The Thursday Show: Quince is serious about getting into the home business. Plus: Havenly goes AI

26:12I think you have a lot of people who are feeling like, wow, things have gotten expensive. And along comes a company that says we're going to show you something really similar, but for a lot less. And often, as we learned, as you point out, made by perhaps the very same factories as where you're getting your pieces now. So interesting. Yeah. And I mean, I think we should unless you really look at the brand, it's hard to even explain exactly how transparent they are around the duping thing. because like on their website, on the product page, they will often do like a little price side by side comparison to the very brand they are duping.

26:48You know, hopefully there's some sort of legal disclaimer we can put on this podcast so we don't get sued. But I don't even think they're being shy about, you know, these products being directly comparable because they advertise around that. So it's just fascinating. I agree. It is a really interesting, you know, it almost we were talking earlier and you were saying it almost sort of gets into human nature and around what people really value. You know, we talked to so many people in the home industry who hate dupes of the passion and see them as the end of the world. And, you know, you get what you pay for.

27:14But at the end of the day, people really do buy this stuff. It feels like to say they have a stigma is kind of a joke. They're celebrated wildly. I don't know. I feel like I'm coming across overly harsh here. I think that, you know, Sagu is obviously a smart business person. And, you know, maybe there's even some lessons and opportunities here to be learned. But certainly I know within the industry, there's a lot of glances askance at what Quince is up to. So we will be following them closely in the months and years ahead, for sure. Indeed. And I'm sure that a lot of people will have feedback.

27:44So I look forward to hearing it. Moving on, we're going to talk about a hot take from Substack, Fred. But not just any Substack. We're talking about David Michon's excellent four-scale newsletter. This week, David wrote a characteristically naughty essay on the popularity of animals in high-end decor and why they might signal a major stylistic shift. What did you think of this one, Dennis? Now, what is he saying here exactly? We're getting away from hard edges and straight lines. This is the joy and the challenge of Fourscale is that it's hilariously funny. It's really interesting, but it's not for the faint of heart.

28:19You have to kind of like sit down and read it. You can't just skim it. So David Michonne was the journalist who writes Fourscale. Former guest on the show. He's at the Design Miami Festival in Paris. And he was talking about how he was seeing in all of these really high end galleries, uh, the consistent animal motifs, you know, there's all, there's the crocodiles here and ducks and dogs and, you know, in sort of a typical David Michon fashion, he kind of riffs in sort of a funny way about what it might mean or what it might not mean. But then he kind of lands on a theory, which I actually think is very astute.

28:51And I think is true. But you talked about how, like at the very high end of decor and design, all the makers in that space, all the designers who push like the aesthetic in that part of the market are really going away from the clean lines of mid-century modern they're going towards some gloopy organic aesthetic animals flowers and i i do think however david is right that like the kind of you know the clean lines the simple boxy shapes the sort of elegant simplicity of mid-century modernism like that look has been fully digested by retail and direct-to-consumer brands like it is so easy to find that at every level of the market.

29:31I think at one time it sort of stood apart by being sort of elegantly simple, like not like all the sort of curly cube brown furniture of the 80s and 90s. And it had a very long moment of popularity that sort of seems different and separate. But now it's so common that I think that people at the high end of the market need to do something different. And what's obviously different from that is something kind of messy and organic. And And, you know, I don't know. I think it'll take a long time before we're not seeing mid-century modern, you know, as a marketing tool for, you know, retailers and Craigslist sellers to move stuff.

30:05But I do think it's like that shift is happening very slowly at the very high end, you know? Well, I couldn't agree more. And I think that we also moved away from what was originally the very carefully considered craft and the innovation of how those mid-century modern pieces of furniture early on were first made. And when you listen to the Rarify guys talk about the genius of some of these pieces and the amount of work that the originals took to make, now, of course, they've all been reproduced and perhaps Quince has made a lot of those pieces, right? And reduce the value of them and also reduce the innovation and all of the careful labor around them.

30:50So I think that's as much part of why mid-century modern, and I don't mean just mid-century modern, but I just mean beautifully crafted pieces that were once original have just been so duplicated that they no longer contain the values of the original design and manufacturing process. And therefore, the very meaning that the original artist and industrial designer intended. It sounds like you've got your panel talk for design Miami, Paris, New York, just copy paste and you've got your note card. I'm going to be dining out on this. Absolutely. This is this is perfect. Thank you, David Michon, for helping me think about this this way.

