← Business of Home Podcast
Business of Home Podcast
The Thursday Show: Peter Dunham on the LA wildfires and what comes next. Plus: Material Bank debuts its long-rumored consumer site
00:59:55
BOH executive editor Fred Nicolaus and host Dennis Scully discuss the biggest news in the industry. Later, designer and showroom owner Peter Dunham discusses the devastation of the Los Angeles wildfires, and what they might mean for the design community there.
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- [00:08]
Dennis Scully
This is Business of Home. I'm Dennis Scully and welcome to the Thursday Show. Later on, I'll be talking to Peter Dunham about the impact of the LA wildfires. But first we're going to catch up on the news, including the acquisition of Floyd, mortgage rates on the rise, and a big debut from Material Bank. To do all that, I'm joined by Business of Homes executive editor Fred Nicholas. Hi, Fred.
- [00:33]
Fred Nicholas
Hi, Dennis. How's it going?
- [00:34]
Dennis Scully
Well, it's a little tough this week, Fred, I won't lie.
- [00:37]
Fred Nicholas
Yeah, this has been a very strange week. You know, Dennis and I, of course, are based out of New York, but I'm a native Californian, have lots of friends in la and it's just been heartbreaking and very surreal to watch. Watch it all play out from afar as we kind of go about our little day's business here to, to see what people are dealing with on the west coast and heartening to see all the, you know, the community coming together over there. I don't, I don't know what your experience has been like, Dennis.
- [01:03]
Dennis Scully
I think it's just been really, really tough. I've just been in touch with so many people, friends who have lost homes and people who are just going through so much. As you say, it's inspiring to see everyone pitching in and trying to get furniture and help and so much kindness coming out of people. But it has certainly been very challenging to focus on anything else this week.
- [01:28]
Fred Nicholas
Yeah, it's been a very sobering week. It's been a real reality check and as I said earlier, a very surreal week, especially watch just on social media. Our hearts are very much with Los Angeles and we hope everyone's all right.
- [01:41]
Dennis Scully
Indeed.
- [01:41]
Fred Nicholas
I know later on you'll be talking with Peter Dunham about what's going on on the ground, but we should get on with our news, starting with a quick look back on Monday's episode of Conversation with Jill Cohen, formerly book agent superstar, now the editor in chief of Lux. She's been there for a year. She's done a lot. What'd you take away from the conversation, Dennis?
- [02:01]
Dennis Scully
Well, always an interesting conversation, wide ranging conversation with Jill Cohen. You know, she's got a lot, she's got a lot of experience and a lot of opinions that Jill. So it was interesting to hear what feedback she's been getting out in the marketplace about her magazine and about some of the changes that she's been keen to make. She's redesigned the book a bit, but I get the sense that there are even more changes that are coming. Yes, yes.
- [02:30]
Fred Nicholas
No punches pulled with Jill Cohen. I mean there's a lot of interesting stuff about look. She's also just someone who's seen every part of the design media landscape and has interesting, real opinions on all of it. There's some hot takes on paywalls for design sites and what AD is up to. So if you just want to kind of get like a really knowledgeable, real perspective on what's going on in design media, I would say get over and listen to it and hopefully we can have Jill back on in another year because I'm sure Lux will be even more changed and there'll be more to talk about in the world of design media. Hopefully then you can get to substack and get 45 minutes with Jill on that because I was sad, sad to see that didn't make the final cut.
- [03:07]
Dennis Scully
I know that's the conversation you're longing for us to have and I'm with you. I'm going to give Jill a little bit more time and then we'll bring her back. But it's always interesting, Jill having been a counselor to so many designers over the years, it's always interesting to hear her perspective and how designers should be thinking about this media landscape that we talk about so often. So good conversation. I hope people get a lot out of it. We're going to take a quick break and then we'll get into the news.
- [03:37]
Peter Dunham
Foreign.
- [03:41]
Dennis Scully
This podcast is sponsored by Laloy. Laloy will be at Vegas market this month, January 26th through the 30th at the World Market center showroom B480. They'll be bringing nine all new rug collections plus hundreds of one of a kind rugs, wall art, pillows and poufs. Laloyloy highly recommends making an appointment for the best possible market experience, which you can do at laloyrugs.com that's L-O-L-O-I rugs.com and follow them on Instagram and TikTok at laloirugs. This podcast is also sponsored by Anthem Smart Showering Only from Kohler Anthem plus creates a transportive world for body and mind with every shower. It combines water, steam, light and sound in a fully immersive sensory experience with custom settings to match any mood and enhance any routine. Discover how you can design a personalized escape with Anthem plus smart showering@kohler.com showers and we're back. First up Fred, the long awaited design.
- [04:59]
Fred Nicholas
Shop Material Bank's long rumored consumer facing cousin is here. The new platform which allows anyone to order material samples overnight. You don't have to be a designer anymore. Quietly, Very quietly made its debut last month. They kind of just turned this one on. It didn't tell anybody.
- [05:15]
Dennis Scully
I think they were hoping it could be even more quiet and that we wouldn't be talking about it, is the sense that I get.
- [05:20]
Fred Nicholas
Yeah. It would be kind of arrogant to say we broke the news, we just saw it on LinkedIn, but wasn't exactly gumshoe reporting to find it out. But, yeah, this is really interesting. We've been talking, we've been kind of like talking about, well, this is going to happen at some point for like two years, maybe even three years at this point. So it's interesting to finally, finally see it in the flesh on the Internet.
- [05:40]
Dennis Scully
I agree. And listen, check a box. It was one of the predictions for 2025, right?
- [05:46]
Fred Nicholas
That's true. Why am I not doing my victory lap?
- [05:47]
Dennis Scully
Hello. Why aren't you taking a little lap here, Fred? But well done, you. Yes. Who knew it would be so early that we would get news from Material Bank. But we should take a step back and remind listeners what Material bank itself is all about and then we can talk about this consumer extension.
