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Welcome back.
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So, uh it was an amazing morning.
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Um and one of the questions I get asked a lot is how can we fund both uh 10-minute meal kits and quantum computers at the same time?
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Uh and the secret, our secret, is that we we have a simple focus, which is that we fund great founders.
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Uh and that's why I'm excited to uh bring out the founders of AptDeco, Raham and Kalam.
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Uh and they went through Y Combinator, uh the winter 2014 batch, about 2 and 1/2 years ago.
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Um and they never, you know, got a lot of hype or or uh you know, investors dumping mountains of money on them, but what they did do is month after month, they keep iterating, they stayed scrappy, and uh and they're building a great business.
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And and it in a in a difficult market where a lot of other companies who did raise a lot of money burn through that money and went out of business.
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Uh but meanwhile, they built uh an actual profitable business, like the kind where every month they have more money in the bank account than they did the month before.
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So, I'm excited to uh bring out the founders of AptDeco. Thank you.
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Good afternoon, everybody. How are you doing? Wow. Awesome. of energy. My name is Kalam.
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This is my co-founder, Raham. Hi everyone.
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And as PB mentioned, we are the founders of Apartment Deco.
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Apartment Deco is a marketplace for buying and selling furniture, and you may not heard of us heard of us before because we are currently operating in New York City and Washington D. C.
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We have a team of 50 employees. Yeah, shout out.
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We have a team of 50 employees.
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Uh we're going to be expanding to Philadelphia, Baltimore, Boston in the next few months.
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Uh and as PB mentioned, one thing that we're really proud of is that we are profitable.
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Uh and that is something that we want to talk with you guys about today.
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We have kind of sum things up in a concept. Thank you.
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There's this concept of building a real business.
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An idea, which means that it's a business that's profitable, it makes money, and that can surprisingly get lost uh in this Silicon Valley VC world.
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And we launched this company in winter of 2014, and we've had a lot of ups and downs, a lot of roller coasters in order to get to this point.
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And what we want to do is share some real actual stories of the trials and tribulations of what it's taken in in order for us to be able to get here.
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Uh and we're really excited to do that with you guys today. So, first things first.
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Let's get from zero to one.
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Many of you, I'm assuming, are probably looking to start a company, and the idea of getting from no customers to getting that first customer it's not so easy. That's me.
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And before starting Apartment Deco, I worked for L'Oreal.
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Uh I was a vice president of marketing.
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I had uh a group of a large number of employees, and I was very familiar and comfortable with taking a large business and keeping that growing and keeping that sustainable. Same for me.
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I also came from corporate background.
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I worked at Goldman Sachs for 6 years before leaving and going to business school.
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I was an engineer ran a team of engineers before leaving Goldman.
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So we both have this in common where we know how to get something not from zero to one but from maybe you know a thousand to two thousand not from zero to one.
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So that's what was great about YC. Right.
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So this is a completely different beast and a completely different animal and I honestly thought that you know I can apply these practices and that was was not true.
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So when I got to YC we had to take a lot of notes.
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what YC was by the way before.
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Put me on blast right there but yeah it's it's true a little ashamed to admit that now but when we started at Deck as a concept and I didn't even know where YC was and we are really grateful we're having the opportunity to work with them because it is what catapulted us and helped us to get from that zero to one.
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So the way that this works is we would sit down with our partner that we worked with who was Kevin Hale and I'll never forget this one of the first meetings that we had he's sitting down and he's looking at our website he's looking at our catalog and he's kind of looking through the listings that's on our website and he asked how are you guys getting the listings today?
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And we say well we email people on Craigslist and we say hey you should list on Apartment Deck because we take care of delivery we do X Y and Z.
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By we was like me mostly trolling Craigslist like emailing people. Very very hacky. Yes. Yeah. And so he's like okay.
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So out of a hundred people that you email how many actually list?
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And we're like maybe ten.
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And so he's like well what about the other ninety?
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And we're like well we don't know about the other ninety.
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And so he's like, "You need to list it for them."
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And I remember looking at Roham and I'm like, like unbeknownst to them, like without their permission? good at all.
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And so he's like, "Yeah."
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He's like, "Listen, you're doing them a favor.
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And you list it for them and then if it sells, I mean, they're getting what they want. They sell their item." We're like, "Okay. All right." So there we go.
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We start listing our items and listing Craigslist items on our site unbeknownst to the sellers.
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And boom, we start getting a transaction. Immediately.
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And so we're like, "Yes."
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And so you know, we're high-fiving and and then we're like, "Oh Like we have now have a buyer.
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How are we actually going to get this item from this person that doesn't even know that it's on our website?"
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of furniture, so it's yes, you have to physically move it. Right.
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So we're sitting in the communal area.
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That's not us, but that was what we were doing.
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But you know, you get you get the you get you get what I'm saying. Like hardly thinking.
