Co-Founder of Wayfair on the Significance of Company Culture

Hi everyone, my name is Laura Moran. I am from the Inbound Studio. Thank you so much for being here. As everybody has said, Inbound has been around for about two years now, but this is actually one of our first live, in-person, outside of Inbound events that we're doing. So so excited to have you all here with us, and so excited to have Steve Conine joining us for the first time. Steve is the co-founder and chief technology officer at Wayfair, and we're going to talk a bit about Wayfair, e-commerce, being in Boston, and all those fantastic things. It sounds awesome. Let's just start briefly with how did Wayfair come to be? Can you give us a little quick history of how the company got started?

Sure. So we started Wayfair in my house actually in Boston back in 2002. It's Niraj Shah, who's the other co-founder, myself. We both went to Cornell, we met at Cornell. We've been entrepreneurs our entire careers. Wayfair was actually the third company that we started, and it started as a series of niche websites that basically all offer different types of products from the home. Then those sites grew, and we got to where we had a portfolio of about 250 microsites. In 2011, we basically announced we're going to collapse all the microsites into a single brand, and over the course of '11 into '12 we did that. In 2012, we launched the Wayfair brand you would recognize today, and we've been building brand awareness and goodness and the experience for the Wayfair brand ever since.

What was the deciding factor in terms of collapsing all the brands and creating one brand name that they lived under?

Sure. So you could imagine, well first of all, in 2002 when we got started, I would say e-commerce was definitely an area that people weren't investigating. It had gone through this kind of boom-bust cycle and the version 1 of the internet bubble, and a lot of investors had sort of seen the potential of e-commerce in the '90s, thought it was going to happen faster, and by 2002 they were kind of saying, 'Jeez, this is going to take a little longer to build these things out. There's a lot more complexity behind the scenes.' And so investment started to dry up. Where you saw opportunity was in very niche categories. So when we started the business, we basically launched little websites and they worked phenomenally well. They were actually an amazing sort of petri dish of experiments that we could run, where we could weed out all the internment sites. In the early years, and even today, e-commerce is 80% back-end. It's the operational durability of the experience that you guys all have when you shop at a retailer that makes you continue to come back. If you think about why you go back and shop and stay where you start to get it again, it's because they deliver a great experience time and again. So it takes a long time to get that great experience actually. All these microsites were a great sort of fertile ground for us to experiment and learn about transportation, learn about shipping big stuff, learn about inventory fees, all kinds of stuff. We got to the point where we had a very consistent experience across all these different properties. And on the internet, there's definitely a dynamic where we all will spend time researching if we need to, and once you've done a number of cycles of research again using Google or some great tools, you start to form an opinion about a quicker way to get your job done. So you see this in travel today, you see destinations online that people tend to go to and they associate with great solutions to the tasks they have at hand, and they don't bother doing the research, they just go straight there instead. So we became very clearly aware that there was an opportunity and some greenfield in the home decor space and in home furnishings, and that we had this amazing portfolio of properties that basically had gotten to where we're delivering a great experience. So the opportunity was to basically say, let's become a well-known brand around shopping for the home, and let's really try to educate consumers that we are a great destination when you shop for the home. The initial place entrepreneurs go is to say, 'Well, can you kind of do it both ways? Keep your microsites and launch a big macro site, and kind of use some microsites for acquisition and then drive people into the macro site for awareness?' We tried that for a year or two and basically proved to ourselves that the real way to do it was to simplify the story and just collapse into one brand and go after what the opportunity was before us.

Let's dive into all things Wayfair. Can we talk a little bit about your relationship with Niraj, because you've known him for quite some time. You met in high school? A co-founder relationship is a unique and special relationship. So what has made yours work?

