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Finding Opportunities, Thinking Outside the Box, and Leading the Retail Evolution, with Jiake Liu co-founder and CEO of Outer

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As ecommerce has become more prevalent, customers are catching on to some of the more suspect aspects of product marketing. They’re starting to notice that when you look for something like furniture online, you’re seeing a lot of the same exact products just branded slightly differently. Companies are using the same materials, the same suppliers, and selling the same or only slightly differentiated products, so the question for brands is, what do you do to stand out? For, Jiake Liu, the co-founder and CEO of Outer, the answer was simple: actually do something different. Outer is the first sustainable consumer brand for outdoor living with a core focus on material science, which, according to Jiake, is only one of the ways that Outer is separating itself from the competition. 

On this episode of Up Next in Commerce, Jiake and I talked about all the ways brands should be thinking outside the box, why problem-solving should be the number-one driver of product development, and how Outer is hoping to be part of the evolution of retail. Enjoy this episode.

Main Takeaways:

  • Make Your Mark: There are industries that you think are saturated, but when you look closer, it’s plain to see that there are no brands truly owning the space. Marketplaces and retailers may be offering products, but no single brand of products truly stands out. This kind of situation is more common than you think, and when you spot the opportunity, you have a chance to differentiate yourself and create a foothold that could propel you forward.
  • Function Over Form: It’s always great to have a beautiful product, but too many companies focus on creating something with a beautiful design rather than a problem-solving function. Even in areas where you might not think there are too many problems to solve — like with furniture — there are still painpoints the need only a simple fix that could make your customers’ lives easier. And in doing so, you win their loyalty. 
  • It’s an Evolution: A lot of people are talking about the death of retail, but in reality what is happening is actually the evolution of retail. Brands are reimagining the retail experience and creating new, unique ways to engage with customers in a retail setting. As such, retail i not going away, but only the brands that are thinking big and evolving in the space will have success in the future.

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

Key Quotes:

 

“A lot of people don’t know about this, [but] outdoor furniture specifically has to use synthetic materials, manmade materials, so pipes, metal, etcetera. You can’t really use just any wood that you would see in your living room furniture because it’s constantly exposed to the elements — UV, rain, oxidation, etcetera. And so how do you create materials that can last in those environments, but it’s also comfortable to the touch? Because at the end of the day, it’s furniture that you sit on and you touch, but also sustainable, ecofriendly, recyclable and all of that. So that’s been the core challenge that we’ve taken on from day one. At the end of the day, we are a brand about helping people enjoy the great outdoors and so we need to take part in protecting it and we go through extend lengths to make sure that everything we do is sustainable.”

“I saw the rise in demand, the problems of everything looks the same, and lastly, there is no recognizable brand for outdoor furniture. You can name cars, you can name TVs, you can name computers, you can’t really name any outdoor furniture brands. And so that was the opportunity that we saw. It’s a level playing field because chances are most people are buying their outdoor furniture from the Costcos, the Amazons, the Wayfairs or the Pottery Barns, the Crate & Barrels, the RHs, IKEAs, but these are retailers and platforms and marketplaces. These are not brands that really focus on designing better products at its core, from material, from the design, the innovation and experience.”

“Most furniture companies, they’re really design driven, they’re aesthetic driven. They’re more like fashion, right? You’re not really solving for any problems, but at Outer, we’re very much a problem solution-driven company, more like a Dyson or even like a tech software company. Because that’s how we truly think about designing every product.”

“A lot of people are touting the death of retail. That’s not something I believe in. I think it’s the evolution of retail — how does physical retail evolve? I think maybe our showroom is just one of many experiences. Maybe it’s a new experience that people can go and at the end of the day, it’s about serving our customers and what they want, right? And I know a lot of our customers don’t want that traditional retail experience, but maybe that that can be done a little bit differently.”

“My cofounder and I founded the business because we believe that a business is the best platform to drive positive change for the world. We both truly believe in that and we’re in the business of inviting people outside and enjoying what the great outdoors has to offer, which means, if in 50 years greenhouse effect is so severe and ice caps are melting and wildfires are blazing everywhere, we wouldn’t have any outdoor space to enjoy, right? And so it behooves us… to really think ahead and think, how do we invite more people outside and instead of beating them over the head and say, ‘Hey, you should recycle. You should really be environmentally conscious,’ why don’t we just make a great experience to get people outside and they enjoy being outside and in return, they will care about protecting the environment. And it doesn’t take a trip to the National Park. It doesn’t take a grandiose like a mountain climbing trip to really appreciate that. All it takes is one step outside in your backyard every day to start appreciating that.”

