How did the idea for Touch of Modern come about and what were the initial first steps to making it happen?
Well actually, my co-founders and I started with a different idea. Originally, we were a discovery and booking agent for outdoor activities and events, which started because we were four guys in New York who were looking for things that we could do. When we started that business, we wanted to cater to other people like ourselves, we didn’t want to be one of those big companies that lost touch with their customers, but that kind of went sideways. There was traction and people used us, but there just wasn’t enough scale with the activities.
I came from an architecture background, studied at Cornell and practiced in New York. My co-founders and I looked at the market and realized there wasn’t a retailer serving customers like ourselves. The idea came when we were sitting in our living room talking about speakers and one of the guys who is an audiophile, was dropping all this technical knowledge on us. The thing is all four of us have our own areas of expertise, things we really geek out about and probably spend more on than we should. We realized all guys have that itch, so we created a site catered toward that, that kind of enthusiasts mentality.
And at what point did you move on from outdoor activity to online retail?
We had received a round of seed funding for the outdoor activity site and were down to about two months of runway left, money was running out. We went back to our investors and told them that it wasn’t working out and asked what the honorable thing to do would be, should we give the rest of money back or keep going until we run out? We also presented our idea that we really liked and believed had legs. They said all three were good options, so we talked among ourselves and decided to go for the third, because we didn’t think that anything would change in the two months, had we kept going with the outdoor activities business. The idea for Touch of Modern had been bubbling up for a while, but we didn’t pursue it because us four guys from New York, coming from the tech thing, only wanted to sit in front of the computer and not have to deal with the problems of shipping and customer service. But seeing what the real challenges were in building that kind of a business once we agreed to do it, made those things seem trivial.
In the first go around you raised money and then it didn’t work out. How difficult was it to continue?
I think we were really lucky that our initial investors, who are founders themselves, weren’t necessarily looking for proof of a business, but were looking to invest in people. After the first business went sideways and we decided to go in the new direction, we ran a couple of sneak peek events like sales and in the first day, we made more money than we did the entire year with the outdoor activities business. The second day went the same, as did the third day. So we went back to the investors and told them that we don’t have a lot of data, but here is what we have, three days of sales and here’s what we think the opportunity is. On the car ride, we were like, if they don’t give us more money, we might as well find our way back to New York because we’re done, that’s it. Mid-way through the car ride, the guy called us back and said, we invest in people and he gave us a million dollars.
How did you meet these people who were willing to give you a million dollars?
We met him through an incubator. They’re no longer around, but they provided us with the contacts.
Let’s talk about your marketing for Touch of Modern, how were you able to grow the number of people who visited the website and conversation rates?
Facebook and Google. A lot of companies start off with the PR thing because if they get lucky and someone big picks them up, then it’s a hit for them. That doesn’t give an idea of how much it actually costs to market, because you can’t really evaluate that approach. So we started right out the gate with direct paid ads. It’s only recently – a year and four months – that we started with PR.
And now you have over 12 million users and over $100 million in sales, which is insane. Let’s talk about your business model. Do you go out searching for unique items, then purchase them so that you build up an inventory?
We actually don’t hold inventory for the most part, we either reserve it with our vendors or we hold on consignment, meaning we physically possess the item but we don’t put it on our books. We pay for what we sell.
That’s very interesting. In your talk yesterday, you stated that a very important part of retail now is content to go along with commerce. How are you guys tackling that.
It’s really video right now for us. With mobile growing and because we sell a lot of innovative, novelty products, things that need to be demonstrated to be understood, we are really investing in video. It’s something we see that works. Every time we put a video of one of the products on, sales get elevated.
But not so much imagery?
Images have been there since the beginning for us, but moving forward, the new push is video.
So what’s next, what are you exploring?
Alongside with the videos is The manuscript, which for us kind of supports the videos. The Manuscript is more educational, more lifestyle, explaining things like: At what age do you outgrow IKEA furniture? How do you save for a good champagne bottle? Things for our customer, the metropolitan man.
How does product selection work now, do people reach out to you or do you still have to go out and find the items?
It is a mix, because now people know who we are and reach out, but we do find things that we think our customers will really like and go after it. Sometimes it intersects with things that we really like and sometimes it doesn’t. We bring things back for approval, work out pricing etc.
Do you consult and advise brands based on data that you collect?
Yes we work with our brands on ways they can improve based on customer feedback or patterns and trends that we observe.
For you personally, do you see yourself staying with the company for a very long time or are you exploring other things to do?
Well there are always ideas in the back of my head, but I think I’m very happy doing this and it’s also always changing. Even our site and what it looks like now, compared with day one, has changed so much. My idea of what is good design has also shifted. Now it’s a lot more about the customer than what it used to be, because before it was from my perspective as an architect and not what the customer wants.
Do you plan to build brands within the Touch of Modern Ecosystem?
Yeah, so we have Dapper man which is our clothing label and that’s done through experimentation and seeing what is resonating with our audience. You know, the clothing model is very hard to build on our model.
Would you do this again, knowing what you know now about entrepreneurship and starting a business?
Yeah, I would say so. I mean the learning experience is really the most valuable thing. You only live your life for how long? You want to learn as much as possible. Doing what I do now, I know it’s a rare opportunity and definitely would have done it again.
May I ask how old you are?
Sure, I’m 30.
Very young. What would you say to a twenty-something year old taking the plunge into entrepreneurship?
Find the right team or the right co-founders because these are the people who will see you at your highest and lowest. You want people with whom you can argue n a heated way, without taking it personally, because you’re all aiming for the same thing. You must also be really honest about your strengths and weaknesses and understand theirs as well. And on the business side, the one piece of advice I would give is to stay alive long enough to see the next day. Live to fight another day and eventually you will get lucky. There’s no rule book or instruction manual that explains how to get people to believe in you, though.