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So we're there and we're like, "How the hell are we going to get this item?"
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So I'm like, "You know what?
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Let's email them and say, 'Hey, I'm the founder of AptDeco.
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We listed your item and we sold it for you on our site.'"
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Remember this is Craigslist where nine out of 10 of the emails people will get are spam and people trying to, you know, get money wired to Nigeria. So yeah. Right.
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So we send these nicely drafted letterhead type emails and we got no responses back.
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And so we're like, now we have not one sale.
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We have transactions that have come in.
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And we're like, "How the hell are we going to fulfill these orders?"
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And so we're sitting there in my face is in my hands and I'm like, "You know what?
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Like, let's just get cash and just pick it up and buy it ourselves."
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And that's exactly what we did.
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So, we have this bag of cash, and we're going around New York City. Accounting nightmare.
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And we walk in, we meet the seller, and we're like, "Here's your $500 for your couch.
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Someone will be here on Tuesday to pick it up."
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And the response was just shock and delight from these sellers, and they just couldn't believe that we were just going to leave this $500 and come back later and pick it up.
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And we said, "Oh, by the way, you know what?
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If you're selling other items, you should actually list on this side Apartment Deco."
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This hack is what got our business off the ground, and it got us from zero to one.
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This you By the way, this is a shotgun approach.
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We tried a lot of different things, and a lot of things did not work, but this was the first thing that really got the business catapulted, and it allowed us for us to get significant listings, and to get this get the business to where it needed to be.
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Another thing was that we were able to get insights into our customers that we never would have had before.
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So, remember, we're going to every seller's home, paying them in cash, going all over New York City all day long.
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So, we're getting getting to know these uh customers on a very intimate level, where they live, um their economic status.
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Uh many times they were uh making room for a baby, and it would lead to all these things that we never would have known unless we figured it out and had a scrappy way in order to understand these customers.
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So, what would you say are the key lessons or takeaways?
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So, this is our hack story, right?
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We This was something that we did that was a little bit out of the ordinary for us, and that made us uncomfortable, but I think that that's the exact key takeaway.
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Is that when you're starting a business, first of all, let's just scrap the advertising on Facebook and advertising on Twitter or wherever and you really need to find out those scrappy free ways in order to see if your product is something that customers are responding to.
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Because this is also an opportunity for you to meet your customers and you know, really learn what this product needs to look like. Exactly.
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So, it's also the other thing too is really just having the ability to humble yourself.
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Um for us this was uh again just coming from our backgrounds was really just quite frankly very uncomfortable and you know, we're in the streets passing out flyers and running around town with a bag of cash that just seemed to so ghetto at the time, but me, by the way.
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He did not pass out flyers on the streets. That was mostly me. But Again. It's so Wow.
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But you know, these are the things that we did that really helped to helped us to get from that zero to one.
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The second thing we wanted to talk to you guys about was the idea of um don't get married to a certain path.
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So, some of you or maybe most of you are thinking of starting a business, working on a business, have an idea that it's you know, that you're thinking of working on.
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And you might have this vision of what it needs to look like and just don't focus on what this grand vision is because you never know what's actually going to end up looking like.
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So, when we first started the company, our idea was, "Hey, we are just going to be a platform.
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We are not going to touch this furniture.
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We are going to be the facilitator.
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We want to be like an Airbnb or an Uber."
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Nice and neat and clean and Touching furniture did was not part of our equation.
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So, we built our platform with the idea that we'll plug into third-party moving companies around New New City.
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So, we worked with a lot of different companies and we would plug into their excess capacity.
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So, whenever they had enough space, they would plug in and we would use them for to fulfill our orders.
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It worked for probably like 1.
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5 seconds and quickly after that we realized that, you know, they wanted their prices to continue to go up and we need to maintain our prices low.
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The other thing is we were just not a priority for them at all.
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So, our quality of service continued to go down.
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And so, we had to make some quick changes.
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Actually, there was like one Saturday where the moving company was like, "Listen, we're too busy.
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You are to schedule all these jobs.
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We're just going to cancel them last minute."
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And so, we scrambled, posted an ad on Craigslist again for a different section this time, and looked for two guys to hire, got a Zip van, and we went and did the deliveries ourselves. It was phenomenal.
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So, we actually had maybe three or four different customers call us that day for the first time ever just because they felt like this was the most amazing moving experience they've ever had.
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And it was what supposed to have been a light bulb moment because it's the first time that customers just wanted to give us feedback and comment on the incredible experience that they were getting.
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So, just take a step back.
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So, we've been doing deliveries 8 9 months.
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We had never we had never had one call from customer saying, "Oh, I love the delivery." Never ever.
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And then in one day we had three to four.
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So, I was like, "You know what?
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Let's just get a van and let's just do it ourselves." And I was like, "No. No overhead.
