← Business of Home Podcast
Business of Home Podcast
The Thursday Show: Quince is serious about getting into the home business. Plus: Havenly goes AI
01:12:29
Host Dennis Scully and BOH executive editor Fred Nicolaus discuss the biggest news in the design world. Later, Havenly founder and CEO Lee Mayer joins the show to discuss her company’s new AI design tool.
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- [00:08]
A
This is Business of Home.
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B
I'm Dennis Scully and welcome to the Thursday Show.
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A
Later on, I'll be speaking with Lee Mayer of Havenly about her company's new AI tool. But first, we're going to catch up on the news, including price hikes from Ikea, furniture from Quince, and a look at why design might be moving on.
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B
From the straight line.
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A
To do all that, I'm joined by Business of Home's executive editor, Fred Nicholaus. Hi, Fred.
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C
Hi, Dennis. How's it going? Great.
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A
How you doing?
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C
Doing good. I've been trying to get out there and hit the parties. Trying to avoid my reputation as a hermit and tend to face all events. Yeah, a few. I went to go see Jenna Lyons new Furniture Collection at Rolan Hill at a party they had there. And before you ask, yes, I did not talk to Jenna Lyons.
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A
I was just gonna say, great, let's get her on the show and talk to her.
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C
The lighting looked good. She looked great. I have the courage to go up and talk to her. But that was fun. And I went to the consultancy, a great PR firm's 10th anniversary party. So congrats.
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A
Yes, I was sorry to miss that. Congrats to them, indeed.
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C
I should probably give them the gift of replying to the 50 emails I owe their various employees. But congrats to them. Same here. I would ask what you've been up to, but I know you're probably lying low in preparation for the big trip.
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A
Yes. Heading to High Point. Fred, I'm so sorry that you're not going to be with us, but I know you're not. Wait.
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C
I like High Point. All the haters out there can eat a biscuit because I'm a huge High Point fan. I'm sad to miss it, honestly.
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A
No, I agree. I'm a fan. I'm looking forward to it. A lot of people I'm eager to see and catch up, so can't wait.
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C
Yeah. And you've got two very exciting panels that people can go and see. So if you're listening to this on a plain North Carolina bound get thee to meet up with Dennis Gulley. Where can the good people find you? Dennis?
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A
That's right, the good people can find me. Saturday afternoon at 4pm you can find me and Stephanie Sabi and Katie Rosenfeld at the Woodbridge showroom at 200 Steel. We're gonna be talking about. We're gonna be talking about William Morris and some unfinished work that's being introduced. So that's gonna be a very interesting conversation and a lively panel with those two.
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C
I'm guessing that's not all you'll be talking about with those two, but yeah, exactly.
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A
I will simply be attempting word in edgewise. We'll see how that works. And then On Sunday at 3pm, I'll be in the Global Views showroom in IHFC talking branding with David MacCachen from Workshop APD and Naz Nozawa from NAS Design and Christine Carney from BlackBerry Farm. And that's going to be a really interesting conversation. Global Views has just rebranded themselves, so I think it's very top of mind for them and we'll see. We'll see how it measures up with our conversation going forward.
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C
Well, yes, that should be cool. I'm jealous that I can't make it, but eager to hear about it the following week. And we'll have Caitlin, the editor in chief of Business of Home, on to talk about her experiences as well with our annual High Point recap. I can't wait because I get to take over the hosting microphone and it's my chance to shine anyway. In the meantime, let's look back on Monday's episode of Conversation with Will Fisher of the British design brand jam. What is. What's the best way to define jam? It's not really a British design brand. It's kind of like a. It's. What is it, Dennis? It's a lot of things.
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A
Well, exactly. It's a lot of things. So it's a brilliant antiques business and Will is an enormous collector who often can't stop collecting antiques and many others.
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C
Common affliction.
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A
Wish that he would slow that down.
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B
Exactly.
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A
A lot of designers out there can relate to that. But he also brilliantly got into the bespoke reproduction business and interestingly, he even talked about what reproductions used to mean and how they came to be redefined. And it's an endlessly fun conversation. When I say endlessly, it is a conversation that, sadly, as you know, Fred, we had to cut down from what went on for several days down to the.
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C
You were literally kicked out of the room.
- [04:32]
A
Yes, exactly. We had to be hauled away. But it is brilliant talking to Will because he's incredibly passionate about what he does and has been wanting to be in the business he is in now ever since he was a little boy, ever since he sent a note to Christie's auction house and met with the board of directors at age 10. And so it's a wonderful, fun conversation and he is a remarkable figure. What did you think?
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C
Yeah, I mean, just the story of how he got into the business is almost this Dickensian tale of at one point I was like, is he talking about like digging trenches and having like a fruit fight with his chums from the boarding school? Like it, it's a, it's a lovely story and he really, you know, he working for Christie's as a teenager and kind of going around picking up antiques and selling them. It's a, it's a wonderful story. Probably that would make a great, would make a great movie. But there's like, yeah, as you mentioned, there's interesting business stuff in there too. You know how reproductions have kind of, you lost their status as a dirty word. I mean, it's just a fascinating business. Where else can you go to get these really intricate high end modern reproductions as well as buy the best 17th century fireplace available in the world? It's a very interesting company and it's good to get a deep dive with Will because he's an endlessly entertaining guy.
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B
As you said, it's also a very personal story.
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A
Will shares that though they didn't know how to properly diagnose it when he was little, he clearly had ADHD and also dyslexia, which they did diagnose. Didn't do anything to help him or point him in a direction to help overcome some of those challenges. So this is someone who really overcame a lot of obstacles and has found enormous success through his passion and his personality and clearly his eye as well. So it is a wonderful conversation. He is a phenomenal guest and many people have written saying how much they enjoyed the episode and I'm so glad about that. All right, we're going to take a quick break and then we'll get into the news.
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B
This podcast is sponsored by Newport brass. For over 35 years, Newport brass has handcrafted solid brass kitchen and bath faucets made to last for generations. Inspired by coastal elegance, these fixtures balance east coast tradition with west coast ease, offering timeless silhouettes and uncompromising craftsmanship. With a palette of 22 finishes and endless configurations, Newport Brass gives every project presence, purpose and distinction. See what's possible@newportbrass.com this podcast is sponsored by Chelsea House. Celebrated designer Amanda Lindroth is bringing her signature island style to high point. Amanda's introducing her line of furniture, accessories and lighting in partnership with Chelsea House, the storied North Carolina based company. Think sun bleached neutrals, breezy verandas and Old World charm. From hand woven trays to scalloped side chairs, each piece captures the effortless elegance of island life.
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The Amanda Lindroth Home Collection debuts during High point Market on October 23rd through the 29th.
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Preview the line at amandalindroth.com or Chelsea House Inc.com and come celebrate with Amanda at her book signing Cocktail soiree on Saturday, October 25th from 4 to 6pm.
- [08:16]
A
And we're back. First up, Fred, we're going to talk about Havenly getting into AI finally.
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C
What took them so long? Last week the online Design platform debuted a 4 free AI design tool embedded in its mobile app. Now we should say, of course, that you're talking to Havenly CEO Lee Meyer in about 20 minutes. So we're going to try not to duplicate that conversation because of course Lee can tell listeners all about what went into the development of this tool. But I thought it would be fun just to chat about a little bit in advance. What'd you think of Havenly's AI tool, Dennis?
