Keith Granet on what the design business will look like in 2035

0:03This is Business of Home. I'm your host, Dennis Scully. Every week I'll be speaking to leaders and innovators from all corners of the home industry. My guest this week is Keith Granet. It's difficult to quickly sum up Keith's career. He's been a business consultant to high-end interior designers for over three decades, but he's also the founder of the Leaders of Design. the chairman of the board at software platform Studio Designer, and the author of several books on the design business. More recently, Keith took over the Decorative Furnishings Association and is in the process of launching an AI symposium.

0:45I spoke with Keith about the six qualities successful designers share, why professional education needs to change, and what the design business will look like in 2035.

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1:51Their transforming furniture from wall beds to expandable tables is designed and made in Italy to maximize every square foot without compromising style. Whether you're designing a home office that doubles as a guest room or occasionally need to accommodate large gatherings, Resource Furniture delivers flexibility with style. Visit their showrooms in New York, Los Angeles, San Francisco, and Seattle. Or visit resourcefurniture.com to join their trade program and unlock exclusive pricing and support. That's resourcefurniture.com. And now, on with the show. Before we jump into an AI conference and what's happening in the software world and the many things that you have your hands in, let's give listeners a little bit of a history lesson in your career and uh and how you got into this industry originally i remember way back when you were working for gensler was the was the original yes well you wanted me to go back that far well i mean you know this is going to be the reader's digest version of this keith because you've you've been in the industry a long time you've done a lot of things and so i i want to make people aware well so i it started out and It's actually kind of a funny story right out of college.

3:12So I went to a small college in upstate New York where I went to a small high school that said, I thought I always wanted to be an architect. I worked for, in high school, an architect as an intern who was a protege of Frank Lloyd Wright's. And she actually had designed Richard Nixon's house in Upper Settle River, New Jersey. right and so i went to this school that had an independent study in architecture and it allowed me to do an internship and that my brother had just gotten married and moved to san francisco and literally and your half your readers won't even know this but he sent me the yellow pages and i literally he ripped out the pages and sent them to me and said find a firm come here and do an internship in California.

4:02And the largest ad happened to be Gensler. And I remember talking to the office manager and we had a nice conversation. She goes, it sounds great. I don't have to pay you. So why don't you come and do an internship? And so I went, did the internship and I came sort of screaming out of there going, oh my God, they don't make any money and I'm not that talented. What am I going to do? At that point, I was in my junior year. And so I took a bunch of accounting classes and was like, oh, I have an aptitude for this. I did really well. And I graduated with a BA in art because of all of these courses around architecture.

4:40And I called up Gensler and said, I'm not going to be an architect, but can I have a job? I was 22 years old. And they're like, yeah, we loved you. Come on, we'll find a job for you. So my first job was to run the mailroom, which seems apropos now in Los Angeles because everybody starts in the mailroom. Exactly. I don't even know if there's a mailroom anymore, actually. But so I started in 1979 after I graduated high school or college, sorry, and stayed there for eight years. It was my 90-day review. And I walked into the office manager's office and she said, you know, I'm sorry, it's not working out.

5:20I was devastated. I love the firm. I love my job. And I go, why? What's going on? and she said, you talk too much. And I was like, well, you know, my job is to deliver the mail, right? And she said, well, yeah. And I said, but I'm not talking about what I had for dinner the night before or a movie I went to. I said, I'm trying to be a sponge and learn this industry. So not only do I deliver the mail, I open the mail, I read all the mail. And when I'm delivering it, I say, there's nothing in here or there's a couple of things you may want to pay attention to. I was just trying to be a sponge and learn the industry.

5:57And she goes, that's great. But I kind of made up my mind. And I go, well, how long has this been bothering you? And she said, since you started. I go, you waited 90 days to tell me. Lessons learned. Oh my goodness. Yeah. So I, and I never would recommend this to any other 22 year old, but I stood up and I said, I'll be right back. And I walked into the managing principal of the San Francisco office. And I said, could you come with me? And if looks could kill, I wouldn't be talking to you right now. Because he walked into her office and I said, could you repeat to him what you just told me? And she did.

