Wayfair: Niraj Shah & Steve Conine (2018)

After selling their first small business and shuttering their second, former college roommates Niraj Shah and Steve Conine thought about getting "normal" jobs. But in the early 2000s, they stumbled across an unexpected trend: people were buying furniture online to get a wider selection. Within a few years, Niraj and Steve launched 250 different websites, selling everything from barstools to birdhouses. Eventually, they consolidated these sites into one giant brand: Wayfair. The company now carries more than 14 million items for and last year brought in more than $9 billion. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  We get support from US Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't. Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems.

• 0:45Guy Raz?

  But here's the thing. Path A, you keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands, on the table in rewards you never earned. Money that could have gone back into the business. Path B, you pause and get the US Bank Triple Cash Rewards Visa Business Card. Now, you're earning 3% cash back on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes

• 1:30Guy Raz?

  based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2:00 AM kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one Hard question. How do we make sure AI goes well for people?

• 2:14Guy Raz?

  So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan, build the prototype, analyze the market, maybe even come up with the idea. What separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt.

• 2:54Guy Raz?

  Does your team want a website that looks and feels handcrafted but is still fast to ship? Well, Framer is built exactly for that. With Framer, you design on a visual canvas with responsive layouts, hosting and a CMS built in, so the work is production ready from day one. And you can get it done with help from Framer's AI agents. Framer is the AI website builder that helps creators, teams and businesses ship production-ready sites faster than ever while getting every detail right. Prompt, inspect, edit and publish in one place at a whole new pace. AI agents and humans work together.

• 3:36Guy Raz?

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• 4:21Guy Raz?

  NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new, expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.

• 5:06Guy Raz?

  If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built.

• 5:26Guy Raz?

  So the How I Built This Team is taking a much-needed and very short break this week, but we will definitely be back next Monday with a brand-new episode. As for today's show, well, some of you may remember a time not too long ago when e-commerce was supposed to be dead, like over. But today's episode is about two guys who never stopped believing in the internet or in the many things that you can buy on it. This one first ran back in April of 2018. Enjoy.

• 6:00Guy Raz?

  So, all right, I'm going to read some of the websites that you guys launched. Hotplates.com, I'm assuming that sold hot plates?

• 6:07Speaker 01

  Yeah.

• 6:07Speaker 02

  Yes.

• 6:08Guy Raz?

  Yeah, OK. Allbarstools.com?

• 6:11Speaker 02

  And what do you think that sold? Yes, you're doing good, you're doing good.

• 6:14Guy Raz?

  Mydinnerplate.com?

• 6:16Speaker 01

  Nice, that's a classic.

• 6:17Guy Raz?

  I love this one. Everygrandfatherclock.com.

• 6:20Speaker 01

  A very hot category online.

• 6:22Guy Raz?

  Who knew people were searching for that?

• 6:27Speaker 01

  We did.

• 6:34Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:45Guy Raz?

  I'm Guy Raz, and on today's show, how an online search for birdhouses led two college roommates down an internet rabbit hole that inspired what would become Wayfair, an e-commerce company that now sells almost $5 billion worth of home goods each year.

• 7:07Guy Raz?

  So, pretty much everyone we've had on the show had a passion for a product that they needed to put out into the world. Lara American believed the world needed Lara bars. Jenny Brittenbauer was convinced that her ice cream was going to change how people thought about ice cream. Even Jimmy Wales, founder of Wikipedia, thought everyone should have access to free knowledge. But I'm here to tell you that that is not always the case. In fact, sometimes the product isn't what drives the founders. What really drives them is the challenge, or rather, solving the challenge. And that's basically the story behind Wayfair.

• 7:48Guy Raz?

  Neither Steve Conynan nor Niraj Shah felt that strongly about home furnishings, but they did feel like people should have choices, no matter where they lived. Because there was a time when, if you lived in, say, Evansville, Indiana, you couldn't easily get the same type of cool coffee table or sofa that someone in San Francisco or New York could get. And today, Wayfair sells almost $5 billion worth of this stuff every year. Wayfair was actually the third company Steve and Niraj started together. They met as teenagers at a summer camp for math and engineering nerds in the early 1990s. They quickly lost touch, but then, almost a year later, as if fate herself was watching

• 8:33Guy Raz?

  over these guys, they both ended up as first years at Cornell, assigned to dorm rooms on the same corridor. Did you know, both of you, did you know that the other one was going to Cornell?

• 8:44Speaker 02

  No, we hadn't really kept in touch, so I think it was a surprise.

• 8:49Speaker 01

  Yeah, pretty much. I was like, hey, what's up? How you been this past year?

• 8:53Guy Raz?

  So, were you friends, like, right away?

• 8:55Speaker 01

  Yeah, we were part of a, you know, I think when you're freshman year, you sort of have a small group of friends that you sort of connect with and spend a lot of your time with. And we were in that group together. And then junior year, Niraj and I started, we got to be a lot closer and lived together that year, junior year. And senior year, we actually lived together as well, with a few other people up at Cornell.

• 9:17Guy Raz?

  Yeah. Did you guys, Niraj, did you and Steve used to talk about starting a business when you were in college?

• 9:23Speaker 02

  I don't know that we ever talked about it, per se, but our last semester at Cornell, we took an entrepreneurship course, as one of our elective courses. And in this entrepreneurship course, one of the things you had to do was create a business plan. And what really happened is through the process of doing the project, which was creating the business plan, we basically started our first business.

• 9:42Speaker 01

  Yeah, it was 95, and it was the very early years of the internet. The Netscape browser had kind of come out that year. Our idea was actually to develop some internet directory services. And we would go downtown in Nethick, New York, and try to pitch companies on paying us $5 to have a listing in our internet directory. And of course, most of them would look at us like we're nuts. A few would say, hey, kid, that's interesting, but I don't even have a homepage, they called it at the time. Could you help me build a website and maybe at least get a presence on the internet? And what would that cost me? And so, the business turned into kind of an internet consulting business that built sites for companies.