31:28Yeah, I mean, I think all that's right. And the technology behind the drove a lot of that production was seen as this way to liberate the masses with great design, produced cheaply. And I think that now it's just produced cheaply. And I think that's pushing people towards these kind of gloopy organic shapes. I keep saying gloopy. I don't really mean gloopy. I just mean curves and organic shapes. Interestingly, those are also harder to manufacture. So maybe it'll take longer for that to trickle down to the retail level. Because you talk to anyone who runs like a furniture shop, they'll tell you like the hardest thing to do is a lot of curves, a lot of variation.

32:00And so maybe that maybe it'll be another 20 years before we get down to talking about how that's played out. And it's all about straight lines and angles. But stay tuned for for scale 2040, because I think that at some point will come come swinging back. Well, I wonder how this message will be received by the by the furniture industry. I doubt I'm going to see too much animal-shaped furniture at High Point in the coming week. But we'll see. We'll keep an eye out for it. All right. That's it for the news. But there's plenty more to check out on businessofhome.com, including a roundup of November's Can't Miss Design events and advice from Sean Lowe about pricing strategies.

32:41We'll be back in a minute. But first, a quick break.

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33:56And we're back. I'm joined now by Leigh Mayer, the CEO of Havenly. Leigh, it is delightful to have you back on the show. It's delightful to be here. Well, and as always, we've got so much to talk about. Sadly, as we talked about just before we came on air, no fun acquisition to discuss today, Lee. I know. Well, so let's jump in because no doubt you're taking this very seriously, Lee. And that's this AI tool that you've come out with. And I'm wondering, tell me before we talk about the specifics of it, tell me how you've been looking at AI, thinking about AI. What has it meant in your world in the last year?

34:39I mean, I think, look, from my perspective, one of the things that was sort of important here is to figure out like where we could be different, if at all. And if the answer is chat GPT does it and they're going to do it better. Cool. Like we don't you know, we can we can figure out how to work around that. And what's interesting, I guess, you know, that's sort of a little bit different for us is we run a fairly large operating business, both on the interior design side, but also on our own and operated brands. And so there are a lot of applications for AI that were originally developed internally.

35:10So in other words, to help our designers be more efficient or be better or find more product or also streamline our operations and do a better job of inventory planning and making design decisions. And so a lot of these tools were developed initially around how can we make our own operations and our own designers better and more effective. And then as we kind of started to look at the consumer landscape, we realized that there's a lot of noise out there on the interior design AI space. But there was no one really that was just sort of like thinking about something that was purpose built for the consumer.

35:48And so we felt like there was an opportunity to take some of the tech that we built and translate that into a consumer app. And, you know, I think it comes with all of the limitations of early beta AI. And I'm like very aware of that. It's really fun to play with. It's sort of got like, by the way, we can see people's conversations. And so it's really fun to sort of look at what people are doing in there. Oh, so you see the prompts and what they're asking and that sort of thing? Yeah, so we can see it because, you know, we're trying. And really the reason we wanted to launch it so early on is to like really understand what the community is even using it for.

36:22What are people doing with it? What do people want from it? Because there's so many directions that you can sort of go as you think about applying AI to interior design. From my perspective, it's really the following. It's sort of an adherence to this idea of space. So a much more thoughtful way. And this is, by the way, the problem that we haven't solved very well yet. But, you know, sort of like maintaining architectural integrity and like using real products and some of that stuff. I think the other thing that I think about is like a genuine taste level. So like kind of understanding what the consumer is asking about.

36:57It's trained on our designs. So, you know, I think from our perspective, it's our own custom felt models on our designs and our data. And so being able to sort of present a little bit of a higher taste level that really is something that a person can and will want to execute against. And then finally, sort of the shop ability of the design. So the ability to go from an ugly, empty, or otherwise room into something you can actually click and buy through. And those are kind of the broad areas that we were focusing on because that's what seems to make the most sense for us. How people are using it is broadly that way.

37:30So it's editing existing designs. We've seen a lot of shopping. We've actually seen a lot of upgrades, interestingly, also from our AI tool into a designer supported process, which has been really interesting as well. And I think one of the things that I think is sort of interesting is philosophically, I'm not one of those people that believes that, you know, the human gets replaced by the robot, at least not yet. From what I've seen with the technology that's around. Sure, not for another year or two. Yeah, yeah. Not this week, anyway. You know, like, we've got a few more, like, weeks to go. Yeah, exactly.