6:33And he goes, that's ridiculous. We love Keith. He's staying. And that was it. And you're going. Keith is staying and you're leaving. And by the way, she was there till the day I left. But six months into it, I got transferred to the corporate office. And the point was that at that time, Gensler wasn't charging for reimbursables for FedEx and mail. And I put all these systems in place and like, well, if you can do this in the mail room, what else could you do? And so I was hired to then work with the director of finance. He actually got sick very quickly after I started. And Art Gensler came to me and said, you know, I know you're studying it to get your MBA from San Francisco State, but I could give you the best education if you give me your time.

7:24And I said, you're telling me to drop out and not do that and trust you're going to give me an education. And he goes, yes. And I said, okay. And I worked directly for Art Gensler for six and a half of those years and got the best education in this industry anybody could ask for. And I remember the day i resigned because i always said to him as soon as i feel like i'm not growing i've got to leave and i walked into his office and he was a very sort of you know boisterous man and you know and he was silent for like a full minute and i was like oh my god what have i done and he said you know we believe in letting people spread their wings and then come back to us you're always welcome, but please come back.

8:09I never came back, but in fact, Gensler has a boomerang award where if you come back, you get actually a physical boomerang because they like the fact that you've gained knowledge elsewhere and you brought it back to them. Today, and I just ran into Andy Cohn, who's the CEO, and there's 6 ,500 people in that firm. It's insane. When I was there, it was 250 and when I left it was 800 and you know and that was huge growth but I you know learned the entire business you know through the eyes of Art Kensler who wrote the forward to my first book. What an incredible story and an incredible education and did you ever look back and think oh I should have gotten the MBA or I should have I mean never never yeah and when you felt that you weren't growing anymore.

8:58Did you have thoughts beyond that? So I need to go because I'm not growing and I'm going to go do what? So I always knew that eventually I'd like to have my own practice. And I thought at Gensler, I was pigeonholed into doing very specific tasks. And it was some project management stuff and mostly financial budgeting. What is it like to run a firm. And so I got recruited to run a 60-person architectural firm in San Diego and figured that way I would have this large firm experience and then this mid-sized firm experience. So I was a director of finance and administration. And basically they said, you know, the financial side of this is about 90 % of your job.

9:41The administrative will be that. Well, he's completely wrong. The administrative side was 90%. And I did all the finances late at night because I was dealing with people's problems all day long. But it was a huge learning lesson about how to manage people. And I stayed there for four years, and then it was 1991, and the economy in Southern California had finally sort of hit the skids. And people were calling and saying, you know, can you tell me how we survive? And I go, well, if you pay me, I will. That's how started my practice. Well, when you were working for Art Gensler, what was he mostly having you do?

10:21Like when you were working so around the clock for him, what was he focused on? So I literally would fly around. At that point, we had seven offices and I would do all their operational budgets. They never had any budgets. And the interesting thing is I walked the first computer into Gensler. So we were in the middle of moving our offices. And so we had a temporary office was in a two-story garage that was subterranean, which we stayed in for two years while they built the rest of our offices. And there were escalators. And I was holding an Apple One computer. And he was coming up the escalator.

10:57I was going down. And he goes, get that out of here. It's going to destroy our business. And I'm like, I just want to do spreadsheets. Leave me alone. And I was like, watch this. I change a number, the total changes. magic magic so that happened and i started doing all of the operational budgets for the firm and then he's like we have to get a computer system in here so we need cad and we hired intergraph to build this and so i had to negotiate the it was a half a million dollar investment back then and then on top of that there's there was a program called harper and schumann which is now Dell tech.

11:32And it's basically the accounting system that many architects still use to today. And I worked very closely with them to customize our program so that Gensler could use it. And one of those things I wanted to do was a comparison of our actual expenses versus a budget. And so I wrote that program with them. And so when I went out on my own, I was like, okay, how am I going to get clients? So I called them up and I said, look, I don't need any money from you. But every time someone buys your program, could you let them know that I could help install it? And that opened up huge doors, some very big firms.

12:08And I would go install their software. And then when I would look at their financials, I'd be like, you need help. And that led to helping them manage and grow their firms. And some of those clients are still clients today. Yeah. Well, so tell me how it evolved. And this is so interesting. I had forgotten and some of those details about the early days. And so in the beginning, you're sort of looking at people's financials and times got tough for a lot of them, it sounds like. And so they needed your help. When did you start to realize you had a whole array of services that you could start to offer them?

