von nesting columbia 2015
TRANSCRIPT
VON NESTING
DUSTIN BLANK, KARA DIMON, TONY HACK, &
SONJA HELLSTROM
Interviews completed in
past 24 hours: 8
Total interviews
completed: 52
Survey responses: 104
Fulfilling the home furnishing needs of
dynamic young professionals by providing
furniture where they need it, when they need it,
and for how long they need it as they “nest”
through life.
Lean Launchpad 2015
2
What We ThoughtDay 1
Von Nesting Solution:• Purchase inventory from West Elm, Pottery Barn, etc. and
rent the inventory for 1-2 years• Additional revenue opportunities – offer design advice
WHAT?
PROBLEM?
• Furniture rentals for millennials living in cities, that move frequently
• Want to furnish their apartments tastefully and affordably
• Ownership of furniture entails many burdens: high upfront cost, roommates with partial ownership; fit issues; delivering/removal issues
3
Value Proposition
We provide high-quality,
chic decorating solutions
at an affordable cost,
while removing the
friction and stress out of
the decorating process.
Our business addresses
the different needs of
how modern day
consumers live in an
increasingly transient
world. We solve the
problem of furniture
being a permanent asset
to consumer – when it
needs to be temporal.
Customer
Segments
High-Frequency
Movers
This group is constantly
transitioning to different
living spaces, while
trying to cut cost in
between. These are
millenials, renters,
students – people who
move a lot and could
benefit from temporal
furniture needs.
Start-up Businesses
These businesses have
short-term furniture
needs on tight budgets.
Channels
• Physical
Showroom
• Interactive digital
Customer
Relationships
• Dedicated
“decorator” team to
ensure satisfaction
and quality control
with product
• Recommendation
engine to alert
customer of new
product they might
like
Revenue Streams
• Revenue from rental contracts to consumers of service
and later from option to buy
• Revenue from designers to be included in catalogue
• Revenue for one-on-one advanced decorator help
Cost Structure
Warehouse, Inventory management, Sales
team, quality inspection team.
Key
Partners
• Designers/
Brands
• Furniture
Stores
• Outlet
Stores
• Interior
Decorators
• WeWork
Type co-
working
spaces
Key
Activities
Relationship with furniture companies, supply-chain management
Key
Resources
Physical furniture, customer lists
Business Model CanvasDay 1
4
Designers, Brands, Furniture Stores, Outlet Stores, Interior Decorators, WeWork spaces
Key Partners Key Activities
Key Resources
Customer Relationships
Value Proposition
Cost Structure
Customer Segments
Warehouse, Inventory management, sales team, refurbishment, shipping costs
Supply-chain management,shipping, delivery, and pick up,developing website
Furniture, customer lists, shipping materials, refurbishing center
We provide high-quality, standard furniture needschic decorating solutions at an affordable cost, while removing the friction and
stress from the furnishing and moving process out of the decorating process.
Our business addresses the needs of young professionals in major cities during the transitory years between college and “settling down” who live in an increasingly transient
world. We solve the problem of furniture being a permanent asset by providing high quality products for one- or two-year periods with the option to buy at the end of the rental.
Interactive website, furniture showroom
Revenue Stream
Channels
Customer nesting stages: • Multi-person home• Single-person home • Couple home
High frequency Mover profile: • 20-30 years • Young professionals• City dwellers • Renters (vs.
homeowners)This group is constantly transitioning to different living spaces, while trying to cut cost in between. These are millenials, renters, students – people who move a lot and could benefit from temporal furniture needs.
Dedicated “decorator” team to ensure satisfaction and quality control with productRecommendation engine to alert customer of new product they might like
GET: paid search, word of mouth
KEEP: allow them to exchange furniture, meet their changing needs as they move to new apartments
GROW: cross-sell other products, up-sell as they move to bigger places
Revenue from rental contracts to consumers of service and later from option to buy, Revenue from designers to be included in catalogue, Revenue for one-on-one advanced decorator help
Business Model CanvasDay 2
5
Designers, Brands, Furniture Stores, Outlet Stores,Early CareerInterior Decorators
Key Partners Key Activities
Key Resources
Customer Relationships
Value Proposition
Cost Structure
Customer Segments
Warehouse, inventory management, sales team, refurbishment, shipping & pick-up costs
Supply chain management, (pick-up service & refurbishment), relationship with stores offering rental sol’n through Von Nesting
Furniture, customer lists, shipping materials, refurbishing center
We provide high-quality, standard furniture needs at an affordable cost, while removing the stress from the furnishing and moving process.