Bio

Jiake Liu is the co-founder and CEO of Outer. He is an entrepreneur and life-long student, angel investor and advisor for early stage startups He was born in Zhejiang, raised in Shenzhen, studied in Alabama, and currently lives in Los Angeles.


Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce

 

Transcript:

Stephanie:

Welcome to another episode of Up Next In Commerce. I’m your host, Stephanie Postles, CEO at Mission. Today joining us, we have Jiake Liu. He’s the cofounder and CEO at Outer. Jiake, welcome to the podcast.

Jiake:

Thank you, Stephanie. Great to be here.

Stephanie:

I’m really excited. So I was looking at your LinkedIn and there was a funny tagline where you’re saying where you were born and then you move to Shenzhen and then you move to Alabama and then LA. I want to start there and hear a bit about your childhood and your worldly adventures.

Jiake:

Sure, happy to. So I was born in China at a small town in the Zhejiang province called Jinhua. No one has ever heard of it, but it’s pretty remote. It’s not very developed, but it’s beautiful. The environment is great. In fact, now, that region is one of the focused areas for the Chinese government to really push for the environmental protection agenda that they have rightfully and I moved out town when I was pretty young, I think four or five years old, to a town that probably a lot of people have heard of it, it’s called Shenzhen in Guangdong. It basically borders Hong Kong and some of the largest tech companies in China like Tencent, Foxconn. They have a huge factory/town within the city over there. It’s like the Silicon capital of China.

Jiake:

So I was there throughout elementary school and then moved out of Shenzhen into a yet another small town this time in America in Huntsville, Alabama, which is a pretty interesting place given that it’s in the south, but it’s an aerospace academic town. NASA has a, I guess, an office there, Marshall Space Flight Center. There’s a lot of government contractor and military, a lot of literally rocket scientists there. That’s why my dad moved there. So I was there for middle school, high school, college, got a degree in computer engineering, thinking I was going to go work for NASA. That was my dream. And then moved down to LA because I had a short stint at a videogame company, as an intern at Riot Games in Santa Monica.

Jiake:

I really fell in love with the city. That’s around 2011. That’s when the startup scene is really blowing up here as well. So I attend a lot of pitch events and got to know some incubators, accelerators, founders, investors and so I moved to LA after I graduated instead of taking on the offer to join the videogame company, I decided to start my own company.

Stephanie:

That’s cool. Was that Outer was your first company or … Because I think-

Jiake:

No, outer was not my first company. My first company is called ProspectWise and the reason why it was found is because I grew up in the small business family. My mom started restaurants, actually started as a waitress and then worked her way up to not speaking word of English to now owning quite a few restaurants across the country.

Stephanie:

Wow.

Jiake:

When I was growing up, especially in Huntsville, I saw that she was struggling with technology. Most small business owners are just not tech savvy. And as a computer engineer myself, I thought I could do something about that. So I coded a program to help her with customer retention and marketing, especially in the survey feedback space and then that was an idea that got picked up by accelerator here in LA called Launchpad. That’s where I started building the first company, really learning how to build a startup from the ground up, hiring, fundraising, sales. I had to walk into a bunch of restaurants literally door to door and that was the beginning of my entrepreneur journey. It was a crash course of many what to do but also what not to dos. Let’s put it that way.

Stephanie:

So what ended up happening with your first company?

Jiake:

So I went through about four or five years of extreme ups and downs, went through pretty ugly founder dispute fallouts and eventually was able to save it, turn it around and now it’s just a profitable cash-flowing SaaS enterprise startup that’s run by a pretty small team. I’m still on the board, but I’m no longer operationally involved. I definitely raised some venture cap for it, but it never really hit that venture growth that we’re all looking for, but the investors are satisfied with … First of all, I didn’t really flameouts when it could have a few times and a few of the investors actually decided to invest in Outer which turned out to be a good move.

Stephanie:

Cool. For anyone who doesn’t know, what is Outer?

Jiake:

So Outer is, I like to say it’s the first sustainable consumer brand for outdoor living with a core focus on material science on this community aspect building authentic shopping experience for home furniture, home goods starting with outdoor furniture. So the easy way to understand it is you can basically buy outdoor furniture that has quality that’s better than some of the main brands like [inaudible] Hardware, some of the Italian design designer brands like a bit B&B Italia, but at DTC prices, right? Because we’re cutting out the middleman.