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A
Well, and yes, we are talking to Lee and it's always a lively and fun conversation, so stay tuned for that. I think it's interesting to see an AI tool coming out of a company that is also selling you sofas and a lot of home related products. So it makes total sense to me that they would create a tool. I don't know how much they looked around and said, gee, all these other companies are making these, we better get on it. But I think it's clearly early days for the tool and a lot of the issues that we've talked about with other tools, the struggles of AI to place things properly or to not add its own elements. But it's interesting to see the first iteration. What did you think?
- [09:37]
C
Yeah, well, I mean, it's not radically different than a lot of the other AI tools we've talked about on the show. You upload an image of your space, Havenly's AI will sort of redesign it to you. You can sort of go back and forth to the chatbot. One of the tweaks that it has is because, as you mentioned, because Havenly sells a ton of home goods. Of course, Havenly isn't just Havenly, but they also own interior, defined and St Frank and Burrough and a few other brands that it can plug its product directly into the AI engine, which gives it a little bit of an advantage and a little bit of an interesting tweak, I will say, because Havenlys is trained on its own designs, which is at least 2 million designs that they've done over the course of their time in business. So that's kind of unique And I think the baseline level of, you know, quote unquote, taste is maybe higher than some of the other engines, but it's not like a wild departure from what's already out there. In a weird way, like, to me, kind of the most interesting part about it, or one of the most interesting parts about it, is that if you go back and forth with the chatbot a while, at certain points, it's just like, I can't help you with that. Let me connect you with a real Havenly designer. So it's interesting. Like, it kind of like, exactly. It sort of tacitly admits, like, okay, I can take you this far, but we got to get a human in here. You know, that was interesting.
- [10:49]
A
Well, exactly. And I love this notion of it building a bridge to ultimately working with a designer. Lee and I joke about it a little bit because I'm always trying to find the. The positive in the AI not coming for humans and not coming for everyone's job. And I'm trying to convince myself of it most of the time. Fred. But I do think this notion of, okay, I get it, you can only take me this far. I do need a human. Let me connect with an interior designer. And that's a huge part of the business that they. That they have. And so why not?
- [11:23]
C
Yeah, and, you know, you said earlier something interesting too, which is that, like, is this playing offense or defense versus all the other people who are trying to get into AI and we're, you know, we're at a really, you know, interesting moment with all this stuff, because, you know, ChatGPT, for example, just incorporated. They just struck a deal with Walmart. So basically, like, when you're searching for product, you know, if you're saying, like, hey, I want this, it can show you a recommendation from Walmart, and you can click to buy within ChatGPT's app. And a lot of people are thinking that, like, that's just the way commerce will be done in the future. You will open up an AI chatbot. You will tell it in natural language what you're looking for. It'll show you products, and you'll click to buy. You'll never visit Walmart site or Amazon site or Google or, you know, Havenly site, for example. And so there's a lot of, you know, concern, interest in what that landscape looks like. I understand why people want to develop their own tools so that consumers think, okay, well, I should go there because I can get this for free and, you know, connect directly with the brand. It seems like there's A lot that's up for grabs. And I think that if you have this data like Havenly did and you have a little bit of money to throw around, certainly not as much as ChatGPT, but if you have a little bit of money to throw around, it makes all the sense in the world to at least make a go for it.
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A
Well, exactly. And I think it takes us back to looking at some of the companies that we've talked to in the past. I'm always thinking about Modzi that was trying to take that image of your room and then fill it with product that they were going to ultimately fulfill. And there were lots of others that, that have tried to be in that space. And I also think this evolution away from AR and VR and having frankly much, much better tools now that I can generate. So I think this is moving very quickly, is very powerful. And I think some of the partnerships that we've heard and these AI platforms coming out with their own browsers, I mean, soon I'll go to bed just dreaming of what I want, Fred, and it'll all be served up to me in the.
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C
Yes, well, one can dream or one can nightmare, depending on how you feel about this situation. But yeah, to be sure, I mean, Haven Lee is not the first company to try this. They won't be the last. There's going to be more stuff like this. So we will be talking about it on the show and stick around for Lee. I'm sure you guys probably also got into the T word a little bit, or at least I hope you did.
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A
We might have, Fred, because mercifully we didn't have to talk about it at the top of the show. So we might have gotten into it. So stay tuned for that. But in the meantime, we're going to move on and talk about ikea, because there's a lot going on with the Swedish real estate retail giant. The company is raising prices and opening two new locations in New York. Where should we start to jump into this, Fred? Because I fear we might get the tariffs in this conversation.
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C
I think it's sort of unavoidable. I think we should start with prices going up. There was a story in the Wall Street Journal about IKEA raising prices. They honed in on a couple of its pieces. Like one of the Upland sofa went from $849 all the way up to the astronomical sum of $899 in August. Some of it, like a bedroom set, went from 959 to just over $1,000. So the Journal found a Few examples of Ikea raising prices, but I'll say anecdotally, as a somewhat regular IKEA browser, I feel like they've been rising prices all summer. I don't know, I think they have been inching those numbers up.
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A
I think that they have clearly seen the writing on the wall with all of the tariff announcements, and I think they have gingerly been trying to adjust. As everyone that you talk, we're trying to adjust to this new environment. So I know it's very counter to how they try and position themselves. And so perhaps it feels newsworthy when prices rise rather than fall at ikea. But I agree with you. It doesn't seem like they just started doing it last week.
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C
Yeah, I think that is why it's kind of newsworthy is because they were on a tear of trying to lower prices and sort of beat inflation by having the lowest price. I think what's sort of interesting about it as well is that any designer listening to this will have been like, well, this is great, Fred and Dennis, but I just got like 16 emails from my vendors last week telling me that they were raising prices. Why is this a surprise? But I think one of the sort of underappreciated, but one angle of the tariff story is that it really affects smaller companies more. They have less room to maneuver. They can't just shift over one supplier to the next. Whereas Ikea, I mean, think about someone who has power over their vendors. IKEA buys a continent of wood every month. And so when they are facing costs that they can't control, know the tariffs are really catching up to everybody. You know what I mean?
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A
Well, exactly. They've never seen a forest they didn't want to own. But I think that they. And so you think surely somebody who buys at this scale isn't impacted by all of this.
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But of course they are.
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And everyone has to protect their margins and everyone has to make the moves necessary. And I think they'd rather it not get attention that the prices have risen in some of these items. Right. Because that's not the message that they want to be putting forward. They always want to be be putting forward the sustainability story and all of the other things that are just part of their culture. And please don't pay attention to the fact that our sofas have gone up by 50 bucks. But I think that it's a reminder of just how dramatic the numbers are that companies are having to deal with.
- [16:46]
C
Yeah, but it is not slowing down their retail expansion. IKEA's just bought a building here in New York in Manhattan, in SoHo specifically. This enormous, very prime real estate here. You know, it's in SoHo, so it's a very touristy area near to a lot of high end brands. They apparently paid a reported $213 million for the building. So this is a sizable chunk of change by a lot of Billy bookcases with $213 million. So this is, this is interesting because like IKEA actually has tried in Manhattan and failed before, but it seems like they want to try again. What'd you make of this?
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B
Right?
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A
I mean the try and try again is, I think the message from this. We know that they're so focused, as you say, on this huge expansion and we've joked on the show about the fact that they're finally spending $2 billion on expanding into the U.S. it was.