Our business addresses the needs of young professionals in major cities during the transitory years between college and “settling down.” Solve the problem of furniture being a permanent asset by providing high quality products for one- or two-year periods with the option to buy at the end of the rental.
We partner with design stores so clients can decorate how they want without the upfront expense.
Interactive website, brick & mortar (referrals from existing furniture companies)
Revenue Stream
Channels
Customer nesting stages: • Multi-person home• Single-person home • Couple home
High frequency Mover profile: • 20-30 years • Young professionals• City dwellers• Renters• Modest disposable
income• Driven by
convenience
GET: paid search, word of mouth, referrals from stores/brands carried, HR at large companies, and rental management companies
KEEP: allow them to exchange furniture, meet their changing needs as they move to new apartments
GROW: cross-sell other products, up-sell as they move to bigger places
Revenue from rental contracts to consumers of service and later from option to buyDelivery revenue (second hand rentals)
Business Model CanvasDay 3
6
Business Model CanvasDay 4
Designers, Brands, Furniture Stores, Early Career Interior Decorators
Key Partners Key Activities
Key Resources
Customer Relationships
Value Proposition
Cost Structure
Customer Segments
Purchase furniture at wholesale prices on demand, warehouse, refurbishment, shipping & pick-up costs
Supply chain management, (pick-up service & refurbishment), relationship with stores offering rental sol’n through Von Nesting
Customer lists, shipping materials, refurbishing center
Customers:We provide high-quality, standard furniture needs at an affordable cost, while removing the stress from the furnishing and moving process and the upfront expense.
We take the commitment out of furnishing during the transitory years of a young professional’s early career.
Interactive website, brick & mortar (referrals from existing furniture companies)
Revenue Stream
Channels
Customer Profile: • High frequency
mover• 22-34 years• Live alone, with
roommates, partner• Young professionals
(from out of town)• Urban renters• Modest disposable
income• Convenience driven
GET: paid search, word of mouth, referrals from stores/brands carried, HR at large companies, and rental management companies
KEEP: allow them to exchange furniture, meet their changing needs as they move to new apartments
GROW: cross-sell other products, up-sell as they move to bigger places
Revenue from rental contracts to consumers of service and later from option to buyDelivery revenue (second hand rentals)
Partner Profile:• Furniture stores:
mid-tier, modern design
• National & NY based • No rental option
currently
Partners:National: build future customer base. Improve conversion & units / transaction.NY Based: build brand recognition.
Opportunity to acquire customers who will growth into their brands.
7
What We LearnedDay 2-4
Private Label vsThird Party
• Private Label: Only way to earn VC-sized margins; requires extensive logistics and capital
• Third Party: Avoids issue of building own brand and allows VN to tap into existing customer base; margins unattractive and potentially not profitable
Customer Segment
• Addition of international profile / elimination of frat boy profile
• Tightening of age demographic
Shop-the-Look • Significant new exposure and revenue for already existing furniture brands
Convenience Issues
• Realized that eliminating all the inconveniences of owning and moving furniture was not within the scope of our business
8
Business Model CanvasDay 5
Designers, Brands, Furniture Stores, Early Career Interior Decorators
Key Partners Key Activities
Key Resources
Customer Relationships
Value Proposition
Cost Structure
Customer Segments
Purchase furniture at wholesale prices on demand, warehouse, refurbishment, shipping & pick-up costs, marketing
Relationship with stores offering rental sol’n through Von Nesting, customer acquisition, refurbishment
Customer lists, shipping materials, refurbishing center
Customers:We provide curated, high-quality furniture needs at an affordable cost, while removing the stress from the move out process and the upfront expense.
We take the commitment out of furnishing during the transitory years & put aspirational design within reach.
Interactive website, leverage partner brick & mortar to showroom
Revenue Stream
Channels
Customer Profile: • High frequency
mover• 22-34 years• Live alone, with
roommates, partner• Young professionals
(from out of town) • Urban renters• Modest disposable
income• Convenience driven
GET: paid search, word of mouth, referrals from stores/brands carried, HR at large companies, and rental management companies, ad campaign targeting aspirational customers
KEEP: exchange service to meet changing needs
GROW: cross-sell other products, up-sell as they move to bigger places
Revenue share from rental contracts and option to buy. Service fee to partners.Delivery fee from subsequent rentals
Partner Profile: • Furniture stores:
mid-tier, modern design
• National / NY based • No rental option
currently
Partners: Build brand recognition.
