A Product Market Fit Show | Startup Podcast for Founders
00:19:08 · Alex Back, Pablo Srugo
[00:19:08] S0: Yeah, that's generally a model. I mean, we did it up until a few years ago, probably five or six years. We did for eight years of Apartment TV. We did online events with them that were incredibly successful as well on costco.com. The local operation kept us going man and it got the word out. I think their model is still similar if not exactly the same. The other thing is they do dictate. They approve everything. It's Costco. It's their way or the highway. They approve the products, they approve the pricing, and they walk you down on the pricing to a place where they know that the customers are going to buy. We wanted to sell something for $1,000 and they're like, how about 800? We're like, okay. Our margins were thin on a lot of that business, but we were running one or two events at any given time congruently. It was a nice revenue stream for a growing business. [00:19:58] S1: Walk me through the timeline. I mean, that's one of the challenges of – there's upsides and downsides obviously to being bootstrap. I think one of the challenges is you don't get a salary at the outset. The second one is you don't have dollars to fuel things. It often takes longer to get things going. How long did it take to hit 100k, to hit a million dollars, to hit an amount of revenue where you could support the operation and even maybe grow it?
00:19:58 · Pablo Srugo, Alex Back
[00:19:58] S1: Walk me through the timeline. I mean, that's one of the challenges of – there's upsides and downsides obviously to being bootstrap. I think one of the challenges is you don't get a salary at the outset. The second one is you don't have dollars to fuel things. It often takes longer to get things going. How long did it take to hit 100k, to hit a million dollars, to hit an amount of revenue where you could support the operation and even maybe grow it? [00:20:22] S0: The big unlock for us of getting to a place where we really started to see it as a scalable thing was when we started shipping nationally. That was in 2013. Very few online furniture retailers were doing this at that point. It was the Wild West. I think that's where we crossed the million dollar a year threshold in 2014, probably something like that, after three years or so in business. Now mind you, this is furniture. These are big ticket items. It doesn't require as much volume and we're selling T-shirts. Those numbers aren't maybe as impressive. A million dollars means a different thing to a furniture operation than it does to another one. These are still big milestones. Yeah, the first year we did nothing. The second year with all of our crazy Groupon promotions and such and with Costco we were probably in three to 500k, maybe third year, 750k. Then when we started shipping nationally, that's when we started to grow exponentially a year to over a million.
00:20:22 · Alex Back, Pablo Srugo
[00:20:22] S0: The big unlock for us of getting to a place where we really started to see it as a scalable thing was when we started shipping nationally. That was in 2013. Very few online furniture retailers were doing this at that point. It was the Wild West. I think that's where we crossed the million dollar a year threshold in 2014, probably something like that, after three years or so in business. Now mind you, this is furniture. These are big ticket items. It doesn't require as much volume and we're selling T-shirts. Those numbers aren't maybe as impressive. A million dollars means a different thing to a furniture operation than it does to another one. These are still big milestones. Yeah, the first year we did nothing. The second year with all of our crazy Groupon promotions and such and with Costco we were probably in three to 500k, maybe third year, 750k. Then when we started shipping nationally, that's when we started to grow exponentially a year to over a million. [00:21:23] S1: Did you or your co-founder ever regret? I'm just trying to think about you're doing, let's say half a million dollars or so. You said 750k. Half of that is cost. There's maybe a few $100,000 of gross and then you got whatever other expenses. Then you net it all out and you look at what's left in your pockets and you're like, I could have just sold couches for my old depo, I would've made more or whatever. Did you guys ever think that way?
00:21:23 · Pablo Srugo, Alex Back
[00:21:23] S1: Did you or your co-founder ever regret? I'm just trying to think about you're doing, let's say half a million dollars or so. You said 750k. Half of that is cost. There's maybe a few $100,000 of gross and then you got whatever other expenses. Then you net it all out and you look at what's left in your pockets and you're like, I could have just sold couches for my old depo, I would've made more or whatever. Did you guys ever think that way? [00:21:44] S0: A hundred percent, because right before we started Apt2B, I had a little side hook of business. I had four roll up warehouses at an extra space storage facility. I would just bring in containers of one type of couch and I would pop them on Craigslist and deliver them myself every weekend, just me. I made a lot of money and then here I am waiting for the money to come in. My wife and I, we had some savings from our wedding and stuff. We just kept pulling into our savings for the first two years. Yeah, those thoughts creep in a lot. It's like, okay. Also what drives you I think is the opportunity. We had all these big opportunities in the beginning. A few years in, we were on Shark Tank and my partner pitched for an hour to the sharks. We were this close to being huge so many times so that those types – [00:22:39] S1: You pitched for an hour, but did you get on the final?
00:22:39 · Pablo Srugo, Alex Back
[00:22:39] S1: You pitched for an hour, but did you get on the final? [00:22:42] S0: No, we didn't get on the show because there wasn't any real drama. They really liked it obviously. It was something they seriously considered. I'm very superstitious. It was the first pitch of the new season that they were doing whatever season it was. They're drinking their coffee. Everybody ready? All right, who's first? I mean, are they going to make a deal on the first one? I don't know. I would say probably never. Yeah, my partner did amazing. We got him prepped and he pitched this idea and it really wasn't much at the time. It was just a lot of opportunity in online furniture and we have an angle. We're already successful. This is something worth investing in. They liked it but ultimately did not make a deal. High percentage of the pitches we never see, because a lot of them are just like, good businesses that they liked but there's no drama or something, a hook.
00:23:37 · Pablo Srugo, Alex Back
[00:23:37] S1: How steady was the business? Obviously you're selling. One of the challenges with furniture is somebody buys a couch, they probably don't come back frankly for a view. I mean, maybe if they got a new place, they buy a few things all at once, but oftentimes they'll buy something and they won't come back for many years. It's certainly not SaaS. There's no recurring element to it. How did that translate, especially at the beginning? At some point you get to scale and things take care of themselves. You understand what seasonality looks like, but what was that like the first few years? Did you have some quarters that just things seemed to come to a halt and you're just wondering if the whole operation makes any sense? [00:24:10] S0: I don't remember in the very early days too well, but what I will say is our volume and revenue was very consistent, very, very consistent. This was probably due to a few reasons. We just stuck to a lot of formulas that worked for us. We did a lot of experimentation. When we found something that worked from an advertising perspective and at some point, obviously, yes, we started really advertising, but things worked. We stuck to them and tried to find the formulaic approach. [00:24:44] S1: What was repeatable from the advertising because Groupon didn't work? Costco obviously did, but it was like you can only do so much of it. What was the thing that just was always running?