The Thursday Show: Wayfair has its best quarter since 2020. Plus: Designers take the shipping process into their own hands

22:26And it sounds like an awful lot to take on, but they did. And we got some great insight into it. What do you think?

22:34Kaitlin Petersen:I mean, I can't imagine a better proof point that things are bad that that you decide to go into the trucking business yourself, frankly. You know, we Caroline interviewed Courtney Bishop, who had done this in 2018. You know, she already saw back then just how much sort of the damages and delays were impacting her bottom line. Blair Moore and Chad Gracie, who are also in the piece, are, you know, slightly more new to the receiving space. But I think both really just hit a point where they said, I look bad to my clients because I don't have partners who can show up for me. And so I'm going to be the partner to myself that I wish I had.

23:13Kaitlin Petersen:And I think what's interesting about this story is, you know, I think certainly, one, it's a really great proof that this industry has sort of reached a breaking point around receiving and shipping. But also, I think that even if, as it will not be for many, you know, opening your own receiving warehouse, you know, if that's not an option to you, if that's not realistic for you next week to go out and rent a giant warehouse, I think there's still a lot here about what these designers have uncovered about what is possible, right? I think so much of where we sometimes get stuck in the design industry is thinking that our experience, especially maybe negative experiences, are normal or that everybody is dealing with it and that's the way it has to be.

24:01Kaitlin Petersen:And I think if you read a little bit between the lines of, you know, what these three designers are saying, they've sort of made standard to their receiving businesses. there's a really nice checklist of things that you can ask of your receiving partners, that you can demand of your receiving partners if they want your business. There's a piece in there where Blair Moore literally says, ask these questions. So go look for that paragraph. But, you know, I think it is a great checklist to say, you know, this is the bar. And maybe it's time to go find a new partner if your partners can't clear it.

24:36We did talk about this so much during COVID, and we thought that more would come out of this in terms of services that would just be vastly improved. And we saw this as such an opportunity for people to take advantage of. I'm not sure we imagined a bunch of designers just jumping in and taking this on themselves, but it shows you that no one else stepped up to really make this happen. So I do think it's interesting, the checklist that you point out, the questions that you can ask and should, but also a reminder that that opportunity still seems to be out there. I've held off getting my trucker's license, but now I don't know.

25:12Maybe I need to rethink because it seems like the opportunity is still there. I was told there would be all these driverless trucks and that was going to take care of the issue, but it hasn't materialized. So I don't know. Damage is still a big issue. So stay tuned for more because there'll be a column every week. And I look forward to talking about other aspects of it. But moving on, we're going to talk about BOH's print issue.

25:38Kaitlin Petersen:Yeah, the summer edition of BOH Magazine is out now. And it is all about how designers can tap into one of the industry's biggest growth opportunities. which is at-home wellness. Yes, indeed. It's something we talk about quite often on the show. It's the wellness craze. And I'm so eager to get into some of the things that covered in the issue. I have the issue right here in my little hand. So I'm eager to discuss. Where should we begin? I think the stories in this issue explore two things. One, how new ideas about wellness are transforming the way designers work. But maybe more importantly, in some ways, what clients are demanding and how their homes should or could perform.

26:19Kaitlin Petersen:We did start with that look at designers' mental health, at how workplace culture is changing, and also I think at why designers are so prone to burnout in the first place and how they can protect themselves. And I do think that's kind of an important moment in this issue, a shift that really is happening. Jen Fernandez interviewed several designers who had founded their firm sort of with the intention of changing workplace practices that they encountered at job after job after job. And for an industry that a culture of late hours and busyness certainly isn't unique to the design industry, but it's definitely a hallmark of a lot of these jobs.

27:00Kaitlin Petersen:And it feels worth talking about sort of other mindsets and other approaches to this work. Yeah, it's definitely, the design industry has always been one that seems difficult to turn off. and where clients more and more have an expectation of you being accessible. And it's just very challenging, particularly people who have small businesses on their own to just let it go and turn it all off. So it's great to get into the discussion about what you can do. I love that you went to clients. I think that is like the much more charitable piece of this. I think the other piece is just the firm owners themselves, right?

27:40Kaitlin Petersen:And coming of age in an industry where being chained to your desk was a sign of success, was how you got ahead. I think in a culture of billable hours in some ways, more is more. And really stepping back from that, questioning that, and figuring out new ways of working today, I think, is also incredibly important. Yeah. I mean, it's funny. I remember when I spoke to Andre Malone, who talked about working for Robert A.M. Stern and the very, very late hours in the office. And he really didn't have a social life. Here was this remarkably handsome young fellow in New York and really didn't see people until much later in his life because he was just a slave to that desk.

