What's the one question you wish people asked you more often?
How do you get that devastating looking at 52?
You folks have been building something together longer than most marriages last, right? What makes this partnership work?
We first met in college. And so I think one benefit we had in our business partnership is that, you know, we already had a very strong personal relationship, trusted each other, valued each other's judgment.
Like our ground truths are very similar. And if they're not, we're willing to argue it out or have a conversation till we get it there.
Looking back, what's the small decisions that you made earlier on that seemed trivial but really created an outsized outcome for your businesses?
You know, when we started this business, we wanted to bootstrap it as long as possible. What we ended up doing in hindsight is we ended up bootstrapping it for a decade. And something Steve always talks about is also that scarcity is often a great driver of good execution, prioritization, focus.
It enabled us to really focus on the core that mattered and over time build a much more durable retail business.
So when you started Wayfair, which one of you was let's go for it and the person who said let's not blow ourselves up?
That would be right. That would be let's go for it.
Yeah, let's go for it. And you're like okay, don't blow yourself up.
Oh, okay. You're the bombsuit.
Well, yeah. The other way I joke about it is like he likes telling people what to do and I like being told what to do.
That's a good complimentary relationship.
Hi everyone and welcome to the Zenov podcast. I'm Nitika Goell, CMO of Zenov and managing partner and I'm very excited to bring this episode to you. I want to start today with a question I've been fascinated by and honestly one that very few founders in the world can truly answer. How do you build something that starts in a spare bedroom, survives cycles, pivots and grows explosively, evolves into a global platform and through it all still stay partners still stay friends. Very few companies have a story like that and even fewer founder duos do which is why today feels incredibly special. We have with us two people who have lived this journey the co-founders of Wayfair Niraj Shah and Steve Conine. Niraj, Steve, thank you so much for joining us and it's a privilege to have you both here today.
Thanks for having us. Yeah.
So I had the opportunity to interact with both of you just briefly before this podcast. I can already see the camaraderie shine through. So, I'm going to start something. You folks have been building something together longer than most marriages last, right? So, let me start with the simplest question. Cut to the chase. What makes this partnership work?
Well, you know, we first met in college and we were friends and then at the very end of college, we were taking an entrepreneurship course our last semester and we ended up starting the first company out of that. And so I think one benefit we had in our business partnership is that, you know, we already had a very strong personal relationship, trusted each other, valued each other's judgment. I think that was a big key piece. And then I think the other thing that's really served us well over time in addition to trusting each other's judgment is that we actually gravitated to different parts of the business. So our skills and our interests were very complimentary.
You know, the thing I would add to that, it would just say like I think we sort of have a fundamental belief in ground truth. Like our ground truths are very similar and if they're not, we're willing to argue it out or have a conversation till we get it there. But yeah, I mean, you know, relationships develop over time. It takes commitment. It takes, you know, I think we both had, well, we learned when we were young and good friends, I think that we both had a very common sense of like we like to work hard, you know, we're honest, we're very straightforward people and so whatever, that's, you know, helped our relationship work well.
I'm going to talk, you talked about you argue it through, right? It's not really simple because obviously when egos come to play you've also scaled. So one thing I keep hearing is founders scale, there's also a little bit of god complex that comes in, right? Which is what I mean by that is, you know, where you're good at and what you're good at but sometimes when people keep asking you about things that are adjacent you still have an opinion of it and sometimes there's conviction because this worked that will also work. So what is your conflict operating system in that case?
I think we're both very quantitative, very data-based folks. So a lot of times when we're trying to figure out something new the way we would approach it is the same way, a little less purely instinct but, you know, some instincts for sure as you describe but really coupling it with data. I'm sure there's been many cases or I know that there are many cases where maybe we have differing views on things and then usually to what Steve just said a minute ago, you want to kind of hear why the other person has a different perspective. It gives you more to think about about that. But one of the things we've also I think been somewhat successful at in our careers is figuring out how to experiment and try things on a small scale. Figure out again, collect data, figure out what's there and then kind of take it from there versus trying to, you know, just guess.
