Wayfair: How Two Engineers Changed The Online Home Good Retail World
Forrest Gump was right from the first time: life is like a box of chocolate – you never know what you'll get!
Or at least, that's what goes through your mind when you read the story of Steve Conine and Niraj Shah, the founders of Wayfair. Their creativity, intelligence, and determination helped them launch three companies from scratch – but only one became a true success!
Here's the story of how two engineers built the company that became the leader in the online home goods retail world - even though they don't know a thing about home design or interior!
Read the full story at:
Friendship Based On Fate
When building a company from scratch, one of the biggest arguments people have is how much of the entire process is based on hard work, and how much of it is pure luck and fate.
Well, with Steve and Niraj, it was all fate – at least at the beginning.
They met at a high-school summer camp for math and engineering in the early 1990 and bonded very quickly. After the summer camp, they wouldn't meet each other until college - and that's when they had a moment of fate – both of them ended up as first-year students of Mechanical Engineering at Cornell University, even living in the same dorm corridor!
It was a chance for them to get even closer as friends, but also to study together, attend classes, and build a stable friendship foundation that would turn out to be crucial for launching three companies.
The dynamic of their friendship changed in 1995, a year when the Internet was making its baby steps into the world: in their last year of college, they attended an entrepreneurship class. Part of the class' subject was making a business plan, which turned out to be the business plan for their first company.
After graduation, they decided to focus on becoming entrepreneurs and see how good they'll be at it.
They did excellent – even without intending to!
Third Time's A Charm!
Steve and Niraj started out small – by creating an Internet directory website, which was basically a website containing links to business's websites.
Do you know how many companies had websites in 1995?
Not too many.
So, unintentionally, while these two pitched their Internet directory idea to business owners, they got a few website design deals. After this, they pivoted to a consulting company for website design and development, giving it the name 'Spinners' – like spiders spinning the web.
Spinners lasted four years, until the autumn of 1998. It was a great lesson for Steve and Niraj, and their discovery that they enjoy the world of entrepreneurs was hair-raising! So, at the beginning of 2001, they decided to try again and create another company.
This time, they focused on the mobile phone market – specifically, managing business mobile phones. Even though mobile phones were still new at the beginning of the Millennium, they figured their business idea had a ton of potential. They created software that helped companies manage their employees' business mobile phones. The name of the company was Simplify Mobile and they only had one big client – Merrill Lynch.
But, on 9/11, Merrill Lynch lost two data centers and their headquarters in the World Trade Center, so Simplify Mobile was left with bread crumbs. After three months of constant rejections, Steve and Niraj had to face reality – it was time for them to give up on their entrepreneurial dream and get a regular job with a regular career path. They were approaching their 30s, so this seemed like a reasonable idea – but only on paper!
In reality, they loved being entrepreneurs and they were ready to give it another go, for the third time.
This time, Wayfair was born.
One Original Idea, 2 Founders, 4 Phones, And 250 Websites!
Even with two failed companies, Steve and Niraj didn't lose their enthusiasm for entrepreneurship in general. In fact, they were even more drawn to it – they loved being business owners and wanted to try again. In 2002, their business mindset changed entirely, and after talking with countless founders, Steve and Niraj discovered that e-commerce was not dead, despite what most newspapers and media were saying.
They started with what they knew the best – the Internet, looking for e-commerce websites up for sale.
Their breakthrough moment was when they discovered a lady who had a website where she sold bird-houses. This discovery helped them define their mission - give people a wider, more comprehensive choice, so they can make smarter buying decisions.
Today, it's easy for us to order anything online, but back in 2002, for many that wasn't an option. Steve and Niraj wanted to change that for everyone and they started by selling TV stands online in Boston, where they set their headquarters.
Around the same time in 2002, Google launched Google Ads, which was right on the money – they started paying for ads to get the traffic on their website. The interesting part was that they didn't own any TV stands nor had them in their basement. The process went like this: the customers order the TV stands, paid with a credit card, Steve and Niraj order the TV stand from the supplier and the supplier delivers it to the customer.
Clean as a slate. Sound familiar? That's because it's the first instance of the modern dropshipping business!
In four months, they did $250,000 in sales only!
Becoming the biggest online retailer in that category had their retailer super excited, but he had news for the guys – other online sellers were doing pretty good at selling beds and desks. At that moment, Steve and Niraj discovered that they can cover those categories as well!
This was a revolutionized moment – all these two did was constantly look for new products to build e-commerce websites around. After TV stands, they built websites that sold TV mounts, birdhouses, old clocks – and everything in between!
What was even more interesting was the fact that they bought domains named after the products they sold. Their logic was that users need to find what they want intuitively and without too much thinking, and the same domain name made things easier for the users!
By the end of 2002, its revenue was around $700,000.
They were still doing this alone. Steve and Niraj even handled the customer support service – they had 4 phones lined up by the bed to answer customer questions.
Imagine calling up the customer service of multiple e-commerce sites and talking with the same person all the time? Yes, these were fun times for the duo!
By the end of 2003, they had a revenue of $7 million and 15 employees!
Around this time, they named their company CSN Store, from the initials of both founders. The name helped a lot during their pitches, something that we'll discover later in the story.
In the next ten years, they launched 250 websites, all for selling different products. Basically, two guys ruled the Internet for an entire decade and people didn't even know that behind all those websites were the same founders!
Once they started selling outdoor furniture, everything changed.
Wayfair, The Rebranding That Lead To Billions
By 2010, Steve and Nash had made $400,000 million in sales and had around 5 million customers. The CSN store was like smooth sailing and what made it successful was their pitch.
Around that time, the skepticism about e-commerce was still around. So, when they pitched to new clients, they avoided using the words 'online' and 'e-commerce' - at least at the beginning. This way, they managed to have longer pitches that resulted in positive feedback from the clients.
More impressive than their pitching strategy was the fact that no one knew who they were. They were making millions and they were unknown to the world.
That's why in 2011, Steve and Niraj decided to make a brand out of the company and raised their first investments of $165 million from four companies: Battery Ventures, Great Hill Partners, HarbourVest Partners, and Spark Capital.
They hired a branding agency that came up with the name Wayfair. It took Steve and Niraj around a year to collect all 250 websites into one – a process that wasn't fun at all, but it was worth it in the end.
Steve and Narij's idea was simple: they wanted everyone to think about Wayfair if they wanted to redecorate their homes.
From that point on, things were even better for the two of them.
Wayfair has become the synonym for home goods and furniture. Most of their market is in the USA, but the company ships to Canada, Germany, and the United Kingdom as well.
The headquarters remained in Boston, the founder's favorite place. The company also received many awards for being one of the fastest-growing e-commerce companies in Massachusetts, but more importantly, Steve and Niraj achieved their goals!
They wanted to offer better choices for everyone and succeeded. The hard work they put in along with their cheerful energy resulted in a better choice for everyone, no matter the geographical location. Not to mention, they practically invented dropshipping!
That's true entrepreneurial spirit!