Alex Back: Founder & CEO of Couch.com

Episode 538

Alex Back, Founder and CEO of Couch.com, shares his journey as a serial entrepreneur and his experience in the furniture industry. He discusses the acquisition of his previous company, Apt2B, and the inspiration behind starting Couch.com. We hear all about the concept of Couch.com as a platform that matches customers with their perfect couches and Alex discusses the content strategy and monetization model of the website. He also talks about the prospects of affiliate marketing and the role of AI and technology in the future of Couch.com. Alex shares the challenges of building a company and offers advice to founders starting their first D2C company. You are going to love this episode and I can’t wait for you to hear it. Now on the #TheKaraGoldinShow.

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Transcript

Kara Goldin 0:00
I am unwilling to give up that I will start over from scratch as many times as it takes to get where I want to be I want to be, you just want to make sure you will get knocked down. But just make sure you don’t get knocked down knocked out. So your only choice should be go focus on what you can control control control. Hi, everyone and welcome to the Kara Goldin show. Join me each week for inspiring conversations with some of the world’s greatest leaders. We’ll talk with founders, entrepreneurs, CEOs, and really some of the most interesting people of our time. Can’t wait to get started. Let’s go. Let’s go. Hi, everyone. And welcome back to the Kara Goldin Show. I’m your host, Kara Goldin. And thanks so much for tuning in. I know there’s so many podcast choices out there, I massively appreciate the fact that you’re taking the time to tune in to our show today. And today, we have a super special guest who is a serial entrepreneur, some of my secret favorites. But we are joined by Alex Beck, who is the founder and CEO of couch.com, which is an innovative new online platform designed to help match customers with their perfect new couches. Formally, Alex was the co founder and chief operating officer of the popular furniture brand apartment to be which you may have heard of. And with his new venture cash.com, he aims to help customers sift through the nearly unlimited amount of variables that you have to consider when you’re buying a couch. And Alex is a builder, like I said, serial entrepreneur. So I can’t wait to hear more about his journey thus far and what he’s learned along the way. So let’s get started. Welcome, Alex. Well, thanks,

Alex Back 1:54
Kara. Appreciate it. Nice to be here. Where did you get your last couch?

Kara Goldin 1:58
Well, that’s a good question. I have not bought a couch in a while. But I have Restoration Hardware, modular sofas. So part of what I realized is that I have a couple of rooms that I knew that I would be changing them up over time as my kids were getting older. And so I’m really boring. I bought the exact same sofas for these rooms. So I could switch them up and the different modular pieces, and they were all sized properly. But couch.com was not available at the time when I did buy these sofas. So if it had been, I might have been coming to you to ask for your thoughts and advice on it. So how did you get involved? Actually, before we get into couch.com? How did you get involved in entrepreneurship, and I guess your first startup because you didn’t start off in the furniture business,

Alex Back 2:57
I used to do something very different, which is that I used to be an actor and a singer. And at the time when I was sort of sort of running my own acting business, if you will. But at the time, when I was starting my last company apartment to be, I was singing on cruise ships in the Caribbean. And that’s where my buddies were out. Busan and schmoozing. I was in my state room, drawing up a business plan on my laptop. So that’s a lot of funny stories within there. But yeah, ultimately, I got into the furniture space by way of my my best buddy and former business partner, Matt, who was in the space for a long time his dad was in the industry. And you find that there’s a lot of legacy. There’s a lot of legacy going on. And it’s one of these old school, you know, salt of the earth industries that is ripe for disruption in many ways, of course. But yeah, a lot of lot of people like generationally being a part of it. So my business partner was that we are good friends. And yeah, I kind of got started started that way. I did it as a side job with my acting at first selling furniture. And then and then we sort of morphed into, backs our way into like a popular ecommerce furniture retail brand department to be,

Kara Goldin 4:24
which is super, super incredible. I have purchased from apartment to be along the way. But

Alex Back 4:30
you didn’t tell you that? Yes.

Kara Goldin 4:32
But use you bootstrapped that startup from startup to 40 million. I don’t know if I have that number. Correct. And then it was acquired. So can you talk to me a little bit about that experience?

