Summary of Business of Home Podcast Episode: "The Thursday Show: Inside the Rise of Design Substack. Plus: Why Designers are Embracing WhatsApp"

Release Date: November 14, 2024
Host: Dennis Scully
Guests: Leonora Epstein, David Michon

Introduction

In this episode of the Business of Home Podcast, host Dennis Scully explores significant developments within the interior design community. The discussion primarily focuses on the burgeoning influence of Substack in design media and the adoption of WhatsApp as a vital communication tool among designers. Additionally, Scully and executive editor Fred Nicholaus delve into recent industry news, including the foreclosure auction of the Dakota design center, rising mortgage rates, and the financial performances of key home brands.

Industry News

BDNY Show Recap

Dennis and Fred begin by discussing the recent BDNY event, New York's premier boutique design show catering mainly to contract and hospitality designers. Fred highlights the event's lively atmosphere, noting the optimistic outlook among attendees despite prolonged lead times in the hospitality sector.

Fred Nicholaus (01:19): "Several people I talked to were like, finally a trade show where people are in a good mood... everyone was remarkably optimistic about the hospitality and contract industry."

Dakota Foreclosure Auction

A major portion of the episode covers the foreclosure auction of the Design Center of the Americas, owned by Charles Cohen. The auction saw no external bidders, resulting in Fortress Investment Group acquiring the property through a credit bid at $76 million.

Dennis Scully (05:46): "Sold to secure party for $76 million."

Fred discusses the implications of Fortress’s acquisition, pondering the future of the design centers and the broader impact on Cohen’s real estate portfolio, which includes other struggling properties like movie theaters.

Fred Nicholaus (10:19): "Fortress is going to come after the money. They've proven they could get some of it. Charles Cohen has filed an appeal on various elements of the lawsuit."

Rising Mortgage Rates and Housing Market

Despite the Federal Reserve cutting interest rates by a quarter percentage point, mortgage rates continue to rise, with the 30-year fixed rate reaching approximately 6.7%.

Dennis Scully (12:07): "It is confusing, but it's a reminder that really the Federal Reserve doesn't actually impact mortgage rates in the way that perhaps we thought they did."

The conversation elucidates the complex financial mechanics behind mortgage rates, emphasizing the role of the 10-year Treasury yield and market sentiments about U.S. debt levels and inflation.

Fred Nicholaus (13:44): "Everyone has been waiting for the number to go down below 6% to unlock the frozen housing market we keep talking about."

Stock Market Updates

The hosts analyze the recent earnings reports of prominent home brands, highlighting both challenges and optimistic signs.

Our House

Our House reported a slight decline in revenue and profitability but remains cautiously optimistic about a recent uptick in demand.

Dennis Scully (15:59): "They suggested that, yes, there was this meaningful hiccup in July and August, but actually in September they've seen a pickup in demand."

First Dibs

First Dibs experienced increased revenue but deeper losses despite implementing cost-cutting measures, reflecting struggles in a depressed market.

Fred Nicholaus (19:33): "One thing I noticed from these numbers was that they've been cutting a lot of costs, which I think is probably smart because the market is depressed."

Home Depot

In contrast, Home Depot showcased robust performance with a 6% revenue increase, nearing an all-time high driven by a strong renovation market and responses to natural disasters like hurricanes.

Dennis Scully (22:01): "Home Depot is near an all time high and looks like it has further to go."

Embracing WhatsApp for Designers

Fred introduces a segment on the growing utilization of WhatsApp among designers as an essential communication and project management tool. Designers appreciate WhatsApp for its immediacy, allowing for real-time collaboration and resource sharing within curated groups.

Fred Nicholaus (24:15): "WhatsApp has quietly become an indispensable tool for designers... it's like texting, supercharged essentially."

Dennis reflects on the benefits, noting the enhanced responsiveness and the ability to maintain organized communication channels compared to traditional email.

Dennis Scully (26:08): "It's a great use of that."

Substack's Rise in Design Media

Host Dennis Scully welcomes Leonora Epstein and David Michon to discuss how Substack is transforming design media by providing platforms for independent, critical, and diverse voices.

Background of Guests

• David Michon: Former editor at Hunker, now writes for "Scale" on Substack.
• Leonora Epstein: Content strategist and writer for "Shmatter" on Substack.

What is Substack?

Substack is a newsletter platform that allows writers to publish content directly to subscribers, offering both free and paid subscription models.

Leonora Epstein (31:04): "Substack has attracted a lot of people because more than other platforms, they seem to have a little bit of a community energy."

The Appeal of Substack for Designers

Substack empowers designers to express more authentic and critical perspectives that traditional media outlets, often constrained by advertiser relationships, cannot accommodate. This independence fosters a more engaged and niche readership.

Leonora Epstein (35:28): "Substack has the potential to revive the decor home and interiors as a sought-after general interest category."

Impact on Traditional Media

The guests discuss how Substack serves as a counterbalance to major publications by offering unfiltered and diverse content. Traditional media's dependency on advertiser relationships often limits their ability to provide genuine critique and varied tones.

David Michon (43:40): "Substack has the potential to replicate that same cycle of where the advertiser actually has more of the upper hand... but so far, in my experience, the advertisers are looking to associate with us because of the unique voice."

Community Engagement

Substack fosters interactive and meaningful engagement, unlike the passive consumption often seen on larger social networks. Subscribers actively seek out content, leading to higher engagement rates.

David Michon (53:18): "Decor should be fun."

Additional Industry Highlights

Create Academy Course Launch

Dennis highlights the launch of Bunny Williams' Create Academy course, an English version of Masterclass, aimed at teaching designers and consumers how to enhance their home decorating skills.

Mika Ertegun's Estate Auction

The estate of iconic designer Mika Ertegun is set to auction an impressive contemporary art collection, including works by David Hockney and Renee Magritte. The auction has already generated significant interest, with catalogs selling out quickly.

Dennis Scully (56:07): "The estate of legendary designer Mika Ertegun is going up for sale at Christie's... it's a really impressive collection."

Conclusion

The episode wraps up with reflections on the dynamic landscape of the interior design industry. Dennis Scully and Fred Nicholaus underscore the importance of adaptability and the adoption of new platforms like Substack and WhatsApp in fostering community and driving innovation. They emphasize that these tools not only enhance communication but also empower designers to express more authentic and critical perspectives, potentially reshaping the future of design media.

Dennis Scully (53:58): "Decor should be fun... that seems to be something that can be learned from what is happening in the Substack space."

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