12:46And how did you develop those services and those offerings? Well, like everybody, made a lot of mistakes along the way and gave advice that probably wasn't the best, but eventually learned what the better advice was. in fact i was just in palm springs last week during you know modernism week and was with one of my clients where we did his first retreat and he's been a client also for 30 years it's um the firm is kaa and grant kirkpatrick yeah and we were just sitting and talking because he was staying in the hotel where we did that first retreat and i walked in to have breakfast and i said i've got ptsd from this place and he goes why and he goes because the first retreat we did one of the questions you made me ask your team was can we each just be honest with each other about our strengths and weaknesses and let's go around the room and it was a disaster oh horrible and he goes so why was that so bad and i go well the lesson i learned was you got to ask for permission yeah you can't just tell somebody how you think of them you got to get their permission to say look where are my strengths where are my weaknesses talk to me but by just telling somebody and one of their employees ran out of the room and you know started crying and i was like okay i don't even know how to do retreats um but i've done hundreds of them at this point and and have learned those lessons of what works what doesn't work when you look at somebody's financials you can see holes in the industry in their business and the things they're doing and whether it's They don't get their billing out in time, whether nobody turns in their time cards, which is usually the principle.

14:24It just slows everything down. And so all of those led to learning how to manage firms, both people and their money. And along the way, I got experience in all those areas. And then clients would ask for different things. Like, I want to do a product line. And that led to, Barbara Berry was my first client. and she came to me and said, I want to do licensing. I'm like, what's that? She goes, I don't know. We're going to do it together. And we did. And we did, you know, the first line I did was with Baker Furniture, which became the most successful line in the history of Baker. In the history of the world, as far as I'm concerned.

15:02I mean, that was so big at the time. It was. It really was unbelievable. And people say, how did you make that happen? I go, well, she has a lot of talent and we put a good deal together. And, you know, it was all her, to be honest. I just got to learn how to do the business side of it. Yeah. No, no, no. That was huge. And people, many listeners might not remember the days when High Point Market would come around and Barbara's new collection would be this huge building and hundreds and thousands of SKUs. And she became this huge personality and star herself. It was quite something. And that led to many big A-list names for you over the over the years i think we have put about a half a billion dollars with a product in the marketplace after all these years and you know it's it's fun to do but there's a lot of everyone thinks they can do it right but the success with licensing is you have to reach the masses you know you i remember years ago having a client show me this beautiful chair and said we're going to turn this into a collection.

16:13And I'm like, the chair costs$15 ,000. How many are you going to sell? And I said, you know, it's a beautiful chair and you can sell them to your private clients, but this is not going to the marketplace. We'll never get there. So you really have to find the right connection that both the designer fits and that you realize it's going to reach the masses. And probably the most successful client I've had in that world, other than Barbara, is Suzanne Kassler. Her collections have done very well. And we're probably 15 years into this. And she sought me out because she wanted to know who did Barbara's Lines.

16:54But we've worked with Charlotte Moss and Tom Felicia and Mary McDonald. The list goes on and put a lot of products in the market. And very exciting. And to be honest, to this day, it still pays residuals for all of us. Yeah. Yeah. No, and that's the hope so often. And we talk about mailbox money and what it becomes over time. It seems to your point, and I want to get to some other things before I come back to this, but it seems like it's a lot more challenging today, the licensing world and what the market needs and all of that. Yes? Well, I mean, I get asked this all the time and they say, is it saturated?

17:37And good design is never saturated if you can bring something new and different. It's just that there's a lot out there. You go to the 200 Lex, it's like, do we need another fabric? there's a million out there, but yet, you know, taste changes, trends change. And so if someone has a new idea and a good idea, it's got a potential, but it is pretty saturated when you think about, you know, how much is out there. Yeah. Well, something has to take the place of Ivory Boucle, Keith. So, I mean, I'm excited. I'm excited to see what that's going to be. So you become, I take it, Keith Granite becomes this industry consultant to all these big designers and firms.

18:29And how does the business evolve from there? And how do we get to the leaders of design and your book and all of that? Oh, it's interesting. So I run right now five different companies. And I guess I call it adult onset ADD. that I just, I see opportunity and want to grab it. So if I go back, I guess leaders of design would be the next thing that I took on, which many of you know that it was the DLM in the beginning. So Waterworks hired me way back when and said, we want a deeper relationship with the design community. And we know you know everybody. And so I said, let's do this. Let's do these.