Alex Back 4:49
Absolutely. So, you know, we never were looking to build the company to to be acquired, I think many entrepreneurs If if not most, I would say are looking, you know, kind of ahead towards the potential potential exit and are working, you know, to build something that is ultimately marketable to potential buyers. I mean, I’m doing that now, with cash.com really thinking ahead, even though right now, you also have to be laser focused on building a great a great business and a brand. But we always were sort of just going going with the flow and seeing where it’s where life took us, and built a really nice lifestyle business for us and our families. When we got approached by this large retail furniture brand, that was sort of looking to get a lot more digitally savvy, so to speak, we talked about, you know, Legacy furniture situations, this was a, this was a brand that has been around for over 100 years, and passed down through three or four generations of a single family. It used to be one store in Chicago, and you know, 1912, and then has flourished now into a 30 store, like big furniture store operation. So they were looking to acquire an E commerce brand to help, you know, sort of bolster their e commerce presence, and they learn from our, our trials and tribulations, our experiences, our culture. And for us, it was mutually beneficial, because they were offering us a just a much larger operational infrastructure that could support scalable growth. So it made a lot of sense. And that happened in 2018. We were at one place. And then during that time, I stayed on a clo for four years and still ran the company essentially as as I would have. And we grew it a lot in that time before I left for the last year. But it was, it was quite, it was quite a process to integrate with a such an old sort of old school legacy furniture brand.

Kara Goldin 7:06
So I’m so curious, many people listening to this podcast have thought about being acquired, as you said, Try what is the exit strategy? Did you hire a banker to get acquired or did somebody? Did they just approach you? And how did that all work?

Alex Back 7:25
Great question. Yeah, because it is quite nebulous, like, how does this happen to you? Like, put your business up on eBay and somebody comes and there is there are so marketplaces, especially in the E commerce space that are that are quite popular. So it’s not not out of the question. But no, they just sort of approached us now. Luckily. One we had this business advisor that we became really good friends with and he had equity in our company and he helped us grow it. Prior to the acquisition for a number of years. We’re very close his business and his family business by trade. They’re, they’re sort of they’re an m&a, like, mergers and acquisitions company that helps broker deals and bring businesses together, usually representing one party. So I think getting connected with you know, somebody who like literally just focuses on on m&a as their you know, life’s purpose is a great way to learn about you know, where you are, just get a gauge of, of where you might be in the market. What’s the landscape of the market right now for a business like yours, because they’re literally just like you would trust a stockbroker to manage your portfolio of stocks. They’re literally buying and selling and vetting businesses every day. Luckily, he was our buddy, and a stakeholder in our company. So it was quite fortuitous. For us to have him as part of the team. That’s

Kara Goldin 8:57
awesome. And so you stayed on as you mentioned, for how long before you decided to leave? For

Alex Back 9:05
long years there’s a lot of just for men in my closet this beard is homeless fully Gray, let me tell you

Kara Goldin 9:13
Yeah, it’s, I’ve I’ve heard many, many stories and every single industry so so now let’s jump into couch.com How did that come about? You left apartment to be? Did you always know that you were going to stay in the furniture industry? Or like how did this whole idea come about? No,

Alex Back 9:33
of course, I wanted to do anything but furniture like most entrepreneurs, I think they you know, there’s a there’s a lot of burnout in you know, over the past 15 years. A lot of hustle a lot of customers and what I knew I didn’t want to do is manage your furniture retail business. As much as I could probably rinse and repeat and you know, continue by not nice lifestyle that I created for myself with a new venture of assembler kind. So I thought about all different sorts of things, I gave myself six months to just like, hang out, I got my first tan that I’ve ever gotten in my life, I think you’d have a somewhat similar complexion to me. So maybe you appreciate this. Yeah, I played a lot of basketball outside, and listen to a lot of business books just like caught up on education and awareness of other industries and how people think and areas of my own industry of E commerce that I wasn’t really familiar with content marketing, and SEO, things I always relied on agencies to do for me that I never really had to learn too deeply about. I’m listening to like, you know, six books in a row, over the course of a week, in my ears all day long. So I made the most of it. Then I was on a solo trip to Norway. And someone had told me that, like the URL couch.com was available. And I looked at the price tag. And I was like, well, that’s not happening. It was very expensive, just for the domain, it had never been anything, but had been established about 25 years ago. And I really thought about and I had this aha moment where I was like, Wait a second, I can do another furniture business, but do it in a way that is a sort of caters to my needs, in my lifestyle that I want going forward and be one that’s way more scalable than a direct to consumer ecommerce business could be, and I’m happy to get into it more. But that’s sort of the origins of the idea and my sort of mindset going into couch.com.

Kara Goldin 11:47
So you acquired the couch.com? How long did that take to actually negotiate that?