- [06:08]
Fred Nicholas
Sure, yeah. So Material bank is a business started by Adam Sandow, who's the founder of Sandow Media, the company that owns Lux. We just talked about Jill Cohen. Jill Cohen is an employee of Sandow Media. Adam Sandow is this entrepreneur who starts a lot of businesses in the design industry. And Material bank is a sampling platform that allows interior designers to order material samples and get them delivered overnight. Let's say you're up late looking at leather and tyrell samples. You want them for a project the next day, you can click a few buttons on Material bank. You get them FedExed overnight. It's a really big business. They've raised, I don't know, $325 million to get it up. Huge amounts of money it's valued. The last fundraise valued the company at $1.9 billion. It's one of the very, very few design industry unicorns. So really, really big company. It's mostly or entirely, rather, I should say been for the design world, largely on the contract and commercial side. But there's always been this thought of, well, why don't we do the same thing overnight samples, but for consumers who are working on their homes or working with a contractor or just enjoy collecting tile samples. And so that's sort of been kind of floating around as a rumored hint dropped from Adam for a Long time. And now we have it.
- [07:23]
Dennis Scully
We have it, and it's called Design Shop. And what do we know?
- [07:26]
Fred Nicholas
Well, it's run on the same rails as Material bank, so there's a logistics facility In I think, Mississippi, right near a big FedEx shipment hub. Material bank runs out of there, Design Shop runs out of there. It's the same idea. You can click on very samples, get them delivered overnight. The main difference is that it costs money. So, for example, Material bank, if you're an approved designer, you can get as many samples as you want for free, whereas Design Shop costs anywhere from three to seven dollars per sample. Some of the hardware ones get up into the $15, $18 range. So that's a very key difference. But then, of course, anyone can use it. You don't have to have trade credentials. You don't have to apply. You just have to be able to fog a mirror and have a working credit card, and you can get a bunch of tile samples. It's also smaller, I think, ma. I don't know the exact number of brands that are on it. I think globally, Adam said there's around a thousand. Design shop has 50 or so. So it's a much, much smaller selection of companies, I think, partially because this is a very quiet, soft launch. But, yeah, same basic idea. Just it costs money and it's for consumers.
- [08:29]
Dennis Scully
It's very early. It's not surprising that it's a relatively small number initially. I'm sure that number will grow. I think it's the question, I think, that both of us are struggling with is how many people out there really want to order, as you say, these tile samples, these leather samples. I see Moran Giles is on there. How many people are eager to do this on their own? And will they? And to what end?
- [08:58]
Fred Nicholas
Yeah, I mean, it's really interesting, right, because Material bank, for the design industry, some people don't like it, Some brands think it's too expensive. For the most part, you get the clear utility of it. Designers need samples. Here's a quick way to get a bunch of samples, you know, for consumers. Obviously, consumers need material samples as well. It's just that they don't need them as frequently. Like, a few and far between are the homeowner who needs, like a bunch of samples every week. And so, you know, there's a reason why they started with Material bank, because obviously Adam has connections in the design world and, you know, there's a clear utility and a clear use for it. You know, this is a little bit more speculative, but it's a much, much, much bigger market. I mean, if you think about how many, you know, we had a long conversation about how many interior designers are there? Let's say it's 100,000 or so. There's obviously way, way, way more homeowners than 100,000 in the US alone. And you know, it's a question of if you can reach those people and become the de facto place to go for anyone who's doing work on their house and wants a quick sample. That's a much, much bigger market than Material Bank. It's just a little bit, you know, I'm just trying to understand, like how do you reach those people? How do you convince them that this is what they need to use to get those samples? How do you connect that with the purchasing? It' murder the Material bank in a way to connect the service that's already built with the people who may or may not need it.
- [10:16]
Dennis Scully
It seems harder. And as you say, we have a much more challenging time putting a number on how many people are likely to want to take advantage of this. But we assume it's an exponentially larger number than the number of designers. So you can certainly understand why they want to lean more in this direction. It certainly seems logical to me that a lot of companies would be willing to take a ch on getting their products into more consumers hands. I know that when we talk to a lot of smaller fabric houses and other companies about Material bank in the past, some of the costs got a little bit prohibitive for some of them. It seems like much bigger players are on this platform, at least initially. And I assume they have deep enough pockets to sort of ride this out for a little while and see how it grows. I just don't know, as you suggest, how many people are wanting to take on these kinds of projects on their own in the way that we're told people do more often in Europe and elsewhere.
- [11:23]
Fred Nicholas
Yeah, I mean, I don't really know either. We're in our weird little bubble. I talk to designers all day and I live in an apartment in New York. I'm not changing out my backsplash every five minutes. And so I do take at face value that there are just in simple volume, way more people who might want a material sample. But I do think just reaching them is more complicated and letting them know that this exists and that they can use it and making it useful for them is a little bit more of an intricate challenge maybe than Material bank was. I think it's a really big to be determined and we're going to watch it closely as it rolls out a little bit. I'm curious. As with all things with Material bank, some people in the industry are really scared of how big it's become. Some people think it's amazing. Some designers I think love it, some bristle at it. What do you think are the implications for designers and for more trade residential leaning brands who aren't on Material Bank? What's the implication for them with something like Design Shop? What do you think?
- [12:21]
Dennis Scully
Well, exactly. Is it yet another unsettling, unnerving development in this world where they think, oh, there's something else that's coming after our business? As designers so often feel under attack anytime that there's a to the trade brand that starts to make itself more read available to consumers, many designers just feel a sense of betrayal. And I can understand that. And I don't know how brands are finding the reality of that. Do people say that in a comment section online, but then go ahead and buy your product anyway? Maybe they do, but I do think that many designers have found great convenience in Material bank and it does really deliver on the promise of you're able to order Those samples at 9 o'clock at night and they are there the next day for that presentation. From what I've been told numerous times from designers that really use it and again, many vendors seem to love it as well. So it certainly seems if it catches on it could find great success. As always, I find myself wanting to say designers don't worry like the people that really want to hire designers. This isn't going to take that business away. I really do believe that there's such a dividend between the people that want to do something like this themselves, to your point, the backsplash and those that just would no more do their own backsplash then then join the army. Fred but you know, I interesting analogy.