Acquire customers who will grow into their brands, high lifetime value.
Monetize inventory excess inventory.
Control branding & marketing campaign once customer is acquired.
9
Where We Ended
The Business / Revenue Model:• Customer acquisition for existing brands and avoid cannibalization
of sales• Partners own the customer relationships• VN still owns customer data
PARTNERS AS CUSTOMERS
VALUE PROPOSITION
• Transitioned to focus on providing service to both customers and our furniture partner stores
• Acquisition of rental customers
• Renters: solves problems like curation, flexibility, affordability
• Furniture Companies: taps into customers who couldn’t buy; expands brand ecosystem to drive traffic revenue
10
Customer Segments - Renters
Core Customer Profile:
Young professionals, 22-34 years old
Urban Dwellers
Renters
>80k annual income
“The Kara”
The newly cohabitating
couple
“The Dustin”
The adult who finally lives alone
“The Sonja”
The mature roommates
“The Randall”
The out-of-towner
“It is really convenient for int’l students who have to leave after 2 years”
“I am always stressed about how my roommate and I will split up furniture when we move”
“Rent - to - own, I like this idea…“ “Would have been
great when moving in with boyfriend, we both owned too much to fit in apartment”
11
Customer Segments - Partners
Brand PartnershipsBrand curated “suites”
Upscale, aspirational brands
Local, rich brand story
12
Value Proposition - Partners
Access to new &
qualified customers with
high CLV
Monetize overstock
inventory
Own & manage
consumer relationships
Flexibility in brand
presentation
Provides channel to monetize
inventory in value accretive
way
CRM tool gives retailers
power to manage this
relationship
VN allows retailer to control
key elements of branding,
merchandising, and
transacting
VN website generates demand
in a new market, by
connecting retailers with
renters
13
q
Revenue Model
Renters
Brand Partners
Customers
interested in renting
furniture
Drive traffic to
partners for
sale items
Furniture Rentals
Von Nesting’sShop-This-Look interface
Transaction &
logistics data
Service fee &
revenue sharing
agreements with
partnersRenta
l P
aym
ents
14
Customer Acquisition
“Get Strategy”Renters
Acquire Renters
- Purchase Google key words
- Geo-target Facebook advertisements
- Leverage brand partnerships to attract consumers
- Offers one location for customers to find and compare desired furniture rentals
- Alleviate burdens of moving through flexibility of furniture rentals
“Get Strategy”Partners
Acquire Partners
- Capture untapped consumer segments
- Drive traffic to their websites through “shop the look”
- Enhances customer management and engagement while allowing
- Generate increased revenue without cannibalizing current sales
- Provide customer data
15
The Von Nesting Approach: MVP
• Develop VN furniture rental site that features furniture suites with ABC Carpet
• Rent out to different customer segments while expanding brand awareness.
• Refurbish rented out furniture (potentially stays with retailer).
• Re-rent and further expand brand awareness.
EXAMPLES / DETAILINITIATIVE
Develop bohemian furniture suite in partnership with ABC Carpet.
Deliver new refurbished furniture to new customers.
Von Nesting picks-up furniture at end of contract and delivers to artisan local refurbish site.
Sign one- year rental deal with newly engaged couple with contract that prevents Von Nesting liabilities for damage; great delivery service from brand partner.
Appendix
17
Needs
• Satisfy changing living needs (space constraints, layout changes, design preferences)
• Figure out what to do with old furniture
• Functional needs of living space & life stage guide furnishing decisions
Gains
• Getting new furniture to satisfy every move and changing tastes
• Having high end furniture without the monetary or time commitment
• Spreads cost if furniture is purchased at the end of a rental
Value Proposition - Renters
Pains
• Eliminating burden of selling/moving/storing old furniture
• Avoiding the embarrassment of cheap looking furniture
• Design decisions are hard to reverse -changing taste is a barrier to purchase
• High upfront cost
18
Value Proposition - Partners
Partners - Pains, Gains, Needs The Von Nesting Solution
Access to NEW and qualified a customers with high lifetime value
- VN website generates demand in a new market- VN customers have strong intent to purchase - Opportunity for a retailer to start and build a long-term relationship with
a valuable customer
Monetize overstock inventory - Provides a channel to monetize inventory that would otherwise be
sitting in a warehouse or sold for an unfavorable price
Own and manage the consumer relationship
- VN’s CRM tool gives the retailer the power to manage the relationship with the customer
- VN’s transaction tool works seamlessly with the CRM tool and allows the retailer to host transactions on their website
- VN’s inventory tool allows the retailer to manage their inventory and the VN listings in real-time
- VN’s pricing tool gives the retailer insight into effective pricing for the rental market
- VN’s API gives the retailer the choice to embed rental capability through a widget on their website
Flexibility in brand presentation
- VN allows the brand of the retailer to control key elements of branding, merchandising and transacting
- Retailer has the choice to enable one-click shopping on VN website or handle the transaction on their own website using VN tools
19
Revised Distribution Process
Brand Partners
CustomersVon
NestingCustomers
New Customers
Furniture
Customers
Existing Customers Purchase
Von Nesting Refurbishing
Furniture
Nest to Nest
Rent to Own
Revised process intended to leverage relationships with established brands while
providing the brands the ability to rent and develop relationship with 22-34 demo.