28:33And so I think a lot of designers from a previous generation talk about the crazy hours that they were asked to keep. So I would love to see that change in a meaningful way.

28:43Kaitlin Petersen:I think the other thing we looked at was Caroline Burke wrote a great piece about how to tap into some of the biggest growth opportunities where wellness is concerned. And I think it's an incredibly insightful survey of home spa amenities, the nuances of health-focused interiors and features that help clients tap into some of those well-documented benefits of being in nature, all without ever leaving their homes. designers told us a lot about these incredibly personalized floor plans and features that they're developing. And I think it's a really nice primer in what you can offer to your clients, what's possible, and also the questions you should be asking to really make sure that you're recommending the best solutions for your clients' needs.

29:34Kaitlin Petersen:Snow rooms did not make it, by the way. Sadly, snow rooms were not represented, but I hope that in the future they will be. And I think, listen, knowing that snow rooms are a possibility, I think can change the conversation a great deal. But I do think to your point that because designers pride themselves on making that intimate connection and really giving clients everything that they want, I think giving them all of these options around, listen, what is possible to incorporate into your home today? It was so interesting talking to Grant Bowen, that client rep that we had on the show not too long ago, who said very candidly, listen, we're not just building homes for these clients anymore.

30:20We're building resorts for these people. And there's just all sorts of services and, to your point, amenities that can be included. And I think half of it is just even knowing what's possible.

30:32Kaitlin Petersen:I will say, you know, and I think you and I were talking about this before we came on air. It's going to be an interesting movement to track in the design industry because it is very much not being caught on camera. This was an incredibly difficult story to find art for just because designers were able to tell us about so many incredible things that they had built or were building. and they were absolutely not ever going to publish photos of any of it. I think so much of this work is incredibly beautiful, incredibly mind-blowing, and incredibly wrapped up in NDAs and won't be making it into the pages of your favorite design magazine.

31:11Kaitlin Petersen:And I do think, you know, I don't think it's something I was thinking about when we assigned this story, but certainly as this issue was coming together, I was thinking a lot about how information will be transferred around details like this when we aren't able to watch the trends evolve in media the way maybe we've kind of absorbed and filtered other design movements in the past. Yeah. I mean, we probably won't know the best of them, but I'm glad that we learned about the snow rooms and some of the other features that can be offered. But you're right. I mean, some of the most personal and intimate details of people's wellness, we won't sadly know about unless we get invited over, which is always my hope.

31:59I'm always hoping to get the invitation to come and see the facility.

32:03Kaitlin Petersen:To come do IV therapy together? Well, I mean, just to get a tour, honestly. I don't have to participate in everything, but I do like just the idea of the tour. And listen, I know a lot of people are doing the IV wellness thing and, you know, good for them. Again, if it works for you, great, which is how I feel about the GLP-1 conversation. Like if that's making you feel right, you lost 20 pounds and you feel great and you're expanding your closet, I say good for you. I'm sure we'll be talking about that issue and more around wellness in the near future. All right. That's it for the news. but there's plenty more to check out on businessofhome.com, including the launch of Tim Papers' new trade-only program and Gail Doby's Secrets to a Healthy Client Relationship.

32:48We'll be back in a minute, but first, a quick break.

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33:48That's J-O-O-N-L-O-L-O-Y dot com.

33:58And we're back. I'm joined now by the co-founders of Pepper Home, Kelsey Brown and Aaron Banta. Ladies, thank you so much for joining me.

34:08Kaitlin Petersen:Thank you. Thanks for having us. Great to have you. I'm eager to have this conversation. So many people tell me, and no pressure going into this conversation, that you two are definitely ones to watch in the industry. So we're going to get into why that is. But who wants to kick it off by telling me what Pepper Home is all about? And then we can get into the origin story. But let's tell people what it is today, and we can work our way backwards. So today we are a brand that sells custom window treatments, furniture, and decor. So Kelsey and I met at Columbia Business School in 2015. And while we were traveling to India for a friend's wedding, we were both really inspired by the textiles we saw there.