- [13:57]
Fred Nicholas
But I'm sure we could probably come up with another analogy there. But yeah, I agree it's a different market and you know, I'm not this some AI stuff kind of gives me the heebie jeebies and I'm like, you know, I feel a little bit probably more terrified for my own job than I do for Suzanne Tucker's. But I agree this does not seem to me to deeply erode trade protections, at least anything more than the Internet kind of already has in a variety of other ways. I mean, as Adam pointed out, some fabric brands sell on decorators best, but then they have trade only showrooms and designers go and visit those showrooms and so I do think there will be some brands that designers might be mildly disheartened to see on Design Shop, but there's also ways to sort of ring fence brands that show on this platform that can just send samples and say, hey, if you want that, talk to your designer. I don't know. I don't want to be overly naive here, and I would obviously understand designers who feel a little bit, as you said, betrayed or feel a little skeptical of something that sort of encroaches on the protections that the trade has historically enjoyed. But I do think it's really tough in the era we live in to get around the desire for convenience. And that's what Adam Sandow is trying to build with this whole empire of brands. And I think that's what Design Shop at least appears to deliver. So we're going to have to watch it closely and see if they raise another $125 million and what they're going to do with that.
- [15:21]
Dennis Scully
Yeah, and I think so much of this will depend on what the market ends up looking like in the coming years and how quickly people adapt to this. But I think, to your point, Suzanne Tucker is in no way worried about this, and I'm guessing that so many designers should feel the same way, at least for now. Moving on, let's talk about Floyd. The direct to consumer furniture brand has been acquired. The buyer is rise Home, a 75 year old company that specializes in beds and bedding. And now, I'm guessing, Fred, they've got a whole host of table legs in their stable as well. Yes, exactly.
- [15:57]
Fred Nicholas
Yes. Floyd famously launched with a Kickstarter campaign in 2014 that was merely a table leg, or it was four table legs, rather, that allowed you to turn any flat surface into a table. It was one of these buzzy crowdfunding projects from that era where they thought they were going to raise $10,000 to get their project off the ground. They ended up raising $200,000. It became sort of a buzzy Internet sensation, and that allowed them to really launch the brand in earnest. But Floyd turned into like, it's a cool whole home brand. They have seating, they got desks, they got a bunch of product now. So it started with this cool, fun launch, but now it's, you know, it's like any other direct to consumer brand that's grown over the past decade or so. How did Havenly not buy it is the big question.
- [16:41]
Dennis Scully
Well, I'm a little surprised about that, but maybe she looked at it and she wasn't ready. I Don't know. We'll hear from her on this, I'm sure. Listen, and I'm joking, but not joking about the table leg. It was actually a fun concept and a lot of people really, really appreciated it. And there were some cute scenes of even just finding flat objects on the street and being able to take them home and turn them into a table with the leg. So I mean, it was a fun concept and nice that it caught on. And as you say, the company evolved into a whole home company from the outside looked as if they were doing okay. But why do you think they really wanted to sell right now? Maybe it had gotten a lot more challenging for them, I take it.
- [17:22]
Fred Nicholas
Yeah, I mean, I spoke to Kyle Hoff for an article I wrote about this. He's one of the co founders. In so many ways, Floyd is kind of like the poster child of a direct to consumer brand. Over the past decade you had this buzzy crowdfunded launch. It grew on social. They eventually raised 25 million or so in venture money to grow even more. And then I think over the past few years after the COVID home boom sort of petered out, I think the logistics got a lot more complicated. Especially in the COVID and immediate Covid aftermath. It's a lot harder to grow organically after all these big social platforms started putting the squeeze on advertisers and sort of the same dynamic that fueled a lot of direct to consumer growth just got vacuumed out of the system. And especially in home. So we've seen so many home brands, DTC home brands struggle, get acquired, interior defined. Of course, another example of that. And a lot of these people are looking for an exit because it's not possible to grow quickly the way it once was. Business is harder than it's ever been. Sales are more uneven. I think all those factors kind of push them to seek some kind of an exit. They're still involved with the business, I should say. Kyle and Alex O'Dell, his co founder, are still planning on running Floyd. I just think they were looking for safe harbor in a troubling time.
- [18:38]
Dennis Scully
Understandable. And for Rise Home, what's your sense of what the appeal was of Floyd?
- [18:44]
Fred Nicholas
Yeah, well, Rise Home is like basically the exact opposite of Floyd. It's a 75 year old company. Didn't used to be called Rise Home. It was an Ohio manufacturing company. I forget the exact Mantua manufacturing or something like that. And it's a classic manufacturer, wholesale business. They make adjustable beds, they import adjustable beds. Very behind the scenes type company. Not one that you. You probably have ever heard of. I spoke to the CEO, and I feel like they exemplify another industry trend where you have these manufacturers who have sold to retailers big and small, and those retailers are really struggling right now. The mom and pops are closing down. The big guys are consolidating. There's a lot of competition from direct factory selling direct. He's looking around going like, well, if I just live and die on the success or failure of retailers, I'm. I'm in trouble. So I want to have a direct connection with consumers. It takes so much time and energy to build that up. Why don't I buy somebody who has already done that work? I think they knew each other socially maybe a little bit, and had partnered together. I think that greased the wheels a little bit. But that's the fundamental business dynamic here, is that everyone's a little bit confused about the future of retail. And if you can get a direct connection to consumers, take it. That's goal.
- [19:56]
Dennis Scully
Yeah, no, understandable. And it seems, as you were suggesting earlier, it seems as though this deal sort of speaks to what the landscape has been like in the D to C space. And we've talked about the dramatic changes in the retail landscape so much on this show over the past couple of years. It seems like this deal is just very emblematic of everything that's going on.