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Remember, we need to be like Uber.
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We want to be a platform.
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We don't want to touch anything ourselves. No physical products."
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So, we um as co-founders will know, we had different opinions and so so we met in the middle.
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So, then the next idea was, why don't we get man in a van type of folks?
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So, people who own their own trucks, but they don't work for a moving company.
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It sounded like great, like, "Hey, we're cracking. This is awesome."
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So, that did not work at all.
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Because that's what we ended up with.
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It's And I wish I was kidding, but it I'm not.
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This is a real truck that delivered our furniture in New York City.
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It This is actually a photo that a customer sent us.
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She loved our product and she loved what we're doing.
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She was like, "You guys, this is just not a true representation of your brand."
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Like, we saw we saw the sign and we just thought it'd be a little more polished and you know, our neighbors are getting scared and it's like Yeah. Anyway.
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So, um so quality was again not there.
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Um brand recognition and focusing on that was not there.
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So, you know, we were fighting this idea of like, "Hey, we need to do this platform.
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We need to be you know, we don't we don't want to touch furniture."
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And we were really really fighting this and married to this idea for so long.
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But, you know, months before that we already knew that customers wanted us to deliver ourselves because we saw it happen and it worked really really well.
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So, finally we landed on having our own trucks, having our own delivery folks, and that's when everything changed.
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That's me and our head of logistics.
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We um this is our actually our first truck.
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I was very very very excited that we got it right. Yeah.
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So, um this was it was instrumental for our business.
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We were able to reduce cost, increase um actually control pricing for our customers, um make it a revenue stream, and also it absolutely changed our dy- dynamic of our business.
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So, before we had our own delivery trucks, word of mouth probably word of mouth uh probably accounted for around 10% of our business.
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After we changed to other model that we knew already worked months ahead of months before, it accounted to around 60 to 70% of our business.
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Delivery was this delightful experience that everyone before hated.
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Nobody wants moving Nobody Everybody hates moving.
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Nobody wants to deal with it.
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And then we were just offering such a delightful experience that people loved it and told everyone about it.
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That was sort of like our, you know, what do you call it, the X factor uh for our business.
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Um so, we were really really fighting that for so long, and you know, this is really one of the key things that we wanted to talk to you about.
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But, Now, so this is a good idea.
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It worked, but that doesn't mean that it doesn't come without its own hiccups.
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We recently our truck completely exploded.
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One of our trucks completely exploded. True story. So, Yeah.
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So, we actually have this thing where we like, "Listen, delivery guys, if there's an issue, you email us.
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Only if something crazy happens is when you call."
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And they they still like they're like, "Listen, hey, uh I left I left a tool in a port customer's apartment."
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They'll call us for that.
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So, usually it's like the boy who cried wolf type of thing.
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So, they're calling we're like, "What do you want?"
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And they're like, "The vehicle exploded."
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We didn't believe it because what does that even mean?
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So, it's then they sent us this video.
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Sent us this video, and we actually saw it exploding.
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So, you know, again, it was a great idea.
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It doesn't come with it's obviously challenges.
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Despite having a vehicle that exploded literally, this still was one of the best decisions that we could have made. Definitely. Yeah.
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So, besides that and showing that insurance is important, what are the key takeaways?
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Insurance is definitely very important.
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Really, don't be married to this one idea.
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Let your customers dictate what your business should be versus what you think it needs to be. Embrace change.
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You know, a startup is all ever evolving.
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So, you really should be embracing that idea and and and learning from your customers.
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So, become default alive.
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There is an amazing essay by Paul Graham asking if you are default alive or default dead.
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And I would really encourage all of you guys to read it if you have it.
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But basically, the long and the short of it is what is default alive is essentially do you have enough money in the bank based on your current expenses to where you will not run out of money if you have to ever have to raise another dollar again.
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So, it means like are you going fast enough in order to get past your threshold of static or expenses?
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Hopefully, they're static or if they're going up.
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So, back in 2014-2015, we were growing really fast, but our expenses were growing fast, too.
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And we were burning a lot of money and not growing fast enough in order to be default alive.
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Well, more like we, you know, we just wanted it was sort of the environment where you just don't worry about your bottom line.
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Only focus on growth, growth, growth, top, top line growth. Right.
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So, we were saying to ourselves, if we can grow fast, like listen, lots of companies are raising. We'll just grow fast.
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We'll grow the top line numbers. We'll raise money.
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We'll continue to grow fast.
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The bottom line is really a secondary component.
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We hit all our goals that we set for that year. But we could not raise.
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And we were we had around 3 to 4 months of money left in order to before we were going to default die, basically.
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And so this was a really, you know, we talk about startups being a roller coaster and this was you know, the part where we had a really difficult decision to make.
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And that decision was can Abacus stand on its own two feet without having the crutch of VC funding?
