Interview
Starting a Startup After Business School - Reham Fagiri and Kalam Dennis of AptDeco
- Company Overview: Appdeco is a New York City-based marketplace for buying and selling furniture that manages the entire transaction lifecycle, including pickup, delivery, and payments, aiming to solve the fragmentation and trust issues found on Craigslist.
- Market Validation: During pre-launch research, the founders tested modified Craigslist listings that included delivery services, observing significantly higher engagement and responsibility from buyers compared to standard listings.
- Early Traction: The platform secured its first transaction on the very first day of its launch in 2014, despite operating with a minimal "Frankenstein" MVP and no prior business infrastructure.
- Incubator Admission: The founders were accepted into Y Combinator (YC), a milestone they describe as the moment the venture transitioned from a casual idea to a serious business.
- Founder Backgrounds:
- Raham Mann: Former employee at L'Oreal (13 years) and Goldman Sachs; attended Wharton School of Business.
- Column (Colman) Nordlund: Electrical engineer from Sudan; attended Clark Atlanta University; formerly at L'Oreal.
- Both founders came from stable corporate backgrounds and initially viewed entrepreneurship as a high-risk departure from the "golden ticket" of secure employment.
- Motivation: The business concept originated from the founders' personal frustrations with selling furniture on Craigslist, coinciding with the rise of the "sharing economy" models like Airbnb and Uber.
- Risk Mitigation Strategy: The founders delayed quitting their jobs until after receiving a YC interview invitation, though one founder eventually quit his job in New York and the other moonlighted on weekends while working at L'Oreal to fund the startup.
- Operational Evolution:
- Initially, the founders outsourced delivery, but faced high cancellation rates from third-party providers.
- They brought delivery in-house, eventually leasing 8–9 vans, a move they acknowledge was premature given the cyclical nature of the business.
- The company later hired a Head of Operations with furniture manufacturing supply chain experience to professionalize logistics.
- Business Model: Appdeco operates without warehousing, utilizing a "lightweight" model where pickups and deliveries occur on the same day across three states, treating individual homes as temporary inventory.
- Revenue Optimization:
- Transaction fees were initially set at 10–15% but have been adjusted to 19–29% after realizing early margins were negative due to unaccounted costs.
- Pricing sensitivity was tested through A/B testing to determine the optimal mix of product volume and delivery fees.
- Customer Demographics:
- Sellers: Typically aged 30–55, often married with higher disposable income (e.g., Upper West Side residents), selling to make room for life changes.
- Buyers: Typically aged 25–mid-30s, first or second job holders (e.g., Williamsburg residents), seeking aspirational brands like West Elm, Restoration Hardware, or Crate & Barrel at discount prices.
- Brand Strategy: Approximately 65–70% of inventory consists of the top seven furniture brands in NYC, which serves as a key driver for organic search traffic and site merchandising.
- Acquisition Channels:
- Subway Advertising: Launched in 2014 with a single subway car ad costing $50k (less than 5% of total YC funds), which tripled traffic and created a "halo effect" for other channels.
- Digital Marketing: Facebook and Instagram are now the most profitable channels; early attempts to use an external agency failed, leading the team to master in-house campaign management over three years.
- Referrals: Word-of-mouth accounts for approximately 45–50% of customer acquisitions.
- Failed Initiatives: The company tested and abandoned services like professional photography, cleaning, and packaging because customers were unwilling to pay for them, even at discounted rates.
- Tech Stack: The company built its own routing and logistics software rather than using open-source solutions, leveraging the founders' engineering backgrounds to solve complex scheduling variables.
- Analytics & Tools: The team transitioned from SQL queries and Excel to Looker for data visualization, enabling real-time tracking of unit economics, brand performance, and customer behavior.
- Organizational Structure:
- Meetings: Weekly one-on-ones for strategic project tracking, daily stand-ups for collaboration, and weekly team meetings for KPI reviews (sales, refunds, reviews).
- Performance Reviews: Conducted annually using anonymous, 360-degree feedback via Typeform with a 1–5 scale; founder reviews are public to ensure accountability.
- Conflict Management: The founders emphasize transparent, early feedback loops to avoid "surprise firings," viewing firing as a failure of management if the employee is not already aware of the performance gap.
- YC Advice:
- Location: Founders recommend physically attending YC in Silicon Valley to immerse in the culture, even if it requires frequent travel from another city (in this case, weekly flights between NYC and Mountain View).
- Execution: Founders advise executing every suggestion, no matter how small or seemingly non-scalable, at 100% intensity to gain traction and feedback.
- Feedback Loop: Establishing recurring meetings with YC partners and maintaining a "managed up" approach where founders present concrete progress updates on partner advice the following week.
- Forward-Looking Considerations: The founders are currently testing whether the pricing sweet spot derived from New York's unique logistics constraints (lack of personal vehicles) applies to expansion into other cities, noting this remains to be determined.