19:12And Dennis, do you remember these days? I do remember them well. Yeah, you were there. I believe, yes, exactly. I believe that the townhouse that I got married in was actually a testing ground for the - Yeah, you're right. That's right. Yes. It was next to Charlotte Moss's townhouse. Exactly. Actually, yes. And so I said, why don't we do a full day where we bring in your top designers from each of these six cities. They'll get a half day of me talking about best business practices, and you'll get a half day of them talking about your product and we'll build some kind of a relationship with them and we did new york la san francisco boston chicago and miami but after the six one i turned to both meg and peter and i go all they want to do is talk about business we've got to do something and that led to aspen which was 95 people and we created you know the design Leadership Summit at the time.

20:13And we did that for seven years, four of them in the States. And then the economy hit the skids, as we all know, in 2008. And by 2009, we were in right after Katrina, we were in New Orleans. And in 2010, I was working with Fortuny, and they said, you need to come to Venice. And the response I got was, no one has any money, they're not coming to venice 200 designers showed up they were all up for coming to venice it turns out exactly well it turns out if designers have two nickels to rub together they'll show up and so they came to venice and then we did venice and copenhagen and marrakesh and then at that point i was like this is getting too big and i would like it to be much more principle oriented and that's when leaders of design was formed and that was 2012 when we hit when we did um america so 2013 was our first conference in berlin and we're about to celebrate 20 years we are celebrating 20 years and we're leaving monday for bangkok that's right it's a far-flung trip but it's a great group and we're really excited about it and we do now these poster pre-trips and literally almost everybody's coming to Bangkok is going to Cambodia for the post trip.

21:32So it's going to be great.

21:38We're taking a quick break to remind you about Resource Furniture. For over 25 years, Resource has defined the multifunctional furniture category with Italian-made custom solutions. Their curated collection includes wall beds, transforming tables, flexible seating, and storage systems, all designed to make spaces more functional and beautiful. Visit their showroom in New York, Los Angeles, San Francisco, and Seattle to experience the remarkable transformations in person. Or visit resourcefurniture.com to join their trade program and unlock exclusive pricing and rendering support. And now, back to the show.

22:25do i understand that it was the leaders of design that acquired the the dfa something that i'm eager to ask you about and better understand is that the entity that you used in in that or or tell me how that is structured well sort of legally it's a little bit different only in that the dfa is a 501c3, and we didn't want to lose that status. So, we are running it, and we did acquire it, but we're keeping it as its own entity. We can't fold it under our umbrella, because otherwise we would lose their nonprofit status. But it came to me actually through David Cohn, who was very close with Meredith Xavier, who was running it at the time, and they felt like it just needed a jumpstart.

23:12And so we looked at it and I said, the only way I would do this, if I could hire an executive director, which I did, which is Rachel York. And we're really excited. We're just starting to kick it off. And we think we can do the same thing for that community that we did for the design community. And for me, it felt like we were closing that ecosystem by having architects, interior designers, and then manufacturers, showrooms, and vendors who have to have a community like that as well. There'll be some crossover, but mostly we're going to keep the company separate. Interesting. And we should remind people what the DFA is and the role that it has played over the years.

23:55We talked about it a little bit on the show at the time of the now, not acquisition, but tell me the history a little bit. I know it, as you say, since 1934, if I recall, it used to be the Decorative Fabrics, and then it became the Decorative Furnishings Group. So tell us a little bit about it. You're exactly right. It was the Decorative Fabrics Association, and then it became the Decorative Furnishings Association, so that anybody making product for the industry had a community. And one of the first people I talked to was Jim Druckmann and said, you know, I'm thinking of doing this. What do you think?

24:29And he goes, please bring it back so we can go have cocktails at lunch.

24:36Many in the industry seem to have fond memories of boozy lunches at this organization. Well, you know, when I first started, I would go to lunch at Gensler and I was 22 years old and they're like, let's have a drink. And I'm like, I have to go to sleep now. I don't know how you do that. But, you know, it was that error where, you know, cocktails at lunch was okay. So, you know, basically we, um, the organization was founded to deal with issues. And obviously the biggest issue we've been all dealing with in that world is tariffs and how do we address them? And so having support that isn't just you trying to figure it out, but your industry supporting you is what that's about.

