Michael Barlow and Lucas Dickey met while working for a Los Angeles-based movie ticketing startup. Both had already experienced the trials and tribulations of moving — a lot. For Barlow, who worked as an investment banker for J.P. Morgan in New York City right out of Hobart College, it was five times in seven years. For Dickey, who graduated from the University of Washington, it was 10 times in 12 years. For both, constant moving made putting down roots, when many decide to invest in good furniture, off the table.
Though neither had traditional retail backgrounds, in 2017 they founded Fernish, a furniture subscription service for an increasingly mobile society. The company offers quality furniture from recognized brands like Crate & Barrel and Campaign that further aims to keep discarded furniture out of landfills. NRF recently spoke with the two co-founders about promising a better customer experience.
Was Fernish was born of necessity or frustration?
Michael Barlow: Probably both. Some combination of work and life led me to move between five apartments and three sets of roommates. So, having an “as-a-service” solution for furniture was on my mind for a while, but the real catalyst for Fernish was in early 2017. I was working to convince my then girlfriend — who is now my wife — to move from Chicago and take a new job to Los Angeles, where I was. The biggest blocker for her was all the friction that came with moving: the buying, selling and storing furniture and other “things” she had accumulated. That experience prompted what is now Fernish.
Lucas Dickey: When Michael brought the idea to me, I could immediately relate. I started my career post-college at MediaNet followed by a four-year stint at Amazon. I ended up moving 10 times in 12 years across Seattle, then to San Francisco to pursue a startup, and finally to Los Angeles, with none of those moves being pleasant experiences. And it turns out, our story is the same as millions of other urban young professionals in the United States, who end up changing jobs, apartments, roommates or styles in those years between finishing school and ultimately “settling down.”
Barlow: We started our business in Los Angeles, which also happens to be a massive manufacturing and distribution hub for furniture across North America. As the second-largest U.S. city with a high population of young professionals, it was a great place for us to get started! We opened up Seattle in late 2018 as our second market as it’s a quickly growing city with some of the largest U.S. companies, including Amazon, that is attracting almost a constant stream of educated professionals. Another reason we liked Seattle as a second market for us, was if a service like Fernish works in Seattle, it has a much broader application across other markets like Dallas, Denver, Chicago.
Renting furniture is not new. How’d you refresh the idea for your target?
Barlow: It all comes down to the customer — identifying who the Fernish customer is and precisely where and why those people’s needs have not been met by other services in the market. The good news for us starting this company, is that we are very much our own customer, so looking at consumer needs through our own lens was a good starting point.
After pretty significant customer development work using focus groups and other methods, it turns out that less than 1 percent of our initial target audience — young urban professionals — had used traditional furniture rental providers, and a vast majority had more negative things to say about their experience with furniture than positive things. The more we talked to people, the clearer it became that a furniture-as-a-service solution was going to be in high demand.
Dickey: Ultimately, the Fernish model works for our customers if it really makes moving seamless and affordable and allows them to pack up a few suitcases and take that new job or try out that new neighborhood or city. Companies such as Rent-A-Center have and still do tend to market their offerings to those who are cash-strapped and/or credit-constrained. CORT has targeted relocation partners for banks, consultants and Fortune 500 executives. They did not speak to, or in the language of, urban professionals who simply had new movement behavior. We wanted to give them a simpler, less stressful, more fulfilling moving and furniture solution. They move a lot, don’t want to throw furniture away, don’t want to pay a lot to move since they are moving a lot. They want inspiring furniture, at predictable payments — that don’t have punitive interest rates via credit payments — with white-glove delivery, via an interface they’re used to.
That brings us to pricing and leasing agreements. What are the basics?
Barlow: We are all about transparency and service. Those are the things that are most important to our customers. We charge (monthly) based on the initial length of time they would like their furniture. The vast majority of our customers tie the length of their furniture lease to the length of their apartment leases. At the end of their initial term, we give the option for customers to swap furniture out and try something new, to buy out anything they might have fallen in love with, or just walk away and have us come pick it all up. If customers choose to buy-out a particular piece, we count all payments made already toward that purchase, so they are never paying more than retail price. Our core customer could actually afford to spend the money to go out and buy quality furniture. However, there is a real psychological barrier around, as we say, “buying permanent furniture for a temporary home.” What we try to do with Fernish’s branding and messaging is simply not to force an unwarranted sense of commitment, especially with an audience that knows the pain of moving given they’ve changed apartments, roommates, or cities at least once already. We’ve found that when you give people the optionality, it alleviates that psychological barrier.
Dickey: Our customers are already trying to mitigate this same commitment issue but in a way that is entirely unfulfilling. They’re buying disposable furniture from IKEA, Wayfair, Article, Amazon and a number of new in-a-box, direct-to-consumer furniture providers. But they don’t want to buy and throw away over and over — the linear economy model simply doesn’t work for them anymore, whether due to sustainability concerns, or they don’t want to give in to their own desire to treat themselves to furniture that’ll make them happier in the (home) environment.
How are you managing the logistics of acquiring furniture and customer delivery?
Barlow: Most retail businesses are optimized for one-way delivery, which is the way a linear economy business has always operated. Because we are a “circular” business, we inherently have more technology involved in asset tracking so we can monitor the full lifecycle of a piece, including its whereabouts at all times and the state of the goods across every step in its lifecycle. This is fairly unprecedented with the possible exception of car rentals. This helps us with operating an efficient business and is in the interest of driving an ROI for investors, but it also helps us optimize our furniture in a way that’s better for customers.
Dickey: In the modern retail age, we also have things to worry about like sophisticated/state-of-practice CRM tactics like day-of SMS communication, advanced delivery email communication and all sorts of automated and human-driven communication with our customers. Customers have a very high expectation when it comes to communication, thanks in large part to the efforts of Amazon over the years, for better or worse.
Since launching Fernish, have you noticed any changes in the furniture industry or furniture retailing?
Barlow: We’ve been watching experimentation happening around the edges with legacy furniture retailers over the last 48 months. We knew retail was not going to build “as a service” for furniture because it’s not core to their business model. But our research showed the customer was amenable.
Dickey: Last year, West Elm announced its partnership with Rent the Runway. With more players driving better consumer behaviors through competition, isn’t that the very definition of capitalism at its best? The opportunity was ripe for Fernish because Gen Z and millennials were looking for innovation in the way we shop. Having been at this for nearly three years, we’re getting coverage for our circular model and I think that has prodded some reaction. When you look on the business side, furniture has a fairly anemic growth rate so there’s a growth need for innovation.