• 10:18Guy Raz?

  And you kind of knew how to do the basics because you were engineering students?

• 10:22Speaker 02

  Exactly. So, you'd go from project to project, and companies were trying to move very quickly. Different people would ask other people, you know, who could we hire, so on and so forth. We were one of the few shops that had actually done things.

• 10:34Guy Raz?

  When you would meet, when you guys would go and meet with clients, did you ever get a feeling from any of them that they would look at you and think, wait, these guys are the ones who are fired?

• 10:44Speaker 01

  This is like a 22-year-old kid, like, what am I doing here? You know, we did, we're both, we're both pretty good sales guys, so I don't, I don't remember that being, smacking me too hard. I mean, I think that, you know, the prices we're charging versus like what they would be looking at for consultancies, I think a lot of these bigger shops looked at it as like play money, where they're kind of like, well, whatever, how bad can it go with a couple of college students here doing this for us? If it works out, phenomenal. If it doesn't work out, you know, whatever. We haven't really, we haven't really lost a lot.

• 11:14Guy Raz?

  So I guess by that summer, you've graduated from Cornell, and then you decided to move to Boston to launch the company?

• 11:23Speaker 02

  Yeah, so we had, what happened very quickly is it sort of was clear, well, Ithaca is not really the right place to be. New York, in theory, would be very logical as a place to be, but we both had more of an affinity for Boston, and we thought from Boston, we could easily work with New York clients, what have you. So we actually decided to move to Boston at the beginning of that summer.

• 11:44Guy Raz?

  And how were you guys managing, I mean, if you were getting all these projects in, coming in, presumably they wanted the two of you to do the work. How were you managing all that work?

• 11:53Speaker 01

  We were working pretty hard.

• 11:54Speaker 02

  Yeah, we were working $100 a week. I mean, we were basically, we set up the living room, we got an apartment, and we flipped coins on who got the bigger bedroom, and then-

• 12:04Speaker 01

  I don't want it.

• 12:04Speaker 02

  Yeah, he won it, and the living room was basically the office, right? So it was just desks with a computer, and we worked, which was fine, because you're working from like 7:00 a.m. to midnight, and then you're sleeping for a few hours and doing it again.

• 12:15Guy Raz?

  Was it exciting, or did it feel like you guys were building something really big?

• 12:22Speaker 01

  Yeah, yeah, it was-

• 12:23Speaker 02

  It was our first year out of college, and so we were young, full of energy. It's very, very exciting.

• 12:27Speaker 01

  There's all this hype around the internet, and everyone sort of got their eyes on it, looking at how, you know, the potential of it. It's, you know, it's an area, when you first see new technology, you can envision the potential of it very quickly. And I think it was, it was awesome to be in the middle of it.

• 12:40Guy Raz?

  By the way, what'd you guys call the company?

• 12:41Speaker 01

  Spinners, because you spin the web.

• 12:44Guy Raz?

  Oh.

• 12:45Speaker 01

  Well, it was the World Wide Web at the time. We were like, oh, spinners, you know, if you're a spider, you spin the web.

• 12:50Guy Raz?

  Oh, I see, you spin the web like a spider. Oh, that's clever.

• 12:55Speaker 01

  Yeah, yeah, right.

• 12:56Guy Raz?

  Oh, my God, you guys are super nerds. So how long did Spinners last?

• 13:03Speaker 02

  About four years. So we started it in the summer of 1995. So I guess that's three years, or the fall of 1998, so maybe a little over three years when we sold it. So a little over three years. We were about 40 people when we sold it.

• 13:17Guy Raz?

  Wow.

• 13:17Speaker 02

  And the internet had heated up a lot. And so there were starting to be some much larger consultancies doing the type of work we were doing. And we didn't think we could scale as fast as these other ones, so we opted in the end to sell to one of them.

• 13:31Guy Raz?

  What'd you guys sell it for?

• 13:32Speaker 02

  We sold it for...

• 13:34Speaker 01

  Combination of cash and equity. I think it was 500,000 cash. So we each got like 250 cash. Does that sound right?

• 13:41Speaker 02

  I think it might have been a little more than that. I think we might have each gotten like half a million cash. And then...

• 13:46Guy Raz?

  And some stock.

• 13:47Speaker 02

  Then we got equity that was worth a few million bucks that then, kind of with the dot com boom, kind of went up tremendously and then came all the way, like all the way back.

• 13:55Guy Raz?

  Down to zero?

• 13:57Speaker 02

  That's where it ended.

• 13:58Speaker 01

  Yeah. Got to watch tens of millions erode.

• 14:00Guy Raz?

  So you guys didn't really walk away with a whole lot of money from that venture?

• 14:05Speaker 02

  No.

• 14:06Speaker 01

  No. I remember, I have this Merrill statement that says I was worth 27 million when I was probably like a 24-year-old. And I remember thinking, I'm all set. And then, you know, six months later, it was basically back down to zero.

• 14:16Guy Raz?

  So at one point, you were worth $27 million when you're in your mid-20s and then...

• 14:21Speaker 01

  Yeah.

• 14:22Guy Raz?

  But it was, really, it was just on paper?

• 14:24Speaker 01

  It was just on paper, but boy, what a good lesson to learn as a young fellow.

• 14:28Guy Raz?

  So this is like the early 2000s, 2000, I guess.

• 14:32Speaker 01

  2000.

• 14:33Guy Raz?

  And the two of you, I guess, decide to start a new business together, right?