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So that means that we had to take a look in the mirror.
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We had to Essentially building a real business.
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Building a real business. Yeah.
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So we cut our marketing to $0.
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We weren't spending a dollar on marketing.
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We had to cut costs in various areas.
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Um we uh we also had to um Uh cut our marketing costs.
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Um actually look just generally looked at our unit economics.
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So looked at our revenue, looked at our expenses, made sure that our we're profitable from delivery.
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We made sure that our unit um customer acquisition costs were I mean at that point where they were zero, but they were profitable as well. Right.
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So this was a really tough decision and we had to raise prices on customers as well in areas where we were offering something at a price that was just not feasible and not realistic.
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And so that is if you have to make these decisions and say is this something that people are willing to pay for?
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We made those decisions and for us at the time it was a very difficult moment and a very nerve-wracking moment.
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But it was the best thing that we could have ever done because it allowed for us to be able to grow a business in a healthy way, continue to grow, and also become truly profitable, more money in than more money going out.
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Um and this is the reason why we were able we're profitable today and it puts us in a position to have much more negotiating power if we decide to ever decide to raise again.
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So, what are What would you say the key takeaways are? Uh don't die. Uh that's one.
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Um really understand your bottom line.
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Uh that is one thing that we pore over constantly, looking at literally every expense.
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And this is really It's really easy to get away from as you are building a business.
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And it's actually sad to kind of say that, but you'd be surprised if not manage that with tooth and nail very meticulously.
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I actually look at our expenses every month.
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Like I pull our data from our bank account and look at every single line item because we would never want to go back to that situation again.
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And we look at that for future months as well.
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And then And then the last thing is just the unit economics.
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So, how much does the delivery cost?
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How much are you charging for it?
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The The what you're charging as a commission for your business or however you monetize, does it support the things that you need in order to be able to grow it?
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And particularly for an online offline business, this is something that's needed.
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Right, cuz you're actually physically moving product, so there's a lot of expenditure that goes with that. Yep.
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So, the last thing that we wanted to talk to you guys about is ignoring the noise.
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So, you know, we had the slide right before with all the headlines about, you know, is this a bubble or you know, it's easy to fund raise, it's not easy to fund raise.
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There's all these chatter out there.
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Um but we had to really learn, especially what we just told you about being default alive and what we had to do for our business, we had to learn to really completely ignore the noise because we had we need to focus on our business.
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So, we put on our headphones and completely ignored everything um that literally, that's what we had to do.
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And you know, there's like the investor noise, there's competitors, there's just all kinds of noise.
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It's not just what people are saying in the press.
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So, we had this one competitor, um, that had raised 20 times the amount of money than us.
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They had, you know, they were growing so fast and they were all over the news.
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They were Oh my gosh, everything.
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Everywhere we went it was all about them, what about them. hundreds of employees.
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And hundreds of employees, exactly.
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So, it was just, um, you know, and we consumed so much of our energy thinking about what's their next move, how could this impact us, and it really distracted us.
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It distracted us for some time from focusing on the things that really matter, which are what we've already discussed is what your customers want, building a real business, making sure that you're uh continuing to build that word of mouth.
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So, ultimately they ended up folding.
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So, all that time and energy that we expensed worrying about what they should what they were doing and how this would impact us didn't really matter.
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And, you know, ultimately for us this was a big learning and something that we really want to emphasize because there's just so much noise out there.
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When you're building a business, you really need to focus on the things that you can control yourself.
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Um, you are essentially the dest- you are in control of your own destiny, not the VC funding environment climate or your competitors or anything of that nature.
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If you're building anything worthwhile, you're going to have competitors. It's going to happen.
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Whether they're there now or whether they're going to be there tomorrow.
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Um, but who decides, um, who's going to last? Uh, customers.
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It's mostly your customers and building something that people want. Listen to them. Absolutely.
24:40
Yeah, I mean, like just block your brain.
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Like once you get to profitability, you're really in control of everything and this is why we're very excited about the the next chapter for App Deco.
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Um, so this is we're still very early on in our journey.
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Um, we've, you know, we're only a 2 years and a half in.
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Um, this These are some of the lessons that we've learned along the way.
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We've heard them many times through, you know, YC and all the YC chats, but we've sort of had to also learn them the hard way.
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Um, and we hope that you guys can take some of these lessons and apply them to, you know, whatever you're working on your business or part of a company or what have you, these are lessons that you can definitely take on for the future.
25:21
My father has a saying, um, my father has a saying, if you know better, you do better.
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And we knew better, but we weren't doing better.
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And I hope that, you know, what you take from that is seeing some of the things the pitfalls that we've had in order for you guys to grow successful companies, um, in order to do the next great thing.
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So, we appreciate your time.
25:43
Thank you guys so much, uh, and have a great day. Thank you.