Yeah, I sort of jokingly say that I've spent more waking hours with him than anyone else in my life, and I'm married, I have three kids. So the trouble is my wife has a very hard time closing the gap because I go to work ten hours a day or whatever, I'm sitting next to this guy. So I think the thing about our relationship, I guess on the one side, I would say good relationships are very similar to any kind of marriage where you basically have a commitment, you believe, you trust, you have similar ethics and structures that you live by. And then I think a lot of it in business is you need to be different and you need to appreciate the difference. I think young entrepreneurs notice that the other person will naturally tend to do stuff that you're like, 'Oh man, I really don't want to do that,' and they're the one who says, 'I really want to do that.' You start to see that dynamic early on when you're a young entrepreneur. When I look back on it today, that's sort of the dynamic that has made the partnership work very well. We both have very different areas of interest and we tend to gravitate toward those things the other person doesn't like doing.

Have you pushed each other into an area that you not only didn't want to do, but didn't even see the value in it, that has become a really successful aspect of the business?

Well, as an entrepreneur, you're a bit of a jack-of-all-trades. I think we're both quite good at doing most jobs 80% effectively. And we're also very good at recognizing that we're only doing it 80% effectively, and we're quite good at figuring out when is the right time to get it off and find someone who's actually great at a particular thing that you might not be as great at. I think we're both very good at calling out the other on when that's happening. General management is a particular area that I don't have a natural inclination to want to run a massive organization and deal with general management issues. Niraj happens to love that stuff. But I'm naturally forced into situations where I'm running teams and having to do a lot of general management stuff, and it has worked very well. We'll call each other out. He'll be like, 'Conine, you kind of suck at that. You got to either find someone who's going to do it well for you, or you got to be real about what you're doing here.' In the same way, there's tactical engineering and building stuff where he's very much like, he'll give the big idea and he doesn't want to think through all the details of the messiness of how to actually make that happen. There will be times I catch him on that and I'm like, 'All right, look, this is the reality of what you just asked for. It's got a lot of grit under it.'

Wayfair is nearly 11,000 employees at this point, which is huge. It definitely makes you guys one of Boston's biggest tech companies and sort of standouts. Strategically, I have to imagine there have been conversations along the way that have kept you in Boston. Can you talk a little bit about why Boston, why you've stayed in Boston, and why you're continuing to grow in Boston?

Yeah, Boston has definitely been a point of conversation quite frequently. You can imagine, you're growing very quickly, you're running out of space all the time. You have numerous opportunities to say, 'Hey, let's move to set up out to a different location,' whether that's somewhere else in Mass or nearby or anywhere in the country for that matter. We have really loved Boston. When I look at it, I'm almost loath to talk about it because it is an ecosystem that even over the 16 years we've been doing this now... Let me put it this way: when I got out of school in '95 and when I went to school in mechanical engineering undergrad, Cambridge and the Cambridge area had the same reputation that Silicon Valley does today. So it's got a history that's steeped in engineering excellence and technology innovation and creativity. It's also a little less self-promoting than I think a lot of areas in the country, but it punches way above its weight in talent. I think we identified that early on when we moved out here and started hiring. The lifeblood of any great company is the team you have. If you're trying to find great people who are looking for a certain quality of life, easy commutes, and other great people to work with, Boston just hits so many checkboxes on those axes. It's been fun to see, as you said, we've evolved to where we're starting to be quite a large anchor company here. It's really neat today to see the number of people we actually relocate into the region. As we've started to have other vibrant companies, HubSpot being one of them, the ecosystem... I would have underestimated that earlier and said, 'Oh, it's not as exciting because it's harder to recruit because now I'm competing with HubSpot, I'm competing with whoever else is here.' The reality is great candidates see that as an opportunity. They say, 'Hey, we'd rather come to the region if there's other options because I love Wayfair today, but five, ten years from now, who knows what I'll be interested in in my career.' So the ecosystem has really evolved over the last 15, 16 years here. It started to have some really cool options, and it still has a lot of the background and education that is amazing in this area.

I know you guys have a lot of data, as you know, in the company and amongst many of your other employees. As you've seen the tech scene sort of evolve and the company grow and other companies come in, have you seen an evolution in people who have gone to school here staying here and working here? Because there's a lot of stories of young people exodus out of Boston after they're done with their degree.