• 14:38Speaker 01

  We did, yeah. We'd had a lot of fun and success in the first one and thought, hey, this entrepreneurship thing is easy. Let's do it again. Let's pick something new and do it again, yeah.

• 14:46Speaker 02

  Yeah. So that takes us, so now we're at the beginning of 2001. And we're like thinking of different ideas and we're not sure what we want to do. Long story short, we came across this idea around mobile phones. So 2001 was still pretty early for mobile phones. But we found that a lot of companies were starting to have a lot of mobile phones, but they weren't really managing them well because they'd effectively have thousands of phones, but they were each on different contracts and they were on the wrong ones, they're paying too much for some, too little for others. So our idea was we would build a software platform that would allow these companies to better manage all their phones and their contracts. And we thought over time we could build that in to basically being a virtual carrier focused on enterprises.

• 15:29Guy Raz?

  What's a virtual carrier?

• 15:30Speaker 01

  I'm thinking Virgin Mobile in the UK where they use a Virgin brand name and they actually operate on top of British Telecom's network. It's a branding on top of an existing network.

• 15:41Speaker 02

  But to the consumer, it feels like they're buying Virgin Mobile. They don't think they're buying British Telecom.

• 15:46Guy Raz?

  Got it, okay. What was the company called?

• 15:48Speaker 01

  Simplify Mobile.

• 15:49Guy Raz?

  Simplify Mobile?

• 15:50Speaker 01

  Yes.

• 15:50Guy Raz?

  But you would just call up companies and say, "Hey, can I talk to the person who handles your mobile phones?"

• 15:54Speaker 01

  Yeah. "I'm Steve from Simplify Mobile. I've got a really great offering to help you save money on mobile phones. I'd love to talk to whoever manages that for you." And occasionally you'd get someone, right?

• 16:04Guy Raz?

  Yeah.

• 16:04Speaker 02

  We did have one key flagship customer that we had lined up who was very interested in doing it, which was Merrill Lynch.

• 16:11Guy Raz?

  Big customer, yeah.

• 16:12Speaker 01

  Yeah, they had a big phone spend.

• 16:14Speaker 02

  And so that was looking quite good. And then unfortunately, what happened in 2001 was, say, September 11th was a huge impact for everybody and particularly for financial service companies. In the case of Merrill Lynch, they lost use of their headquarters in the World Financial Center and their priorities obviously had to dramatically change. So with that, we lost the flagship customer that we had anchored around. And so the combination of everything caused us to become much less bullish on this idea, that the odds of it succeeding was just not high enough.

• 16:47Guy Raz?

  See, it's interesting because many people that have been on the show have had similar experiences, but they've said, "And we just kept at it. The first year sucked and then the second year was less sucky, but we just kept at it." And eventually it took off like a rocket. But you guys just kind of came to this conclusion that it was not going to work.

• 17:09Speaker 01

  Yeah, I mean, we were in a, it was a business where you look around and we're the only one doing it. And that's always kind of a scary spot to be as well. And I think when we thought about the market potential and the odds and, you know, what we'd, what we'd learned in that intervening year. I mean, we spent probably the last three months of that business, literally just pounding the Yellow Pages, like just coming in and just like taking rejection all day long and trying to see if we could, how, we tried just really hard to try to sell it. And as entrepreneurs, I think we've been a big fan of saying like, well, look, if you can't, you gotta start with a sale. And if you can't sell anything, you don't have an idea. And so, you know, after kind of validating that, I guess, we sort of said, it's time to walk away from this one.

• 17:47Guy Raz?

  Was that rejection hard for you to handle? Was it humiliating? Did it just like eat away at you after a while?

• 17:54Speaker 01

  Not too bad. I mean, it's not, not a lot of fun. I remember, I remember my dad gave me some advice. He was a, he was a stockbroker for years. And he, he said, look, when you're, when you're going in and calling through the Yellow Pages, he's like, the thing you have to do is set yourself a goal. And he's like, your goal needs to be, when you get 30 rejections, you can leave. And he's like, because that way, if you look at it, every rejection is a good thing because it gets you closer to your goal. And so it keeps you motivated to working at it. You learn a lot more from when things are going bad than when things are going well. So I think we sort of, we both like went out and started thinking about just getting a job. And like, I remember interviewing a few places and sort of, you know, thinking, hey, maybe I should go the more traditional career route. Did that for, I think we both did that to some extent for a little while. And then, I don't know, we just loved being entrepreneurs.

• 18:34Guy Raz?

  So when, when Simplify Mobile kind of like fizzled out, you guys both were starting to approach your 30s, right? So you're still pretty young.

• 18:43Speaker 01

  Yep.

• 18:44Guy Raz?

  Did you have a sense of what you were going to do next?

• 18:47Speaker 02

  Of course, you're going to get into furniture. What else are you going to do?

• 18:50Speaker 01

  Yeah, I mean, furniture on the internet. It's, it's where it's all at.

• 18:53Guy Raz?

  So what did you guys do? I mean, you wind this business down, you're still presumably thinking, let's continue to work together?

• 19:02Speaker 02

  We went right back to the drawing board. So we started looking at that point, we got very-

• 19:06Speaker 01

  Were you living in my basement at this point?

• 19:08Speaker 02

  That's right. So I, in your downstairs bedroom. Yeah. So I was living there.

• 19:13Speaker 01

  Yeah, because we'd kind of brainstorm stuff.

• 19:14Speaker 02

  Right. And then my girlfriend at the time moved, moved up from New York. And so I'm like, honey, this is a great deal. We can just live here.

• 19:22Speaker 01

  And the deal was he bought the groceries.

• 19:23Speaker 02

  Yeah, and we bought the groceries. And that only lasted about two weeks, though, before she decided that we really should get our own place. That was the end of the free rent. But what happened after Simplify Mobile, when we decided, we spent, basically, the first couple of months of 2002, we ended up talking to a lot of different business owners. And there was this theme that emerged, because if you read the New York Times, and if you believed what the journalist said, you would have been left believing that e-commerce was dead. That was what all the articles talked about.