- [20:20]
Fred Nicholas
No, Very well said. I think it's like each of these companies comes to the table with their own strengths and weaknesses. Floyd, his has a real cool brand, very organic connection with its consumers, but it didn't have the logistics and sourcing network built up. That gets built up over 75 years in business, and it had ups and downs in sales. And I think Rise Home is a brand that probably most people don't know directly, but they have a very robust sourcing and logistics network. And their weakness is just a reliance on the retail channel. So you put these two together, and ideally, you get something that makes both sides of the equation stronger. You're seeing all kinds of these new combinations. Like Havenly, we joked about earlier. You put a bunch of these direct to consumer companies together and you get something a little bit stronger. There's other acquisitions that have happened and will happen that put these players together in a new way. I think what's encouraging about this is that there's so much doom and gloom around direct to consumer. Like, oh, it's a busted flush. These companies are all going away. But they created something really valuable. Floyd is a cool furniture brand. How many cool furniture brands have been launched in the past 20 years, not many. So I'm hopeful that this is a win for both of them.
- [21:34]
Dennis Scully
No, I agree. And I hope it works out well and I hope we see more cool brands like this find a way to thrive because it is a very challenging environment out there, to be sure. And part of the reason it's a little bit challenging is going to be our next topic, Fred, which is broadly the economy.
- [21:52]
Fred Nicholas
Yes, we may have to revise all those optimistic predictions about the housing market for 2025 because so far the year is off to a bumpy start. The average 30 year fixed rate mortgage has climbed back over 7%, the highest it's been since July 2024. Not a great number to start off the new year. Dennis, what's behind this? The Fed has been cutting interest rates. Why are mortgages going up?
- [22:18]
Dennis Scully
Yeah, as you say, not what everyone was hoping for and certainly not what many people were expecting. But there's, there's just broadly a sort of a not so fast feeling about a lot of what's happening in financial markets. And another one of the predictions that we talked a little bit about on the prediction show was this 10 year yield, the yield on the 10 year treasury bond which has.
- [22:43]
Fred Nicholas
Don't turn off the podcast. Stick around, stick around.
- [22:48]
Dennis Scully
We're going to make this very quick and painless. This ten year treasury talk. But basically, in simplest terms, one of the key factors in pricing 30 year mortgage rates is the yield on the 10 year Treasury. And the 10 year treasury is not under the direct control of the Federal Reserve. So while the Federal Reserve has been lowering interest rates, unfortunately this 10 year yield has gone the other way, in part because many bond traders who buy and sell that bond as part of their day to day business just have this growing perception that inflation is not yet defeated and that unfortunately, many of the economic policies that are likely to be put in place in the coming weeks and months are likely to be even more inflationary and that the economy is still pretty darn strong, the unemployment rate is low, people are still spending. And so there's just a perception that we might have gotten a little bit ahead of ourselves in terms of thinking that rates were going to come down in a meaningful way and that things were going to slow or cool.
- [23:54]
Fred Nicholas
You know, I don't want to get too far ahead of our skis on tariffs, but the next time we talk, Trump will be in office and he's promised all kinds of things on tariffs. It's kind of hard to sort of piece together. I Don't know if what do you feel like is the latest consensus on what the tariffs are going to be?
- [24:10]
Dennis Scully
I think a lot of people have tried to walk back the fear of tariffs, but it's clear that the administration feels as if it's been very out in front with its language. And so they have to put something meaningful in place. And China certainly seems to be one of the main targets, perhaps Mexico and Canada as well. That heat has certainly gotten hotter, language wise. So, I mean, as you say, I would not be at all surprised and I think the bond market is telling you that too, that it wouldn't be surprised if meaningful tariffs are put in place. With the outcome being higher prices.
- [24:52]
Fred Nicholas
Yeah, exactly. Higher prices, inflation going up, the Fed isn't going to cut rates anymore, mortgages are going to stay high. So, I mean, what does it mean for designers in the broader industry that we are, we're not going back under 6% anytime soon? That was the hope. It's not going to happen. What do you think that's going to matter for our corner of the world?
- [25:11]
Dennis Scully
Well, I think there was the perception, and interestingly, our guest on the show, Peter Dunham, one of his predictions was that people just weren't, weren't going to want to wait any longer, that they were going to move forward, that they were going to buy or sell a home because enough was enough, they'd waited long enough. And I think, unfortunately, with the creep up in mortgage rates, I think it definitely is dampening some of the hopes that we were going to see a pickup in the spring. In the housing market, we've seen a lot of mortgage application numbers come down, cool off. And I think for designers it means that it's not yet the all clear for just a lot of movement in the housing market, which is a big driver for their business. And then of course, we throw in the uncertainty in what's going to come out of the situation in LA and that market, which was already facing great challenges on the real estate front. And I think it's going to be even more challenging.
- [26:16]
Fred Nicholas
Yeah, it's interesting. I kind of have a slightly more optimistic take on this news. Not that I think that everything you just said is obviously right, but as we've talked about, stocks are crazy high. All the finance guys are about to get their bonuses or they already got their bonuses off a record year. I think some of that money is going to trickle down to the design industry. I think the 1% is obviously more immune from shifts in mortgage rates than everybody else. I feel like the kind of optimism, I know it can turn quickly, but I do feel like a lot of people have told me, yeah, ever since the election is over, however you felt about it, people want to move on, they're going to do the project, they're just going to get it started. I don't feel like these numbers necessarily make me turn that optimism off. I guess what kind of gives me pause more is for brands in our industry because any one designer can have the best year of their entire career during a weirdly down housing market. But if you sell at all levels of the market, you're much more vulnerable to this stuff. And I think that's what's driving all these consolidations, acquisitions is people are trying to get stronger in the face of what may be a longer downturn. I feel like last week we were talking about, oh, there's been already 10 acquisitions already, there's been 20 acquisitions since then and we may see even more pick up. So I kind of feel like in a way, none of this makes me fret for designers as much as it does make me think brands are going to have to buckle up a little bit more. But I don't know. What do you think of that?