Yes. So today we have over 2,100 data scientists and engineers that work here in Boston. We have about 5,000 people in the city, in the Copley area. In terms of people staying in schools, we get a lot of people out of the schools in the Boston ecosystem, as you can imagine. We've actually found that we get a lot of relocates who have gone to school here, they've left, they've done stints in their career elsewhere, and our recruiting team has had a lot of success bringing people back to the region who have gone to school in this area. If you looked at our overall employee base, it definitely skews very heavy New England, and it would skew the heaviest in Boston and the Boston proper schools.

Culture is a buzzword in general, it's definitely a buzzword in the tech industry. How do you think about your employee happiness and the culture of the company in terms of retaining people, making people happy, and maintaining that sort of anchor company status within the city?

Yeah, it's critical. It goes back to the one thing you have as a company that can differentiate yourself: it really is the people. I do the new hire orientation every Monday. I just did it two days ago. Every Monday, with a lot of new people starting, I go in and talk to them about joining Wayfair and thank them for being part of the team. I always make the point that the culture of a company, if it's done right... We put a lot of effort to try to find and hire great people and then retain great people. We're trying to create a culture where they can all work to their full potential. Every day we think a lot about that and worry a lot about that. The thing that's interesting with a good culture is it's not just giving people everything they want. It's not just making it comfortable or cozy. It's making sure you have the right blend of challenging but also reasonably safe, or at least people can understand that risk is rewarded, errors are not a problem, and things are going to go wrong. If things aren't going wrong, it means you're not trying hard enough. Getting that right blend is critical. It's one of those things that we worried about when we were five people, worried about at 50 people, worried about at 500 people, worried about at 5,000 people, and we worry about it a lot today. If you stop worrying about it and stop focusing on it, if your leadership team decides to rest on its laurels, it will degrade. Cultures don't naturally stay great. You look around at great big corporations who in their heyday people regarded as unbelievable places, and you look at what they did at the time to make themselves that way. A lot of it comes down to they had great people and they empowered them to be creative and do great things. They didn't burden them with a lot of overhead and process and heavy corporate stuff. You just have to keep fighting that. We're lucky in some ways to be founder-led, where we have a leadership team that truly has a very long view on how you build great value. When you see companies that can get that dynamic, or get a leadership team that really thinks long-term about how they create value for their shareholders and further create value for their employees who are all shareholders as well, that's a very healthy dynamic to create a very healthy culture.

At 10,000 people, there are markers along the way, milestones that you feel a difference at 500 employees, 1,500 employees, 3,000. Are there sort of really specific things that you've noticed along the way that in retrospect you didn't see coming, but now looking back you're like, 'Oh right, when we hit 5,000 we had to do this different or say this different'?

It's less at certain numbers of people, there's a natural cycle I've seen. The other thing I always tell the team is, look, I'm very cognizant of when it was just me and Niraj in a room together, the efficiency that felt like. It's like straight out of my brain to keyboard, boom. Very efficient, no communication gap. So we're always trying to fight to make sure our team is working as close as we can to that efficiency. What you see happen as you scale is, if you're doing that well, it naturally causes things to kind of get bloated. You take advantage of the ability to run quickly, so you build and build, and you're being pretty creative. When you started the thing off, you have this evolution path and you think it's going to evolve in this direction, so your team is all working and plugging stuff in and building. Three years later, the evolution path has changed, and you look at what you built and you're like, 'Oh man, parts of this are really good but parts of this are ugly.' Then you have to go through cycles of tearing that apart and reorganizing into discrete groups who are focused on things where they can understand the blast radius of the problem and the problems they might create if they're pushing hard. You go through these cycles. As you get bigger, you go through different points of that. There's always an area in the company where you're focusing on breaking it back down again. When you've just broken them down, you're feeling like this is nice and polished and in an awesome shape. Five years from now, you know that's going to be the hood and that's going to be... but that's just part of the natural cycle. The hardest thing is when you have a workforce with a whole blend of people who have seen that multiple times in their career and they're like, 'Okay, I get we're going through that,' and other people who just get frustrated with it. It always frustrates me if you lose people because you're in those periods. You wish you could make this move faster because the output you're doing today does not feel right, and you're right, it should be faster, and we'll get there, but it's going to take another little bit of time. That's the thing I've seen.