Jiake:

But what’s really unique is that we have gotten to the source of the materials and how to build outdoor furniture from ground up. A lot of people don’t know about this, which is outdoor furniture specifically has to use synthetic materials, manmade materials, so [inaudible], metal, etcetera. You can’t really use just any wood that you would see in your living room furniture because it’s constantly exposed to the elements, right? UV, rain, oxidation, etcetera. And so how do you create materials that can last and those environments, but it’s also comfortable to the touch because at the end of the day, it’s furniture that you sit on and you touch, but also sustainable like ecofriendly, recyclable and all of that.

Jiake:

So that’s been the core challenge that we’ve taken on from day one. At the end of the day, we are a brand about helping people enjoy the great outdoors and so we need to take part in protecting it and we go through extend lengths to basically making sure that everything we do is sustainable.

Stephanie:

That’s great. So when thinking about you building your company, and essentially originally for your first company, you’re scratching your mom’s [inaudible]. She’s like, “I have a problem here,” and you’re helping, and now without her, I was reading a bit about how essentially you’re looking at your cousin’s company, I think, where he you helped him get on Wayfair with his outdoor furniture and you’re helping him and then you just decided to start your own using sustainable materials. Is that the right story? And if so, can you add some details in there?

Jiake:

Yes, that’s right. So my cousin has a factory in Zhejiang, my hometown and he’s been basically the OEM, right? So white label production factory for retailers and ecommerce sellers in America, but these are the typical, I like to call them disposable outdoor furniture that you see like the wicker type that you see in a lot of yards and hotels everywhere pretty much. That’s probably in this array where there’s 30 or like the wicker is falling apart. Everybody has that mental image, right? But that’s what he did and I was still building my first company, ProspectWise and I basically took some information of his factory, found out that he was basically working with razor-thin margins, being the supplier for a lot of these retailers.

Jiake:

So basically I told him, “Hey, you know what? I can do this for you. I can help you sell your own brand on Amazon, on Wayfair, on these marketplaces, and yeah, I did exactly that and it became I think one of the fastest growing outdoor furniture vendors on Wayfair back in 2016 this was. And that’s how I stumbled across this industry, and then from there, I found out problems that are associated with industry and also opportunities.

Stephanie:

So what did you do next after you started seeing all these problems? Did you go raise money or did you go through an accelerator? What was the next steps?

Jiake:

So the first thing I saw was, “Wow, a lot of people were interested in outdoor furniture.” I didn’t know that there was such a huge demand for this kind of products, but if you go to the Amazon right now and typing patio furniture, the funny thing is you’ll see a lot of options, but they’ll all look exactly the same.

Stephanie:

They do. I just shopped for this. They were all the same at different price points. I went to even Overstock and everywhere. I’m like, “These are all the same pieces of material, just a little bit different.”

Jiake:

They come from the same factories in China, just branded very differently. For example my cousin’s factory they actually provide the same goods for different brands and selling the same thing and they’re sometimes competing with each other on Amazon, right? And the prices are different, so you don’t know whether it’s the material like, “What kind of wicker? Why are they different? What’s the difference between steel and aluminum construction? Okay, should I get some umbrella? Should I get polyester fabric?” There’s a lot of information and misinformation and-

Stephanie:

The wrong keywords are added to the listing. They’re like, “This is organic, humanely raised fabric.” And I’m like, “Oh, got me some $20”-

Jiake:

What does that mean?

Stephanie:

I don’t know.

Jiake:

What does that mean? So exactly, that’s the problem, right? And then they all use the same [inaudible], which is funny because you can tell they use same photos. They probably photoshopped some of it out. So yeah, that was a problem. And another thing that I noticed was the customer complaints. So if you go to Amazon, Wayfair, look at all the one, two, three-star reviews, very essentially repeating the same things, specifically for, take, for example, an outdoor sofa. I know what you shopped for, but if it’s an outdoor sofa, the cushion is so hard to keep cleaned. It falls apart after a few months. The frame is deteriorating.

Jiake:

So basically, it really paints a [inaudible] picture of just the product itself is inferior, right? And it’s a pain because a lot of people, they buy the kind of stuff, they’d be thinking to make a great use out of it, but the fact is, after one weekend, you forgot to take the cushions in or you forgot to cover it up, it’s basically covering dust, bird poop, mold, whatever, you name it, right? So you don’t-

Stephanie:

That’s all mine right now. I can see our backyard over here and I’m looking at all these beautiful white little cushions that were nice looking, not anymore.

Jiake:

Photogenic for sure, right?

Stephanie:

Yeah.