- [27:40]
Dennis Scully
Well, I mean, I think that's certainly a good argument and I certainly agree with you that we've seen a great many announcements about deals and I think we're going to see a lot more of that in the coming months. There's little question about that. I think there's a great deal of hope that it's just going to be easier to do a deal in the near future with whoever.
- [28:01]
Fred Nicholas
With whoever.
- [28:02]
Dennis Scully
Yes, yes. For better or for worse, those deals are going to be possible. So I mean, yes. And listen, I agree with you. I mean, I think interestingly, when you look at the very high end, and actually I saw that Leonard Steinberg, the real estate agent, very high end real estate agent, made note of the Delta airline earnings that came out recently and I noticed them as well. You saw very strong numbers coming out of Delta Airlines and the greatest strength is in their first class section where business is really booming and people are willing to pay a lot more to travel. And I think that's the very same customer that these designers are servicing. So, I mean, I think all of the indications on the high end are that people have plenty of money to spend and they are eager to spend it. And I think the perception is that they are going to be even more eager to spend it after January 20th is what we hear a lot. I do think that unfortunately, the challenge of being in the third year of a bull market is often a little dicey. And these interest rates are just a cause for concern, particularly for many smaller companies in our industry that have to borrow money. They're borrowing money at a much higher rate and that will no doubt have an impact on them. So I think your point about some of the companies in our industry is very well taken. I would not at all worry about the 1%. They're doing just fine.
- [29:27]
Fred Nicholas
Suzanne Tucker Want again.
- [29:29]
Dennis Scully
Once again, Suzanne Tucker. Nothing to worry about.
- [29:31]
Fred Nicholas
The big winner of this podcast.
- [29:35]
Dennis Scully
Absolutely. Next up, another big winner, perhaps Robots. Ces, the annual consumer technology extravaganza just wrapped over the weekend. The innovations on display included plenty of smart home technology, as well as no small number of robots. Fred, it was your favorite.
- [29:56]
Fred Nicholas
I'm going to try not to butcher this pronunciation here. Nekojita Fufu was my favorite robot, a quote unquote tiny, minimalistic cat robot that does nothing more than blow air to cool down hot food and drinks. It's a little robot you put on the edge of your steaming mug of Earl Grey. I would pay good money for that. Did you have a favorite robot from ces, Dennis?
- [30:17]
Dennis Scully
Well, I love that the conversation was all about robots, and I feel like I get that there were a lot of incredibly robotic vacuums that are terribly efficient. I still don't have one, but I'm told that there's never been a better time to own one. I was intrigued by the spoon that uses a little jolt of electricity to somehow make your food taste like it has more salt in it without it actually having salt in it. So I'm all for technology helping you to lower your salt intake by fooling you, but I did think that. But it was interesting that a lot of people were talking at CES about the fact that AI has been such a hot topic, but maybe is starting to run out of steam. But wait, what if we combine AI and robots, which I think science fiction has pretty much told us will be the end of Western civilization as we know it, but also might be the next innovation in terms of tools. Although I sense on the smart home front, there just wasn't a lot to really get excited about. Yes.
- [31:24]
Fred Nicholas
Yeah, it's funny. A little behind the scenes. Look. So every year when CES Happens, which is a big consumer show in Las Vegas for all these gadgets, we here on the Business of Home editorial team are like, we should do a story about this. There's a lot of smart home stuff that debuts, and whenever we do a story. It does not do well with our audience. It's interesting. I feel like smart home technology and interior designers, there's this sort of mutual distrust, maybe, or maybe more distrust coming from the designer side. And I don't feel like anything that debuted at CES this year will really do anything to change that. I mostly saw locks and as the aforementioned vacuum robots that can. Apparently they have arms now there's like a vacuum robot that can sort of pick up dirt and put it in the wastebasket, which I guess I'm in favor of. I don't know if I would pay top dollar for it, but anything that allows me to do less work, I'm very much a fan of. Did you see anything spec a smart home technology that you liked, or do you agree that nothing that happened at CES will catch the eye of most designers?
- [32:27]
Dennis Scully
Well, I mean, there were lots of ways to help your refrigerator door to be a lot more helpful to you. It seemed cool.
- [32:36]
Fred Nicholas
I've always felt it wasn't pulling its weight around the house.
- [32:39]
Dennis Scully
My expectations for my refrigerator door are so low that I really am not looking for it to help me. And. And I gather that the perception has been that a lot of people have just felt a little unsettled, a little unnerved, if in fact, their refrigerator door got too smart and was keeping track of them or was reporting back on their activities. So I think that it seems that people are kind of cool to that. No pun intended. But what was your sense?
- [33:10]
Fred Nicholas
Well, yeah, I mean, this kind of ties into this article that came out last month in the Wall Street Journal that we didn't talk about at the time, but I really loved which was talking about why the promise of smart appliances just doesn't seem to have really delivered. I think all these really interesting numbers from the report saying that it was like only half of the buyers of these appliances actually keep them connected to the Internet. And who knows how many people actually use the Internet connected features. I think there was so much hype around this idea of the Internet of things. And your dishwasher is going to talk to your cat litter dispenser is going to talk to your phone, and. And most of it hasn't really come to pass. It's interesting. I always sort of felt like interior designers don't really like technology, maybe just culturally and maybe because there's no margin in it, you don't make a lot of money selling a robot vacuum. But I'm starting to wonder whether it's just like actual homeowners people don't really want this stuff. Most of the utility of it is pretty minimal. And as the article pointed out, a lot of all this Internet connectivity is really more for the company making the washer dryer so that they can understand, like, okay, this is how they use it, that'll help us develop the next product. It's really more for them than it is for us a lot of the time.
- [34:16]
Dennis Scully
Right, Exactly. And it seemed in talking to a lot of designers, they talked about the fact that so many of their clients just don't want to be tracked and they don't want to be followed around. And as you say, that seemed to be what was at the heart of so much of the smartphone, even by.
- [34:31]
Fred Nicholas
A tiny minimalistic cat that does nothing more than blow air to cool down hot food and drinks. I wouldn't mind being followed around by.
