When we buy furniture, we buy in bulk in the local areas we serve, thereby saving time and labor on transportation costs.  We leverage technology to make the purchasing process efficient and margin-rich.

We provide an ideal solution to individuals whose parents have downsized or moved into a retirement home who now need to sell the house and get rid of the furniture.  They don’t want the hassle of Craigslist for the 30-40 pieces they have, so we come in and give them a single payment for everything. They're happy, because they get money right away, and we're happy because we get great quality stuff.  These leads come to us via our website where we perform very well for pertinent search terms, and we are very selective about which opportunities we take.

The second way we acquire furniture is through local people in the vintage furniture industry, such as estate sale companies.  Furniture is often the hardest thing for these companies to sell at an estate sale since selling it requires the right customer to walk in the door with the right need and the right method of transportation.  We work with tens of companies in each market directly and buy from them week after week. Because we can buy many pieces at a time that they otherwise could not sell, we get fantastic deals.

When we started Loveseat, our original idea was to build a local peer-to-peer marketplace for people to buy and sell furniture to each other. With our local marketing efforts, we were getting a decent number of people looking at items, but we weren’t seeing a lot of liquidity. 

In 2015, we decided to become a seller on our own platform in order to diagnose what it took to move inventory successfully. We literally went out and started buying furniture and selling it out of our garage. We offered super competitive prices combined with great photography for quality pieces.  Soon, we noticed that we were selling more than everybody else combined, and that the amount of money we made on each sale was astronomical compared to our potential as solely a middleman.  Around the beginning of 2016, we decided to make the business purely about selling curated furniture pieces ourselves.

In 2016, we grew from a small garage to a storage unit to a bigger garage to, eventually, a little warehouse. We now have two big warehouses in two cities, Los Angeles and San Diego, totaling over 30,000 square feet, and we turn thousands of pieces each month.

First of all, we're fanatics when it comes to vintage furniture.  The styles and designs of decades ago are really cool, and you can't find the same quality in furniture being manufactured today. 

Furthermore, we saw this segment as being the largest underserved niche for local selling. Since furniture is so big, shipping it nationwide doesn't make sense at an affordable price point, and there's no national brand out there that people think of when they think of vintage furniture.  The current local markets are super fragmented, mainly peer-to-peer and full of friction.

We believe the vintage furniture market as it exists today is at least a $10 billion market.  As we make vintage furniture more approachable and easier to buy, we are actually expanding this market to capture many of the consumers who are too busy for traditional secondhand shopping.  It's a huge opportunity for the company that can establish itself as a leader.  The only brands that have any real presence have been dedicated to the higher end of the market, which is unaffordable for most people.

There are very few areas of e-commerce still untapped, and we think used furniture is an enormous part of the market.  However, because every piece of vintage furniture is unique with it's own "character flaws", many consumers still want to see the furniture in person to test out the drawers, sit on the cushions, etc.  Our combination of home-built technology and offline warehouse logistics enables us to handle thousands of SKUs and maintain a perfectly synced online and in-store inventory system.  This hybrid online / offline model uniquely positions us to conquer this market.

Our offering has broad appeal to customers of a variety of ages and backgrounds, but if I had to pick our typical one, it's a young woman, maybe a young mom, between her late 20s and early 40s. These customers are looking for "adult" quality furniture and are ready to invest in something that speaks to their personal style, but they're above all savvy shoppers. They want a great deal and appreciate the convenience of being able to browse on their own time via the website.  

We do get many vintage-lovers and enthusiasts, but our main appeal is to the everyday consumer who may not have a great depth of knowledge in interior design and is looking for something unique at a great value.

We try to make the process as open and convenient for the customer as we can, so there are a few different ways to buy from us. One way is to just find the things that you want on our website and purchase them there with "white glove" home delivery service.  You pick a delivery time that works for you during checkout, and we'll show up with all of the things that you purchased and place them in the room of your choice. You have an opportunity to inspect them to make sure you're happy or we offer a full refund.

The other main way to buy from us is to visit our warehouse and see the pieces in person.  People can either purchase pieces online and then pick them up in the warehouse, or inspect them in our warehouse first and then purchase in person.

Every single piece of inventory we have in-store is listed on our website, and every single piece of inventory on our website is updated in real time when it sells in the warehouse. What's unique about our business is that our furniture sells very fast. It's all one of a kind, and sometimes we say a piece "gets hot" when two or three people are looking to buy it at once. So it's really important that the second it's sold, it's taken down from the in-store inventory and the online inventory. There is a ton of technology that goes into making those processes seamless.

Our closest competitors are still the traditional local thrift shops. They're the ones doing something that’s most similar to us, but it's just not a very modern way to shop. We have a much larger selection than any local retailer, plus we offer better pricing.

The newer tech companies that are most similar to our model are probably Chairish and 1stdibs, plus another called Viyet. The big difference between us and them is that they're focused on the super high-end furniture market. Their inventory is usually far out of the price range for the average customer wanting quality vintage stuff for his or her apartment.