Jiake:

But in reality, it’s so hard to make use of it and so it ends up just being sitting in the corner. Sometimes when your guests visit, you’re ashamed of it, you cover it up. That problem is not just pervasive in, let’s call the more affordable outdoor furniture. Even if you spend upwards of $10,000-20,000 at the RHSs of the world, you have the same issues. It’s so hard to maybe … Maybe they can last longer, they don’t fall apart, but they still get very dirty. They get very wet. You still cover it with a rain tarp. And once that goes on, you don’t want to take it off because you just want to go outside for a coffee, you want to sit in it for a few minutes, but you have to spend 10 minutes just removing, get them covered.

Jiake:

And so that’s a huge problem and sounds like a really easy problem, but no one has thought about how to solve for that. And everyone’s complaining about the same thing. So giving that I saw that the rise in demands, the problems and everything looks the same, and lastly, there is no recognizable brand for outdoor furniture. You can name cars, you can name TVs, you can name computers, you can’t really name any outdoor furniture brands. And so that was the opportunity that we saw. It’s a level playing field because chances are most people are buying their outdoor furniture from, like you said, the Costcos, the Amazons, the Wayfairs or the Pottery Barns, the Crate & Barrels, the RHSs, IKEAs, but these are retailers and platforms and marketplaces. These are not brands that really focus on designing better products at its core, from material, from the design, the innovation and experience.

Jiake:

And so we thought it’s a level playing field for us. We can come in and really put 100% our energy and money and focus and developing fundamentally better materials, fundamentally better products, solving those pain points that we just mentioned and build a brand just for outdoor living.

Stephanie:

So how did you go about sourcing and finding and testing high-quality materials and also thinking maybe if you were like a little bit more of an outsider like you didn’t have ties to China and you didn’t know, “Okay, my cousin’s manufacturing so that’s a good one. How would I even go about finding good materials like that and sourcing them?”

Jiake:

So it turns out that outdoor furniture is quite a specific category, even within furniture as a whole. For example, these example of if you’re just talking about general furniture and most likely indoor furniture, even in LA, where I’m currently residing, you can’t find more than 200 studios, factories that can produce furniture, right? But hardly any of them, probably closer to zero, can produce outdoor furniture. And it’s because of the materials in the supply chain. Like I alluded to earlier, it’s really hard to find synthetic materials domestically that can be used in outdoor furniture.

Jiake:

All of that is concentrated in Asia. A lot of it is in China. And also the skilled labor, for example, the wicker type, which is very popular in America, it’s all-weather wicker. It’s actually a kind of plastic. It’s not natural material despite popular belief because natural materials can’t be used outside. The all-weather wicker, it can only be handmade. It’s hand woven. It can’t really be done with machines and that skillset is only really available in Asia, mainly in China, in Vietnam.

Jiake:

And so there are a few challenges around like the barrier to entry to the industry and a lot of that is in China. So fortunately, you don’t have a family connection there and that’s how we got started and that’s how even I knew about this industry in the first place, but I also saw that there’s a lot of opportunities to really improve upon what they already were doing. Mainly they were taking order requests. If you really think about it, the retailers in America are picking what’s available from the suppliers, right? They’re just looking through a catalogue and seeing, “Okay, well, for this season, these are the styles that are in.”

Jiake:

The problem is the manufacturer being in Asia. Now in Asia, if any of you have been to Asia, especially in China, people don’t have houses with big backyards. People live in apartment buildings, in high rises. They are not customers of outdoor furniture themselves. In this case, my cousin, he hasn’t really used his own products, right?

 

Jiake:

They don’t really know the pain points. And so even this loop of the retailers looking to the supplier, the supplier is literally just copying whatever style is out there. That’s why you’ve seen the same products over and over again and they don’t really get the pain points and the retailer is not thinking about pain points because they’re just thinking about the exterior design, the color, the style, just like the indoor one, but the truth is the outdoor, you’re dealing with so many more variables, right? If you live in New York versus LA versus Miami versus Seattle, the product works very differently.

Jiake:

If you’re working with an indoor sofa, that’s not a problem, whether you’re in Hong Kong or Tokyo or Chicago, it’s the same, right? That’s a problem and I saw an opportunity to really go from a customer-centric, customer-first approach and solving these actual problems. I’ll give you a concrete example, this example probably too many of us are familiar with, we jokingly call it the wet bottom syndrome and it’s you’re seeing this innocuous-looking sofa, right? You go in there just for a rest. You’re sitting down for a few minutes, and after 20 seconds, you’re starting to notice that the cushion is wet, right?