- [34:37]
Dennis Scully
Nekojita, but it always seems to know where you are and that seems unnerving. So I don't know. I mean, I think a lot of people raised privacy issues, which I get. Although hilariously, those same people seem to be on Instagram 24 7. So I don't know. But I do think that, as you say, there still seems to be a great divide between designers and their clients and the the love of technology in homes. And this year's CES show didn't seem to bring us anywhere closer to filling that divide. Although I'm excited about the AI robots just coming for all of us very, very soon. Moving on, we've got some sad news to report. Peter west, the co founder of the San Francisco showroom Hune, has passed away. Peter was a veteran of the Northern California design space and together with his partner, Jeff Holt, created an institution beloved by San Francisco designers who have been paying heartfelt tribute to him this week. I know he's been in touch with us a great deal in the past. Fred. He will be missed.
- [35:47]
Fred Nicholas
Yes, he will be missed. He will be missed by me. Peter's not someone that I knew particularly well directly, but I emailed with him many, many times and he was just such a passionate guy about the design industry. He was a very passionate defender of multi line showrooms and the whole model. Every time I would write an article that even had the slightest little bit of critique of the model or questioning of it, he was there to defend it. And he was just such a champion of designers in the design industry. Funny, passionate, really. So many designers have been talking about what a tragic loss this is. So just wanted to pay our respects and say that I will certainly miss seeing his name in my inbox and I know a lot of people will miss him much more than that. So he will very much be missed.
- [36:33]
Dennis Scully
Absolutely. And our heart certainly goes out to his partner, Jeff Holt. We're terribly saddened by this news. All right, that's it for the news, but there's plenty more to check out on businessofhome.com including advice from Sean Lowe on setting goals for the new year and a roundup of the latest hires in the industry. We'll be back in a minute, but first, a quick With Anthem Smart Showering only from Kohler, you can design a showering escape that commands up to 12 water outlets, supports custom lighting environments to match any mood, and allows for three levels of soothing steam set to music from personal playlists. Every moment asks the user to imagine when you take a shower, where does your shower take you? Explore Anthem+ smart showering@kohler.com Showers for over 20 years, Laloy has made its name in home textiles and customer service. Members of the trade have dedicated laloyloy sales representatives to answer their needs with an easy to use website samples, fast shipping from Laloy's warehouses, access to exclusive trade only collections and showrooms across the country. Learn more@laloyrugs.com that's L O L O I rugs.com for an inside look at all things Laloy, follow Eloi on Instagram and TikTok. And we're back. I'm joined by Peter Dunham, interior designer, textile designer and showroom owner. Peter, I'm, I'm sorry that it's this unimaginable tragedy that brings us together so early in the year, but I'm delighted to see you nonetheless.
- [38:25]
Peter Dunham
Thank you for having me, Dennis. As you know, it's always a pleasure.
- [38:28]
Dennis Scully
Well, I appreciate that very much. I don't even honestly know where to begin in all of this. I'm wondering, first of all, I hope that you and all those on your team are okay and I wonder, wonder if you can just share a little bit of what's been going on for you these past few days in all of this.
- [38:51]
Peter Dunham
The team is all good. Thanks for asking. I think they had a couple of days off when it got really bad. We had one day of incredibly poor air quality that was just horrible. So everybody we shut down and there was a sunset fire. So of course the shop was really kind of not a good place to reach on the Cienega and West Hollywood. So those are the sort of big direct impacts on a personal point of view. I think people are very stunned. It's hard to say. I mean, I don't live in the Palisades nor do I live in Altadena. And the losses are very different because they're two very different communities economically. The Palisades obviously is in its way much more diverse luxury area than the others. The people that the starter house, let's say in the Palisades is probably, I'm going to shoot a number, probably two, $3 million and it can easily go to 50. And in Altadena the starting price is much lower and in fact more heartbreaking. I think when people are displaced there, it's going to be a much harder recovery. I think what they have in common is they're two spectacularly lovely communities. But Altadena is probably the most racially and economically diverse community in la. It was one of the oldest. It was started in about the 1880s. It started off as a development for rich Midwesterners to take the train to Pasadena, go up the hill to this kind of Ojai esque, wonderful thing. It sort of fell, but farms took over and it was at its time the largest wine produce in California. Citrus did really well there. It was really kind of a pretty affluent middle class community, very pretty easy to reach. And then the 70s hit, it struggled. There was white flight. And the Palisades equally has a very big historical thing. It also was part of a Spanish land grant. So these juicy pieces of real estate that the Spanish carved up and the Mexicans sold off and whatever. And then somebody created a huge studio down there. It was really like this giant precursor to the big studios. That's sort of almost a template for the big studios that erupted in, you know, that came up in the valley later. It was called Inceville. The guy was some producer called Inc. So that was the original thing. And then it also burned down. So it was abandoned after a series of fires, interestingly enough, was bought by a ministry by, I think, I think it was a Methodist Episcopalian thing who subdivided it. And originally it was people living in cabins and tents and it was getaway, not very well connected to the city. Sunset hadn't been paved. Both the communities were kind of far away. And there were these. I mean there is almost nowhere nicer to live than the Palisades. It has wonderful climate, the air is cooler in summer. It doesn't have fog like Santa Monica, Malibu. And it kind of started being like this incredible family community of people, multi generations. I mean a lot of my friends who are makers and artists are in Altadena, but a lot of the clients and my other colleagues in the business are in the Palisades.
- [42:37]
Dennis Scully
Yeah, I mean, there was this very poignant video. Jennifer Garner was actually talking about the neighborhood feel of the Palisades and how the kids would all play. There was a house that had a gong in front of the house and they would bang the gong and all the children would know it was time to go home for dinner. And she talked about the little local parade that came through and as you say, that it was just such a community and that people knew one another and now all just completely gone.
