was called CSN Stores at that time, and eventually they became Wayfair.
Pablo:That's crazy.
Alex:That's how we got into the furniture business figuring out that, oh, there's somebody who's doing this and doing a really good job. There's a ton of opportunity.Yeah, it was early dropshipping. This company had never even done that before. They were going through the process of figuring out how do we even palletize single shipments to go to one place like that? That's something they had to adapt to as well. The retailer that was buying all this furniture was called CSN Stores at that time, and eventually they became Wayfair.
Pablo:Was he supplying then one of the first pieces of furniture that Wayfair would've sold?
Alex:Wayfair got out this early, early 2000s. They started as CSN stores. Even before that, there's just these two guys. They were not in the furniture business. Their story's really interesting. They have a great, like how I built this with Guy Raz, if anybody's interested. It's just a good business story. They started with just a very robust SEO driven e-commerce strategy where they had bartos.com or awesomemediastands.com. They bought up these URLs and then worked backwards and found the product to fit those. Essentially used keyword research to back their way into the furniture industry to figure out what were people interested in buying online. Then as I said, they worked backwards from there. Very, very interesting story.
Pablo:Your buddy sees this, let's say market pulse is this new model of selling furniture. Where are you in the picture? Are you all also working with him or how do you enter?
Alex:I was an actor living in Hollywood. I used to sing and dance. I was singing on cruise ships when I wrote the business plan for Apartment 2B, our former company. That's a whole other story. I was always a very entrepreneurial person. I didn't want to wait tables. My friend was selling furniture. I was like, "Hey, let me sell some furniture with you." My side job was, we had this deal with Costco where we do all these special events and we basically sell our couches at Costco next to the guy sampling hummus or whatever. I was the sales manager for our Southern California operation. I just did this on my off days. If I had an audition, I would go do that, or if I had a show, I would take a couple weeks off. All that to say I was doing that, he was doing this, and I started working more in that direction. At some point it was like, hey, I have a good concept for making an online store where we're just bridging the gap between Ikea, which at the time was seen as much more lower end quality, as promotional as you can get, and Crate & Barrel, which at the time was seen as a little bit more high end. There was nowhere where people in their 20s who could go to buy furniture and feel confident knowing that they got a good piece of furniture that's actually good looking. That's where we started. I was like, that seems like a pretty good idea. I moved back to LA from New York at that time with my wife and we started the business in his apartment and hence Apartment 2B was born.
Pablo:What was the first iteration of the business? What were you selling? Where were you getting it from?
Alex:We basically ran Apartment 2B like a retail store. My friend had run a retail store. I had worked with him too. We understood the basic ins and outs of running a mom and pop furniture store. We just did it online. We didn't have this grand scope or scale to the concept. It was just first let's see if we can support ourselves with this lifestyle business of just selling furniture online and let's see where it goes. Initially we just got connected with a number of different suppliers. We used his prior connections in the industry to literally just get people to sell to us because nobody in the furniture industry wants to sell to online businesses. They saw it as a threat to their brick and mortar businesses, which still, by the way, 20 years later drive the majority of the business in the furniture industry. They're very protective of these players. A few people allowed us to put their products online for sale. We put together a catalog. We spent a number of months building a website and we basically just flipped the switch and did all these alternative methods of advertising and marketing that were – we advertised on TV before. This was before Google ads was even really a thing.
Pablo:Where did you get the money to do TV ads?
Alex:There was a lot of hustle here. He knew the TV guy for – wasn't spectrum, but what was it? Time warner at the time. He was like, "Hey, Dennis, we have this new business. What can we do? How can we get this going?" He's like, well. He's like, I know this guy. You can do a little commercial and we'll put you in. We'll just choose one demographic like West Hollywood. In that place it's actually affordable to have a few ads. Let's see how they perform. The key was the hustle was in that. He's like, yeah, I got something good for you though. There's something called Autofill where there's a time slot that wasn't filled yet. We'll slot your commercial in. My best anecdote about this is we got into the Super Bowl pre-game, the pre-game show leading up to the Super Bowl. We're like, what? We had our crappy commercial that we made in my buddy's apartment showing on this.
Pablo:Oh my God! They still charge you but just some reduced rate or how does that work?