Yeah. And certainly having the two of us, I think we call each other out on situations where we see one of us is maybe getting a bit of that complex. Where you become, you know, I think it's easy if you're a sole entrepreneur to kind of fall into that where there's no one to sort of check you. I think we've grown up in an environment where there's always been someone checking us and so you're just naturally used to having your, expecting your leadership team to check you on things or to probe you on things and whether, you know, early on it would be the two of us doing it but you naturally have a culture that you start to develop that your broader group that you work with I think does it really nicely.
I think that's fantastic. I think both of you being so open to checks and balances in place and being each other's source of truth is such an important dynamic. Looking back, what's the small decisions that you made earlier on that seemed trivial but really created an outsized outcome for your businesses?
I mean, one of them for sure is that in what turns out to be very non-traditional in early stage tech startups is that we bootstrapped the business. And we had started our first business that way and, you know, when we started this business we wanted to bootstrap it as long as possible. What we ended up doing in hindsight is we ended up bootstrapping it for a decade. And when we did raise capital 10 years in, we were already at 500 million in sales. We raised capital because we wanted to build Wayfair into a household brand and we didn't generate enough capital internally to go on that mission without raising capital. But obviously the economic benefit from the standpoint of dilution is greatly enhanced by not taking that early rounds of investment. And something Steve always talks about is also that scarcity is often a great driver of good execution, prioritization, focus. And we definitely had a lot of competitors who raised a lot of money and in some cases much to their detriment, you know.
Absolutely. You know, so I think the most creative periods in mankind I think are the world wars, right? I think they keep saying that the most innovative periods because that's the time where you said scarcity mindset. Couldn't agree more. Yes. Then what about right sort of that, yeah, the pressure that puts on the overall system a lot of times, you know, it just forces you to be smarter or be scrappier or innovate in ways that, you know, historically maybe it hasn't been done. I mean we saw that for sure a lot of competitors who raised money would develop bad habits or do things kind of the way they were done and we couldn't a lot of times because we were kind of in a different, you know, had a scarcer set of resources but it enabled us to really focus on the core that mattered and over time build a much more durable retail business. And I'm blanking on whose quote this is. It's a famous one I should know. But it's, you know, necessity is the mother of invention.
I think plays right into that.
Great. When you are 10 years in, you're used to running the organization your way and then you get investors coming in. Is that hard? And how do you manage more people in that equation when you're used to running it a certain way? It's also hard, right? Because you have more people weighing in.
Exactly. I was going to say it wasn't that.
Yeah. It felt very natural. Like we were so used to debating with each other. I mean the first time we went out to raise money. I remember remarking to Niraj that we didn't end up doing the round. We ended up going out and talking with investors for I don't know a week. I remember remarking that, you know, that was the best free consulting we've ever gotten because you're talking with some of the brightest minds out there probing everything you could do. And we were just very open to feedback. We were very used to communicating and just getting feedback. And so when you finally picked a set of investors and said, 'Hey, we want to work with this group.' I think it was exciting to just bring them together. It was more smart minds around the table. And, you know, we had an ownership dynamic where we maintained, you know, huge amount of control of the business anyway. But it was really just about bringing other people into the tent where you're like, great, we have some additional really incentives, you know, smart people here.
I also think there's the, you know, one other outcome of staying bootstrapping for so long is that we were able to retain control. And so then not only were we able to retain control, but then if you think about it from the investor perspective, the investors who are going to do a minority deal, they're going to say, 'Hey, is this a team I want to bet on because they're going to have control? We don't have control. So we're betting on them. Do we want to bet on them?' So in some ways the interests are, you know, very aligned, you know.
So I think you talked about stay hungry, stay aligned, you know, and stay innovative. On the flip side, as you scaled, did this, was there something you had to unlearn?