- [17:39]
C
On your urging, wasn't it? I think you were the one.
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A
Pretty sure I made it happen, Fred. I'm just saying I'm going to, I don't want to take all the credit, but I'm pretty sure they got my message loud and clear. And I think they feel, and I agree with them that they cannot say that they have a huge presence in New York simply. And forgive me, Fred, simply by being in Red Hook, Brooklyn, okay? You can't say you own New York without having a meaningful presence in New York. They've tried in a different location. This is a much bigger space. And I think being down in soho and having this very international crowd that will come from all over and that will see their presence. And I think the uptown location that they've chosen, also around a hub, it's right near Grand Central and a hub of activity. I think they're going to be highly visible. I think they're going to have to build very different stores than they're used to building because I think the, the Red hook space is 300,000 square feet, if I recall, versus this 25,000 square feet.
- [18:44]
C
It's a small city. I sometimes just take my kids there and tell them, just run around. It's, it's, it's, it's a fun shop. IKEA is a really interesting company and I think we've talked about this before, but you know, if you grew up near one, as I did in the, in the Bay Area, it was a major event when it opened and it seemed like everybody was talking about Ikea. And of course everyone shops at Ikea, right? But I think when you get outside of major urban centers, it's not as known in America as you might think. New York is sort of interesting because of course, on the one hand they want a store in New York that works. They can move a lot of units in a giant city. And as you said, they had this sort of kitchen and bath focused location that didn't really work and now they're trying this. But the other thing here is it's like a signal. If you're in SoHo, on this big corner used to be a Nike store right there. This is a location that people from all around the country are going to walk by when they come to New York. They're going to walk down to Canal street by their knockoff bags, walk back up, walk through soho, see all the models and celebrities, and they're going to see Ikea. And a lot of people walking by probably will never really heard of it or will have heard it, but never seen the brand. So I wonder if this is sort of the kind of flagship, the billboard model as much as it is a retail model. Is this a way to get attention as much as it is to move units? I don't know. I hope it works. I'm a big IKEA fan. I know that definitely opens me up to being soft on fast furniture, but I think it's at least high design fast furniture. So I'm interested to see what they do with all that money.
- [20:07]
A
I agree it's a much more thoughtful company when it comes to fast furniture. And I think you're absolutely right that there is certainly an element. Even though many retailers will tell you, please don't call it a flagship, because flagship began to have this negative connotation that it was this money losing operation. And nobody wants to say, yes, we're opening this enormous money losing store just because we need to be present in SoHo. And so I think they don't want to think of it that way. But of course it is a place where they're going to be highly visible. They do have a lot of ground to cover when it comes to brand recognition. Still, pretty sure my mom has no idea what an IKEA is.
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C
And so case in point, crack that Mrs. Gully market. We'll know that they succeeded.
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A
Exactly. I don't know if opening in SoHo is going to help with that, but, but we'll see the, the Upper east side, you know, so much is being written now about how the Upper east side is becoming cool again. And, and maybe when they've got a big one near the Upper east side that will, that will help. But they certainly, they certainly know that they need to get that brand in front of a Lot more people, so we shall see. I'm sure we'll be talking about it more. Moving on. Fred, we're going to talk about quints. The buzzy direct to consumer brand known for its $50 cashmere sweaters, is getting into home goods in a big way. With furniture, lighting, rugs, you name it. Fred, this week you wrote a feature on quints for Business of Home. What'd you find?
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C
I found out that there's actually a lot of quints in my household and I didn't even know about it. I knew of the brand, but when I started talking to my wife about, hey, I'm writing about quints, do you have any quints? I found out she's got like 25% of her wardrobe is quints. We have Quint's vitamins in the house. I've probably taken and didn't know about it. So this is. That was definitely a surprise for me. But I don't know what's been your experience with the brand. Are you a Quint's fan? What's your experience?
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A
See your wife, the savvy consumer. I'm impressed. I haven't had a lot of personal experience, but when I shared with people that you were writing about it, I certainly got a lot of opinions.
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C
All of them positive, I'm sure.
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A
Oh, absolutely, absolutely. No, I mean, everyone very eager to hear about this. And some people clearly tiptoeing into the brand via the aforementioned cashmere sweater, but also a lot of people using the bedding and seeing what that's like.
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People sort of on the fence about.
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A
Some other things, but we'll talk about it.
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C
Yeah. So I guess maybe the place to start here is like, what is Quint? Very simply, for those who haven't heard of it. So it started in 2019. So it's a pretty young company. It was founded by this entrepreneur named Sid Gupta, and sort of at base, it's kind of like a direct to consumer company on steroids. So in a classic direct to consumer model, it's like the company buys widgets from a factory, imports them into the US and then instead of selling them Walmart or Target, they sell them directly to consumers, thereby cutting out the proverbial middleman and offering a lower price. Gupta and Quinn go one step further. Instead of having their own warehouses and shipment operation here in the US they basically just get the factories that send it to the consumer directly. By doing that, they can offer the product at a very low price. Hence the $50 cashmere sweater. The interesting thing about them that Got me interested in them from a home angle. Is that that a few weeks ago or months ago at this point, I was at a party. You were at a party too, for a certain brand with a two letter name. I won't say what those two letters are, but I was talking to a fan of this brand and then saying, well, do you like this and do you like that? And she was saying, well, I do like this company. But just to let you in on a little secret, I actually just bought a leather sofa from Quince, which made me realize, okay, first of all, they're getting into furniture in a big way and they are reaching customers who these other brands really want to reach. So it made me wonder, what are they doing in furniture? Will it work? Can it work? What the heck is going on with Quints? And that's what I went looking for.
- [24:02]
A
And you learned a lot. And it sounds like they're coming for home in a big way. It was funny to me that we were at that particular furniture store for that party and Sid Gupta, the founder of Quints, had worked for Catter Partners at one point, who had been a big investor in furniture store.
- [24:24]
C
That's what people know at this point. Yeah.
- [24:26]
A
Yes, exactly. So, I mean, Katterdin was a big early investor and believer in what Gary Friedman was doing for RH and made a lot of it possible. And so interesting that Sid spent some time there and no doubt learned a lot while he was there. So, I mean, I think it's clear that furniture is the next big channel for them to set their sights on. And I have every reason to believe that they, they will find at least some success there.
- [24:56]
C
What do you. Yeah, well, I mean, they've raised a ton of money. That's kind of the other thing about Quints is that they've raised over $460 million with a valuation of $4.5 billion, which is, you know, it's, it's a, it's a paper valuation, but still, that's a enormous company. Like the market capitalization of RH is only 3 point something billion. So, you know, again, this is paper money. But it still shows that investors are taking it very seriously. You know, the other thing about Quint that is probably worth getting into and discussing a little bit is that it's not just stuff that people like because it's cool, but they typically find their competitors bestselling items and produce more or less dupes. You could call them knockoffs, you could call them look alikes, but they are in some cases just purely Celebrated by lots of observers as, hey, you want this cheaper? Get it at Quench. That's sort of like a key part of their brand. And it's true at home as well.
- [25:46]
A
Well, exactly. If you feel like you've seen this product before, it's because, yes, you absolute only we're selling it to you for less. And interestingly, they often say the name of the other company whose product you've seen and perhaps come to love, and now you can find it for so much less. And I think a lot of people are willing to get on that program, particularly in a time of runaway inflation.
- [26:12]
B
In the home space.