- [43:12]
Peter Dunham
Well, interesting enough, she was my first proper client and it was her starter home was in the Palisades. And I think this community of people in the movie business, once you made it, you moved to the Palisades and you're able to interact and network with everybody else in the community. So it's kind of like casual living in la, but within the industry, I would say, more than almost anywhere else. Yes. So that sense of community that Jennifer described was, until last week, palpable. I think what's going to happen is that a lot of the people who had houses who are maybe empty. Empty, nesting out now, are probably not going to rebuild, but their kids are probably going to return in 10 years when the community is rebuilt and the trees have grown back up. It's going to take a long time to rebuild just to clean up. These sites are so toxic with lead and with asbestos that the state has to go in first, clean up, and then you have to have other specialized people to remove all this stuff and take them to special dumps. And we're talking about, like thousands of houses. It's like, it feels like this Herculean effort is going to take quite a while.
- [44:38]
Dennis Scully
Well, exactly. It seems as if it's going to take just ages for them to even make it safe for people to even think about what the next steps are. All this flame retardant has been dropped on the whole area in an effort to put out the fires, which still are far from being completely contained as we speak on Monday evening. And I feel like so many members of the design community seem to have also been there. And I'm struck by just seeing these stories of designers who have also lost their homes. And I don't know if you've heard from many in the design community and what they're saying beyond just their shock, as you articulated earlier.
- [45:26]
Peter Dunham
Well, I think everyone had to jump somewhere to live. Right. So everyone's dispersed. Every hotel's full and people have moved. You know, take. Every hotel in Palm Springs is full. Every hotel in Orange County's full. You know, I think anyone with a kid or something just like, okay, we're getting out of town. Yeah, we're going to Phoenix. We're going to. Lots and lots of people went to Palm Springs, anywhere out of the flow of smoke. So the logistics are just like, how can we pick up the pieces just to house ourselves for the time being? A lot of people moved in, obviously with friends or family or rented places. A lot of price gouging with rentals and. But you know, in Altadena, on the other hand, people are probably living in their cars or struggling to find like, you know, camper van to sleep in or moved in with family. And there I'm hearing stories from one of my co workers that one of her relatives was starting to get calls about three days after the fire saying, do you want to sell? Do you want to sell? Do you want to sell your property? They're already trying to like, scoop up.
- [46:36]
Dennis Scully
No, no, I mean. And as you say, I mean the price gouging and the bad actors just showing up in any number of ways. And I saw several people in the community posting about don't sell your plot of land, don't say yes right to those offers, and don't take first number from the insurance company and all sorts of warnings.
- [47:01]
Peter Dunham
Well, thanks for bringing that up. I have no idea. I haven't spoken to anyone. Several of my clients were kind of calling after calling us and saying, okay, well the project, can you like cancel the furniture? Can you put a hold on everything? And of course, we're working with our vendors to try and return. Cancel everything out. And people in the store want to return things, you know, custom orders, they've made or bought stuff. And what can we do? You naturally, you try and help whoever you can. But. So the insurance trigger, I'm sure, is going to be horrific because as we know, the insurance industry is in really bad. The fire catastrophe, as my mother always says, who's English and lives in Paris and occasionally the sun rises a little higher in front of her. But really she said, darling, in America, these natural disasters are just so huge because can barely understand them. You know, like, if it's an earthquake, it's huge. If it's a hurricane, it's huge. Tornadoes, it's huge. You know, floods, it's huge. So, yes, this is a huge event. So I don't know what it's going to look like. I mean, I'M sure a lot of people are incredibly inadequately insured if they could at all. Just to put in perspective, we had a client bought a house about two years ago for Santa Barbara. I'm embarrassed to say it was about $10 million. So it was kind of like maybe a starter house in Montecito kind of thing. And they were way far away from the mountain, away from any of the big danger signs of like, you know, all the boulders coming down the hill that we remember. And they were quoted their fire insurance, $850,000 a year. So they said, well, what everyone does, what do people do? So everyone self insures, which is euphemistically for they don't get insured, they don't take insurance. They decided every 10 years they can rebuild or something. But that's not the luxury for almost everyone. I mean, the Palisade has a lot of younger families who put it together to buy something there. And they're in the network of the industry they want to be part of. They're not gazillionaires either. So I think it's going to be a big shock. It's going to take a while. I mean, first of all, where's the money coming from?
- [49:21]
Dennis Scully
Well, I mean, they're already suggesting that this might be the most costly natural disaster in the United States history. I mean, numbers are already up towards $150 billion and we don't even know. And as I say, the fires in so many areas are not even contained yet. So impossible to really get an assessment. And, and as you suggested, many people, it seems, might not want to rebuild, at least initially, or can't for a whole host of reasons. And even if they want to, things were already pretty backed up to begin with.
- [50:01]
Peter Dunham
Definitely a huge construction labor shortage. So I can't imagine how it's going to be possible to find enough plumbers, electricians, framers, et cetera, to make a dentist. But amazing enough, America's resilience and energy seems always to surprise me. And I think it will. I'm definitely the Palisades will rebuild because it's such a choice place to live. The problem about it is the nicest place to live are closer to nature, where the hills and ravines and things. People love that it's very romantic and beautiful, but you do take, take a huge risk. And I don't think going forward they're going to find it easy to get insurance.
- [50:46]
Dennis Scully
It's just heartbreaking that it's just going to be years until we can really see what that all is going to look like. And I wonder what that means for the design industry. I wonder what that means for this whole community.
- [51:02]
Peter Dunham
I think it's going to take a while, but I think it'll happen quite quickly. The state's already talking about letting people rebuild, build as of right, what they had, which seems, I mean, slightly lunacy. You've got to start thinking about having fireproof buildings. And you can't rebuild exactly what just burnt down and hope it's not going to happen for another hundred years. So there's probably going to be some. There should be some adjustments to building codes. There were obviously problems getting out of those communities, so that's going to count for something. And sprinkling your house from the outside and inside. There was a guy, I can't remember what his name, an architect in Carpinteria who was known for building fireproof houses. And so it feels like it's going to be in that direction. If you're going to live in these places that close to nature, you're going to have to have much more fireproof buildings that sprinkled the exterior while it's happening and all this stuff. So this. That's going to happen. I definitely can foresee a lot of people not wanting to rebuild. I think a lot of people in the business, which is already. The entertainment business, which is already struggling hugely.