34:49The colors, the pattern, the layering. It felt really different from what we were seeing in the U.S. market at that time. And so we ended up launching this business at the end of 2018. and the initial concept was much simpler than what Pepper Home is today. At the beginning, we were very focused on creating this accessible decor brand, really centered around color and pattern. We wanted to think about the small accent pieces, pillows, et cetera, that you could add to a space to really make it feel special or have personality. But candidly, as you might imagine, that initial version of the business did not have a strong enough point of differentiation, and we really struggled at the beginning to find product market fit.

35:30And so what we learned in the first, I'd say, 12 to 18 months of operating and also getting a crash course in manufacturing was that customization was going to be the real unlock for us. We knew there was a demand for more personalized interiors, but custom products had historically been this category that was largely reserved for high-end projects or trade-driven experiences. but we saw an opportunity to make customization more accessible, easier to navigate while still creating this product that would resonate both with our direct customers, but the design community as well.

36:04Kaitlin Petersen:Part of the evolution is also how we started. So when we launched Pepper, a lot of people in our field were raising a lot of venture capital. We did not. We took a very different path And I think that has evolved and shaped who we are as a brand. When we launched, we put a little bit of our money in. We raised a very small friend and family round, but we primarily bootstrapped our business. And we had very limited resources, as you can imagine. So we had to be very disciplined in how we grew and how we operated. And I actually think that that has been one of our biggest advantages. and part of our success as a brand, we were able to maintain so much control over what we were building and doing it at our own pace.

36:56Kaitlin Petersen:And we have been profitable since 2021. We're now a mid eight figure business and we have seen high double digit growth year over year. And it's really exciting for us because I feel like we've built this great core of our business And there's just so much opportunity there to now grow as we get into more product development, new ways to do marketing, and just how we expand into manufacturing. There's just, we feel like there's a lot of opportunity ahead of us. And as we've talked about in the past, it's surprising on the one hand that there was opportunity because there are some big names in the space that you would think wouldn't leave a lot of room or opportunity.

37:45But you both quickly discovered that there was some room to get in there and window treatments and custom curtains and custom just in a wide range of products became something that you could really pull off in a meaningful way. And I wonder when you really came to realize that and when that became clear and became what you started to accelerate and focus on. I will start by saying, and I think it's important to stress, we're almost eight years old. And it really took us a few years to figure this out. Like, manufacturing is not for the faint of heart. And in the beginning, like, we were learning this industry in real time.

38:32As I said, we met in business school. We both had backgrounds in retail, but neither of us had any experience in the home industry or formal training in areas like branding, product development, marketing, you know, all of these things that would be pretty critical if you're trying to launch a consumer brand. And so I think one of the biggest decisions that we made early on that really changed the course of this business and I think shifted us towards this path that would lead to the success we're experiencing today was this decision to manufacture domestically and build a business around this on-demand production model.

39:09Kaitlin Petersen:Yeah, and I think it's funny what Aaron failed to mention is when we started, we actually made everything in Portugal. Yes. And we were, it was not a custom made to order model. And we, after a year of that, we just completely shifted. And I think in the beginning, we did find our sweet spot with window treatments. And that has been the biggest category to this day. And I think for window treatments in particular, customization is so important. And as we kept adding new features, we were expanding just our customer base. And then they were asking for more and more customization. And I think a lot of the big players within window treatments, they're either function as like a workroom where they're doing mostly COM and they're not really focused on the pattern development, I would say, or like fabric development as a whole.

40:03Kaitlin Petersen:And then on the other side, you have a lot of brands that do focus on the fabric development, but they're not doing the customization part. So we really wanted to marry those two and build a brand, not just a workroom that can offer these customizations, but at a larger scale. One thing we learned very early on is that there's not one partner that can do everything. So we've tried to find people that are, they have different specialties in a certain area. And then we've expanded that network of manufacturers as we've expanded into new product categories. So we've tried to really find the people that are best at what they do.

40:44Kaitlin Petersen:Two of those partners, actually, you've had on your show. So we work very closely with Valdez Weavers in North Carolina, as well as 22 Wallpaper and Textiles in Connecticut. And I think the beauty of our relationship with 22, they were one of our early partners. They've been with us since when we were very, very small. They took us on and they're now not just a manufacturer for us. They're actually deeply rooted in our product development process. And they are a key partner as we have really broadened our assortment and... Up-level product development. Exactly. Like we've done a lot to elevate the assortment and grow into different types of wallpaper and textiles in the last five years.