I would think a lot of these same principles in some ways ring true externally as well, like thinking about customers and their experience and their happiness. From my perspective, I think there are a lot of traditional companies that have not survived the tech evolution. As a consumer, my opinion is that some of that is their online experience has been pretty awful and they haven't kept up with what it might mean to live in both worlds; they've just focused on the brick-and-mortar. Can you talk about how you think about customer experience, how important it is to Wayfair's survival and success, and how you measure, keep track of, and measure trends and keep up with what's going to be?

Look, I guess to your first point, when you look at traditional retail... I started off my career as a consultant. We basically ran a consulting business, we sold technology development services to companies. You would see a lot of historic retailers are purchasers of technology. What they're doing is they're offloading the technology execution risk that you'll always have in anything you're doing. They say, 'Hey, I'm going to buy a point-of-sale system, or you're going to build my website for me. I'm going to buy that from you. If it goes badly, you're taking on a fair amount of the risk as the person I am hiring to do it, and I really want to be sheltered from that.' As a result, you're forced to sub-optimize. We have always thought very much about this business as a technology company. We feel very adept at knowing how to manage technology execution risk, meaning we can play much more aggressively than you would if you were running a consultancy. I saw this firsthand. In a consultancy, you basically have to hedge the project, so you're under-promising and over-delivering. When you're running your own business, you can basically just go as hard as you can, and that compounds dramatically over the course of a number of years. You're able to innovate quicker, you're able to get solutions done that others will not have gotten to. I think there's a shift, and a lot of great companies today have figured out how to harness that, how to use technology to really innovate and push very aggressively. In terms of our customer, it literally is the corner that every day we talk about. It's all about the customer. What are you doing to improve the customer's experience? What are you doing to make their lives easier and better? How do you make sure shopping for their home is fun, not a source of anxiety? There are a lot of ways we talk about and think about our customers. I always tell our team, we're lucky to be in a business where we can all understand the customer side of it. We all shop, we all can. So if you set up some general core principles for the business, core visions, you can basically rely on teams and their own intuition to make smart decisions. When you get to the core tech of it, it goes back to a common layer. A lot of e-commerce... I always tell our team, look, it is very easy to throw up a sexy-looking website. You guys could go publish one pretty quickly, I imagine. Go copy the best-in-class person, make it look great. Very easy to promise everything's in stock and all ships within 24 hours. It is very hard to durably make that happen. So we really dig into the customer experience we're creating with technology. There's some fun, sexy tech we're doing. We're doing some really cool things with AR and VR, real future-looking things. We're using a lot of that to do photography rendering, and it's really fun stuff and open greenfield stuff where it hasn't been tarnished by the sort of... But most of the tech we work on is getting the experience really tight on the very detailed stuff that you don't think of when you first think of what the experience would be, but you need it and you require it. I was thinking about Apple a little bit recently. In a lot of ways, they're considered a very strong tech company. The minutiae a lot of their team has to deal with to get stuff very tight so that the swipe is just responsive enough... That type of engineering is what we tend to do a lot of. We're lucky that we're in this problem domain space which is home, which historically has a lot of complexity and a lot of room for improvement. That is really our greenfield opportunity: to say every day we're going to come in and work on trying to make that better and better, make the customer experience better and better, so that when you shop for your home, you're just like, 'Wow, Wayfair is an unbelievable platform.'

When you do think about things like AR and VR, how much of that is 'I'm going to give this to our customers because I think they are going to want it and need it,' and how much of it is in response to feedback or something that you're hearing directly?