20
Hypothesis - Distribution Channels
Target Renters are willing to rent furniture online
Proposed Experiments
Hypothesis - Get Strategy for Renters
Renters will be interested to use this service if they can get furniture they would have bought otherwise or couldn’t afford it if they could be rented at a discounted price
Test
Interviews with and surveys of target consumers
Test
Interviews with and surveys of target consumers
Test
Interviews with industry professionals from ABC Carpet, Living Spaces, and HD Buttercup
Hypothesis - Get Strategy for Partners
Furniture companies will be willing to partner with Von Nesting if they feel we can increase their website traffic and sales within a new customer segment
Test
Survey willingness to pay of customers and validate with costing information from industry interviews.
Hypothesis - Revenue Model
Primary revenue stream is from monthly rental fees and mark-up charged for rent-to buy option. Buy furniture from partners on-demand at wholesale prices, and charge rental based on percentage of retail.
Hypothesis - Distribution Channels
Von Nesting will need to rely on partners to handle the manufacturing and initial distribution (storage, shipment, and delivery)
Test
Interviews with industry professionals and venture capitalists
21
Hypothesis 1 - Distribution Channel
ExperimentInterviews with and surveys of target consumers
Result
A majority of consumers reported being comfortable shopping for furniture online but like the ability to view items in person and would feel more comfortable if there was a return option available
IterateVon Nesting’s partnerships with NYC based stores allows consumers to view specific items in person while still purchasing online
Target Renters are willing to rent furniture online
22
Hypothesis 2 - Distribution Channel
Experiment
Result
Iterate
Von Nesting will need to rely on partners to handle the manufacturing and initial distribution (storage, shipment, and delivery), subsequent rentals
will be handled in-house.
Interviews with industry professionals and venture capitalists
Logistic and economic feasibility of taking on inventory after initial rental has been a constant concern of those interviewed
Continuing interviews to determine a realistic solution for inventory management and shipping logistics
23
Hypothesis 3 - Get Strategy for Renters
Experiment
Interviews with and surveys of target consumers
Interviews with and surveys of target consumers
Result
Survey results showed that 62% of respondents were interested in the service as long as they felt they were saving money. Customers expressed interest in option to buy at the end of rental.
Iterate
Von Nesting needs to work with partners to determine a feasible wholesale discount to allow for customer savings on rentals & sustainability of the business model.
Renters will be interested to use this service if they can get furniture they would have bought otherwise or couldn’t afford it if they could be rented at
a discounted price
24
Hypothesis 4 - Get Strategies for Partners
Experiment
Result
Iterate
Von Nesting needs to provide more of a benefit to their partners buy driving traffic to their sites and encouraging sales of additional, non-rentable items through the “shop this look” feature
Furniture companies will be willing to partner with Von Nesting if they feel we can increase their website traffic and sales within a new customer
segment
Interviews with industry professionals and venture capitalists
ABC Carpet expressed interest in this service because it captures a younger customer that they have been unable to reach
25
Hypothesis 5 - Revenue Model
Experiment
- Survey willingness to pay of customers and validate with costing information from industry interviews.- Compare to common methods of renting other large assets
Result
People are willing to pay between 30-60% of retail for rental furniture. Differences are seen between men and women and for different furniture items.
Iterate
Explore price segmentation strategy to capture difference in willingness to pay of customer segments (primarily men vs. women). Determine realistic wholesale deals through comparable partnerships
Primary revenue stream is from monthly rental fees and sale proceeds from exercised purchase options. Buy furniture from partners on-demand at wholesale prices, and
charge rental based on furniture depreciation and interest expense.