Jiake:

Now you have a wet pants, you have a wet bottom. So we jokingly call it wet bottom syndrome. So that’s a problem that many, many people can relate to and the solution that the industry came up with to date has been a bulky rain tarp that goes on that collects dust and bird poop and you don’t want to touch it. And you just end up just leaving the cover on the sofa or you carry the cushions into your garage and you don’t want to carry it out. They end up just sitting on a naked frame, which is uncomfortable and defeats the whole purpose, which is also dirty, right?

Jiake:

So we just came up with I think it’s pretty clever solution, which is what we’re calling the Outer Shell. That’s how Outer was first known. It’s literally a simple waterproof piece of fabric that’s sewn into the cushions itself. When you want to use it, you just roll it open. Once you’re done with it at the end of the night, you just roll it back and cover it. And once it’s in a covered state, there is a little handle on the top of the cushion that’s part of the cover itself that makes carrying the cushions inside very easily. So if you live in an area with inclement weather, it’s really easy to carry everything in and out without stacking them up like pizza boxes and this could be a tripping hazard, right?

Stephanie:

So smart.

Jiake:

We actually patented it and it’s such a simple invention that no one has ever thought of, but once we came up with it, everyone’s like, “Oh, yeah, that solves my problem. I don’t have to ever use rain tarps again. I don’t have to carry in and out, making multiple trips. I can do that in one go,” and this is one that one innovation that has solved a huge problem of people just don’t use the outdoor furniture despite how great they are. So that’s the lens that we take into the supply, the manufacturing side.

Stephanie:

I love that. I love the idea of simple innovations can actually be what the market needs and they’re just overlooked, so you’d be like, “No. Why would we need any patents around something like this?” and then here you all come along.

Jiake:

You hit the nail on the head and a lot of people ask us, what kind of company we are and you think about like most furniture companies, they’re really design driven, they’re aesthetic driven. They’re more like fashion, right? You’re not really solving for any problems, but at Outer, we’re very much a problem solution-driven company, more like a Dyson or even like a tech software company, right? Because that’s how we truly think about designing every product. I’ll give you one other really clear example. Even one of the latest products that we released, it’s a blanket. Now you asked like, “Okay?”-

Stephanie:

Outdoor blanket, I guess?

Jiake:

Yeah, an outdoor blanket, but what problem do you have? It’s just to keep you warm, right? Well, like I mentioned, I grew up in the south and the reason I didn’t get outside during the season I can, namely summer or fall, it wasn’t because of the temperature, it was because mosquitoes were biting you. A lot of bugs. So our blanket is actually bug repellent. It’s a bug repellent blanket. You can go check it out right now, liveouter.com and then you can look for the bug repellent blanket. It uses a technology called Insect Shield. It’s a company that really has this basically unharmful material that’s woven into the fabric itself. It’s being used by US military as we speak. It repels any blood sucking insects and it’s actually baked into our blanket. And so it’s one little innovation. You don’t have to drape it. You can actually just put it next to you and it actually repels mosquitoes around you.

Jiake:

So even in the summer, you can just put it as a thick curtain piece on your outdoor [inaudible] and it actually keeps mosquitoes away.

Stephanie:

Wow, I need that here in Texas right away. That sounds awesome. I always think about that, “If I had a blanket just put over me, it’s nice out, I want to be out here, but I don’t want to get eaten alive tonight.” So that’s really cool. So when thinking about earlier, we’re talking about people buying in different areas. If you’re in Chicago, you have one set of weather. If you’re in Florida, you have another. California, you just have beautiful all year long, but I saw you had an idea around a neighborhood showroom, which I thought was brilliant and also I was like, “That’s like a whole separate company in and of itself developing that as well,” but I want to hear you know, if you can tell everyone, what is neighborhood showroom and how did you even think about this because it seems so different than anything I’ve heard?

Jiake:

Yeah, if you can … A penny every time I [inaudible] ask me, “Hey, is that a separate company?”

Stephanie:

I was thinking, I was like, “This seemed like that.”

Jiake:

So that’s an astute observation for sure. So neighbors showroom for your audience that doesn’t know what it is, it’s a concept of turning our customers backyards into real-life showrooms. So instead of going to a store furniture store, you will come to our website, you will type in your zip code and then we’ll show you who near you actually has Outer in their backyards. And you can browse photos, you can get inspiration, but most importantly, you can schedule an appointment to go physically visit that person. It’s like Airbnb meets retail. That’s how a lot of people like to think about it.

Stephanie:

I almost called it Airbnb earlier. I was like, “No, is that too much? I don’t know,” but that’s a good description.