25:19And that's our hope is that, even though this is product, we know AI is going to have an impact on it. And that's where we have to really dig deep to know what the top issues are for the industry and help them address them, bring in experts, have regular meetings, create a community that supports each other. As you say, it used to be a big industry gathering, talking about everything from the early days of the internet and how that was going to affect showrooms and business and all of that. And then this whole debate about whether the trade world was ultimately going to evolve and would consumers need to be addressed in some meaningful way.

26:07I think everyone's still trying to figure that one out and not too much seems to evolve. But also an important issue that was being raised in the latter years of the organization was how do we get more consumers or homeowners to want to hire interior designers and to help really sort of keep this industry growing in a meaningful way. I mean, you mentioned the internet. I mean, that was such a major change for them. And I remember the days where when we launched product lines, you couldn't come in and look at the showroom unless you were invited. and then you couldn't take any picture right now it's like it's for free for all uh so you know all those things that evolved and then the diy movement became huge and then people like oh my god they don't never need an interior designer again they can do it all online and now i was actually having lunch with one of my employees yesterday and saying oh my stepmother is decorating her house and using chat gpt and i'm like what oh no how's that going and you know but we've got to adapt as things change and that's what we're you know that's what keeps me alive every day it's like what's going on and how can we help address it and not you know just let it pass us by because if we don't stay relevant, we're gone.

27:29Well, it's so true. And the issue of AI is just coming up more and more, not just in the home industry, obviously, but every industry is just being throttled by it. I mean, the software industry has just been decimated in the past few weeks with everyone thinking that AI is just going to replace all of these tools that we've come to rely on. And to your point, many designers share stories of their very high-end clients jumping on ChatGPT and saying, oh, how would Peter Marino design this room? Or how would Bunny Williams outfit this living room? And it's unsettling. And I get it. Well, to that point is I was in Gil Schaefer's office recently and they said, let's just do this.

28:19and they typed in the chat tpd show me a project by gil schaefer and this house that couldn't be anymore or any further from his designs shows up this is a gil schaefer designed house and then we typed in show me a project by norman foster the same house came up and it was like it would not be norman foster either so it's like how confusing is this that it exists now obviously it's going to get tweaked and get better but it is a little frightening to think that one is your ip protected because you know your designs are now open to anybody's interpretation it's a fascinating time in fact that's leading to us doing an ai symposium in may the speakers are the head of digital at gensler one of the partners at big an executive from nvidia and then we just got the dean of the school of architecture at usc so great great people talking about you know what what to expect and what they're doing in this world and it's you know this is part of my consulting business to do things like this but we're really excited about this particular program where is it going to be and and tell me again when it's in los angeles may 14th and 15th and uh right now we're in negotiations with the with caa to do it at their their offices um but we're waiting on confirmation for that just because of the dates and i've you know i've sort of tested the market by asking clients would you come to this and they're like i'll send four people you know it's they really want to know what they can do and we also are looking at for an ip attorney to talk about that as well to speak um and there's some artists that are doing some amazing things in la that we're going to bring in as well.

30:05So the program is meant to be two days where it's a day and a half of speakers and panels. And then the last half day will be breakout sessions of all that knowledge and how you're going to bring it back to your firm. So that really becomes a very useful symposium. Yeah, no, it really sounds amazing. I can't wait to hear more about it. You are a big shot in the software world as well with Studio Designer. So you mentioned your five different companies and hats and everything. So a big one is Studio Designer. Tell us about that. So it sort of followed leaders of design as far as the next thing I took on.

30:47And the founder of Studio Designer, a man named Lance Haverly, is somebody that I had recommended all the time. Like, this is the best program. You should be using it. And he came to me 10 years ago. and he said, I brought this to the cloud. I have tremendous amount of data and I'm not sure what I could do with it. And I looked at it and said, this has so much potential. I was mostly interested in the data than I was necessarily in just growing the business. And, you know, spoke to my attorney and we basically said, we want to buy it. And so I raised money through all these great people that I know and we purchased the company with two employees and 2 ,000 users.