38:05But I do think it's been interesting to see how much this kind of like almost expanded the scope for the consumer. It feels like people are kind of getting started, they're playing, and then they're like, oh, actually, yeah, I might want to use a designer. And I think, you know, that's a very like expansive view of what AI can do. I think it can bring people into the fold in maybe more of a meaningful way. I think there's the other like sort of perspective on AI, which is I was just referencing, which is like it replaces the human, which is a little bit dystopian and doesn't feel quite as quite as interesting to me as this other world.

38:41Right. I like the more hopeful world where it encourages people to work with a designer rather than just replacing them all together. You know, I realized that we jumped into conversation and we should remind people the many brands that are now under the umbrella of Havenly and even check in on what Havenly was originally, which was all about e-design and then how it has evolved. And so let's talk about that. Yes. So Havenly originally was online design. Still is, really. Right. do have an in-person component now in our major markets. And that's how we started and that's how we operated for six, seven years.

39:25And then a couple of years ago, what we started to do was buy other brands, brands that we were selling through on our platform. So in other words, designers were suggesting these brands. We were then selling it through on our marketplace to the client. And then we found that for a variety of reasons, we were able to acquire many of these brands. So the brands that we own now in order of size, Interior Defined, which does custom sofas and sectionals, Burrow, which does modular and smart furniture solutions, Citizenry, I think it's the first fair trade certified home brand here in the States. And then two smaller brands, The Inside and St.

40:04Frank. So we own a whole bunch of these brands and have been lucky to be new owners and grown them over time and sort of brought them into our family in a lot of ways. And do they collectively all give you data to look at and work with? And in the context of even this AI discussion, give you inputs to work with? They do. I think actually it's been interesting to see a little bit of the gives and takes of our of our data and where it's useful and in particular, what we can use and then how we're effectively extracting value as well. I think, you know, we get a lot of data around competition, things like what's converting, what's not converting, where the consumer is going across all of these brands.

40:53And then on the flip side, we also get a lot of like market data and consumer preference data and designer preference data from the Havenly business. And those kinds of things can be pretty important as you build a body of knowledge that you can then train a model on. And so we are fortunate in that we have a diverse set of data, but it's also a fairly broad set of data. One of the things that's been so powerful in the most recent iterations of generative AI is the human, like in the old days when you were doing data analysis or even machine learning was like, our data would be a little too thin.

41:31So you'd get this idea called overfitting, like you'd almost overfit to the one person that liked this one thing. And I think what's been interesting about the generative work and just the evolution of AI over the last couple of years is you can now really make sense of a very broad set of heterogeneous data and make it actually turn into a beautiful image. And in a world in which I've done a lot of chat-gibiti designs, they look great. They're great. And then I found it impossible to kind of triangulate that design into something that I can actually then execute. It's been this thought process of what is missing, and maybe that'll evolve over time.

42:14I mean, certainly there's a lot of investment going into many of these models, certainly more investment at OpenAI than here at Havenly. But again, I think it's sort of taking, I'd say, what is best of breed about our brands and our data and trying to see if we can expose that to be better for the user. Again, along these lines of how can we keep sort of more of the layout components? Can we have a higher level of taste and a little bit of a better language to communicate to the consumer? And can we make it executable? And those are kind of like the three areas, at least as an initial hypothesis we were focusing on.

42:54I mean, I think what's interesting is like when we think about it and what it's been able to do, like our tooling and what it's been able to do for those humans, it's been able to allow that human to do a higher quality of work for less time. And so, for example, in a world like ours, it's increased the earnings potential for our humans because we pay them a flat fee plus commission on every design they do. And so I think actually there's like a lot of goodness to be had from this. Like I think the like, again, dystopian future of like robots designing. But like, you know, I think it's one of the things that's sort of like interesting is our model is trained on designs we've already done.

43:37So if you don't have people generating designs, you don't get sort of like the new creativity that I think leads to what is ultimately an artistic process. and I think all of those things sort of lead me to believe that again there was probably a category of people that will not use a designer I mean frankly I needed a guest bedroom design before I had guests over like I didn't use a designer I used our tool and ordered you know because like that's just the way it is um and and there are plenty of people that you know would never have entered the funnel but I think it is an interesting way to like play a little bit see what could be, get inspired to do something different for your home.

44:18And my perspective is for some portion of those people that will hopefully, again, expand the user base that might consider a designer, or at least a designer maybe with AI-assisted tools. And at the moment, is everything that is being pulled into a design coming from St. Frank and the citizenry and interior define, or is it just a whole broad spectrum? and just giving people ideas as much as anything? We do limit the number of products that we can bring in, but no, we are, as you'll see, we put our thumb on the scales, obviously, because we think our product is fabulous. Because why wouldn't you want this?