• 19:52Guy Raz?

  Yeah, because there were a bunch of companies that crashed.

• 19:54Speaker 01

  Oh, yeah, big time.

• 19:55Speaker 02

  But I think there was even, at that time, there was a lot of skepticism that Amazon was going to succeed. There were a lot of people talking about Amazon's imminent demise.

• 20:04Guy Raz?

  Yeah.

• 20:05Speaker 02

  And so, we got fairly methodical. We said, well, OK, we should start looking at internet ideas. We know internet, we know internet software. We should look at internet ideas, and then we should look at other ideas that we think are just good business ideas. We're good operators. And so, we started making lists of ideas. We started looking at businesses that were for sale, thinking that maybe there's something small that we could buy and could really grow. And through that, we ended up tripping over these e-commerce websites that were for sale. And we would talk to the owner-operator, and they would tell us how they're growing 20% or 30% year-over-year.

• 20:37Guy Raz?

  When you say e-commerce, what were they selling?

• 20:39Speaker 02

  I remember there was one lady who was selling birdhouses. She was storing them in her garage every day. She was taking all the orders and collecting all the items out of the garage, and packing them up, and taking them to the post office.

• 20:50Guy Raz?

  And selling them online?

• 20:52Speaker 01

  Yeah, all birdhouses.com or some such thing.

• 20:54Speaker 02

  Yeah. The theme we found was really simple. Consumers had realized they could go online and search for any product category they wanted. There were a lot of product categories like birdhouses that are just not really available locally with good selection. If you want to buy a birdhouse locally where you live today, where would you go if you want a decent selection?

• 21:12Guy Raz?

  You'd go to, like, a local store, and you'd find, like, two or three different birdhouses, and then you'd have to... Pick one of them.

• 21:21Speaker 02

  Exactly.

• 21:22Speaker 01

  Right.

• 21:22Speaker 02

  And, you know, they're pretty basic styles, right? Because they're only going to have three or four, right? And so, all of a sudden, people started to realize, well, I don't have to be stuck with that. I can go online.

• 21:30Guy Raz?

  And find 100 different options.

• 21:32Speaker 02

  Exactly. I can order whatever I want. I save the time of the trip to the store. It'll show up in the mail. Super easy. And so, about a month's worth of research kind of helped us figure that out. And so, what we ended up doing is we ended up deciding that there was a big opportunity in buying these businesses. So, the first website we ended up launching, we launched a site called racksandstands.com at the very end of August of that year.

• 21:58Guy Raz?

  Which was?

• 21:59Speaker 02

  TV stands and speaker stands. So, it was entertainment furniture.

• 22:03Guy Raz?

  Did you have a particular passion for TV and speaker stands?

• 22:07Speaker 01

  I was a mechanical engineer out of Cornell. I mean, these things are central.

• 22:11Speaker 02

  But you know what you find? There were, in those days, Yahoo, on Yahoo's search, you could type in terms and it would tell you how many searches a month there were for that item. And on some of the product comparison sites, they would tell you their top 100 categories. And so, both of those terms were in the top 100 searched product terms.

• 22:27Guy Raz?

  Wow. So, people were looking for TV and speakers? Why wouldn't they just go to their local, like...

• 22:34Speaker 01

  You couldn't find anywhere that sells them.

• 22:35Speaker 02

  The same thing about just selection of only two or three, and you can't find a good selection. The furniture stores want to focus on living room, bedroom, dining, furniture. So, where would you go?

• 22:44Guy Raz?

  Yeah. So, wait, so you're thinking, all right, our first one is going to, we're going to sell TV and speaker stands. Just out of curiosity, where did you got, where did you even go to find TV and speaker stands?

• 22:57Speaker 02

  Well, in the beginning, what you do is you'd go online and you'd look for companies that made them. You'd also look at what the other online retailers were selling. What brands did they have?

• 23:05Speaker 01

  And you'd buy the audiophile magazines and flip through and see what brands they're advertising.

• 23:09Guy Raz?

  And so, did you just buy a bunch of TV and speaker stands and just have them shipped to your apartment in Boston?

• 23:15Speaker 01

  No. So at the time, there was a bunch of electronics distributors that actually would stock small amounts of speaker stands. And so we initially started off buying through them. So we'd buy out of their inventory. So we had no inventory risk. So it was all drop shipped out of distributors.

• 23:29Guy Raz?

  And somebody would go to Yahoo or Google and type in speaker stands, and that was one of the things that would magically come up?

• 23:36Speaker 01

  Exactly. They'd click into it, and it's the promised land if you're looking for speaker stands.

• 23:41Guy Raz?

  So when did you launch the website?

• 23:44Speaker 02

  August 29th, 2002.

• 23:47Guy Raz?

  2002. And how long before you had your first orders?

• 23:50Speaker 01

  Hours.

• 23:51Guy Raz?

  Hours?

• 23:52Speaker 01

  Yeah, hours.

• 23:56Guy Raz?

  When we come back, how racksandstands.com, then allbarstools.com, then everygrandfatherclock.com, and on and on, eventually turned into Wayfair. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 24:28Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's 2002, and Steve Conine and Niraj Shah are on their third business idea. They're selling TV stands on the internet. It's a site called racksandstands.com. And this was a time when a lot of people thought e-commerce was dead. But Niraj and Steve, they thought it was very much alive. So they started to advertise.

• 24:57Speaker 02

  Google had just launched AdWords, which is keyword bidding.

• 25:00Guy Raz?

  Where people, where you pay money for...

• 25:02Speaker 01

  Yeah, you'd bet a nickel a click.