- [26:13]
A
I think you have a lot of people who are feeling like, wow, things have gotten expensive, and along comes a company that says, we're gonna show you something really similar, but for a lot less. And often, as we learned, as you point out, made by perhaps the very same factories as where you're getting your pieces now. So interesting.
- [26:33]
C
Yeah. And I mean, I think we should. Unless you really look at the brand, it's hard to even explain exactly how transparent they are around the duping thing because, like, on their website, on the product page, they will often do like a little price side by side comparison to the very brand they are duping. You know, hopefully there's some sort of legal disclaimer we can put on this podcast so we don't get sued. But I don't even think they're being shy about these products being directly comparable because they advertise around that. It's just fascinating. I agree. It is a really interesting. We were talking earlier and you were saying it almost gets into human nature and around what people really value. We talk to so many people in the home industry who hate dupes of the passion and see them as the end of the world and you get what you pay for. But at the end of the day, people really do buy this stuff. To say they have a stigma is kind of a joke. They're celebrated wildly. I don't know, I feel like I'm coming across overly harsh here. I think that SIGUP is obviously a smart business person and maybe there's even some lessons and opportunities here to be learned. But certainly I know within the industry there's a lot of glances askance at what Quint is up to. So we will be following them closely in the months and years ahead, for sure.
- [27:41]
A
Indeed. And I'm sure that a lot of people will have feedback, so I look forward to hearing it. Moving on, we're going to talk about.
- [27:49]
B
A hot take from Substack, Fred.
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C
Not just any substack. We're talking about David Michon's excellent, excellent four Scale newsletter. This week, David wrote a characteristically naughty essay on the popularity of animals in high end decor and why they might signal a major stylistic shift. What'd you think of this one, Dennis?
- [28:06]
A
Now, what is he saying here exactly? We're getting away from hard edges and straight lines.
- [28:12]
C
This is the joy and the challenge of 4 scale is that it's hilariously funny, it's really interesting, but it's not for the faint of heart. You have to kind of sit down and read it. You can't just skim it. So David Michonne, who's the journalist who writes for Scale, former guest on the show, Former guest on the show, it's the Design Miami Festival in Paris, and he was talking about how he was seeing in all of these really high end galleries the consistent animal motifs. There's crocodiles here and ducks and dogs. In typical David Michonne fashion, he kind of riffs in sort of a funny way about what it might mean or what it might not mean. But then he kind of lands on a theory which I actually think is very astute and I think is true. But you talked about how, like, at the very high end of decor and design, all the makers in that space, all the designers who push, like, the aesthetic in that part of the market are really going away from the clean lines of mid century modern. They're going towards some gloopy, organic aesthetic, animals, flowers. And I do think, however, David is right, that like the kind of, you know, the clean lines, the simple boxy shape, shapes, the elegant simplicity of mid century modernism, that look has been fully digested by retail and direct to consumer brands. It is so easy to find that at every level of the market. I think at one time it stood apart by being elegantly simple, not like all the curly cube brown furniture of the 80s and 90s. It had a very long moment of popularity that seems different and separate, but now it's so common that I think that people at the high end of the market need to do something different. What's obviously different from that is something messy and organic. I don't know. I think it'll take a long time before we're not seeing mid century modern as a marketing tool for retailers and Craigslist sellers to move stuff. But I do think it's like that shift is happening very slowly at the very high end.
- [30:09]
A
Well, I couldn't agree more. And I think that the we also Moved away from what was originally the very carefully considered craft and the innovation of how those mid century modern pieces of furniture early on were first made. And when you listen to the rarefy guys talk about the genius of some of these pieces and the amount of work that the originals took to make, now, of course, they've all been reproduced and perhaps Quince has made a lot of those pieces.
- [30:43]
B
Right.
- [30:43]
A
And reduce the value of them and also reduce the innovation and all of the careful labor around them. So I think that's as much part of why mid century modern. And I don't mean just mid century modern, but I just mean beautifully crafted pieces that were once original have just been so duplicated that they no longer contain the values of the original design and manufacturing process and therefore the very meaning that the original artist and industrial designer intended.
- [31:14]
C
Sounds like you got your panel talk for design, Miami, Paris, New York. Just copy paste and you've got your note card.
- [31:22]
A
I'm gonna be dining out on this. Absolutely. This is perfect. Thank you, David Michonne, for helping me think about this this way.
- [31:29]
C
Yeah, I mean, I think all that's right and like, you know, the technology behind, you know, that drove a lot of that production was seen as this way to liberate the masses with great design produced cheaply. And I think that now it's just produced cheaply. And I think that's pushing people towards these kind of gloopy, organic shapes. I keep saying gloopy. I don't really mean gloopy. I just mean curves and organic shapes. Interestingly, those are also harder to manufacture. So maybe it'll take longer for that to trickle down to the retail level. Because you talk to anyone who runs a furniture shop, they'll tell you the hardest thing to do is a lot of curves, a lot of variation, and so maybe that. Maybe It'll be another 20 years before we get down to talking about how that's played out. And it's all about straight lines and angles. But stay tuned for scale 2040, because I think that at some point will come swinging back.
- [32:16]
A
Well, I wonder how this message will be received by the furniture industry. I doubt I'm going to see too much animal shaped furniture at high point in the coming week, but we'll see. We'll keep an eye out for. All right, that's it for the news, but there's plenty more to check out on businessofhome.com including a roundup of November's Can't Miss design events and advice from.
- [32:39]
B
Sean Lowe about pricing strategies.
- [32:41]
A
We'll be back in a minute, but.
- [32:43]
B
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- [33:29]
A
Trusted by designers for more than three.
- [33:31]
B
Decades, Newport Brass has handcrafted solid brass kitchen and bath faucets made to last for generations. With a palette of 22 finishes and endless configurations, Newport Brass gives every project presence, purpose and distinction. See what's possible at Newport Brass.
- [33:57]
A
And we're back. I'm joined now by Lee Mayer, the CEO of Havenly. Lee, it is delightful to have you back on the show.
- [34:05]
D
It's delightful to be here.
- [34:06]
A
Well, and as always, we've got so much to talk about. Sadly, as we talked about just before we came on air, no fun acquisition to discuss today, Lee.
- [34:16]
D
I know.
- [34:17]
A
Well, so let's jump in because no doubt you're taking this very seriously, Lee, and that's this AI tool that you've come out with. And I'm wondering, tell me before we talk about the specifics of it, tell me how you've been looking at AI, thinking about AI, what has it meant in your world in the last year?
- [34:39]
D
I mean, I think, look from my perspective, one of the things that was sort of important here is to figure out, like, where we could be different, if at all. And if the answer is ChatGPT does it and they're going to do it better, cool. Like, we don't, you know, we can, we can figure out how to work around that. And what's interesting, I guess, you know, that's sort of a little bit different for us is we run a fairly large operating business, both on the interior design side, but also on our own and operated brands. And so there are a lot of applications for AI that were originally developed internally. So in other words, to help our designers be more efficient or be better or find more product or also streamline our operations and do a better job of inventory planning and making design decisions. And so a lot of these tools were developed initially around how can we make our own operations and our own designers better and more effective. And then as we Kind of started to look at the consumer landscape. We realized that there's a lot of of noise out there on the interior design AI space, but there was no one really that was just sort of like thinking about something that was purpose built for the consumer. And so we felt like there was an opportunity to take some of the tech that we built and translate that into a consumer app. And you know, I think it comes with all of the limitations of early beta AI and I'm like very aware of that. It's really fun to play with. It's sort of got like, by the way, we can see people's conversations and so it's really fun to sort of look at what people are doing in there.