Those companies are national platforms, and it’s expensive to ship furniture across the country. Our average piece of furniture sells for about $200, which we think is a really accessible price point for everyday consumers. If you were to ship that piece of furniture from California to New York, the shipping charge would be about $500. It doesn't really make sense on a per piece basis, which is why we went the local route.

Another thing that we have over these other platforms is the ability to see and touch the pieces in person. Some of pieces had been around for 50 years and a lot of people want to open the drawers to make sure they work or sit on it to make sure it's comfy. Each piece is one of a kind and has one of a kind character, so it's important for consumers to be able to touch it before they make a commitment.

We use a pretty broad definition of vintage, but the bulk of our inventory is between 30-50 years old. We do sell things that are newer but still used, as well as pieces that would qualify as antiques (over 100 years old). Our curation focus is on style and quality.  We want to make sure that each piece is recycled and that we're not buying anything new or made to look old but actually isn't.

The bulk of our pieces are coming from a time period that's called "Mid Century" -- the '50s, '60s, '70s -- when all the furniture manufacturers were using quality wood with quality joints. That’s the stuff that we buy most often and sell through most quickly.  An interesting side consequence of this selection is that almost all of the furniture we have is made in America, which is funny because you don't see that anymore in anything, especially not with our product margin.

We do also focus on providing a broad range of styles to appeal to a broad range of consumers and their changing tastes.  We offer quite a bit of painted "Shabby Chic" furniture which is hot right now, as well as international styles like Asian and Danish Modern furniture from Denmark.

We both went to Wharton Business School, so we can't help but think about margin in everything we do.  With each piece that we sell, we need to make sure we hit a certain product margin percent or we won't buy it for our inventory. If we are selling something for $200, we want to make sure that we're getting 67% to 70% profit, so we'll aim to pay the original seller about $60 for the piece.  Our margin percent has been ticking up in each market as our buying power has grown, so the product margin is just getting stronger and is now 70% overall.

This whole concept of maximizing margins was baked into the foundation of the business as we have iterated on our original idea. We're able to achieve 70% margin on every single piece because we're controlling what we buy and sell each piece for.  A lot of platforms that only provide a marketplace for the inventory take only a small cut of the sale price, but because we're willing to do the work of holding onto the inventory, we're able to get the margin that's so important to making us operationally profitable.  

We also work hard on our operational efficiency.  Because we are sourcing inventory in bulk from nearby locations, our transportation costs per piece are super low.  Due to the power of our online marketing engine and being able to browse each piece before visiting the warehouse, the amount of staff we need in our retail warehouse locations is low because only serious buyers pay us a visit.

Because we are a revenue-producing business, our key growth metrics are furniture and delivery sales revenues.  Our quarterly revenue has grown 2.6x in the past year, and 17.5x in the past two years.  On a monthly basis, our revenues are up 10x from the beginning of 2016 and over 54x from the beginning of 2015.  

Our main avenue of growth has been by growing our inventory since our sales are directly correlated to how much inventory we have. Every single piece that we take into our inventory generally sells in around 40 to 50 days, which is really fast for the furniture industry, so in order to grow our inventory we need to be buying a lot all the time. 

By opening consecutively larger warehouses in San Diego and a large second location in Los Angeles, we've been able to house more inventory, which has correlated with this growth in sales. Since there is still a much larger supply of inventory in each market than we are currently buying, the only real barriers to growth are how fast we can process the inventory that we bring in and how much inventory we can house in our warehouses.

Since we're buying and selling inventory within the same local markets, all our marketing is online, but done in a local fashion. We are experts in search engine optimization and a good deal of our traffic comes via local search.  We also invest in paid search and remarketing campaigns, but instead of competing as national brands, we're competing against other retailers in the local market. This way we're able to actually get the costs much lower because we're bidding against local businesses that don't necessarily have a large advertising engine behind them. 

Much of the advertising we do is based on the inventory that we have. As opposed to just advertising Loveseat as a place to get vintage furniture, we'll actually advertise with specific pieces of furniture from our inventory.  Our goal is to have our furniture be everywhere a potential furniture buyer is looking online, so we syndicate our furniture to other platforms, many of which are free or extremely low-cost advertising.

In terms of our spending on marketing, it's about 8% of revenue. Our cost to acquire a customer is around $20, and the average sale is over $200 plus delivery fees.

We enjoy a lot of word of mouth marketing from our customers, and one of the things we're most proud of is our reviews. If you go to Yelp or Google Maps, and you look at either of our San Diego or Los Angeles locations, you will see that not only are we getting tons of 5-star reviews, but customers are also writing whole stories about how much they love the company. This is another great cheap traction channel for us, and the only reason that we're able to take advantage of it is because we have physical locations.

The average consumer typically buys furniture once a year. Since our furniture is more affordable, we are actually seeing people come back every few months to buy from us, as they are cycling out things that they have and replacing them with something more unique and stylish from our inventory.  Because of the lower price point and high style factor, we've moved furniture from a large-commitment purchase that is primarily necessity-based to a more easily changeable expression of style.  