44:58Because, you know, girls gotta make money somehow. Well, I mean, but that's the thing. I mean, because listen, there were plenty of businesses, most of them didn't work, but there were plenty of businesses that were trying to do just that. Here's an image, everything that you're seeing we sell and you can click on it. And that was it. And, you know, Modsy tried to do that and others. And I don't know if that's, I mean, that's doable with this, I suppose. It is doable. And, you know, again, I think that there is a lot of reasons why people start to think about financial incentives first. I think our perspective is let's make this delightful.

45:33And that's always kind of been our perspective. Like if we can't find a sofa that works for you, that in our catalog, that's fine. You should get a design that makes sense for you. And so that's the same philosophy here. Fundamentally, interior defined shows up a lot just because it is custom. So you can have it fit a lot of things, whereas not always the case with other things. But you'll see plenty of rugs that aren't from citizenry, for example. Because you know that someone's going to try and disrupt the space with AI. And we, I think, are sort of in some ways the best position to do so, at least to do so while still maintaining a, you know, sort of a healthy perspective on where the human fits in.

46:13In the beginning of the conversation, we joked that we're not going to talk about an acquisition today. And part of why I'm guessing we're not is that you've made quite a few in recent years, as you suggested, right? And I'm assuming that a digestive period was necessary, right just to understand all of these operations yes but no like we were like we had a we had an LOI out on March 29th but then like this funny thing called Liberation Day happened I'm I'm a little bit familiar but tell me how it showed up in your world yeah we're where we were liberated from the oppression of low prices um yes exactly uh oh I'm definitely gonna get deported today Exactly.

47:03They're going to come and collect you. Oh, it's been so nice knowing you, Lee. It's been great. I think really what was next, so we felt like we'd ingested citizenry really well at the beginning of the year. At the beginning of Q2, we felt like Burrow was in a good spot. And so we were ready to do more deals. Burrow, as you know, was our last deal that we did in October, November of last year. And then, you know, Well, the amount of focus that shifted to understanding tariffs was pretty astounding. Because as you know, there were fluctuations in tariffs. They went up, they went down, they went around.

47:39And so both understanding what to do, but also understanding what the lay of this kind of steady state lay of the land was going to be, just took a lot of team effort and really kind of made it so we felt like it wouldn't be responsible to do an acquisition in Q2 or Q3. We're back looking at deals. I mean, we always sort of kept an eye out for things that were high quality. I made a really, really hard run for one that I really wish I could have announced to you guys because I think you would have liked it. But, you know, I think from our perspective, we've always felt like you can't acquire businesses into an unstable base.

48:15And so when we weren't sure where our margins were sitting, we were resourcing all of our product out of China. We were looking at American manufacturing. We were just doing all of these things across the team. It didn't really make sense to ingest another business. But, you know, we're back. We're back looking at things. So, you know, we'll see. Okay. Well, I mean, as you spent these many months figuring out all of this, how did it show up for you knowing that you've got this huge Asian supply chain? What did you have to figure out? And how have you been dealing with price increases and how much you've been able to take on yourself versus how much you pass along and all of that?

48:58So I think the biggest thing that's stabilized is that we now have a supply chain that runs across countries. So like, you know, the biggest thing was China seems to be really in the spotlight at all times. And so ensuring that we've sort of multi-sourced out of China if necessary, even if we keep Chinese production going, which in some cases it made sense for us to do. So is one. So like the ability to shift things around. And I've said this before, the interior defined program is a complicated program. It is custom. You're holding 175 fabrics. You know, we technically customize down to the inch.

49:35So, you know, it took a little bit to resource us. So it was one. And then the second is we did a lot of like price and price testing and have developed a lot of processes to understand where the market is. By the way, AI driven to understand kind of where the market is and be able to kind of try and inch up prices when we can. And so we're probably only about halfway to where I think prices are going to land, but we don't want to get too far ahead of the market. So we are eating a little bit. We just have to, by nature, have to take it on because I don't think the consumer really supports that level of increase in price without seeing a massive sort of deterioration in demand.