• 25:05Speaker 02

  And you'd write your text ad, and you'd basically pay per click. And we would track every time we got an order which advertising unit drove it. And so we'd either bid those up or bid them down if they were nonproductive.

• 25:17Guy Raz?

  And what kind of advertisements were they? What'd they say?

• 25:21Speaker 02

  They'd be text ads. They'd say, "Largest selection available TV stands."

• 25:24Speaker 01

  "Great TV stands for less."

• 25:26Speaker 02

  "Hundreds available."

• 25:27Speaker 01

  "Racksandstands.com."

• 25:30Guy Raz?

  So if you were a consumer, you'd click on this. And if you were adventurous in 2002, you would put your credit card into the computer? And then it would go to you guys, and then you guys would order it from one of these companies and then have that company directly shipped to that customer?

• 25:45Speaker 01

  Exactly.

• 25:46Speaker 02

  Correct. We launched at the very end of August. So September, October, November, December, the fourth month in business in December of 2002, we did about $250,000 in sales.

• 25:56Guy Raz?

  Wow.

• 25:57Speaker 02

  In the category.

• 25:58Guy Raz?

  Racks and stands.

• 25:59Speaker 02

  Racks and stands.

• 26:00Speaker 01

  Racks and stands.

• 26:01Speaker 02

  And we grew to be one of the largest, or the largest, online seller in the category. And what happened is our supplier started telling us, hey, you've become my biggest online retailer of TV stands, or speaker stands, or what have you. But you know, my other online guys sell more of my beds, or my other online guys sell more of my desks. And so we started learning that, in fact, these other furniture categories that we hadn't focused on, but that they were doing quite well online as well.

• 26:28Guy Raz?

  And I have to assume that just like getting this off the ground wasn't that expensive, right? It didn't require a whole lot of capital?

• 26:35Speaker 01

  No, it didn't. I mean, some computers, we'd pay, I don't know, $15 a month for hosting on a shared hosting platform. And we had a couple of computers in our office, but it was very expensive. We didn't pay ourselves a dime for the first year and a half or two.

• 26:51Speaker 02

  That was the biggest leverage, was that we didn't need to pay ourselves, and that we knew how to also build the software and do that work. We didn't need to hire anyone to do that work.

• 27:00Guy Raz?

  And did you have a number on the website, like a customer service number, that people could call and complain?

• 27:08Speaker 01

  We did. There's four phone lines in my house that it would ring. They were right near my bed.

• 27:12Guy Raz?

  And you were, like, one hand, you were programming the technology, and the other hand, you were picking up the phone?

• 27:17Speaker 01

  Yeah, well, this is the beauty of that setup. It was Niraj and I, this little tiny table, and we had four phone lines. We were kind of juggling. If phones were ringing, we'd take customer calls. And a lot of times, we'd get off a call with a customer, and we'd change what we were working on that day. In my case, I'd probably change what I was programming. Niraj, he was the data entry guy, so he'd go line up new products. And we'd be like, oh, a customer's asking for this. He'd go figure out how to source it, and he'd add it to the site. And those two activities rapidly made the site a lot better, and it got to where we couldn't juggle four phone lines, and that led to us starting to hire people.

• 27:47Guy Raz?

  So once you start selling racks and stands, and you do pretty well, what's the next category you go to?

• 27:53Speaker 01

  Mounts, TV mounts.

• 27:55Guy Raz?

  TV mounts.

• 27:56Speaker 02

  And we were surprised. So what happened in that timeframe also, the 2002 timeframe, is two different things. TV mounts were not widely available, so if you had a gym and you wanted to hang some TV mounts, like you didn't know where else to buy them, so on and so forth. But the other thing that happened is flat-screen TVs started really becoming more popular.

• 28:14Guy Raz?

  Oh, yeah.

• 28:15Speaker 02

  And so people wanted to hang those on the wall. And so our timing on that was quite good. So we saw this huge sales sort of start, you know, kind of momentum. So then we built a site just for that, to have every type.

• 28:25Guy Raz?

  What was it called?

• 28:26Speaker 01

  Mounts and More.

• 28:27Speaker 02

  MountsAndMore.com.

• 28:29Guy Raz?

  But it didn't really matter what you called it, right? Because you would make sure that the search engine-

• 28:33Speaker 01

  Oh, these were brilliant branding.

• 28:35Speaker 02

  Well, the traffic was primarily driven by the search, by the advertising we would do, the paid search, and then other forms of advertising that we would do. So the key to the name of the site wasn't so much that it was something someone would type in, or that would be memorable, or they'd pick it over other items. It was more that it made sense as a place you would go for this item.

• 28:54Guy Raz?

  All right, so TV mounts, and then how did that do?

• 28:58Speaker 01

  That did phenomenally well. We were the mount kings of the internet.

• 29:00Guy Raz?

  My god. And so then what came next?

• 29:04Speaker 01

  Then we, I think we started kind of a new beachhead in outdoor furniture. And so we started a site called Teak, Wicker and More, which was basically outdoor furniture.

• 29:12Guy Raz?

  I mean, it's so interesting, because you didn't have to build a brick and mortar store, and you didn't have to stand outside in front with a sandwich board saying, "Come on, 10% off today, try our samples." Like, you would just, you just put this out on the internet, you figured out the search, how search worked, and people came-

• 29:30Speaker 02

  Well, that was the sandwich board.

• 29:31Guy Raz?

  That was the sandwich board.

• 29:32Speaker 02

  We paid Google to run the sandwich board for us.

• 29:34Guy Raz?

  And you didn't have to take in any outside investment at that time, because the revenue from each expanding website was fueling the business?