Jiake:

You got it. It was actually originally inspiration. I was an Airbnb host and a guest and I loved it, not just because of the utility of it like replacing a hotel, but it’s the experience, right? You get to meet the host, you get to know the local area wherever you visiting more holistically and so it’s really the social and community aspect that really drew me in and very much so in the neighbor showroom, that’s what we found as well. Currently, we have over a thousand locations and-

Stephanie:

Wow, a thousand. That’s so interesting.

Jiake:

It’s actually way over a thousand now. So wherever you are, if you’re in New York, you type in your zip code. We have a few in Manhattan, we have a few in Brooklyn, we have a few in New Jersey across the bank. I remember this one, one of my favorite showroom, we call them hosts, people who volunteer to do this. Scott, he has a beautiful rooftop neighborhood showroom in Tribeca and it’s a gorgeous condo penthouse. And he’s basically availing his rooftop which has a 360 view of the entire city to be a showroom. And so he’s hosting basically would be buyers of [inaudible]. If you’re visiting his home, instead of dealing with a salesperson who’s trying to sell you on this product, we basically tell Scott not to worry about selling it, “Just talk to the visitor as you would any neighbor or friend, right? Tell them about how you truly feel about the product, what are the pluses/minuses.”

Jiake:

It’s a very neighborly kind of experience. Scott gets compensated, but it’s not with a commission because it doesn’t matter if you buy or not. We want you to have a great experience and really to see, touch and feel the product in person and he basically gets paid a flat fee because he’s availing obviously his space and his time for that 15 minutes, but sometimes the visit go a lot longer and we’ve actually had many stories of visitors becoming friends with the host. We’ve had dates happening. We have business deals that was cemented over we’re visiting a piece of sofa and that’s been the pleasant surprise about building that community up from the ground up.

Stephanie:

I think we need a reality TV show just around neighborhood showroom and just see what’s happening. I want to know.

Jiake:

There’s so many just great stories I hear back from our team, community team all the time about this host writing a handwritten note for a visitor, for our team, like I said, like the dates. We’re actually thinking about creating more content around that, right? Because I do think, especially after two years of isolation through the dynamic, people are desiring that human connection and this return to … Even people who don’t talk to neighbors for the longest time. They do because of the pandemic because they’re literally the only people you see anymore, especially also the pandemic [inaudible]. I think there’s definitely something that’s really wholesome and authentic about that. So we’re excited about maybe taking creative spin on the content piece then.

Stephanie:

That’d be cool. When you first brought this idea up, was there any pushback? Because my first thought is, “I don’t want to go to someone’s house.” Same thing as Airbnb, same thing as Uber, all the early days, we come over that early day fear. Was there anything that you knew just from those two companies launching where you’re like, “Okay, take it pass that. Let’s skip ahead by doing this in our marketing,” or how did you approach that?

Jiake:

You answered the main pushback which is companies have trailblazed this, right? It’s not a new idea. I think it would be a different world if Airbnb did not exist, but if you really think about it, visiting a stranger’s place for furniture purchases, it’s a behavior that already exists in the world, namely I remember buying my Herman Miller office chair on Craigslist.

Stephanie:

Even sketchier.

Jiake:

[crosstalk]. It’s really just an unrefined experience to put it mildly to do that. I’ve posted plenty of people through online classifieds and people who come in and check it. I just sold a set of old dining set, right? So it’s all happening already organically and so we really just building a more polished, great customer experience layer on top of it, just like how Airbnb has solved the couch surfing, the awkward handshake with the cash exchange. In that case, in our case, it’s really just, “Hey, meet like-minded people. Browse homes near you that reflect design styles that you, whether it’s Mediterranean, modern, whatever, to visiting a neighbor.”

Jiake:

Again buying outdoor furniture, you really want to see that this product works in my area. What we work in Alabama would be very different in LA. My two homes will be very different. And so I want to know that this thing does last after a year of use, two years to use, many years of use. I want to talk to a real neighbor that can speak to that. And so that’s really … It’s worked itself out just because like the behavior is actually surprisingly in the beginning very accepted, if not welcomed. And in this case, we’ve scaled it to over a thousand locations, so we definitely know that this works and people have no issues with it.

Stephanie:

The blessing when you’re not first to market. How do you think about the ROI with this program? Do you ever look at a host and you’re like, “Okay, these conversions for this girl right here, not so great. What’s she doing? We’re going to cut her out of our program,” or how do you think about [inaudible]?