41:31Kaitlin Petersen:That's been a huge focus for us. And they've been a key part of that. The last thing I'll just mention, manufacturing, another reason why it's so important to us is because we have to find folks who can do on-demand, custom manufacturing, but that can also grow at a scale that allows us to maintain quality and support our growth. And that is very challenging to find. And also to deliver, to meet our standards around what we want our lead times to be. It's very hard to figure out. Well, no, no, exactly. And I mean, to that point, Erin, and I want to come back to what Kelsey was just saying, but talk about your lead times really quickly, because that's a really interesting aspect of this whole business model.

42:15Yes. So lead times for all of our window treatments and decor items like pillows and shower curtains, that's about two weeks or less. Wallpaper is about four weeks and furniture is six weeks.

42:28Kaitlin Petersen:And everything is cut and sewn here in the United States. And then we do work with a global network of fabric mills to bring in our fabrics and our textiles. But I think lead times is a very interesting thing. I think it's a blessing and a curse. It's a huge part of our value prop because one, producing domestically allows us to have such short lead times. But for example, this year we had, all of a sudden we grew very, very fast. And there was a period where our factories had to catch up to that. So it's a blessing and a curse. I think one thing that we're really striving for this year is to make sure that we diversify this network of manufacturers, and then we can handle the double digit growth that we are seeing.

43:16And what are you attributing this sudden growth spurt? I mean, you've been growing, but suddenly at a faster rate. Yeah, this year really felt like an inflection point for us. I mean, we've been busy. We've had a ton of product launches. Like I think we've, this year we'll have 30 or 35 product launches, but it's like we've expanded into new categories. Roman Shades we launched in February. That's been really significant for us. Furniture we launched last June, but we've expanded into sofas and sectionals and additional categories. So I think it's definitely category expansion, but I think it's just a growth in our trade business, this word of mouth amongst our customers that our product is of a certain caliber and quality.

43:58And then finally, I think just seeing the flywheel in effect with all the different marketing channels that we have in play. I mean, I think what is happening is we've been building towards this moment and it's been really hard and very arduous, but we're finally at this point where we're just kind of seeing everything work at once.

44:13Kaitlin Petersen:And I think that's something that when we look in the future too, we are really trying to build this ecosystem of product so that somebody can come to us and buy every type of window treatment, every type of furniture, the decor, the wallpaper, and get this full room experience. And I think what we've noticed is as we add more product categories, it's also helping the growth of our existing product categories and people are getting more coordinated pieces. So for example, when we launched Roman Shades this year, which was our most requested product, we spent two years on R &D to figure it out just right.

44:50Kaitlin Petersen:But that also shot our normal curtain volume through the roof overnight, just launching Roman Shades. So that has been just, I think, an interesting learning lesson to us as we grow into these new categories. And so was that the marketing around the announcement of the Roman Shade launch that just reminded so many people that you did all this other product? I mean, is it all sort of to the point of the flywheel and building and the momentum? I mean, is that part of it? or it's marketing it's allowed us to to reach new customers acquire different customers but it's also just allowed us to increase our repeat purchase rate with existing customers i mean typically when we launch a product it takes some time for it to really get up to speed right like when we launch furniture i'd say it took a few months for us to really see proof of concept there with roman shades i think we knew in three weeks that this was going to be a runaway success for us it was really unusual but i think it was just something that the customer was already really telling us that they wanted.

45:53So of course, marketing is part of it and like that deserves some credit, but I think it's also just like finally offering a product that our existing customer base already indicated they wanted. And I also think frankly, it's harder to find that product in the market than it is say a custom pillow.

46:09Kaitlin Petersen:I was going to say that, Erin, and just to piggyback on that, something that is so core to us is creating a good online experience. That is something we take a lot of pride in. We're constantly revisiting. And it is truly hard to find custom Roman shades online where you can specify the width up to an eighth of an inch. You can add trim. You can get a pink stripe or a blue floral or a white linen. It is hard to find that online. So when we applied all of our learnings to custom curtains and then transferred it over to Roman Shades, I think that was, it just unlocked another layer and it was an instant success because of that.

46:50Yeah. And I'll share just like a follow-up anecdote to this, which I actually shared with Kelsey prior to this call. This relates to furniture, not Roman Shades, but we recently did an analysis of our furniture business. And we said to ourselves like, okay, in the past year, people that came to us and bought furniture for the first time, this is our D2C customer, not our trade. Were they existing customers already or were they new customers? 80 % of those customers were new. which we were both pretty shocked by. But I think it just speaks to the fact that the furniture customer might be a little bit different than the window treatment customer, right?