• 29:45Speaker 01

  It was. I mean, this business is cool. It's from that day, early years on, it runs a positive cash cycle. So, you know, customers would pay us right away and we didn't have to pay suppliers for 30 to 45 days. And so you had this kind of natural cash cushion. And so, yes, it was, you know, it was, we were able to self-fund it very well.

• 30:03Guy Raz?

  Do you remember how much revenue you were doing in, you know, I don't know, like,

• 30:10Speaker 01

  2003.

• 30:10Guy Raz?

  Yeah, 2004.

• 30:12Speaker 01

  Do you remember, Niraj?

• 30:12Speaker 02

  Yeah, so 2000, 2002 was our first year. We did about 700,000. 2003 was our second year. I think we did about 7 million. And then the following year, 2004, I think we did 27 million.

• 30:26Guy Raz?

  Wow. I mean, you probably had to just hire tons of people, tons and tons of people fast.

• 30:31Speaker 02

  Yeah, so we started hiring as early as January 2003, we hired a couple of people. Then we probably ended that year with, you know, 15 people or something like that. And then that became the model to grow is, you know, we would be reinvesting aggressively by hiring people so that we could keep expanding the selection and expanding the categories, which then gave us more things to advertise, which then would get us more customers, you know. And that was a virtuous cycle. And we would take the money that resulted and we would invest that into growing the team to keep driving it.

• 31:03Guy Raz?

  Just out of curiosity, when people ask you like, "Oh Niraj, what are you up to? What are you doing these days?" Would you say, "Oh, I'm, I'm selling TV stands"? Like, how would you describe your business to people?

• 31:14Speaker 02

  Yeah, I remember one time I was very uninterested in describing what we were doing. And a lot of Indians in the United States are doctors. They assumed I was a doctor. And I'm like, "Oh, no, no." It's, "Oh, hi, doctor." "No, no, I'm not a doctor." "No, I just sell furniture." Because if you say you sell furniture, no one's interested. There's no follow-up.

• 31:32Guy Raz?

  It's almost like silence is the conversation. "Oh, I see, right."

• 31:35Speaker 02

  Yeah. So that's a good way to wrap up the conversation.

• 31:39Guy Raz?

  So, so obviously what you were doing is, of course, what eventually would become Wayfair. But at this point, you, you started calling it, I think, CSN Stores, right?

• 31:48Speaker 01

  Yeah, that was what it, I think at the end of 2002, 2003, we adopted that.

• 31:52Guy Raz?

  It's a great name, CSN Stores. Very catchy.

• 31:55Speaker 01

  Well, thanks. It's our initials.

• 31:57Guy Raz?

  Did you get a bunch of consultants to help you figure out that name?

• 32:00Speaker 01

  No, we could get it for 12 bucks a year and there was no trademark issues with it. I think Niraj came up with it. It was our initials kind of conglomerated together.

• 32:08Guy Raz?

  CSN, oh, Conan.

• 32:09Speaker 01

  Yeah, Conan, Steve, Shaw, Niraj, yes, it's overlapped.

• 32:11Guy Raz?

  Right, I gotcha.

• 32:12Speaker 01

  It was a generic name we've, we could use across any category, you know, and-

• 32:16Speaker 02

  Yeah, it helped with two key things, basically. One is we needed a company name that, you know, sort of implied we had a lot of stores.

• 32:23Guy Raz?

  Sounds like it, yeah. CSN Stores.

• 32:25Speaker 02

  You didn't want to just name it after one of the names, right? The second is, a lot of the suppliers are very traditional companies. And so when we would go to like the High Point Furniture Market and approach suppliers, you wanted to be able to get into a conversation with them. And during this timeframe, 2002, 2003, 2004, they're, they're still not very keen on e-commerce. They're not, they're not dead set against it, but their experiences have been poor. And so what happened is when your badge says CSN Stores, and where are you based? Oh, we're in Boston. Oh, we're in Boston. Oh, we're right in Back Bay. Oh, we have an office on Newberry Street. Oh, great. Oh, what do you guys focus on? Oh, well, we're really focused on entertainment furniture. Oh, what do you carry? Oh, we carry brand, this brand, that brand, this other brand. Oh, great. You get into a conversation and, and they say, well, what are you, what are you interested

• 33:10Speaker 02

  in? Well, we'd really be interested in this selection. We think it would do well for these reasons, dah dah dah. And they say, oh, well, you know, how big is your store? At that point, you'd say, you know, you'd be honest. You'd say, well, we actually, we sell online. And if you had to discuss online too early in the conversation, you get kicked out of the show.

• 33:27Guy Raz?

  They didn't want you, they didn't want to be involved with that?

• 33:29Speaker 01

  If you came in calling stuff like eastshop.com, they knew right away. It's an internet guy.

• 33:34Speaker 02

  But now they've gotten into a 20-minute conversation with you and you sound very rational and you're carrying a bunch of good brands. So now they're like, well, you know, I don't really do much e-commerce business, but maybe, maybe this does make sense. Let's have a little more of a conversation. So the generic name helped you get deep enough into a conversation for them to really consider and understand you, which was really important in those days.

• 33:57Guy Raz?

  So, all right, I'm gonna read some of the websites that you guys launched, because I just think they're amazingly straightforward. Hotplates.com, I'm assuming that sold hot plates?

• 34:09Speaker 01

  Yeah.

• 34:09Speaker 02

  Yes.

• 34:10Guy Raz?

  Okay. Allbarstools.com?

• 34:13Speaker 02

  And what do you think that sold? Yes, you're doing good, you're doing good.

• 34:16Guy Raz?

  Mydinnerplate.com? I'm assuming you sold dinner plates? Yeah, I love this one. Everygrandfatherclock.com.

• 34:25Speaker 01

  A very hot category online. Painful to ship.

• 34:28Guy Raz?

  Who knew people were searching for that?