Jiake:

You look at the ROI, you look at the I, the investment. If there’s costs associated with it, then we might have expected return on it, but the truth is, 100% of our hosts are all-paid real customers. And that was important from day one because we didn’t want people who are doing this. They’re doing it for ulterior motives or the wrong reasons, namely, this is not a … It’s not even like Airbnb or Uber where it’s a little bit more commercialized and transactional, right? “We’ll do it professionally to make money,” right? This is not the case. For us. It’s really, truly a community of believers in Outer. They like the product so much that they want to do this. The cash that they make is really just a nice bonus, but we just did a survey, and once that jumped out was first of all, 97% of all the hosts would recommend the hosting experience to their friends and family. So they’re like, “Oh, you should do this too because it’s so much fun. I can meet people.”

Jiake:

And the second thing is most people will like it because they feel like they’re part of the community of the brand and truth is a lot of our customers spend a lot of money and effort in renovating their backyard and outdoor spaces. Our product is not cheap, right? There’s a show-off aspect to it too as well, “We really want to share my space and show it, be the best yard of the street,” kind of thing. And So there are a lot of motive reasons why we’re doing it, rather than getting paid, right? So, to your question ROI-wise, from day one, it’s positive because we haven’t really burned a cent to stand up this program. All 1,000 showrooms have been profitable from inception essentially. So we don’t have that. So no, we’re not going to say like, “Hey, you’re not performing well.”

Stephanie:

“All right, Jimmy, you’re out.” Got you.

Jiake:

Not yet.

Stephanie:

Throughout this conversation, I can tell that you definitely think big, think outside the box, definitely pushing certain things like materials and how to actually build a community and do referrals and neighborhood selling. I can already tell. What are you now betting on next? What big things are you investing in? What are you trying out that you’re not sure if it’s really going to work out?

Jiake:

That’s a good question. I really think you have given that the audience and the theme of the podcast as well, a lot of people are touting the death of retail. Not something I believe in. I think it’s the evolution of retail, how does physical retail evolve. I think maybe her showroom is just one of many experiences. Maybe it’s a new experience that people can go and at the end of the day, it’s about serving our customers and what they want, right? And I know a lot of our customers don’t want that traditional retail experience, but maybe that that can be done a little bit differently, right?

Jiake:

And so we’re definitely thinking about physical retail and how to do that differently, just like we’ve applied that same outside-the-box thinking to the materials, design, the shopping itself. So without disclosing too much detail, we’re still in the oven, so to speak. We are really excited about physical retail. I am particularly excited about commercial opportunities. I think outdoor furniture category is very interesting compared to a lot of other, let’s say DTC brands, is the fact that it’s applicable to businesses as well.

Jiake:

If you’re in LA, you’ll see, all the restaurants have outdoor dining options now. So outdoor furniture used to be nice to have now are necessities for restaurants, right? Office buildings, hotels, shopping centers, anything that has a communal public space is really just asking for nicer furniture that requires less maintenance. And so that is also an area that we’re really, really excited about. So working with maybe hospitality partners, real estate partners to really get into that channel as well, that we’re really excited about. And the last piece, I think it’s really going back to the sustainability piece of it.

Jiake:

Terry, my cofounder, and I founded the business because we believe that a business is the best platform to drive positive change for the world. We both truly believe in that and we’re in the business of inviting people outside and enjoying what the great outdoors has to offer which means, if in 50 years, greenhouse effect is so severe and ice caps are melting and wildfires are blazing everywhere, we wouldn’t have any outdoor space to enjoy, right? And so it behooves us even the cold-blooded capitalist investor, we don’t have any of those, thankfully, [inaudible], but it behooves us to really think ahead and think, how do we invite more people outside and really instead of beating them over the head and say, “Hey, you should recycle. You should really be environmentally conscious,” why don’t we just make a great experience to get people outside and they enjoy being outside and in return, they will care about protecting the environment, right?

Jiake:

And it doesn’t take a trip to the National Park. It doesn’t take a grandiose like a mountain climbing trip to really appreciate that. All it takes is one step outside in your backyard every day to start appreciating that. So concretely, we’re taking a pretty serious commitment and investment into material science. We really want to create the next generation of green materials that can be used in the home space, which is out of all the industries, if you think about apparel, if you think about electronics technology, every company is really pushing for sustainable materials.

Jiake:

And whether it’s greenwashing or not, I think that desire is there. A lot of companies are doing that, but I think no one is really carrying the banner in the home space. And I think that’s huge miss because furniture is one of the, I don’t know if it’s the most polluting industries, but it’s certainly very pollution heavy, both in the manufacturing, the harvesting of raw materials, the transportation. I think I’ve read a study somewhere that says I think Americans throw out like 10 million tons of furniture every year

Jiake:

It’s a huge problem and I think more people, more our peers and competitors, I wish everybody can really join in to think about how to create sustainable products. And I think it comes from the source which is materials. And so we want to do a lot more in material research and finding the best fabrics that’s not just comfortable and performance driven, water repellent, all that but also sustainable.