47:24Like our AOV on furniture is much higher than it is on some of our other products. And so I don't think we had a full appreciation how expanding into these new categories would really allow us to reach new customers. I think we had an assumption that it's a little bit more of the same. And I would just also say on Roman Shades, Like earlier today, I was talking to our head of trade about some notable trade partners that we've seen come into the program recently in the past couple of months and like big names that we've known about for a long time. The first time they've shopped with us is buying Roman shades or buying a piece of furniture.

47:57So it's just like we're able to reach them now in a way we weren't able we weren't able to before. Interesting. And I want to talk more about that because so perfectly understandably, designers are often skeptical of a direct to consumer brand. And really, can you manufacture or produce at the level that I need and the quality level? And the quick turnaround is great. And many times they'll take a flyer on something to see what it's like, but it sounds as if your trade business is growing pretty rapidly. I want to hear more about that. Yeah, I mean, 80 % of our business is still D to C. But we have just seen really significant growth in the trade channel in the last two years alone, in the last six months alone.

48:47Like even on our team call last week, some of the rate at which people are signing up for our trade program, again, the type of designer that's joining our trade program, there's just been a sea change here. and no amount of outreach, marketing, sending packages could have caused that to happen, frankly. It truly is a testament to the product quality. And it's not just the categories, but I think it's the breadth and depth of our fabric and text and wallpaper assortments. You know, when, as we said, like when Kelsey and I launched this brand, to be frank, we did not know what we were doing in many respects.

49:22And as we have learned more about this industry and we've learned more about product development, it's just really allowed us to finally bring to market the things that we had always envisioned wanting to bring to market, but just not having, we didn't have the know-all or the skills at the time to translate our vision into actual product. And we're just seeing the benefits to that today. So I think it's really a mix of adding new categories, but also offering a much better caliber of both textiles and wallpaper, for sure. Well, and I wonder, and Kelsey, I'm going to turn this over to you. I'm wondering if what you didn't know, all that you didn't know, as you've described, was in a way great for you because you didn't know what you didn't know and also maybe weren't, and let me find the right word, egotistical or didn't have a strong sense of ownership over the product and the product development process because it seems like your product has come a long way.

50:23right and that's an understatement yes well right i mean and listen and and well done because i i mean i think often that is the hardest part is sort of raising the the level and the bar of the of the core product itself in the very beginning we had a pr firm that we worked with and one of the big things that they said to us is they're like you're not industry insiders this is going to be basically impossible for you to figure out and i think that what really worked against us at the beginning, understandably, has been the thing that has served us in the long run, because a lot of times what we've decided we want to do, like I think an industry insider may have said, this is impossible to do.

51:02So I'll turn it over to Kelsey, but I think what worked against us at the beginning is serving us really well now.

51:06Kaitlin Petersen:Well, it's funny. Somebody also said to us in the beginning, who is an industry insider, said, don't touch curtains. Just don't touch them. You don't want to touch window treatments. And that became, after we launched window treatments, curtains in particular, that became our number one best-selling product and our core product. So I think we are just honest about what we don't know. And we find the experts, whether it be a manufacturer or a consultant or an employee, we take their expertise and we are humble enough to learn about what we need to know to make the product as good as possible. You want to be able to do everything all at once, right?

51:46But what we have learned is that we are not going to do something until we know we can do it really well. And we're gonna take the time, we're gonna do the research, we're gonna make the investment to like really build out a program with a lot of thought before we launch it out into the world. And so, you know, as Kelsey said previously, because of the fact that we're not a venture-backed business, we've bootstrapped this on our own, like we will get there eventually, but it's probably gonna require a couple of years of real thought and like investigation, Like, for example, with our curtains, people ask about hardware all the time.

52:21They ask about installation, too. But, like, we will be launching hardware in the near future. You know, that's one step towards giving our trade members, especially this full service experience that they expect. Because if they're not shopping with us at this point, very likely they're shopping with a workroom. And so that's who we're competing against. So that's the frame of reference that our trade customer is using. We're a D2C customer. It has a little bit different of a frame of reference. And as the trade business becomes bigger for us, those types of add-on experiences become increasingly critical for us to offer to them.

52:51Kaitlin Petersen:So right now, a big focus for us is taking our packaging to the next level, especially when it comes to custom curtains. So making some changes there that we'll launch in a couple months. And then, yes, the in-house installation is something that is definitely on our roadmap. and we think that we'll just be able to get a whole nother customer who wants that full end-to-end experience of buying the product but also installing it definitely i mean like like for a very long time i think there was a belief from our point of view i also think that the industry at large there was a moment in time where it's like direct to consumer we're disrupting the retail industry and we're cutting out the middleman and blah blah blah um and obviously that has since changed.