- [36:11]
A
Oh, so you see the prompts and what they're asking and that sort of thing?
- [36:14]
D
Yeah, so we can see it because we're trying really the reason we wanted to launch it so early on is to really understand what the community is even using it for. What are people doing with it, what do people want from it? Because there's so many directions that you can sort of go as you think about applying AI to interior design. From my perspective, it's really the following. It's sort of an adherence to this idea of, of space, so a much more thoughtful way. And this is by the way, the problem that we haven't solved very well yet. But you know, sort of like maintaining architectural integrity and like using real products and some of that stuff. I think the other thing that I think about is like a genuine taste level. So like kind of understanding what the consumer is asking about. It's trained on our designs. So you know, I think from our perspective, it's our own custom built models on our designs and our data. And so being able to sort of present a little bit of a higher taste level that really is something that a person can and will want to execute against. And then finally sort of the shopability of the design. So the ability to go from an ugly empty or otherwise room into some, you know, something you can actually click and buy through. And those are kind of the broad areas that we were focusing on because that's what seems to make the most sense for us. How people are using it is broadly that way. So, so it's editing existing designs. We've seen a lot of shopping, we've actually seen a lot of upgrades, interestingly also from our AI tool into a designer supported process, which has been really interesting as well. And I think one of the things that I think is sort of interesting is philosophically I'M not one of those people that believes that the human gets replaced by the robot. At least not yet from what I've seen with the.
- [37:56]
A
Sure. Not for another year or two.
- [37:58]
D
Yeah, not this week anyway. You know, like. Like we've got a few more weeks to go.
- [38:04]
A
Yeah, exactly.
- [38:05]
D
But I do think it's been interesting to see how much this kind of like almost expanded the scope for the consumer. It feels like people are kind of getting started, they're playing and then they're like, oh, actually yeah, I might want to use a designer. And I think that's a very expansive view of what AI can do. I think if you bring people into the fold in maybe more of a meaningful way. I think there's the other like sort of perspective on AI, which is I was just referencing, which is like it replaces the human, which is a little bit dystopian and doesn't feel, you know, quite as interesting to me as this other world.
- [38:41]
A
Right. I like the more hopeful world where it encourages people to work with a designer rather than just replacing them all together. You know, I realized that we jumped into conversation and we should remind people the many brands that are now under the umbrella, umbrella of Havenly and even check in on what Havenly was originally, which was all about E design and then how it has evolved and so.
- [39:09]
B
Let'S talk about that.
- [39:10]
D
Yes. So Havenly originally was online design, still is really. We do have an in person component now for in our major markets and you know, that's how we started and that's how we operated for six, seven years. And then a couple of years ago what we started to do was buy other brands, brands that we were selling through on our platform. So in other words, designers were suggesting these brands. We were then selling it through on our marketplace to the client. And then we found that for a variety of reasons we were able to acquire many of these brands. So the brands that we own now in order of size interior defined, which does custom sofas and sectionals, Burrow, which does modular and small smart furniture solutions, Citizenry, I think it's our, the first fair trade certified home brand here in the States and then two smaller brands, the Inside and ST Frank. So we own a whole bunch of these brands and have been lucky to be new owners and grown them over time and sort of brought them into our family in a lot of ways.
- [40:16]
A
And do they collectively all give you data to look at and work with and in the context of even this AI discussion, give you inputs to work with?
- [40:29]
D
They do, I think actually it's been interesting to see a little bit of the gives and takes of our data and where it's useful and in particular what we can use and then how we're effectively extracting value as well. I think we get a lot of data around competition. Things like what's converting, what's not converting, where the consumer is going across all of these brands. And then on the flip side, we also get a lot of, like, market data and consumer preference data and designer preference data from the Havenly business. And those kinds of things can be pretty important as you build a body of knowledge that you can then train a model on. And so we are fortunate in that we have a diverse set of data, but it's also a fairly broad set of data. One of the things that's been so powerful in the most recent iterations of generative AI is the human. In the old days when you were doing data analysis or even machine learning was our data would be a little too thin. You'd get this idea called overfitting. You'd almost overfit to the one person that liked this one thing. I think what's been interesting about the generative work and just the evolution of AI over the last couple of years is you can now really make sense of a very broad set of heterogeneous data and make it actually turn into a beautiful image. And in a world in which I've done a lot of ChatGPT designs, they look great, they're great. And then I found it impossible to kind of triangulate that design into something that I can actually then execute. It's been this thought process of what is missing, and maybe that'll evolve over time. I mean, certainly there's a lot of investment going into many of these models, certainly more investment at OpenAI than here at Havenly. But again, I think it's sort of taking, I'd say, what is best of breed about our brands and our data and trying to see if we can expose that to be better for the user. Again, along these lines of how can we keep, you know, sort of more of, you know, the layout components? Can we have a higher level of taste and a little bit of a better language to communicate to the consumer, and can we make it executable? And those are kind of like the three areas, at least as an initial hypothesis we were focusing on. I do. I mean, I think what's interesting is, like, when we think about it and what it's been able to do, like our tooling and what it's been able to do for those humans, it's been able to allow that human to do a higher quality of work for less time. And so, for example, in a world like ours, it's increased the earnings potential for our humans because we pay them a flat fee plus commission on every design they do. And so I think actually there's like a lot of goodness to be had from this, like, I think the like, again, dystopian future of like robots designing. But like, you know, I think that it's one, one of the things that sort of like, interesting is our model is trained on designs we've already done. So if you don't have people generating designs, you don't get sort of like the new creativity that I think leads to what is ultimately an artistic process. And I think all of those things sort of lead me to believe that again, there, there's probably a category of people that will not use a designer. I mean, frankly, I needed a guest bedroom design before I had guests over. Like, I didn't use a designer. I used our tool and ordered, you know, because, like, that's just the way it is. And, and there are plenty of people that, you know, would never have entered the funnel. But I think it is an interesting way to like play a little bit, see what could be, get inspired to, to do something different for your home. And, and you know, my, my perspective is for some portion of those people that will hopefully again expand the user base that might consider a designer or at least a designer maybe with AI assisted tools.
- [44:31]
A
And at the moment is everything that is being pulled into a design coming from St. Frank and the citizenry and interior define, or is it just a whole broad spectrum and just giving people ideas as much as anything?
- [44:46]
D
We do limit the number of products that we can bring in. But no, we are, you'll see we put our thumb on the scales, obviously, because we think our product is fast.
- [44:57]
A
Because why wouldn't you want this?
- [44:59]
D
Cause girls gotta make money somehow.
- [45:02]
A
Well, I mean, but that's the thing. I mean, because listen, there were plenty of businesses, most of them didn't work, but there were plenty of businesses that were trying to do just that. Here's an image. Everything that you're seeing, we sell and you can click on it. And that was it. And Modzi tried to do that and others. And I don't know if that's, I mean, that's doable with this.