Stephanie:

So when thinking about the B2B angle, how have you had to shift your thinking when it comes to going from selling straight consumers to now you’re approaching hotels and apartment buildings or whatever it may be?

Jiake:

So like I mentioned earlier, we are a product and problem solution-driven company. So a lot of people say, “Hey, Outer is DTC brand.” In fact, we were rated as one of the fastest growing DTC brands, btu I think that misnomer, I think DTC is a great channel, but that’s just it. At the end of the day, we’re thinking about creating products that can better the lives of customers, but also businesses, right? I think, for example, hotels, they spend a lot of money and human resource to basically take care of the rooftop furniture or the swimming pool furniture. They spend hours each day just tearing the cushions in and out. Those are the problems that they also face.

Jiake:

And so we really think, as long as there’s a problem somewhere, that our products can solve for, then that’s an opportunity because the truth is not many people in that industry are thinking through that lens. Again, it’s the same thing as the consumer industry. Not a lot of outdoor furniture … I’ll be in the B2B encounter, the commercial side, there are a lot more established players, the Brown Jordans of the world, [inaudible] of the world. They built a respectable brand and they work with a lot of hospitality partners, but I don’t think they’re quite thinking about the way that we are, which is, “Hey, Hotel Operator, what are the problems that you are facing on a daily basis that’s costing you, that’s diluting your customer, your guest experiences?”

Jiake:

So that’s also a lens that we look at that problem, instead of competing on price and competing on style. It’s the same angle that we’re taking to that industry as well.

Stephanie:

Very cool. So when thinking about starting Outer, all the experiences you’ve had, what’s the one thing, one piece of advice that you always think about now or maybe a piece of advice you would give yourself when starting a company? So it can be from someone else or yourself, your choice.

Jiake:

I got to think about that one. So many.

Stephanie:

Or you can say a couple if you want to. That’s fine too.

Jiake:

I think when I reflect on the two companies that I’ve built it, it sounds cliche, but it always comes back to people. And the first one, I mentioned that I had a founder dispute. I had a three-way founders situation, three cofounders, equal splits, not a lot of clear ownership, overlapping skillsets, none overlapping values. You name it. Made all the mistakes there, and so with Outer, that’s the mistake that I avoided. Fortunately, I found a great team. I found an awesome cofounder where we have complementary skillsets. Terry, a much more talented cofounder than I am, he’s the chief design officer. He was IDEO trained, was the former head furniture designer at Pottery Barn, basically the furniture expert, right? I don’t know anything about furniture.

Stephanie:

I wonder I find it so beautiful. I was looking at it and I was like, “Wow, this is nicer than Pottery Barn.”

Jiake:

Thank you. He’s going for that what he calls a transitional look. Even our wicker collection, you’ll see that it’s a pretty classic frame, but if you look at the legs, they’re like really piece of jewelry. It’s like very modern. It’s shiny. It’s stainless steel. And so anyway, I think he has skills that I don’t and I have skills that he doesn’t, but we have totally overlapping values, the fact that we want to build the first sustainable furniture brand, the fact that we really want to leverage this authentic model with building community instead of just going for hardcore salespeople and sales team, right? So I think reflecting on that I think it’s really just like finding … We’re all finding a partner that really have overlapping values and not overlapping skills, that’s number one.

Jiake:

And then when it comes to the core team, my management team, my executive team is just so great. Everyone is just very good at what they do. Every single one of them is stronger than I am in their respective areas, and really, it’s just about letting go and just not being the bottleneck for them. That’s been told and that’s been advised to me and been taught to me by many other founders and investors, but in practice, it’s really, really hard. And so how do you actually do that and really just building a great relationship with them even like personally, so you can learn to let go and trust them as a person to start. And then practice it’ll be easier because then you will trust their decision in their respective fields. Anyway, that’s a mouthful, but I think that comes back to people.

Stephanie:

I agree and I love it. Well, Jiake, thank you so much for chatting today. It’s really been a pleasure. I love learning what you’re doing at Outer and all the cool things you guys are up to. Where can people learn more about Outer?

Jiake:

So it’s liveouter.com or you can follow us on Instagram, liveouter as well, but thank you for the opportunity, Stephanie. It’s a really fun interview.

Stephanie:

Thanks so much.

Episode 172