I mean, the first place my mind goes on that is, you know, part of the way you succeed as an entrepreneur is you're in all the details and you really know how everything works and you're always working to make them better. As you do scale, it's a tricky balance because if you abstract too far away, you actually cannot run the business well and keep the pace up and but if you don't let go of certain things, you know, you really can't scale it. So there's this art of learning how to abstract yourself up but still pick the key things that you're still very deep in and learn how to have enough information about each. That was something that I'd say we kind of learned over time. And then it's different that, you know, when you go from like the two of us to 100 people it's one level and you go from 100 to 500 people it's a different level and 500 to 2,000 different. You know today we're over 10,000 people. So it's not a one-time learning either. There's an evolution to it.
So yeah. Well, no, I was going to say, you know, I don't know if this is so much, it's a little bit on the same theme, but I don't know if it's so much an unlearn as a discovery. Like I think one of the things that I learned or kind of is, you know, when you're growing a team and you're an entrepreneur and you're kind of doing a little bit of everything and you're a bit of a jack of all trades and you're okay at everything, it's easy to hire people that sort of look like you. But really as you get larger and you start skillization, you're trying to find people with specialty skills that oftentimes they excel at things that you're not particularly good at and they get energy out of the things you're not particularly good at. And it's hard to identify that and although you eventually start to and then you start to figure out how to value it and then, you know, ultimately leads into how do you hand stuff off and how do you sort of, you know, really scale an organization.
I think both of you made great points but I want to like double click on it a little bit because every time as consultants as we study organizations the hardest is to cross the value chasm like you said and you said it's in an ongoing basis like you said hiring in the likeness of yourself from a decision-making standpoint and like you said getting, learning what to keep, what to let go and keeping that balance and it's a continuous balancing act. How do you build it at a systemic level? Right? Both of you as individuals are highly self-aware. I can say that. And you have each other to be your truthkeepers. But how do you build that systemically for your organizations?
Well, one of the things we've tried to do as we built up Wayfair is try to keep the whole entrepreneurial spirit very much alive in the business and really have leaders that are, you know, not just like running a function, but think about how we're going to build the overall business and innovate and so on and so forth on an ongoing basis. So one of the things we've tried to do is create like management constructs that make it possible for people to really know what's going on broadly without, you know, a lot of bureaucracy or overhead in terms of presenting or excess number of meetings or a lot of extra reviews or things like that. So what we've done is like the right system for one point in time ultimately antiquates itself and so then you kind of evolve the system. Like for example for the last four or five years we had a review system where every six months each team would write a five-page document on their area of the business. What went well? What didn't go well? What are the goals for the next six months? And that was our cadence. We've gotten to a point where business, teams are executing well. Everything's quite tight. We felt like it actually had too much overhead in it. So, we've like slimmed it down. We've evolved how we do that. And part of the reason we were able to evolve that is that the technology planning cycle that we put in place has now matured to a certain point that some of these business reviews were duplicative. So I think there's sort of like you need to have both an interest in finding like that cohesive way to keep everyone knowing what's going on moving forward with sort of a little bit of like that entrepreneur mindset of like not liking bureaucracy of wanting to kind of always thin it out and find that balance of where it's as thin as it can be but still work.
A lot of that comes down to culture. I mean we've been very deliberate about setting the culture in this business. I remember the first time we wrote down the sort of people principles which we're on our third generation of it thinking like oh man what a waste of time why are we doing this, you know, because we're just entrepreneurs trying to like get the thing...
But in hindsight it's like, and we both had seen earlier companies we started not have good cultures and in hindsight it's just having the artifacts and having those pieces that sort of set the standards by which you want to try to hold, you know, everybody to becomes a thing that can retain that more of that entrepreneurial culture so that people are willing to kind of like modify it as you go through time and, you know, keep the efficiency, keep the risk tolerance similar as you move through time. It's been a remarkably beneficial artifact which originally I would have thought like this is a waste of our time.