50:16And what's nice is, I'm not saying we've solved it all, unfortunately. I wish we had, But at least from a leadership team perspective, we've got a process. Like we have, roughly speaking, we know the playbook. Is it perfect? No. But from a brain perspective, we can now focus on some other things, even as that playbook gets executed anytime we have sort of a change in tariffs. We were talking earlier about the fact that you were just in Vietnam recently, right? And an awful lot of furniture is coming to the US from Vietnam. And I'm I'm curious. I'm curious the mood on the ground and how they're seeing all of this and thinking about it.

50:56You know, it's it's interesting because I think Vietnam has been one of the winners, I would say, maybe not winners, but like relative winners relative to China. Anyway, I think obviously they were certainly the winner in the hey, we've got to get out of China. So let's go to Vietnam. Right. Yeah. I think they were incredibly disappointed by, you know, some of the more recent developments. So kind of like the broader upholstery tariff, I think even landing at 20 was higher than I think maybe what was expected on the ground there. I would say, though, that if you are a person that had invested in a Vietnamese factory a few years ago, and there were many people that did because of the first Trump administration and those Chinese tariffs, you're feeling pretty good about yourselves right now.

51:40You know, there's certainly a lot of growth, it seems like, for a lot of them. And so I'd say it was cautiously optimistic and there was a lot of curiosity around what's going to happen to the consumer market in the U.S. Because that's really, you know, if you think about what pretty much any upholstery manufacturers felt for the last couple of years, they felt kind of the extreme lows of a consumer being relatively soft in the home market. And what they're worried about is that because like most factories will tell you they saw orders decline quicker and for a larger duration of time than even consumer demand.

52:14sort of looked on the ground because people were holding onto inventory and they were selling through. And so there's a real concern about the consumer. And if we raise prices, what's going to happen to demand? There's a very clear question on whether or not the consumer will continue to show up in what to them feels like potentially a softening American economy. And so it's interesting, Like you get to talk about a lot of our competitors or frenemies and cases and sort of compare yourself. And it does feel like, you know, from any individual customer, they're feeling a retraction. But across the board, from a macro perspective, there's a lot of sort of coming inbound.

52:57And so and more and more people are obviously manufacturing in Vietnam and in places like, you know, in Asia and otherwise to just kind of, again, get a little bit of diversity on the ground. But these like 232 tariffs make the benefit of that go away a little bit. Yeah. No, no, no. That makes sense. I wonder, does any of this, can you envision production facilities coming to the U.S. in a meaningful way for any of your businesses, which is the supposed intended effect of all of this? It's. Oh, she lowers her voice. She's like, no. Well, no, I think for some of our brands. Yes. in particular for the ones that have sort of pricing that can support it.

53:42I think the biggest challenge for us is honestly capacity. And it's human capacity, not manufacturing capacity. There just aren't as many. I mean, we saw this in COVID whenever it was trying to remove manufacturing here, right? Because container prices were so expensive that it started to make a lot of sense. Like there just isn't enough capacity in the United States right now. The skilled labor to do it. The skilled labor. And so, you know, I think for us, it's difficult to see it happening this week. Now, if we can, like, somehow create an AI robot that, like, can upholster things, I think that's certainly possible.

54:20But it's been, we've been looking, honestly, like, I've been actively, like, trying to figure out if that's what makes the most sense for us, we will absolutely do it. But the challenges so far kind of unfortunately outstrip the promise, I'd say. I know some people are doing it like, you know, we've sought to out Syria, famously fought Mitchell Gold, Bob Williams, you know, that kind of thing. And so people are looking at it, but it's definitely hasn't been like an easy unlock for us, unfortunately. So you mentioned the fact that rather than having to worry so much about digesting all the acquisitions, you sort of got that under your belt.

54:59It was really digesting all of this tariff news. And it sounds like it was that. Yeah, it's just I mean, it's it's it's just been like a whiplash year. It definitely wasn't what we were expecting. And, you know, I guess that the market seems to be tolerating it. And, you know, I think it remains to be seen if like consumers hold up over time. But it did require quite a bit of work. on our side and not fun work. It wasn't like, let's brand something or let's buy a business. It was like, let's figure out how to get this back to this factory. And you know what I mean? I mean, the interesting thing is to your point about, so we've seen recently a shift in the language coming out of the Federal Reserve as the Fed has grown concern about employment rather than inflation at a time where unfortunately nobody was thoroughly convinced that we've beaten inflation back.