Alex:Each play paid our normal rate of 80 cents a spot or something. I don't remember what it was, but we didn't spend a lot of money on marketing. I'm not saying it was successful, it's just more of a good story of how we found these weird ways of growing that were not the conventional like advertising ROI focused route.
Pablo:By the way, what did you use to build? I mean we're talking 2010. This is when Toby from Shopify was selling snowboards on online? What did you use to build that website?
Alex:We ended up being a major early adopter of Shopify. That was a huge part of us being able to grow our business with all the players that emerged around that ecosystem. Prior to that, we first started on a Magento website and we had a local LA house build it for us. Probably spend, I don't know, 30 or 40 grand just getting it going. We had some bells and whistles to it that we really were proud of. We had this package builder application where you could bundle products together and it was like a living room package and choose your sofa, we give you four couches and you can choose which one you want and then you go to the rugs. This is something you see on websites every day but back in 2011, this is not a big thing. We got a lot of attention for that.
Pablo:Do you remember your first sale?
Alex:Yeah, I do. I remember when we went live. We pressed a button and went live and then we didn't get a sale for a day or two. Then our first sale I think it was a friend of a friend, someone we knew. It wasn't like a random at first. That would've been unbelievable. Yeah, somebody bought a bed and then we're like, okay, this is us. Oh wait, oh, we have to get the bed now to give to the person. Okay, who's doing that? It wasn't that ragtag.
Pablo:Did you do dropshipping or were you actually in charge of the logistics?
Alex:Yeah, so dropshipping in the furniture industry at that time was very different than it is now. Right now all the manufacturers, definitely all the major ones, are set up for dropshipping situation. Their packaging is ready to be drop shipped. They're used to shipping companies, like 20 different shipping companies coming to their distribution facility to pick up. Used to be that they would be in charge. They would have one – if you need us to ship to you, we're going to use R+L carriers and we'll charge you the freight to give you your whole furniture order to your warehouse to sell in your store. For us though we had to wait and massage things. Some retailers were able to ship direct, but most of them we needed to have them send to our warehouse. We had to have a warehouse and we had one here in the San Fernando Valley in LA basically just like a roll up and the stuff would come in and we would deliver it locally. We had a zip code gate. First it was Los Angeles only and we did that for about two or three years just working in LA.
Pablo:Did you have to hold inventory or were you able to at least time that properly?
Alex:We were able to time it properly so that we were always stayed cash positive. We would take a hundred percent customer deposit at the time of order placement and someone would buy a dining table for $1,000. We would then buy it from the manufacturer for 500 plus whatever the shipping charge was to get it to our warehouse. Then we had to pay for delivery. There was some decent margin in this, but it took a lot of operational hustle for every single order at that time for years.
Pablo:I'm just thinking. I mean between the website, between the warehouse, how much money did you and your co-founder have to put into this just to get it started?
Alex:I think it was $125,000 total. My friend and his dad were the initial 50,000 and then we raised from another friend of my partner's another 75. That's it. I say raise. I mean basically it was like, is he lending it to us? We brought him into the deal and luckily he made out a head. I mean he got a nice return on his investment. Yeah, that was it. It was just basically a friends and family cobbling together what we could. Luckily we were always a cash positive business, so we never needed money. After a couple of years in business we were able to pay ourselves too. It was like, okay, let's just – we were in a stable position. We can grow from there.
Pablo:I mean, the hardest part I would say of any business is getting customers. You get this first sale to a friend of a friend. I'm curious if you just think back to those days as you grew to that first million or so in revenue, what were some of the things? I'm curious to hear the anecdotes from back then because I always find they're interesting. There's always crazy things you got to do to just make it happen. How did you get that first million or so in revenue? What were some of the experiments that you tried to really get customers? What worked? What didn't?
Alex:Yeah, there were two things that were really instrumental in us really getting a healthy revenue flow going. I got to hesitate to say healthy because some of it wasn't healthy. The first thing we did was, at that point Groupon could not have been hotter. There was Groupon living social and all of these little deal sites everyone was looking at them every day. Everyone was getting Groupon's emails at that time because it was a new thing that everyone was socially participating in. The good thing was nobody was doing them for furniture. We saw an opportunity there. It was an easy pitch to them like, hey, let's do a Groupon for furniture where somebody spends $100 but they get a $250 coupon or a gift card rather to our stuff. Now we do that they were going to spend 750 to $1,000. Really we're just giving a 15 to 25% discount. Obviously we got burned on this in various ways, but we also were able to use their platform.