- [45:23]
D
I suppose it is doable. And you know, again, I think that there is a lot of reasons why people start to think about Financial incentives first. I think our perspective is, let's make this delightful. And that's always kind of been our perspective. Like, if we can't find a sofa that works for you, that in our catalog, that's fine. You should get a design that makes sense for you. And so that's the same philosophy here. Fundamentally interior defined shows up a lot just because it is custom. So you can, like, have it fit a lot of things, whereas, like, not always the case with other things, but you'll see plenty of rugs that aren't from Citizenry, for example, because you know that someone's going to try and disrupt the space with AI. And we, I think, are sort of, in some ways the best position to do so, at least to do so while still maintaining sort of a healthy perspective on where the human fits in.
- [46:13]
A
In the beginning of the conversation, we joked that we're not going to talk about an acquisition today.
- [46:18]
B
And part of.
- [46:18]
A
Part of why I'm guessing we're not is that you've made quite a few in recent years, as you suggested.
- [46:26]
B
Right.
- [46:27]
A
And I'm assuming that a digestive period was necessary. Right, just to understand all of these operations.
- [46:35]
D
Yes, but no. We were an LOI out on March 29, but then this funny thing called Liberation Day happened.
- [46:46]
A
I'm a little bit familiar, but tell.
- [46:48]
C
Me how it showed up in your world.
- [46:50]
D
Yeah. Where we were liberated from the oppression of low prices.
- [46:56]
A
Yes, exactly.
- [46:59]
D
Oh, I'm definitely going to get deported today.
- [47:02]
A
Exactly. They're going to come and collect you. Oh, it's been so nice knowing you, Lee. It's been great.
- [47:08]
D
I think. Really? What was. So we felt like we'd ingested Citizenry really well at the beginning of the year, at the beginning of Q2, we felt like Borough was in a good spot, and so we're ready to do more deals. Borough, as you know, was our last deal that we did in October, November of last year. And then the amount of focus that shifted to understanding tariffs was pretty astounding because, as you know, there were fluctuations in tariffs. They went up, they went down, they went around. And so both understanding what to do, but also understanding what the layup, this kind of steady state lay of the land was going to be, just took a lot of team effort and really kind of made it. So we felt like it wouldn't be responsible to do an acquisition in Q2 or Q3. We're back looking at deals. I mean, we always sort of kept an eye out for things that were high quality. I made a really, really Hard run for one that I really wish I could have announced to you guys because I think you would have liked it. But, but I think from our perspective, we've always felt like you can't acquire businesses into an unstable base when we weren't sure where margins were sitting. We were resourcing all of our product out of China. We were looking at American manufacturing. We were just doing all of these things across the team. It didn't really make sense to ingest another business. But we're back, we're back looking at things, you know, we'll see. Okay.
- [48:36]
A
Okay. Well, I mean it's as you spent these many months figuring out all of this, how did it show up for you knowing that you've got this huge Asian supply chain? What did you have to figure out and how have you been dealing with price increases and how much you've been able to take on yourself versus how much you pass along and all of that.
- [48:59]
D
So I think the biggest thing that stabilized is that we now have a supply chain that runs across countries. So like, you know, the biggest thing was China seems to be really in the spotlight at all times. And so ensuring that we've sort of multi sourced out of China if necessary, even if we keep Chinese production going, which in some cases it made sense for us to do so is one. So like the ability to shift things around. And I've said this before, the interior defined program is a complicated program. It is custom. You're holding 175 fabrics. We technically customize down to the inch. So it took a little bit to resource that. So that was one. And then the second is we did a lot of price and price testing and have developed a lot of processes to understand where the market is, by the way, AI driven to understand where the market is and be able to kind of try and inch up prices when we can. And so we're probably only about halfway to where I think prices are going to land. But we don't want to get too far ahead of the market. So we are eating a little bit. We just have to by nature have to take it on because like, I don't think the consumer really supports that level of increase in price without seeing a massive sort of deterioration in demand. And what's nice is, you know, I'm not saying we've solved it all, unfortunately. I wish we had. But at least from a leadership team perspective, we've got a process. We have, roughly speaking, we know the playbook. Is it perfect? No. But from a brain perspective, we can now focus on some other things. Even as that playbook gets executed anytime we have a change in tariffs.
- [50:40]
A
We were talking earlier about the fact that you were just in Vietnam recently, and an awful lot of furniture is coming to the US From Vietnam. And I'm curious. I'm curious the mood on the ground and how they're seeing all of this and thinking about it.
- [50:57]
D
You know, it's interesting because I think Vietnam has been one of the winners. I would say maybe not winners, but like, relative winners relative to China. Anyway. I think obviously they were certainly the.
- [51:07]
A
Winner in the, hey, we've got to get out of China, so let's go to Vietnam.
- [51:11]
C
Right?
- [51:11]
A
They were winners.
- [51:12]
D
I think they were incredibly disappointed by, you know, some of the more recent developments. So kind of like the broader upholstery tariff, I think even landing at 20 was higher than I think maybe what was expected on the ground there. I would say, though, that if you are a person that had invested in a Vietnamese factory a few years ago, and there were many people that did because of the first Trump administration and those Chinese tariffs, you're feeling pretty good about yourselves right now. There's certainly a lot of growth, it seems like, for a lot of them. And so I'd say it was cautiously optimistic. And there was a lot of curiosity around what's going to happen the consumer market in the US because that's really, you know, if you think about what pretty much any upholstery manufacturer has felt for the last couple of years, they felt kind of the extreme lows of a consumer being relatively soft in the home market. And what they're worried about is that because, like most factories will tell you they saw orders decline quicker and for a larger duration of time than even consumer demand sort of looked on the ground, because people were holding onto inventory and they were selling through. And, you know, and so. So there's a real concern about the consumer, and if we raise prices, what's going to happen to demand? There's a very clear question on whether or not the consumer will continue to show up in what, to them feels like potentially a softening American economy. And so it's interesting, you get to talk about a lot of our competitors or frenemies in cases and compare yourself. And it does feel like from any individual customer, they're feeling retraction. But across the board, from a macro perspective, there's a lot of sort of coming inbound, and more and more people are obviously manufacturing in Vietnam and in places like in Asia and otherwise to just kind of, again, get A little bit of diversity on the ground, but these, like, 232 tariffs make the benefit of that go away.
- [53:13]
A
Yeah, no, no, no, that makes sense. I wonder, does any of this. Can you envision production facilities coming to the US In a meaningful way for any of your businesses, which is the supposed intended effect of all of this?
- [53:28]
D
It's.
- [53:30]
A
Oh, she lowers her voice. She's like, no.
- [53:34]
D
Well, no, I think for some of our brands, yes. In particular for the ones that have sort of pricing that can support it. I think the biggest challenge for us is honestly, capacity, and it's human capacity, not manufacturing capacity. There just aren't as many. I mean, we saw this in Covid whenever he was trying to remove manufacturing here. Right. Because container prices were so expensive that it started to make a lot of sense, like there just isn't enough capacity in the United States right now.
- [54:02]
A
The skilled labor to do it.
- [54:04]
D
The skilled labor. And so, you know, I think for us, it's difficult to see it happening this week. Now, if we can somehow create an AI robot that can upholster things, I think that's certainly possible. But we've been looking. Honestly, I've been actively trying to figure out if that's what makes the most sense for us. We will absolutely do it. But the challenges so far, unfortunately, outstanding. Strip the promise, I'd say. I know some people are doing it like Satya at Surya famously fought Mitchell Gold, Bob Williams, that kind of thing. And so people are looking at it, but it definitely hasn't been an easy unlock for us, unfortunately.