55:51And so we're having to shift gears because obviously there are meaningful signs. And of course, we're not even getting employment data at the moment because of the government shutdown. So we don't even, right, we don't even know. We could be a 10%. We could be a 10%. Could be great. We have no idea, but we're feeling like it's pretty likely that it's been softening. And so we can't really tell. The market, the equity market seems to be shrugging so much of this off thinking, oh, this isn't really meaningful. Inflation hasn't shown up there. The companies are so smart and we're investing so much in AI and technology, right?

56:30That AI is just going to propel everything. And who cares if the furniture industry is slowed down a little bit, right? Compared to all of that. And so maybe in the big picture, it doesn't really matter, but it does seem like everyone is just starting to believe, yeah, maybe these tariffs do stick around for a while. I think that what's interesting about how I'm thinking about it, but also I think some of my other CEO or business leader friends are thinking about it is the uncertainty. And you could think about it with acquisitions, but I think about it also with hiring. The uncertainty around what is happening makes it so that I'm less likely to engage upon a new fixed cost.

57:18So people would be one of those fixed costs. But also with people, the tantalizing closeness of AI to replacing people has made it so that I almost don't always feel like I need to. And I think that that anxiety, if you're an employee or employed by a business, I think that anxiety is just, you know, even if you don't, for example, aren't terribly worried about it. I think it's like, you know, consumer shocks, consumer slowdowns happen because of like consumer psychology often. It's like that generalized anxiety about, I think, the economy that I worry about the most. Because frankly, like people are the customers we serve are still fairly affluent.

58:01They have exposure to the market. They're probably seeing their stock portfolios run up quite a bit over the last 12, 18, 24 months. Oftentimes, they're homeowners. So they've likely seen some capital appreciation in their primary household. And there's still a bit of anxiety out there. And I think one of the things that's difficult about tariffs is, you know, it's another, I call it, I don't know if it was like the, it was the only thing that has sort of like changed, I think, perspective from late last year to this year. But it certainly feels like it's not helping. And I hear you that furniture, relatively speaking, is a small side of business.

58:39But it's apparel. It's footwear. It's everything that the consumer sort of touches and feels. And I think that it just adds to this sense of, I think, consumer anxiety that, again, triples down to all of us. But you are seeing, if you look at the stock market, there was an article on this in the Wall Street Journal, I think, on how, you know, sort of under the headline numbers of like, just, you know, kind of a wonderful upswing in the S &P 500. What you're seeing is like, you know, a mix shift in where people are putting their money. And there are winners and losers in that bucket. And it does, you know, people will tell you this all the time that it's like the Mag 7 that's really growing.

59:18Exactly. You know, like, and so, you know, how durable is that? Or how sustainable is that? Or, you know, will that actually make for a healthy economic picture? I don't know, because there are smarter people than I looking at it and they all say different things. But if you're asking about like my general, you know, concern, it's generally around that. It's like I could probably have dealt with the margin challenge if I didn't feel like it impacted my consumer. But having both at once is very difficult. And I feel as though a year ago when you and I were last talking about the many possible acquisition targets that were out there.

1:00:00Even then, there were a lot of different reasons why companies needed to sell. There was a sense of real urgency with many of them. That certainly, I imagine, must still be the case today, if not more so. It is the case today. I will say the one thing that I've noticed between, call it, last year and this year is there are more buyers. I don't know why there are more buyers. My guess is they've seen it and they've seen that it might work and they understand that the cost base is low enough that you don't really need to do a lot to make these things work a little bit better. Which when we acquired Interior Define, there were no other suitors.

1:00:43There was nobody. It was just, you have it, you take it. Really, they quite literally effectively paid us to take it on. And so like, I think that's changed a little bit, which is sort of interesting. And I think there aren't a lot of places to put your money right now. And it's not unreasonable to say, oh, wait, I can take this unprofitable business, buy it for effectively nothing, turn it into profit with this capital I have and wait it out until the market kind of corrects itself because it typically does. And so I think there's a little bit of that going on, which I think is really fascinating.

1:01:17Like we're now seeing kind of financial buyers come in, like ex-private equity dudes with a holding company, that kind of thing, which we didn't used to see in this little category. So, you know, I guess I think there's more people potentially in distress. Frankly, a lot of people didn't make it through 2023, 2024. So there's that. The people that did, I think there's a lot of looking around to see what strategic options are. but I am noticing that there's a little bit more at the table. So we always talk to the big M &A guys, you know, the stumps, right? So Tim and Bo that come on the show and they're always trying to give us a fun catchphrase.