• 34:31Speaker 01

  We did. You can look online and see what people are looking for.

• 34:34Guy Raz?

  Well, we definitely did.

• 34:35Speaker 01

  Yeah.

• 34:36Guy Raz?

  That was, I mean, you would find categories and then you would basically get these domain names, and you started to build a huge business that way.

• 34:44Speaker 01

  Yeah, we got up to where we had 250 of these.

• 34:47Guy Raz?

  How were you managing 250 different websites? How'd you even get your head around that?

• 34:52Speaker 01

  Yeah, we had a very good tech platform that was built around the idea of building, we had a centralized product catalog. And then when calls came in, our call system would tell you exactly where the call was coming into, so you knew how to answer the phone.

• 35:04Guy Raz?

  Did you ever have a situation where somebody called the customer service number for, you know, racksandstands.com and then said, "Oh, thanks, you know, I'm still looking around," and then called the customer service number for, you know, mounts.com and then got the same customer service rep on the phone?

• 35:19Speaker 01

  Oh, yeah. When it was just near to night work, that happened all the time.

• 35:22Guy Raz?

  Did they ever say, "Hey, didn't I just talk to you at racksandstands.com?"

• 35:25Speaker 01

  They usually didn't put it together. It was the funniest thing. And you even tried to hide it from them, but they just, they wouldn't put it together.

• 35:33Guy Raz?

  I've heard that by, I think, by 2010, you hit almost $400 million in sales. You had almost 5 million customers.

• 35:44Guy Raz?

  And you were like this aggregation of 250 websites. Like, nobody would have known what CSN stores necessarily was. No one knew who you guys were. I mean, people just knew Allbarstools.com or Mydinnerplate.com.

• 35:58Speaker 01

  Yeah, and they didn't know those that well.

• 36:00Guy Raz?

  Yeah. I mean, was that crazy to you guys, that that much revenue was coming in? Or were you just too busy to even stop and think about it?

• 36:08Speaker 01

  I mean, it's like watching your kid grow up a little bit. Like, it's just happening so incrementally and you're just following this playbook that you've got that's working well that, you know, didn't, I don't, I mean, when you step back from it and think like, oh, wow, this has actually gotten huge, you know, you try not to do that too much because it gets scary.

• 36:25Guy Raz?

  And how about your relationship with the two of you? I mean, is it just you guys are wired in such a way where you just, you're kind of chilled out and you get along and you don't have any tension? I mean, it's just, it's, it is crazy that you're still, after all these years from like high school, you're, you're working together.

• 36:44Speaker 01

  No, we, um, gosh, it's interesting. You know, when we would, when we first started working together, I can remember having arguments where he was usually right and he was telling me something I needed to hear, but I really didn't want to hear it. And of course, my emotion would flare up and I remember having to walk out of the room and just be like, I gotta go walk around the block and, you know, just be cursing under my breath at him for half an hour. Um, when we got into this business, you know, we were a lot more mature as individuals and had been through a lot of that, had both gained and lost a lot of money together. And so I think, you know, greed is one of the things that can create a lot of tension in partnerships. I think we'd gotten past a lot of that and we'd also gotten to where we valued each other's advice and had gotten, and gotten to the point where we were like, look, I trust

• 37:26Speaker 01

  what he's telling me because he cares and he actually is trying to make me better, make us better as a company.

• 37:31Guy Raz?

  Yeah. Niraj, what do you think?

• 37:33Speaker 02

  I think the two key things that I think have always helped us, one is that we gravitate to different areas of the business and the second is, we definitely have always found each other to be very hardworking and very committed to it. I think those are not to be taken for granted because I do think they, those traits may not be as common as, as you would think.

• 37:54Guy Raz?

  Yeah. In 2011, I guess, it was when you decided that you, you needed to scale this even bigger and this is the first time you actually took in outside investment. Why did you allow venture capitalists to get involved in this, in this company?

• 38:11Speaker 02

  We're, we're definitely ones who would rather just fund it ourselves or self-fund the business and have it fund itself. The challenge became, in 2011, we believed the big opportunity to continue the trajectory and to really capture the big opportunity, we needed to build a brand. And the amount of capital, we thought, to go through that migration and to build a brand that it would take was not an amount we could sell funds.

• 38:36Guy Raz?

  Because you did not have a brand. CSN was not enough of a brand.

• 38:40Speaker 02

  Right. Consumers didn't know that brand. It wasn't... You want a brand that one, you think, hey, I need to shop. I want to redo my living room. You want someone to think, oh, I go to Wayfair. You want it to be a top-of-mind brand for a category, right? And that is not... That's not easy to do. And even if you figure out how to do it, it's not inexpensive by any stretch, right? So we wanted to be able to do that.

• 39:03Speaker 01

  The other, just minor dynamic, I think, that happened is investors, they'd started to change their pitch to being, purely from, we want to invest and buy part of your company, to, hey, we'll invest and buy part of your company, invest in it, but we'll let you guys take some cash off the table as well. And at that point in our lives, we'd both gotten married, I had kids, I guess, near-type kids as well. Being able to take a bit of money off the table as part of an equity was also appealing. And so those things kind of tied together at that timing in our lives.

• 39:32Guy Raz?

  So you had 250 websites under CSN Stores. How did you come up with the idea for Wayfair?

• 39:39Speaker 01

  Well, we knew we wanted a different name. The CSN name, CSN Stores' name, was difficult for people to remember, recall. We've always been reluctant to use consultants, but we hired a branding agency and they came up with the name Wayfair. And it's a made-up word. The two words, Way and Fair, we liked. They're positive kind of shop terms. The domain name was also available. And so you weren't going to have to go out and spend millions trying to buy domain names from people. You could just register it and be off to the races.

• 40:10Guy Raz?