53:35But for us in the last year, again, as our customer base shifts, as our product assortment expands, as we have things like furniture, we know that there's a real need to eventually allow our customers to be able to see those products in person. And that will kind of hit a limit with how much we can grow with having an online website only. So we are starting to like think about stores in earnest. And we've actually just hired a woman to join our team to oversee that on our behalf. So I think, you know, it's not going to be a situation where we're opening five stores a month, unfortunately. We're going to have to start with one store that we can both access easily and really use it as a way to learn, understand what our customers like, what they don't like.

54:15And so we can establish a formula that really makes sense. But we're really excited about that opportunity. We know it will be hard, but we think it's just so fundamental to the long-term success of our company. The other challenge is, so here you are going into all these categories, right? And with a conviction that you can, and you're obviously seeing success, right? The challenge is often making that leap from, let's say, window treatments to sofas and all of that. Again, the skepticism comes in, oh, can they be a jack of all trades, master of none, or can they execute with the same level of reliability and detail and all of that into each of these categories?

55:06And by the time you open in a year or two, it sounds like who knows what other categories you'll be into by then. But it sounds like you're imagining a whole home store. Yes, I think the goal at the end of the day is to be a brand where somebody, I always think about this in the context of many years ago, probably 15 years ago, when my first friends bought their first house and they tore a page of the restoration hardware catalog, went into the store and said, I would like page 55 of the catalog. I want everything in it. And, I mean, to be frank, like, that's the end goal here, right? Like, we want to touch as much in the space as possible.

55:46You know, we are growing a lot, but we know that there's a cautionary tale here, and the cautionary tale is don't grow too fast and get yourself into trouble. So I would say that we do pursue, like, pursue everything with a pretty high level of caution, and even though we want to get there, we don't need to get there tomorrow. We're okay with getting there in 10 years. Um, Aaron, I, I, I can't drive past the fact that you mentioned restoration hardware as sort of a model, you know, I'd love to have that conversation and, and it's, and it comes at an interesting time, right? Because so here's, so here's RH shifting gears a little bit and, and Gary Friedman coming out and saying, Hey, you know, we did away with the trade program years ago when we introduced the membership program.

56:29And and now I want to come back and talk more about a trade program and talk more about COM and all of that. And I think also realized, hey, we went a little too modern. We went a little too contemporary. We've left a lot of I mean, this is him saying this, you know, we left a lot of money on the table with this more traditional. And so we bought up some some brands and we're bringing back some things. But I wonder what you've learned, if anything, from looking at that model and how you're really thinking about it yourself. So we talked a lot about before how we want to stand for something as a brand, right?

57:06We don't want to just be viewed as a manufacturer. And I think there's a lot of power in that, but I think that there is also a risk in that. You don't want to be known as one thing. I think you can kind of pigeonhole yourself with customers a little bit. And so our goal over time is to really, really fight that by expanding the depth and breadth of our fabric and wallpaper libraries. Because any of our fabrics largely can be customized into a pillow, a curtain, be upholstered onto a couch if it's upholstery grade. And I think, you know, we really want to be known as this brand that stands for using color and pattern in a really tasteful way, whether your aesthetic is modern, it's eclectic, it's coastal, it's preppy, etc.

57:53I mean, we always laugh, like we're kind of fighting against this assumption. And we've made really big strides in the past year of like being the brand for like the preppy Southern ladies. And there's nothing wrong with that. We love that customer. Well, and that's been the customer to lean into, right? I mean, that's been the market that everyone's trying to go after. We're so committed to continue to serve that customer, but we also feel really, we just feel like there's so much white space here to also serve another customer type. Like, for example, I pulled our sales by state earlier today for a collaboration that we're working on.

58:30And I expected to see the typical five. Texas is a huge state for us, has been for a while. A couple of other southern states, New York, Massachusetts, whatever. California was in the top three for us. Now, that might not sound like a big deal because it's a humongous state and for lots of brands. They have a huge audience for there. They didn't even hit the top 20 last year. It's just we're able to now reach this customer we could not reach before because our aesthetic is changing. I'm not saying it's moving away from the thing that it was before, but we're just widening our assortment so that we can serve a broader customer base.