- [54:52]
A
So you mentioned the fact that rather than having to worry so much about digesting all the acquisitions, you sort of got that under your belt. It was really digesting all of this tariff news. And it sounds like.
- [55:03]
D
I think it was that. Yeah, I mean, it's just been like a whiplash year. It definitely wasn't what we were expecting. And, you know, I guess the market seems to be tolerating it. And, you know, I think it remains to be seen if, like, consumers hold up over time. But it did require quite a bit of work on our side, and not fun work. It wasn't like, let's brand something or let's buy a business. It was like, let's figure out how to get this spec to this factory. And you know what I mean?
- [55:32]
A
I mean, the interesting thing is, to your point about. So we've seen recently a shift in the language coming out of the Federal Reserve as the Fed has grown concerned about employment rather than inflation at a time where, unfortunately, nobody was thoroughly convinced that we've beaten inflation back. And so we're having to shift gears because obviously there are, are meaningful signs. And of course, we're not even getting employment data at the moment because of the government shutdown. So we don't even. Right. We don't even know.
- [56:04]
D
We could be at 10%. We could be at 10%, could be great.
- [56:08]
A
We have no idea. But we're feeling like it's pretty likely that it's been softening and so we can't really tell. The equity market seems to be shrugging so much of this off, thinking, oh, this isn't really meaningful. Inflation hasn't shown up there. The companies are so smart and we're investing so much in AI and technology that AI is just going to propel everything. And who cares if the furniture industry has slowed down a little bit, Right. Compared to all of that. And so maybe in the big picture it doesn't really matter, but it does seem like everyone is just starting to believe, yeah, maybe these tariffs do stick around for a while.
- [56:50]
D
I think that what's interesting about how I'm thinking about it, but also I think some of my other CEO or business leader friends are thinking about it, is the uncertainty. And you could think about it with acquisitions, but I think about it also with hiring. The uncertainty around what is happening makes it so that I. I'm less likely to engage upon a new fixed cost. So people would be one of those fixed costs. But also with people. The tantalizing closeness of AI to replacing people has made it so that I almost don't always feel like I need to. And I think that that anxiety, if you're an employee or employed by a business, I think that anxiety is just, just even if you don't, for example, aren't terribly worried about it, I think it's like consumer shocks, consumer slowdowns happen because of consumer psychology. Often it's that generalized anxiety about, I think, the economy that I worry about the most because, frankly, the customers we serve are still fairly affluent. They have exposure to the market. They're probably seeing their stock portfolios run up quite a bit over the last 12, 18, 24 months. Oftentimes they're homeowners, so they've likely seen some capital appreciation in their, in their primary household. And there's still a bit of anxiety out there. And I think one of the things that's difficult about tariffs is, you know, it's. It's another. I call it. I don't know if it was like the. It was the only Thing that has sort of like changed, I think, perspective from last year to late last year to this year. But it certainly feels like it's not helping. And I hear you that, like, you know, furniture, relatively speaking, is a small side of business.
- [58:39]
A
Sure.
- [58:39]
D
But, you know, it's apparel, it's footwear. It's everything that like, you know, the consumer sort of touches and feels. And I think that, like, it just adds to this sense of, I think, consumer anxiety that again, trickles down to all of us. But you are seeing, like, if you look at the stock market, there was an article on this in the Wall Street Journal, I think, on how sort of under the headline numbers of just kind of a wonderful upswing in the s and P500, what you're seeing is a mix shift in where people are putting their money and there are winners and losers in that bucket. And it does. People will tell you this all the time, that it's like the Mag 7 that's really growing.
- [59:18]
A
Exactly.
- [59:21]
D
And so how durable is that or how sustainable is that? Or, you know, will that actually make for a healthy economic picture? I don't know, because there are smarter people than I looking at it. And they all say different things. But if you're asking about, like, my general, you know, concern, it's. It's generally around that. It's like I could. I could probably have dealt with the margin challenge if I didn't feel like it impacted my consumer. But having both at once is very difficult.
- [59:50]
A
And I feel as though. So a year ago, when you and I were last talking about the many possible acquisition targets that were out there even then, there were a lot of different reasons why companies needed to sell, and there was a sense of real urgency with many of them. And that certainly, I imagine, must still be the case today, if not more so.
- [60:16]
D
It is the case today. I will say the one thing that I've noticed, noticed between call it last year and this year is there are more buyers. I don't know why there are more buyers. My guess is they've seen it and they've seen that it might work and they understand that the cost base is low enough that you don't really need to do a lot to make these things work a little bit better. Which when we acquired Interior, fine, there were no other suitors.
- [60:43]
A
There was nobody.
- [60:44]
D
It was just a suitor.
- [60:45]
A
You have it, you take it, really.
- [60:47]
D
They quite literally effectively paid us to take it on. So I think that's changed a little bit, which is sort of interesting. And I think there aren't a lot of places to put your money right now. And it's not unreasonable to say, oh, wait, I can take this unprofitable business, buy it for effectively nothing, turn it into profit with this capital I have, and wait it out until the market kind of corrects itself, because it typically does. And so I think there's a little bit of. Of that going on, which I think is really fascinating. Like, we're now seeing kind of financial buyers come in, like ex private equity dudes with the holding company, like that kind of thing, which we didn't used to see in this little category. So, you know, I guess I think there's more people potentially in distress, frankly. A lot of people didn't make it through 2023, 2024. So there's that. The people that did. I think there's a lot of. Of looking around to see what. What strategic options are. But I am noticing that there's a little bit more at the table.
- [61:51]
A
So. So we always talk to the big M and A guys, you know, the stumps. Right. So. Right. So Tim and Bo that come on the show and they're always trying to give us a fun catchphrase. So it was supposed to be survive to 25 and thrive was the last one. And then we got to 25 and hasn't been so great. Right, right. And so last time Tim was on, he said, Unfortunately, 27, a lot of companies go to heaven.
- [62:15]
B
Oh, no.
- [62:16]
A
What? So that wasn't good. That wasn't positive, but I mean, he was hoping there would be a fix in 26. So I don't know. I think a lot of these High Point companies have a lot that they need to figure out. And many of them bought giant spaces at High Point Point that now I bet they wish were smaller. Right. And just a lot of decisions that were made before this landscape changed so dramatically. And now between tech and tariffs, I mean, it's a lot coming at them.
- [62:54]
D
It's a lot to navigate because I think tariffs for our industry, regardless of whether you're a North American manufacturer or not, not, are going to naturally kind of impact the business, probably in a negative way. I know y' all have talked to some folks that have sort of a contrary take, which I'm actually really interested in. But, like, you know, fundamentally, I think, like, clearly this is not our year as well, like survives 25. Well now. Yeah. To your point, now we've got a. We are not really. And so, you know, how many of us have been just like exhausted by the like Even the ups of COVID and the crazy container rates and then the downs of 2022 and the sustained issues of 23, and now you're faced with tariffs and it does feel a bit like we can't catch a break. And yet again, I think if you think about it long term, there's a lot of pent up demand for housing. There is a lot of probably pent up demand downstream from that in furniture and furnishings and renovation. And we started to see that a little bit this year, although muted, I think maybe more muted than we'd expected. And if you do get interest rate cuts, I can see why there are people around the table that are sort of like, oh, hey, I can buy these things cheap. Because the founder sees exhausted and their capital is gone and they're seeing a prolonged decline in sales and profit. And let me just hold on until whenever, 2, 5, 7, 10, in some cases years that it comes back because again, there's a physicality to what we do that thankfully doesn't get replaced by the technology revolution. Again, unless you're making robots with upholsterer robots.