One of the things that we're going to be doing is making it easier for customers to sell things back to us, so they can more easily cycle out and get newer pieces into their home.  In addition, we recently added decor items to our platform, which are things national consumers buy every month. These items are bringing people back on a more continuous basis. 

Another thing adding to our product stickiness is the unbelievably high amount of "window shopping" our customers do via our website.  Because we add 60+ pieces of new inventory every day, we have customers who check our site daily just to make sure they don't miss out on that one-of-a-kind item they've been looking for.

The amount of space to house inventory in our warehouses is our limiting factor to growth right now. We want to get to 100,000 square feet in both cities, but right now we only have about 7,500 in San Diego and 23,000 in Los Angeles, so we have a lot of room to penetrate deeper in the markets that we are in. We think that there are 30 large MSAs in the United States that can support a 100,000 sqft Loveseat warehouse, so our plan is to slowly expand to other cities after we max out SD and LA.

In addition, we have all kinds of ideas on how to expand beyond our warehouses to give customers who have purchased from us the ability to sell to each other on our platform.  This would allow us to take advantage of not just inventory in our warehouses, but also the inventory that's in people's homes.  It would be completely different than other peer-to-peer platforms because it would be people who are part of the Loveseat family and are selling Loveseat-curated items. There's definitely a certain type of person that uses Loveseat, and we want to make sure that we keep that customer base cohesive, instead of just having independent sellers on the platform.

This would be a major inflection point for us because it'll change the nature of what we are and take it to another level. We have thousands and thousands of pieces that have cycled through our possession. We still have all the data regarding dimensions and style, and all the professional photos for all of those pieces. Giving that data to our customers would really help them when they try to resell their pieces, and that’s something that's really a rich offering for the potential new furniture buyer.

The challenges right now are purely operational. There's no specific thing that we can't figure out, but there are a lot of details involved in moving all this unique furniture around, and it's a very logistics-heavy operation. It's a challenge that's unique to our business because we're dealing with all these physical objects, which is not something most tech startups experience.

We've actually built a ton of custom technology that most people never see to manage the logistics of what's happening behind the scenes at our warehouses.  We have home-built apps that control the flow of the inventory as it moves through each step in getting processed to be on our website.  

Managing the labor that is involved in a cost-effective manner as we grow is the trickiest part about our business. We know how to source furniture, and the more we're sourcing, the easier it is for us to find increasing quantities of stuff at better prices, which in turn makes us more attractive to furniture buyers.  Our buying power is growing and our customers are referencing each other on the demand side.

Our customers love our business, so we felt like it was important to give our customers the ability to own part of the business. Equity crowdfunding is something that we've been watching for years but hadn’t pulled the trigger on because it was still in development and the laws were not solid yet. 

We know Wefunder has figured it out and is compliant. We can crowd-fund in a way that's not going to prohibit us from being able to raise future equity routes downstream with institutions. It just seems like a really good fit for us because we're at a point right now where we need additional fuel to keep growing the business.

Our company is for the everyday consumer, and people who are on Wefunder are going to identify with it and understand what we do. We hope they will be equally enthusiastic about the business and want to see Loveseat come to their own city. Ultimately, we want to be a national company and be in every market.

We want to have Loveseat in every major metro area. That's 30 locations throughout the United States. The platform, obviously, will power all of that. Now that we have done this in two markets, we have a playbook and could fire up a third one very quickly, and then a fourth and a fifth. We know the locations become operationally profitable pretty quickly in less than 6 months. Because of the size of furniture and the shipping costs associated with it, we think it's important to source in the local market where we're selling.

We think of Loveseat as like an operating system for used furniture and a process for buying and selling that is better than anything else that's out there. Now we just need to bring our solution to every major market.

Chris: I went to the Wharton School for my undergraduate education in business. I've always been a tech nerd. While I was in school, I started an event ticketing company called TicketLeap and launched it immediately after graduating. Along the way, I ended up raising $8.5 million. We actually just sold the company a few months ago. I was chairman of the company when it sold. One of the first employees that I had, a guy named Iqram, was the first head of technology at TicketLeap. He left and started a company called Venmo, which does mobile payments and a lot of people are using.

Jenny: I'm also a Wharton Business School graduate with three degrees from the University of Pennsylvania. After college, I went into private equity investment banking on Wall Street. It didn't take me long to decide I needed a lifetime pivot, so I taught myself software engineering, and I'm now a full-stack developer. I was an early employee at Venmo - employee #7 to be exact. I was in charge of building their administrative backend interface that they use to evaluate fraud and monitor users. That was a really formative experience for me, and that was my last job before we started Loveseat together. 

Chris and I are both Wharton graduates, but that's not where we met. We're a product of early online dating: Match.com. We knew for a long time that we wanted to start a company together, and finally the timing was right. We've got really complimentary skills that make us a great team.