Pablo:Like what?
Alex:Just the margins.
Pablo:I was going to say, I mean what were your margins back then on a couch?
Alex:We were working on what they call a keystone, which is 100% markup, which is a traditional furniture retail markup. That's what we knew. At that time we were operating as a local entity in Los Angeles. We were able to really use traditional financial modeling of a furniture store. The unit economics are, let's say someone bought $1,000 couch, they did the Groupon. By the way, we didn't even get the $100. We got 30 of those dollars. We are almost giving them, let's say in this case a 22% discount. We could probably support that. However, some people were doubling up the Groupons. Some people were just buying $500 items where we would actually lose money. At that time we were so bullish about it and probably irresponsible that we were just, we'll figure it out later. Let's just get as many customers as possible. I don't know that that was the wrong strategy. We really did make a name for ourselves within this world. I don't know. Just word of mouth started spreading. We provided a great product and service because we actually were good at that from the jump. People were satisfied with it; getting really good reviews on Yelp and things like that. We were able to leverage Groupon basically instead of paying for advertising as this affiliate marketing partnership, so to speak. That's one thing we did. The other thing was working with Costco. I had mentioned before my friend had run this whole operation with Southern California. Costco was a very successful partnership with all Costcos in SoCal. We got back in touch with the buyers and we were like, hey, we have this new business. They gave us a chance and it was super successful. We did a test event or two where we would go into a Costco for 10 days. We would put six couches on the floor. We would let people decide which – we would give them a choice of 10 fabrics that were approved by Costco and people would be coming in for their diapers and their pierogies and we're selling them couches on the spot, or they would come back one additional visit and they would come back after measuring their house and they would buy it. We would do 20, 30, $40,000 in a week at Costco and they take 14%. There's no other participation fee. They just want a cut. For us, there was a very little risk involved. We would just go there. We had to have this small inventory of stuff. For a few thousand bucks, we were just in another cash positive situation where they just wanted a cut of whatever we sold and as long as we sold enough to keep us going,
Pablo:Costco wasn't selling the couches. I mean, they're just giving you space and traffic. That's the normal model for them for those because – walk through Costco, you see these things, selling barbecue, selling this, selling that. That's the model.
Alex:Yeah, that's generally a model. I mean, we did it up until a few years ago, probably five or six years. We did for eight years of Apartment TV. We did online events with them that were incredibly successful as well on costco.com. The local operation kept us going man and it got the word out. I think their model is still similar if not exactly the same. The other thing is they do dictate. They approve everything. It's Costco. It's their way or the highway. They approve the products, they approve the pricing, and they walk you down on the pricing to a place where they know that the customers are going to buy. We wanted to sell something for $1,000 and they're like, how about 800? We're like, okay. Our margins were thin on a lot of that business, but we were running one or two events at any given time congruently. It was a nice revenue stream for a growing business.
Pablo:Walk me through the timeline. I mean, that's one of the challenges of – there's upsides and downsides obviously to being bootstrap. I think one of the challenges is you don't get a salary at the outset. The second one is you don't have dollars to fuel things. It often takes longer to get things going. How long did it take to hit 100k, to hit a million dollars, to hit an amount of revenue where you could support the operation and even maybe grow it?
Alex:The big unlock for us of getting to a place where we really started to see it as a scalable thing was when we started shipping nationally. That was in 2013. Very few online furniture retailers were doing this at that point. It was the Wild West. I think that's where we crossed the million dollar a year threshold in 2014, probably something like that, after three years or so in business. Now mind you, this is furniture. These are big ticket items. It doesn't require as much volume and we're selling T-shirts. Those numbers aren't maybe as impressive. A million dollars means a different thing to a furniture operation than it does to another one. These are still big milestones. Yeah, the first year we did nothing. The second year with all of our crazy Groupon promotions and such and with Costco we were probably in three to 500k, maybe third year, 750k. Then when we started shipping nationally, that's when we started to grow exponentially a year to over a million.