  So it took about a year for all these sites to consolidate under Wayfair. And to the consumer, Wayfair seemed like a brand-new thing, right?

• 40:19Speaker 01

  It did, yeah. It just kind of came out of nowhere. People were kind of like, wow, this is a cool place to shop for home.

• 40:27Guy Raz?

  And the fact that you guys got into home goods, it had to do with the fact that people were searching for these products. In other words, I mean, you could have ended up being a company that sold, like, personal grooming products, right?

• 40:40Speaker 02

  Yeah. The one thing I would say, home, the beauty of home, most categories, people want to all buy the same thing as each other, right? So AA batteries, you buy Duracell or Energizer or the private label. There's only a couple of categories where a huge selection is really a key piece, where visual and aesthetic considerations are very paramount, where people want unique items. And the two are really fashion and home. And we've basically, by focusing on home, where the logistics are quite complicated and different, where there are no brands, where the visual merchandising is critical, where people have a very unique style, there's a lot of value you can add as a retailer. If you're in any of these other categories,

• 41:24Speaker 02

  certainly there's a big business there, but that's effectively the business that the Walmarts and the Amazons and the Targets and the Costcos, they're all in that business, selling the same exact items to everybody. And you can fight that out and try to find an advantage, but typically the advantage is either in price or speed, there's really no other way to do it. And so the beauty in home is that it's more multifaceted and it doesn't, if someone's a winner in these other categories, it doesn't automatically make you a winner in home.

• 41:55Guy Raz?

  You're a public company, you are listed on the stock exchange, right?

• 41:59Speaker 01

  Yep, New York Stock Exchange.

• 42:01Guy Raz?

  And the company, I believe, is today is valued at more than $3 billion, with a "B," billion dollars. I mean, could you imagine, obviously, both of you guys are still pretty young, you're in your mid-40s, and, I mean, there are other things you could conceivably do with your lives, you could start, you guys could start another company. Could you imagine, I don't know, like an Amazon or a Walmart, you know, coming to you and saying, "Hey, guys, we want to buy your company. We're going to give you X billion dollars." Could you ever imagine accepting that or agreeing to that?

• 42:38Speaker 02

  You need to be prudent, right? So we know all those folks. You, of course, would have conversations with anyone who wants to have a conversation. Last year, we grew 40% from the year prior. You know, the company's getting bigger at a fast rate. And if you believe you can do a lot for the customer, that is more than anyone else can do, well, why wouldn't that continue to grow at a fast rate? So it's really super early days if, in fact, we can be the best. So it would be very premature to think about selling it if we think we can win.

• 43:06Guy Raz?

  How much of the success of your partnership and the businesses you've built is because of your intelligence and your skills and how much because of just a lack in serendipity?

• 43:21Speaker 01

  It's all Niraj's skill. I just show up to the office daily. You know, it's obviously a bit of both. I don't know that there are dramatic intellectual skill differences in humans in general. So I think it tends to be, you know, your ability to focus and keep doubling down on your own, believing in yourself and your work ethic and continue to focus on a narrow enough set of things that you can win in. And we've been good at kind of staying focused on that and not listening to other people who would tell you, go try and do other things.

• 43:54Guy Raz?

  Niraj?

• 43:55Speaker 02

  You know, serendipity and luck always play a little bit of a role, right? So I think that definitely is a piece. So you think about it, we happened to be in college, the last semester of college, we happened to be the beginning of the commercial internet. The commercial internet has created a huge amount of opportunity. Well, if it was a different point in time, would there have been no opportunity? No. But there would be opportunities. Would it be as big? Maybe, maybe not. Would have been different? Possibly. Would it have been as well suited to us? I don't know. You know, so I think there's a mix in there. I do think a lot of it is how hard you go after something and how pragmatic you are about it.

• 44:27Guy Raz?

  With all this stuff in home furnishings that you've done, are either of you any good at interior design?

• 44:34Speaker 01

  Niraj likes to think he has a design eye. He likes to comment on design, let's say that.

• 44:41Guy Raz?

  And what about you, Steve?

• 44:42Speaker 01

  I have a very clean, modern aesthetic in my homes. And Niraj, he has a much more traditional look. Your wife would probably kill me when she hears me say that.

• 44:51Speaker 02

  Exactly.

• 44:52Guy Raz?

  That's Niraj Shah and Steve Conine, founders of Wayfair. I talked to them back in April of 2018. And today, in the midst of a pandemic, the company is actually doing incredibly well because so many more people are now shopping from home. In the last quarter, revenue at Wayfair jumped to $4 billion. And the company just announced that it's profitable for the first time since going public. And by the way, one last question for you guys. What's the weirdest domain name that you ever registered?

• 45:27Speaker 02

  What's the rooster decor one?

• 45:30Speaker 01

  Allroosterdecor.com.

• 45:31Speaker 02

  That's probably the best one, yeah.

• 45:33Guy Raz?

  People want rooster decor?

• 45:35Speaker 01

  Rooster, vases, pitchers, planters, pots. You name it. If it's got a rooster, we're going to try to find it and source it and sell it to you.

• 45:42Guy Raz?

  I just cannot imagine having a bunch of rooster decor in my house, but that's just me.

• 45:46Speaker 01

  It's a thing.

• 45:47Guy Raz?

  Maybe I'm weird.

• 45:48Speaker 01

  Someday, you'll visit someone who's got a lot.

• 45:52Guy Raz?

  And thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. You can also write to us at [email protected]. And if you want to send a tweet, it's at howibuiltthis or at Guy Raz. This episode was produced by Rachel Faulkner with music composed by Ramtin Arablouei. Thanks also to Candace Lim, Derek Gales, J.C. Howard, Julia Carney, Neva Grant, and Jeff Rogers. I'm Guy Raz, and you've been listening to How I Built This.