Like an eye roll required but actually the interesting thing is I also looked at your cultural document, right? And first thing I saw was relentless customer focus, we own it, I do know it, right? So I wanted to talk about the fact that you build a business where customers make very emotionally charged decisions. Our house is deeply personal, building it, furnishing it, doing everything in between. Like what are some of the things that you did early on to understand that emotive thing and how do you really build it into the culture of an organization? Saying being relentlessly customer focused is one thing, but how do you get people to understand that with a deeper nuance and just have that much customer love?
Well, I think one benefit we have, right? So, what we do, right? We're a retailer of home goods. Well, everyone in our business is also a customer of home goods, right? So in terms of what we're, it's not a piece of B2B software that's in a very specialized, you know, that maybe sold chemical, you know. And so then what we were pretty explicit about. We said, hey, you know, fashion and home are those two large categories where people don't want to own the same item as each other.
And they're two of the only, we think there's really only three categories. But it's those two and automobiles where people pay to get a magazine subscription telling them about what new product innovations are made in the category, what themes, what trends, what styles.
So if you think about that, the passion people must have for the category is very high.
Absolutely. And so we've always said that, hey, we're by being a specialist in this category, we're then going to focus on solving the pain spots and helping it come to life because most folks we compete with are more generalists. They're in many, many categories. This is just another category.
Yeah. And we think that is fine, but that doesn't necessarily do it the maximum amount of service you could. We were also like early on, I mean we did all the customer service and so we right from the get-go, I mean the first I don't know 100 people we hired they all worked on customer service like they all... and so that just created like that foundation of like just being very customer focused and there's always that balance of like, you know, as a customer there's what you think, there's a way you think you behave and then there's a way you actually behave and try to make sure the team is honest with themselves about like, hey, when you're building stuff, you know, you're going to probably think one way when you're in the office of how you would behave as a customer. Really watch how you do behave when you're voting with your own dollars. And so, we've tried to make sure people kind of like keep themselves honest about that. But having that foundation of just having, you know, the team care about customer service is important. To this day, I get a lot of the order receipts from our stores. I watch what's coming through and what people are buying, you know, because it's like keeps you grounded and like what are we actually selling?
And how has that changed? I'm just curious.
Well, it got so, I mean it's gotten to be so many orders at this point you have to filter it to subsections because you can't watch all of it. And, you know, there is, as you get bigger too, there's a change in the way customers interact with how, I don't know, personal they are with you perhaps because they see it as a larger corporation but it's, you know, it's remarkably similar I would say to what it was in the early years.
What is one of the most interesting customer stories you have?
You have since you've done all the calls...
Appropriate to tell, right?
And interesting when you can not tell us who the customer was, but...
Or the choicest of words they've used or not used.
I know. I was trying to think of specific stories. You know, I remember customers when we were started doing 3D rendering to do image production. One of the funny things was that once in a while we wouldn't get the image quite right and we could make, we could draw stuff that looked like real furniture. And of course customers would buy it and they would get it and we talked to them. I remember talking to a few, they couldn't understand how we couldn't just ship them what was in the photo. And he had to try to explain like well actually it's just made up. Like that thing has never existed. It's just made up. We got it wrong. We're sorry. We'll fix it. But, you know...
He's like I want that one.
Yeah. They're like I want that one. And we're like ah it just doesn't exist. They just couldn't comprehend, you know, you're like, well, no, it's like Pixar, like they, you know, they make these movies, they're completely digital. I was like, we use the same kind of technology to do this. And, you know, but yeah, it's there's so many thousands of customer interactions we have, you know, it's like it's hard.
Yeah, it's hard to just say, oh, this like one comes to mind like...
No, that's lovely actually. Like you said, sometimes it's just as you grow, there are many things that you will learn as well in the way. A couple of things that you said, right, with customers keeping that dynamic alive and you also talked about scaling and as you scale and have 10,000 people I want to specifically bring that angle. You have now become a truly global company, you have offices all over the globe. More recently you started the India center. So what have some of the learnings been, right? What made you bet on India? What made you, was it talent, was it a deeper second order benefit? Would love to hear a little bit of nuance in terms of made you set up this GCC?