- [52:13]
Dennis Scully
Yes.
- [52:13]
Peter Dunham
And this city, you know, had Covid basically a real estate recession. I spoke to a broker yesterday whose friend said last year was the worst year she'd ever had. You know, people would not get to the finish line. And I said, why should really the interest rates and waiting for the election. But, you know, you already had this recession. Real estate, which is a huge business. The move business is completely restructuring. People are getting paid a whole lot less. Human being are perishable. If you're a movie star, you are perishable commodity. You only have 10 or 15, maybe 20 years if you're very lucky. You know, they're going to take whatever work they can. And Netflix doesn't pay what Warner Brothers used to pay. So anyway, the reality is people are not making as much money and it's dispersed. So are a lot of these people in the palace is going to think, I'm not going to spend five years struggling. Am I going to move to Austin, Dallas, Atlanta, Santa Fe? I mean, you. The list is there. They're waiting for them. With lower taxes, I would suspect 25 to 35% of people are not going to rebuild.
- [53:23]
Dennis Scully
That's a huge number. So that, that's a. Yeah, okay.
- [53:26]
Peter Dunham
I think it's going to have a huge impact in our business because for many of us that was a very core customer. It wasn't like the Uber customers who live, you know, remember big chunk of Malibu burn too on the beach. So but you know, it's like those really big, big, big expensive projects that people might say about. They weren't necessarily in the Palisades in big time but a lot of us medium sized firms were doing a lot of jobs in the Palisades. For my store it was definitely like the core customer, the textiles, the same. That community was younger, less formal. So I think more casual. Right, Definitely. So I think that it's going to affect my segment of thing. We may, we may find people start buying to furnish their temporary housing or whatever. They end up in, in. We'll see. It's very hard to really know. I'm just going to point out the other day I went to see the, my vendors. You know, once a week I go around the vendors to check up on them and two days after it happened my upholsterer said, oh, we've had six projects completely canceled. The stuff was in production, it was made. I mean we're holding on to stuff. They said cancel, stop everything. The house has burnt down. There's nowhere to put, put it. We have another situation with 10 pieces of furniture there that it's got nowhere to go. So yeah, that's going to be just right now a short term impact. So it's a big blow for the city that felt like it was already struggling to get back on its feet. I mean thank God not more people died. Yes, but you know, whatever dip in my business, selling lampshades compared to coming home and not having a house house with any of your family photographs, with any of your wards, with any of your school photographs with nothing, nothing, nothing left. It was probably for most people all there. So you can't really say, oh my God, my cell's gonna dip. But it is a huge blow for the city of Los Angeles.
- [55:38]
Dennis Scully
Well, as you say, things can happen quickly. I, I mean we'll see a new administration is coming into to office and hopefully, hopefully they will step up and take this very seriously. I'm a little bit concerned about some of the language that they've used thus far, but we'll see what happens there and hopefully the community will get the support that it needs. And as you suggest we will check in regularly and see how all of this is going. I'm so glad that you and your team are well and safe, and I'm glad to be able to speak with you. And I, I appreciate you taking the time.
- [56:19]
Peter Dunham
Thank you, Dennis.
- [56:25]
Dennis Scully
And 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.
- [56:33]
Fred Nicholas
Fred, Wayfair caught my eye. Apparently, Wayfair is quitting Germany, citing weak macroeconomics, leaving the country altogether. I don't think these two items are related, but this comes on the heels of RH saying it wasn't going to renew its leases in Dusseldorf in Munich. Now, they may stay in the country, but this does seem to speak to some kind of divide between the rest of Europe and Germany. I don't know. I've been to Germany many times. I feel like they like furniture there. I don't get this. What was your read on this?
- [57:00]
Dennis Scully
Well, I mean, listen, I think it was an indication of two things. The challenges for Wayfair continue in earnest. And Germany. Germany has been a drag for a long time, and with the economy performing as poorly as it is at the moment, it just seemed like it had to happen and somebody was pressuring them. And finally they had to say, you're right, we give up on Germany for now. And I know that they had been investing there for a long time, and in the case of rh, they never meant to be in Germany.
- [57:34]
Fred Nicholas
It was a weird real estate, right?
- [57:37]
Dennis Scully
They had to take those leases in order to get other leases. And so it's not like they had ever intended to do grand openings in Dusseldorf before they were in downtown London, but it was just the way that that shook out. But it is interesting and a reminder that Germany, unfortunately, that economy is really struggling and so many brands are looking to see what they do there in the future.
- [58:01]
Fred Nicholas
It's kind of interesting. It is Europe's largest economy, but it, it also just doesn't have the same, like, cultural connection to the design industry in America that a lot of other European countries do. There's, you know, I guess there's Heim Techs, and we don't need to talk about any more German stuff than this. Let's keep going. What's, what's your, what caught your eye this week?
- [58:17]
Dennis Scully
Let's move on from Germany to Paris. Fred, that sounds much more romantic and exciting. And that is where I am headed in just a few hours. In fact, after we record this show, heading over for, for deco off and really, in this case, looking forward to seeing a lot of friends, many who have flown in from LA, including my good friend Gina DeWitt, the president of Niedler Faucher, who is one of the kind souls that puts the American in Paris party together. And Gina was forced to evacuate from her home in LA just before leaving for Paris, but despite all of that, was still reaching out to making sure I was coming to the party. Very kind of her. And, and I know that everybody is just looking forward to coming together with so many of the people that we haven't gotten to see since, since all of these terrible developments in LA have happened. And so I'm, I'm really as excited as I am to see the fabrics and all the introductions. I'm this case, more excited to see many of the people that I haven't seen seen in a long time and just look forward to being with our community there. 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@businessofhome.com if you want to get in touch with the show, write to us@podcastusinessofhome.com this episode was produced by Fred Nicholas 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.