1:01:59So it was supposed to be survive to 25 and thrive was the last one. And then we got to 25 and hasn't been so great, right? And so last time Tim was on, he said, unfortunately, 27, a lot of companies go to heaven. Oh, no. What? So that wasn't good. That wasn't positive. But I mean, he was hoping there would be a fix in 26. So I don't know. I think a lot of these high point companies have a lot that they need to figure out. And many of them bought giant spaces at high point that now I bet they wish were smaller. They had, yeah. Right? And just a lot of decisions that were made before this landscape changed so dramatically.

1:02:47And now between tech and tariffs, I mean, it's a lot coming at them. It's a lot to navigate. Because I think tariffs for our industry, regardless of whether you're a North American manufacturer or not, are going to naturally kind of impact the business probably in a negative way. I know that they're, I know y 'all have talked to some folks that have sort of a contrary take, which I'm actually really interested in. But like, you know, fundamentally, I think like clearly this is not our year as well. Like survives 25. Well, now, yeah, to your point, now we've got to, we're not really. And so, you know, how many of us have been just like exhausted by the like, you know, even the ups of COVID and the like, you know, crazy container rates and then the downs of 2022 and the sustained issues of 23.

1:03:36And now you're faced with tariffs and it does feel a bit like we can't catch a break. And yet, again, I think if you think about it long term, there's a lot of pent up demand for housing. You know, there is a lot of probably pent up demand downstream from that in furniture and furnishings and renovation. And we started to see that a little bit this year, although muted, I think maybe more muted than we'd expected. And if you do get interest rate cuts, like I can see why there are people around the table that are sort of like, oh, hey, I can buy these things cheap because the founder sees exhausted and their capital is gone and they're, you know, they're seeing a prolonged decline in sales and profit.

1:04:11and let me just hold on until whenever two, five, seven, ten, in some cases, years, that it comes back. Because again, there's like a physicality to what we do that thankfully doesn't get replaced by the technology revolution, you know? Again, unless you're making robots with upholsterer robots. At one point, we were all going to be living in the metaverse and then it wasn't going to matter, right? Yeah. Thankfully, we've moved away from the metaverse. We've moved away from that. Thank goodness. So, yes, we are going to need those physical sofas that you're sitting on now. Thank goodness. And there's supposed to be this huge wealth transfer to the next generation that's taking place in the in the coming years.

1:04:49And certainly plenty of people are optimistic about that. To your point, we know there's not enough housing. Many more houses need to be built. We're a couple of million shy of what we need. Right. So everyone everyone keeps coming back to that. But that doesn't seem to have gotten us through in a meaningful way these last few years. It doesn't seem like it has. And again, I sympathize with all of my compadres here that are figuring out how to, you know, kind of continually remain in survive mode until we get through this. But I, you know, I also I think for us, it's been a lot of like we have typically taken these downward moments and tried to make hay.

1:05:27So acquire businesses, grow at outsized rates, you know, do things that are a little bit more interesting. And I think what's been hard for us here is like, it's been a lot of like rework that we weren't expecting. And it's just, it's somehow not as fun as some of the growth oriented things that we've been able to do in previous years. Yeah. I like to say that there's a little bit of also like, now we're a bigger business with a lot more to lose. So like back in the day, it was like yellow. And now, and now, you know, there's like a whole lot of things that unfortunately it would be, it would be tough to walk away from.

1:06:02So maybe it won't be long until we're having an acquisition conversation. I mean, it sounds like you're eager, but. I would love to. We are back active, I'd say, looking at some things. There are some interesting things. I think typically we see it at the end of the year. So you get, you know, people start to do planning for the next year and then they start to realize, like, I don't know if I want to sign up for this one more year. So I'm anticipating some things. I remember Interior Defined kind of came together over the holidays. So I mean. Oh, yeah. Right. Kind of famously. Yeah. Yeah. Yeah.

1:06:36I will never forget that. It was like the Sunday of Thanksgiving. Yes. And they were like, can you do this deal in two weeks? And I was like, are you kidding? I'm with my family right now. I'm like, I had a one-year-old. Like, I was like, I had no childcare. My nanny had quit. Anyway, you get through it. And then it becomes a fun story that I can tell on a podcast. Well, exactly. Exactly. And maybe I will check in with you over the holidays and see if there's an exciting deal that's coming together. I'll call you Thanksgiving Day and just check in. I will say my lawyer is now before, like well before they go on vacation, they ask me if I'm looking at something.