Well, so obviously many others have set up GCCs in India before us. So we were well aware of the talent but I think one of the things that really helped us make the investment into India and then it's been really fabulous actually, it's worked out incredibly well, was that some of the technology leaders who run the technology side of our business today, they joined us over the last 5 years, they all individually had great experiences in India and so this is a case where Steve and I are learning from them and it's been fascinating and, you know, obviously you end up with, in hindsight I wish we'd come to India sooner, right? But we're really happy to be here now.
So a very interesting dynamic is obviously your products are not in India, right? It's a global, right? So you're a global platform and a lot of it's getting delivered out of India and you also talked about it, right? Two people in the room versus 10,000 people in the room, very very different dynamic. So how do you ensure that culture percolates here globally and some of the best practices from here also get seeded back home?
Well, part of it is you visit. So, yeah, you just show up and I mean, we have a lot of travel between our offices. A lot of the team here comes over and we've, you know, I see people over here that I know fairly well because I see them back in the Boston office.
And we've also had some of our leaders who've been with us for many years in the United States move to India.
Yeah. So we try to facilitate that, meaning we encourage it and because that to your point about culture, you know, every company has a different culture and if you want to maintain the same culture you do need to spend the time, you need to have folks go back and forth because otherwise you can have different areas of the company just have very different cultures.
Yeah. In terms of like technology and the work being done out of India, right, is there anything that you've learned from India that like I said you've reverse engineered and taken globally? And it could be a, that's fine, we're just checking.
Well, I think what we, you know, the thing that comes to mind is more that like when we were first building out the TDC here in India, we started by building engineering teams but then what we've done over the course of the time is been building out...
Like full stack teams. So the product leadership for that area is also here, and the machine learning, everything is contained so that we now have full topics that are owned by teams, whether it's here or whether it's a team in Boston or a team in Mountain View. And that's been very good because then that technology team is very close with whatever business group they're working with, which may be located or often is located somewhere else. And that's really, I think, allowed things to really flourish. I don't know that that's necessarily something we took back, but that's something that really allowed us to, certainly reinforced it being here, that having autonomous teams that own an area is important and that it's worth putting effort into that full on.
I'm going to come back more specifically into the retail space, right? Obviously, that's your bread and butter. You understand it possibly better than most. So technology is reshaping retail faster than ever, right? So what are some of the technologies that are really exciting you and you see is going to make a tremendous impact to your business?
Well, I mean you mentioned certainly AI is an unbelievable new tool that's been kind of, you know, given, whatever, put in the hands of people to use in different ways. And in retail, particularly in home, you know, we get excited about it. I mean, the visualization capabilities are really neat. So, you know, the ability to take products and visualize them in different settings and show customers looks that are specific to them and really get into like deep personalization is really exciting. I think there's a whole set of uses of AI that'll just drive efficiency in retail. And, you know, retail is a business where the most efficient retailers tend to win over time. Customers are looking for people that provide great value and provide great service and they do it, you know, very cost-effectively. The AI tools are like absolutely helping us drive that and it's everything from, you know, enabling our tech teams to build software faster to our customer service teams to respond better to, you know, our catalog quality is a lot better because we can do a lot with using AI to sort of recognize what products are and are they accurately described and tagged correctly and all that stuff. So those tools are just an amazing set of new tools that we're kind of in the early innings of, but we can just see how they can be really transformative and then they will be part of the way people shop as well. I mean, you know, agentic shopping is in its infancy. I find it fascinating when we were building websites back in the '90s and I remember watching e-commerce websites kind of evolve and the UIs were all different and people didn't really know what the basket did or what to call it and all, and now they all look the same pretty much.
Absolutely. Well, you're seeing this happen right now with AI and, you know, sort of that interaction of images with text and how do you sort of deal with that. And it's a fun space to be in and we play with it a lot and our teams play with it a lot and it'll evolve over the next several years to something that will be a fun, great new way that people shop. I have no doubt.