- [64:30]
A
At one point we were all going to be living in the metaverse and then it wasn't going to matter. Right? Yeah, thankfully, we've moved away from the metaverse. We've moved away from that, thank goodness. So, yes, we are going to need those physical sofas that you're sitting on now, thank goodness. And they're supposed to be this huge wealth transfer to the next generation that's taking place in the coming years. And certainly plenty of people are optimistic about that. To your point, we know there's not enough housing, many more houses need to be built. We're a couple of million shy of what we need.
- [64:59]
D
Right.
- [64:59]
A
So everyone keeps coming back to that. But that doesn't seem to have gotten us through in a meaningful way these last few years.
- [65:07]
D
It doesn't seem like it has. And again, I sympathize with all of my compadres here that are figuring out how to kind of continually remain in survive mode until, until we get through this. But I think for us it's been a lot of. We have typically taken these downward moments and tried to make hay. So acquire businesses, grow at outsized rates, do things that are a little bit more interesting. And I think what's been hard for us here is it's been a lot of rework that we weren't expecting and it's somehow not as fun as some of the growth oriented things that we've been able to do. In previous years, I like to say that there's a little bit of. Also, like, now we're a bigger business with a lot more to lose. So like, back in the day it was like yellow and now there's like a whole lot of things that unfortunately it would be tough to walk away from.
- [66:03]
A
So maybe it won't be long until we're having an acquisition conversation. It sounds like you're eager, but I would love to.
- [66:10]
D
We are back active, I'd say, looking at some things. There are some interesting things. I think typically we see it at the end of the year. So you get, you know, people start to do planning for the next year and then they start to realize, like, I don't know if I want to do sign up for this one more year. So I'm anticipating some things.
- [66:29]
A
I remember interior defined, kind of came together over the holidays. So I mean.
- [66:33]
D
Oh, yeah. Kind of famously. Yeah, yeah, yeah. I will never forget that. It was like the Sunday of Thanksgiving.
- [66:40]
C
Yes.
- [66:40]
D
And they were like, can you do this deal in two weeks? And I was like, are you, are you kidding? I had so many years.
- [66:46]
A
I'm with my fans.
- [66:48]
D
I'm like, I, like, I had a one year old. Like, I was like, I had no childcare. My, like, nanny had quit. Anyway, you get through it and then it becomes a fun story that I can tell on a podcast.
- [66:57]
A
Well, exactly. And maybe, maybe I will check in with you over the holidays and see if there's an exciting deal that's coming together. I'll call you Thanksgiving Day and just check in.
- [67:06]
D
I will say my loyalty now before, like, well, before they go on vacation, they ask me if I'm looking at something, so I anticipate that call.
- [67:16]
A
Yeah, well, hopefully everyone gets to have the holidays at home and not putting together an emergency deal, but. But I think we'll know a lot more post, post High Point. And, and once the government reopens and we can see some of this data, we might have some better insight as to what's actually happening, happening in the country.
- [67:35]
D
You know, you know, small things.
- [67:36]
A
Great. All helpful. Lee, always a pleasure to chat with you. Thank you so much for your time.
- [67:42]
D
Thank you so much.
- [67:47]
A
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. Fred, what caught your eye?
- [67:55]
C
A couple things caught my eye this week. First of all, you know, I think most everyone listening to this will have heard the Very sad news that actress Diane Keaton passed away earlier this month. You know, and obviously she's known for her great movies and her great performances. But if you're in the design industry, you also know that Diane Keaton, like, showed up in a big way in our industry. And a lot of celebrities kind of breeze through High Point. They got their one thing they're trying to flog. They take the overnight flight out and, you know, but not. She was really committed. She had all kinds of interesting collections. Collections. She wrote several books. She was a big house flipper. She was really invested in design. And I was really heartened to see a lot of people who had, like, had personal experiences with her, posting about on Instagram, talking about how genuine she was and how sincere she was. And there was a great retrospective in the New York Times talking about all the, you know, houses she'd done. So, you know, this is a little bit of an in memoriam to a side of Diane Keaton that I think most people didn't know about. What was a big part of her, her life over the past one years.
- [68:50]
A
Absolutely. And she did so many homes with the great designer Steven Shadley, who I'm, I'm hoping to have on the show at some point. But she was, she was so passionate about, about home. She was always in some state of redoing a home, buying a new home and, and fixing it up. So it was a, it's obviously a huge part of her life. And she was, she was such an incredible person. I was a. Such a huge fan. It's, it's been sad to, to look, look at all of the clips of her great movies and think about her no longer being here.
- [69:21]
C
Yeah, no, I know. It's definitely sad. The next thing that caught my eye is just kind of a little bit of business minutia. But I noticed that our friends over at AD Pro are doing this new thing where they're taking their directory and offering something that sounds quite similar to the expert I was going to toss. Wonder where they got that idea where they're.
- [69:40]
A
Yes, I wonder where they go.
- [69:42]
C
They're going to offer video consultations with some of the designers in their directory to, you know, to readers of AD and just anyone who can, you know, front the coin. But I mean, I think that makes all, you know, frankly, it makes all the sense in the world for AD to do that, to capitalize on their brand, you know, their awareness with customers. And, you know, if designers get some, some money out of all this, I'm really happy. But I'm curious if our friends over at the Expert are watching that with some suspicion. I don't know. I think it's really interesting. I'm sure at some point we'll have time to talk about it in more depth. But the fact that they announced it certainly caught my eye. I don't know about yours, Dennis. What caught your eye?
- [70:15]
A
Well, that certainly did catch my eye, and I think I know how they feel at the Expert, but we'll. We'll talk about it more in the future. In the meantime, one of the things that caught my eye was there was a great article in the New Yorker, and by great, I mean really, really long.
- [70:34]
C
You know, I love that.
- [70:36]
A
I know. I know that appeals to you, Fred. But there was a piece about Jason Saft, who has a business called Stage to Sell Home, and it was talking about his remarkable staging business. And many of you out there might know that he's having a big warehouse sale where I understand you'll perhaps be spending some time, Fred. But it'll be open to the public. Public on. On Saturday, I believe that's the 25th, from 10am to 2pm And Jason says you better get there early because he expects things to sell out pretty quickly. But it's going to be in Industry City in Brooklyn, so. So look for that.
- [71:17]
C
Yeah, I would say don't even bother going because I'm going a day before to the VIP sale. I'm just gonna buy all the good stuff run off in a big, big truck. No, but I am going to that. And, you know, I do think what Jason has done is really cool. I had coffee with him a few months ago, or I don't got, maybe a few years ago at this point. Really interesting business brings a really interesting aesthetic to home staging. And how cool that the New Yorker, you know, spent 3,000 words on him. I'm just sad I didn't get there first because, you know, I love a long article and Jason's an interesting guy. So, yeah, check out that sale and hopefully you can deal with the dregs that I didn't buy.
- [71:51]
A
Yes, I was sorry to miss it. I sent them a note that I got to be at High Point, but I'm glad that you'll be there representing, and perhaps we'll talk to Jason in the future. 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.
- [72:12]
B
The show, write to us@podcastusinessofhome.com this episode.
- [72:17]
A
Was produced by 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.