59:06And so to get back to your original question, like, yes, we think about what you just said. We think about the risk of becoming kind of too much of one thing. And I'm sure we will encounter that to an extent. But I think that because of the way our business is structured and because we've always been a company that's like fabric first, that's going to help us fight that a little bit. Talk to me a little bit about your marketing and what you're finding is working for you. What's really helping to sort of build awareness, but also really bringing people to the bottom of the funnel, if you will. So as I said, we launched the business in 2018.

59:43We didn't do any form of paid marketing until about, I think it was early 2021. And at that point, we really started with digital advertising. So first Meta, then Google. and we've been able to scale that program like really significantly over the past several years. It still continues to be our largest channel at the moment for paid marketing. And I think we've been really lucky because it's become increasingly expensive to advertise on those platforms. 10 years ago, it was really, really cheap to advertise there. That's no longer the case. And we just have a system that works. Our price point is higher.

1:00:20So we're able to make money on the first purchase, which is obviously like hugely advantageous to us. So we continue to expand that channel. We got into direct mail at the end of 2024. We ran a small test and then really pursued it in earnest in 2025. And we've seen a lot of success there, honestly. Like I was candidly nervous about doing that because it requires a much larger upfront investment than something like digital marketing. But we've been really encouraged by the success of that program and our ability to grow. I'd say, you know, the biggest challenge there is making sure that there's a high level of photography that we maintain, but we really want to resist what we've seen people do in the market, which is include like a lot of rendered imagery in their mailers.

1:01:06And I get it. You know what I mean? It's really hard to pump out that volume of photography, but we just think it's like so critical to our brand. So we've been really excited about direct mail. And now we're getting into connected TV and like really pursuing influencer marketing more wholeheartedly, just doing a lot. And then again, I'd go back to like trade, like those interior designers are really, really important ambassadors to our brand. And where are they? So what makes them show up? So we have kind of an interesting way we work with some of our design partners. There are some people that have like been with us from the beginning that we have like a relatively close relationship with and close enough that we can go to them and say, hey, we have this product we've launched.

1:01:53Do you want to use it for a project? If you do, we'd be happy to give it to you in exchange for content. There are lots of designers that really have been really savvy and also function as influencers in their own right. And so we work with traditional influencers also, but we find that our interior design friends that also have built up a pretty decent following online are really like an ideal partner for us because they also understand all of like the nuances to the type of product we're selling, which again, even if you're an influencer who knows a ton about beauty and a ton about fashion, it's always a little bit jarring to like dip your toe in this space.

1:02:32And Kelsey and I literally experienced that firsthand when we built this business. Like we just, we knew we were hyper consumers. We knew we loved fashion and all these other things, but like we were so naive to how complex it is to buy some of the product that we sell. So to take it back to designers as influencers, I think any opportunity we can look to partner or we can find a partner with somebody like that, we just see so much value in it. You know, the one takeaway I would kind of offer here is we've really learned how to be pretty lean and really conservative about how we approach things.

1:03:08And I know we could be growing more quickly than we are, but we're just not willing to burn cash to do that. And so we've had to be really disciplined, not because we want to, but because we literally had no choice. Like there's no one coming to save us if it doesn't work out. And so I just think that's really shaped the way we think about this business and the way that we want to expand it. And to be honest, like we love what we do. We are still learning so much. We see so much opportunity to improve this business. And that's incredibly rewarding. Like I love coming to work every day. And not everybody can say that, even a business owner.

1:03:46I think sometimes it can feel really hard and really disheartening. And of course, it feels that way for us sometimes. But at the end of the day, we really feel like we're just getting started. We're hiring people with really stacked experience. And we feel really lucky that we're a company that can even attract people like that. So we know it's going to continue to be challenging. We know this industry is really nuanced, but we're kind of up for the challenge. Yeah. Yeah. No, no. I mean, I think the lesson of not getting that money early is such an important one, right? I mean - It was a blessing in disguise.

1:04:21Yes, absolutely. Truly it was. Absolutely. It was a huge bummer at the beginning, but yes. Of course. And all of the slow growth or all the times you thought, oh, this is such an opportunity. If we had X, we could have done this and that. And listen, it may change in the future for when you expand. But I mean, I think there's just so much to be said for just having to make it work with the resources that you've had and all that it's taught you. And again, as we've talked about, look how much opportunity there is. I mean, there's some big players out there and look at how much opportunity you've already discovered.