The AR and VR is driven by we think that's something they will want. It is in its infancy, and it's a technology space where spatial computing in general is at a point where we feel like we need to just be part of the pack that's running with that, experimenting with it. The neat thing is a lot of the device companies... We just recently have been talking about a partnership. They get very excited about our use case as well. Gaming and entertainment are obviously things they sort of jump to first when you think about e-commerce. We have an amazing use case for helping people visualize products in their home. Again, it's very easy to envision how it would be creative: I could pull up my iPhone, take a quick scan of this room, click 'style this room,' and get back a bunch of ideas. Right now, the tech to make that happen is extremely difficult because you have to clean up the room first of all, understand the space... There's a whole litany of problems. It's going to take a while to actually get that to where it performs the way you would expect, but you can envision it very quickly. That's the type of thing where we love to put that in front of our customers, show it to them, get them to dream, and get them to be excited about our platform. On balance, we try to create things we think today will be functional for them. We have a View in Room tool you can actually use to visualize the scale of things. I think that's probably the stronger use case today. A lot of the tech, though, is more about how do you make sure that our fill rates are running at high 99%, how do we make sure that our lead times continue to go down? We're offering a tremendous amount of stuff for two-day delivery, and we're offering a ton of stuff for one-day delivery. How do you continue to chip away at that? If you think about e-commerce strategy long-term, it's kind of like people are going to want better pricing, faster delivery, better selection. So you're working on that all the time. Customers want those, and you can measure firsthand if you do tests and stuff, but we're all customers as well, so it's pretty intuitive.

You guys have announced recently a new call center in Pittsfield, and space that will accommodate 10,000 employees in Back Bay, correct? Is there anything that you can share about what Wayfair's got coming up that's going to take all of that extra manpower you've got in store?

Well, in Q3 we grew at 43%. We had a $1.7 billion quarter, which puts us just under $7 billion in annual run rate. If we continue to grow at any reasonable pace, you just need a lot of people. We are also continuing to see really good opportunities to invest in areas where we can improve the customer experience. I'll give you a great example: transportation. Right now we have a major build going on where we've rolled out a lot of new... we're revamping the way large parcel freight is basically done. This is an area of the business where 16 years ago, I could have told you, you worked the phones for two hours and you'd be like, 'Okay, every customer that has a large parcel order is having problems.' Transportation of large parcel freight is very difficult, but it has a small operating... you can't do anything about it, you're just beholden to whoever you can buy up on the spot market. We can now take control of that. We're at a scale where the economics are at a state where we can take control of it, we can make the experience dramatically better, and we can do it for less cost. So there are investments we're now able to make like that. The people who are going to join us over the next few years tend to be joining small teams working on discrete efforts focused on specific things that are going to improve the customer experience a lot. Some of them are augmenting stuff we're already investing in, some are going to augment things we have on the roadmap to invest in. And then things like our Pittsfield call center, which is exciting to have one of our call centers in Mass, tends to scale more with revenue. As your revenue scales, we kind of know the number of people calling on the phones, and you want to make sure you continue to service them well. We have a pretty significant call center footprint. We have two in Maine, one in Texas, two in Utah, one in Massachusetts, and we opened one in New York just this summer. So we're starting to have those distributed around the country to close us out.

Do you have a piece of advice, as somebody who has built a large company here in Boston, that you would give to startups or small business owners or even mid-sized business employees in the city or in Massachusetts about growing your business here?

I mean, the simple stuff, right? It's all about the team. Hire great people. You're lucky to be in an ecosystem where there's amazing talent and sharp, motivated, exciting people to work with. Be picky. Make sure you find the people that are the right fit for you. You're doing no one any favors by having people you're just squeaking by with on your team if you don't believe they're the right fit. Maintain a lot of rigor around hiring. In an ecosystem where people are going to find other great opportunities if they're not a great fit for you, do that. The other thing I would just say is growing big companies takes time. You look at bigger companies like us today and say, 'Wow, it's amazing how you've grown this thing to be so big.' Well, 16 years. I can tell you the first thousand dollars we did was pretty dramatic. The first $10,000 a day we did was pretty dramatic. It just compounds slower than you'd think. Don't try to go too big too quick. I think there's a natural cadence that if you keep yourself honest to, you'll do well over the long term.

Excellent advice. Thank you for coming and joining us at the studio. Thank you all for being here. If you want to check out any more from Inbound or the Inbound Studio, definitely go to inbound.com. We're on Instagram and Twitter @Inbound, and you can find us on YouTube. Steve, thank you again, and feel free to stay and mix and mingle for a little bit longer. It's been fantastic. Thanks everybody.