1:07:13So I anticipate that call. Yeah. Well, hopefully everyone gets to have the holidays at home and not putting together an emergency deal. But I think we'll know a lot more post high point. And once the government reopens and we can see some of this data, we might have some better insight as to what's actually happening in the country. You know, small things. Right. All helpful. Lee, always a pleasure to chat with you. Thank you so much for your time. Thank you so much.

1:07:47And we're back. We're getting to the end of the show here. But before we go, we'd like to take a second to highlight anything going on in the industry that might have caught our eye. Fred, what caught your eye? A couple of things got my eye this week. First of all, you know, I think most everyone listening to this will have heard the very sad news that actress Diane Keaton passed away earlier this month. You know, and obviously she's known for her great movies and her great performances. But if you're in the design industry, you also know that Diane Keaton, like, showed up in a big way in our industry.

1:08:14And a lot of celebrities kind of breeze through high point. They got their one thing they're trying to flog. They take the overnight flight out. And, you know, but not she was really committed. She had all kinds of interesting collections. She wrote several books. She was a big house flipper. She was really invested in design. And I was really heartened to see a lot of people who had like had personal experiences with her posting about an Instagram, talking about how genuine she was and how sincere she was. And there was a great retrospective in the New York Times talking about all the houses she'd done.

1:08:42And so, you know, this is a little bit of an in memoriam to a side of Diane Keaton that I think most people didn't know about what was a big part of her life over the past 20 years. Absolutely. And she did so many homes with the great designer Stephen Shadley, who I'm hoping to have on the show at some point. But she was she was so passionate about about homes. She was always in some state of redoing a home, buying a new home and and fixing it up. So it's obviously a huge part of her life, and she was such an incredible person. I was such a huge fan. It's been sad to look at all of the clips of her great movies and think about her no longer being here.

1:09:20Yeah, no, I know. It's definitely sad. You know, the next thing that caught my eye is just kind of a little bit of business minutiae, but I noticed that our friends over at ADPro are doing this new thing where they're taking their directory and offering something that sounds quite similar to the experts. I was going to toss, I wonder where they got that idea. Yes, I wonder where they got that idea. They're going to offer video consultations with some of the designers in their directory to readers of AD and just anyone who can front the coin. But I mean, I think that makes all, frankly, it makes all the sense in the world for AD to do that, to capitalize on their brand, their awareness with customers.

1:09:56And if designers get some money out of all this, I'm really happy. but I'm curious if our friends over at The Expert are watching that with some suspicion. I don't know. I think it's really interesting. I'm sure at some point we'll have time to talk about it in more depth, but the fact that they announced it certainly caught my eye. I don't know about yours, Dennis. What caught your eye? Well, that certainly did catch my eye, and I think I know how they feel at The Expert, but we'll talk about it more in the future. In the meantime, one of the things that caught my eye was there was a great article in The New Yorker, And by great, I mean really, really long piece of The New Yorker.

1:10:33You know I love that. I know. I know that appeals to you, Fred. But there was a piece about Jason Saft, who has a business called Stage to Sell Home. And it was talking about his remarkable staging business. And many of you out there might know that he's having a big warehouse sale, where I understand you'll perhaps be spending some time, Fred. but it'll be open to the public on Saturday, I believe. That's the 25th from 10 a.m. to 2 p.m. And Jason says you better get there early because he expects things to sell out pretty quickly. But it's going to be in Industry City in Brooklyn. So look for that.

1:11:17Yeah, I would say don't even bother going because I'm going the day before to the VIP sale. I'm going to buy all the good stuff, run off in a big truck. But I am going to that, and I do think what Jason has done is really cool. I had coffee with him a few months ago, or I don't know, maybe a few years ago at this point. Really interesting business, brings a really interesting aesthetic to home staging, and how cool that The New Yorker spent 3 ,000 words on him. I'm just sad I didn't get there first, because I love a long article, and Jason's an interesting guy. So yeah, check out that sale, and hopefully you can deal with the dregs that I didn't buy.

1:11:51Yes, I was sorry to miss it. I sent them a note that I got to be at High Point, but I'm glad that you'll be there representing and perhaps we'll talk to Jason in the future. All right. That's all the time we have today. Thanks so much for listening. If you want to keep up with the latest news, browse job listings, or take a workshop, visit us online at businessofhome.com. If you want to get in touch with the show, write to us at podcast at businessofhome.com. This episode was produced by Fred Nikolaus and Caroline Burke and edited by Michael Castaneda. I'm Dennis Scully. Have a great weekend and we'll be back with you on Monday.