Pablo:Did you or your co-founder ever regret? I'm just trying to think about you're doing, let's say half a million dollars or so. You said 750k. Half of that is cost. There's maybe a few $100,000 of gross and then you got whatever other expenses. Then you net it all out and you look at what's left in your pockets and you're like, I could have just sold couches for my old depo, I would've made more or whatever. Did you guys ever think that way?
Alex:A hundred percent, because right before we started Apartment 2B, I had a little side hook of business. I had four roll up warehouses at an extra space storage facility. I would just bring in containers of one type of couch and I would pop them on Craigslist and deliver them myself every weekend, just me. I made a lot of money and then here I am waiting for the money to come in. My wife and I, we had some savings from our wedding and stuff. We just kept pulling into our savings for the first two years. Yeah, those thoughts creep in a lot. It's like, okay. Also what drives you I think is the opportunity. We had all these big opportunities in the beginning. A few years in, we were on Shark Tank and my partner pitched for an hour to the sharks. We were this close to being huge so many times so that those types –
Pablo:You pitched for an hour, but did you get on the final?
Alex:No, we didn't get on the show because there wasn't any real drama. They really liked it obviously. It was something they seriously considered. I'm very superstitious. It was the first pitch of the new season that they were doing whatever season it was. They're drinking their coffee. Everybody ready? All right, who's first? I mean, are they going to make a deal on the first one? I don't know. I would say probably never. Yeah, my partner did amazing. We got him prepped and he pitched this idea and it really wasn't much at the time. It was just a lot of opportunity in online furniture and we have an angle. We're already successful. This is something worth investing in. They liked it but ultimately did not make a deal. High percentage of the pitches we never see, because a lot of them are just like, good businesses that they liked but there's no drama or something, a hook.
Pablo:How steady was the business? Obviously you're selling. One of the challenges with furniture is somebody buys a couch, they probably don't come back frankly for a view. I mean, maybe if they got a new place, they buy a few things all at once, but oftentimes they'll buy something and they won't come back for many years. It's certainly not SaaS. There's no recurring element to it. How did that translate, especially at the beginning? At some point you get to scale and things take care of themselves. You understand what seasonality looks like, but what was that like the first few years? Did you have some quarters that just things seemed to come to a halt and you're just wondering if the whole operation makes any sense?
Alex:I don't remember in the very early days too well, but what I will say is our volume and revenue was very consistent, very, very consistent. This was probably due to a few reasons. We just stuck to a lot of formulas that worked for us. We did a lot of experimentation. When we found something that worked from an advertising perspective and at some point, obviously, yes, we started really advertising, but things worked. We stuck to them and tried to find the formulaic approach.
Pablo:What was repeatable from the advertising because Groupon didn't work? Costco obviously did, but it was like you can only do so much of it. What was the thing that just was always running?
Alex:Costco was a through line for us for a long time. We can depend on that revenue. Early on we started advertising, I remember first doing Facebook ads when they just came out and doing a lot of things like that. When we found something that worked, we would work it really hard. When we started doing Google advertising and saw something that was successful, we would just stick to it and really try to establish the baseline. The other thing about furniture is we really were aware of when people are buying furniture. I wouldn't call it seasonality in the traditional sense. People buy toys. 90% of the toys that are bought are bought in the month of December. It's nothing like that. It's very consistent. It's like the wave is like this throughout the year. The market is driven by holidays and major sales events. You have like President's Day, Memorial Day, July 4th, Labor Day, Black Friday. Those are the big five. Then you have all these other ones like Martin Luther King weekend. It's just like the car and mattress business and furniture runs along the same cycles. During those times, if we showed up with a good promotion and we put our advertising focus on those time periods, we are able to achieve consistency because there's something like almost every six to eight weeks in the furniture space that we can hang our hat on from a marketing perspective. That really contributed a lot to our consistency. There are just this promotion. Inherent promotional calendar that we followed in the furniture industry was very helpful.
Pablo:Do you remember any specific promotions you ran that worked especially well to the point where you're like, whoa, we just struck a nerve with that one?