1:04:57And I just think there's clearly more room to run. So I look forward to talking to you in the future when that store is opening up or other things are going on. But I'm but I'm delighted to get to speak with you both. And I really appreciate you making the time. So thank you. Thank you, Dennis. Thank you.

1:05:19And 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. Caitlin, what caught your eye?

1:05:28Kaitlin Petersen:AI caught my eye this week. Your favorite subject. Surprise. Yeah. No. The Wall Street Journal published an article about the rise of solopreneurs who are hitting a million or more in revenue without making a single hire. And I think what's especially notable about that data point is that when you get them on the phone, they're citing AI tools that take over tasks like answering emails and fielding customer service requests as sort of the secret to their really accelerated success. And while none of the examples were in the design industry. I think what's interesting, what caught my eye about this is that it's pretty safe to say that these same efficiencies are definitely going to start shaking up team sizes at design firms.

1:06:14Kaitlin Petersen:I think this is a trend that's coming for us too. Yes, I think it's coming for us all, Caitlin. I don't want to scoop what we're working on in the newsroom too much, but our team is hard at work right now on the upcoming issue of BOH, which is all about technology. And it's funny, you know, I read this article. I was thinking about this piece and what it means for the design industry when one of our reporters let me know that on her call yesterday, a designer admitted that she was actually about to let her freelance design assistant go because she found out that a chatbot could do all the same stuff.

1:06:50Kaitlin Petersen:And so I think, you know, if you need a proof point that this is happening, maybe that's the first one. But this article, I think, was just a really interesting overview of all of the different efficiencies that people in different corners of business are tapping into and just how much room I think there is still for disruption. Yeah, it's coming. No doubt. Shameless plug. If you have stories about how AI is showing up in your work, we'd love to hear from you. Email editors at businessofhome.com. What caught your eye this week, Dennis? Absolutely. A couple of things caught my eye. One, I wanted to say a quick goodbye to Pultrona Frau CEO Nicola Koropoulos, who's absolutely one of my favorites, former guests of the show.

1:07:35He announced over the weekend that he's going to be stepping down as CEO. He, in true Nicola Koropoulos fashion, sent me a playlist that goes along with his saying goodbye. Nicola has an incredibly deep knowledge of music. And when he and I first spoke, he brought up the Grand Ole Opry, which I thought was sort of strange for an Italian furniture maker to talk to me about the Grand Ole Opry. And it turns out his life is really just steeped in music. And he shared with me his top ten Desert Island albums. And he's built many a great playlist that he has shared with me. So I'm sad that I will just lose this great source for music as much as anything else.

1:08:21But he also got Poltrono Frou out through COVID and has been a great leader there. So I wish him great success in whatever he decides to do next. I know he's working on a book, and I hope that we'll get to see that. But the other thing that caught my eye, big news that we've actually talked about quite a bit here on the show in the past, And I'm sure we will talk about more on next week's show, perhaps. But it seems that an activist investor has acquired 5 % of the shares of Ethan Allen and is calling for a big change on the board of directors. And he says, in fact, that he'd like to get rid of all of the board members and replace them with some people that listeners of the show will know well, including Anna Brockway is apparently one of the people that he'd like to put on there.

1:09:13But yeah, sadly, I think this is a call to say that things have not been going well for some time at Ethan Allen, and the growth of sales is just not there, and they're looking for a leadership change. So we'll have to see how this all plays out, but it is a big breaking story as we come on air, and we haven't had a chance yet to really dive too deeply into the story, but it is one, as I say. Listeners to the show will know we've talked about this before.

1:09:48Kaitlin Petersen:Not to open a huge can of worms in the last two minutes, but do you think this has legs? Well, I think, again, it's another reminder that I think many feel that the company needs some kind of a shake-up and that Farouk Pithwari has been a great leader and a great steward of the company for many years, but many have just been worried that there hasn't been a clearly outlined succession plan. And so it seems that finally someone is stepping forward to try and force the hand of that company. We will see. As we come on air, it's not as if the stock price is soaring on the news. So I don't know if that's because people don't think that's likely to happen or if there isn't a tremendous value to be unlocked.

1:10:32We'll have to see. But it definitely is a story to watch. And as you say, look at us burying this hot story all the way at the end of the show. But that's why you need to stick around and listen to the caught by eye section at the end of the show because you never know what's going to be in there. We'll probably talk about it more next week. Look forward to that. Caitlin, it's been so great having you on the show. And I thank you so much.

1:10:52Kaitlin Petersen:It's always fun to be here. Thanks, Dennis. A pleasure. 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.