Alex:Yeah, no, I just think we realized early on the power of being promotional. That's not the answer to the question that you're looking for, but a lot of new brands are like, how promotional should we be? We have a premium brand here, should we even be on promotion? Our thing was once we saw that promotions worked, we're like, no. We learned that early on with coupon. We got all these people to buy furniture that weren't even interested in furniture. Same thing at Costco. They were coming in there for diapers. It's really the promotion that gets people over the hump when buying furniture and its incredibly competitive landscape. We knew that, that worked for us. I think our first Black Friday sale where we gave 30% off and saw just that number, the percent off how much people are saving. That's what people are focused on in our industry. They want to know how much they're saving, so much more interested in that than how much they're actually spending. They just want to feel like they're getting a good deal. We basically realized there was a direct correlation between how much discount percentage we give and how much people buy. As simple as that sounds, it's not always that linear. We then figured out a way to price our products in a way that we could. Give 15% off and 20% off, and we're driven by the promotional discount percentage that would drive the business and we worked backwards from there.
Pablo:That makes a lot of sense. Maybe let's fast forward a little bit. You're growing this business. I mean, things are generally speaking, going pretty well. At some point, you get acquired. Walk us through how that happened. Where did this acquire come from and just how long did that process take?
Alex:The furniture industry, as I alluded to a number of times, is still catching up to the online wave and that's a huge part of what I'm addressing right now with my new company couch.com. We are in a position where these old school generational players were just becoming more comfortable with the online space and also saw it as an opportunity finally rather than a threat. That's on the manufacturer and retailer side. Unsurprisingly, our suitor, the one that was interested in us was a old school legacy furniture, retail, brick and mortar chain in the Midwest. They had about 30 stores, big stores. I'll name a few names of retailers that are similar just to give you. In different places in the southeast, Rooms To Go is a good one; on the west coast, Living Spaces; the northeast, Raymour & Flanigan, Bob's Discount Furniture. Big huge furniture stores like built in warehouse and huge showrooms, they're interested in moving into the online space. They were looking for opportunities. We were always, after a few years, fairly well known in the furniture space. It's a very big industry but very incestuous and everybody knows each other. We were one of the names that were getting thrown around. A few online businesses like ours had been acquired over the past few years. This was a model that other legacy furniture retail brands were looking to repeat. We got approached. I think for them they were interested in bringing in our e-commerce expertise and experience to their world and seeing if we could help catapult them into that space and also just investing in a growing business that had a lot of opportunity that they could probably use their operational infrastructure to help support. Both things ended up being very true. That's the reason we were able to grow the business so much post acquisition.
Pablo:You started around 2010. When did you get acquired? What year was that?
Alex:We started building the business in 2010. It went live in 2011, got acquired in 2018, so that conversation started in 2017. We were in business for about five or six years I guess. I mean, it felt like an eternity, but theoretically, I mean we grew pretty fast. My partner and I, we were making nice livings. Everything was going really well. Our business was growing. We had a bunch of employees and then this company came to us and asked us if we would be interested.
Pablo:Walk me through the emotions, especially the last few weeks before you actually get this deal closed because the reality starting a business and especially I think a bootstrap business where at some point you're paying yourself a decent salary, but you're always mining cash flow. Every now and then there's an entrepreneur who wants to build a business that they can run forever. I would say 99% it's about building a business and at some point selling it and then doing another. When you get here, I mean it's a huge event. What was that like? What did that feel like, those first weeks right before it and then when the thing actually happened and closed?
Alex:I've never worked so hard in my whole life during the diligence process to provide all of the things that they were looking for in the format that they were looking for them. We used a third party. I was doing big business things in my living room at night after my kids went to bed. I was educating myself at the same time about how to do them and how to put together financial statements in the way that they needed to see them and things like that. I'm super proud of the body of work that I did personally to just get us ready for that. At the same time, it was very rewarding because a lot of it was just asking and answering questions about what made our business successful.
Pablo:What about the anticipation of it? Were you able to just cost and be like, well, if it happens, it happens, if not, whatever, we have our business or were you like, oh my God, let's freaking close this thing, I can't wait to close this thing?
Alex:No, Option B, because we were – at a certain point, I think with anything you get excited. You start committing to it hardcore. We started really not counting our money or anything like that, but we were really focused on getting this done. Then we had a snag right at the end in the last few weeks that delayed us about a month which was interesting. It had to do with the difference in cash basis accounting and accrual basis accounting that we were on cash basis and they were on accrual. It materially affected how our payout and payment situation was going to work. We had to take a big one on the chin right before closing this deal. My partner who had a larger stake than I did, he was really thinking about shutting it down. I'm hopeful but also trying to manage my emotions and also trying to keep him calm and sane. I'm working all the angles at the same time. When it finally closed, like, yeah, man, what a wonderful feeling to have a climactic moment in one's life! It's like winning a game. You watch these sports games. Someone wins a Super Bowl, like, man, what must that feel like? I'm not saying this is akin to winning a Super Bowl, but it is like –
Pablo:The feeling is probably similar. Yeah.
Alex:You close something, it's done and you can celebrate an actual achievement not just growth or something more nebulous. It's like, you didn't sell the business yesterday, today you did, and this is the day you can celebrate. Does that make sense?
Pablo:Boom, I love that. Yeah, makes perfect sense. Maybe that's a pretty good endpoint actually. Let me ask the two questions that we always close on. The first one is, I'm actually really curious how it fits in here. When did you feel like you had true product market fit?
Alex:I think we knew early on that we had product market fit light, I would say, in the sense that we figured out that there was a gap in the marketplace that we were filling. Literally price points and product that people were like – everybody who bought our stuff was like, oh, this is a really good value. We found product market fit initially in our curation of the right product at the right price point. Then I think it was when we started shipping nationally and realized that people outside of our word of mouth, like LA community, were actually interested in buying this product that we had. We were offering product and a service being an online business. You can buy furniture and we'll deliver it into your house and set it up for you and everything so you don't have to lift a finger, that people were really looking for at the time. They were looking for this convenience. Yeah, in 2013 when we flipped that switch and took off our little zip code checker, our first order was in Florida I remember and I'm like, oh, perfect, literally the furthest place we could go to aside from Maine. We figured it out and that was a real unlock for us.
Pablo:There's something special about getting out of your own backyard. I can tell you I've heard that before from other founders and even for me, with this podcast, you see people listening from the UK or different places like Spain, different places in Europe, and you're like, it's crazy. It's just a similar feeling. It's one thing to sell in an area. Even though you don't know the people you're selling to obviously, but it's like, okay, it's my area and all of a sudden you're selling in Florida, you're selling in New York, you're selling Boston, whatever it is. Yeah, it's definitely a zero to one experience. Let me ask the the second question, which is, now you're starting another company called couch.com in a related space. The question is, and really applies to you, if you could go back to when you were starting up to be with one piece of advice, or maybe now that you're starting couch.com, what piece of advice have you transferred over to this new venture?
Alex:I have a pretty nuanced specific answer there. I don't know. It was very much an aha moment for me. This past year I've been immersing myself in the world of SEO and content marketing and man, we were one of the early players in the online furniture space. I feel like if we really invested in that early on, and I think this applies on a more macro level too, investing in something about your business that isn't going to produce immediate cash, even if you have to raise or do something uncomfortable to lay that foundation. I can see now how much that would've paid dividends in actual dollars. There's all these things about your business you're like, oh, I don't want to do this. It's going to be so annoying. I would have to spend all this money and all this time, let's just say the course. Sometimes I think, and this is a good example of that, sometimes it pays to make that investment and do the thing that everyone tells you, you should do but you're like, okay, because man, we should have invested in that. I mean, that company would've been, I don't know, five times the size of what it is right now probably just based on organic traffic alone.
Pablo:That's perfect. Thanks a lot, Alex. I appreciate you coming to the show. It's been an amazing journey. Frankly simple idea, but just at the right time, executed it the right way and turned out to be a huge success. Thanks for sharing the story with us.
Alex:Thank you, Pablo . I appreciate it.
Pablo:I just gave you content that you like so much. You actually listened to the end. Guess what? You didn't pay a single dollar. Not only that, I didn't even put any ads in your face, so you just got a bunch of content for free. Now that I've delivered that value, I'm asking for something in return. Open your app, open Apple Podcasts, open Spotify, open whatever app you use to listen to this and hit that follow button. It's actually going to help you because it's going to help you make sure you don't miss out on the next episode which you like so much that you listen to the whole thing.