Alex Back 11:55
Um, yeah, took a few weeks. I was, it was actually a very interesting story. It was, you know, in that world, sometimes you just go on a marketplace, and you can just buy a domain, and sometimes for the more premium ones generally have to go through a brokerage. So when you’re talking about a six figure, you know, deal, you’re essentially buying a business, but it’s not really a business, it’s very hard to evaluate, or put place evaluation on a website URL. And the price, there’s, and you can’t use comps to do it very easily, because it’s like couch.com, could be this, but couches.com could be like 1/10 of the price. And you’re like, Okay, well, what, what really is the difference? What is the value, and then you start to to assess some of these intangibles behind it. And ultimately, the people who are selling the domains, it’s whatever they want to sell it for. It’s not like they’re governed by any sort of, you know, like the real estate market is governed by comparables in your area, because you can’t get a mortgage unless, you know, unless the houses on your street are of a comparable value to what you’re asking for the mortgage for. So in this industry, however, and URLs, it’s the Wild West. So getting in and getting some information about you know, how it worked from this broker was very eye opening to me. Well, he also told me that it was owned by a very high net worth individual and that there would be no price negotiation. And the best I could hope for was structuring the deal in a way that was alternative and ultimately advantageous to me, but the price tag would not be lowered.

Kara Goldin 13:41
Interesting.

Alex Back 13:42
Did he lower it though? No, he raised it but interest on it. And I’m not buying it over a number of years, but at least I got it on like, I got it on a deal in a deal structure that actually does make more sense rather than dropping down a lump sum. So in a sense, now, this person who’s very active in the tech VC world is sort of involved peripherally, indirectly with the success of my business. If we if we continue to be successful, then he will realize his investment potential, and if not, I may have to walk away at some point, hoping that’s not the case. But we’re sort of connected now in that way. So when I need that favor, I’ll be calling you a time, don’t you? Don’t you worry about that. Interesting.

Kara Goldin 14:29
So can you explain the content strategy for couch.com? For those who haven’t visited it before? I mean, you talked a little bit about it, but how would you lay it out to somebody who maybe couldn’t see it visually? Exactly what you’re what you’re doing? Yeah.

Alex Back 14:46
So what we have up now, at this moment in April, is just sort of a part of the site. We are building the ultimate platform that will be a lot more robust. So So from a consumer perspective, what couch.com is, it’s a place to find a couch where like the match.com of calories. So how do you build that? Well, we are connecting with basically as many retailers as we possibly can across the country to offer customers a very robust listing of retailers in their area, retailers online, and actual products, counters that suit their needs. And we’re getting information on what they’re looking for using a quiz entry point, where we sort of get into what I call the lead variables of a couch buying experience, there’s always a few things that guide people’s couch, buying experience, or buying anything for that matter. And it’s based on like, things that are very important to them, I need something that works with kids, and I need something that’s hot pink fabric, and I need something that I can get next week, because I have I’m having a party, those three variables will narrow down your, your, your opportunities to buy something, or selections very, very, to be very, very thin. So, you know, in that case, people will often jump at the first thing that that they see, and it may not be the best option for them. So accounts.com, from a user perspective, we’re trying to offer people access to way more than what you would normally find through a Google search or search on Yelp or a drive around your neighborhood. Hope that makes

Kara Goldin 16:32
sense. Definitely does. And you have tools on the site that help people to kind of make those decisions, which is super great. Is there an opportunity for a retailer to kind of game the system a little bit and and sponsor in some way to be able to highlight that they are all of those things?

Alex Back 16:53
Well, yes, that is exactly what we’re what we’re shooting for. I mean, we we’re we’re sort of going for taking sort of the the wire cutter or Consumer Reports approach, where we are presenting brands in positive light, these are all going to be paid partnerships. Ultimately, what we’re building is an advertising platform for the furniture industry. And it’s very, very much needed. Because there does not exist anything that is sort of like a furniture first platform for retailer discovery, and for retailers to advertise and find great warm leads of people who are looking for couches. So that’s ultimately the monetization and business model. But, you know, we really have to give people a lot of information about these pieces to make them feel comfortable. If retailers want to want to give us information and access, the more they give us, the more we’re able to give to the customers. So that’s one thing, but of course, yes, there’ll be advertising opportunities for you know, let’s say, Bob’s Discount Furniture or Raymour and Flanigan to advertise their sales or advertise specific pieces or sponsor things. It’s a very competitive industry. And I intend to capitalize on that, you know, competitive nature as much as possible.

Kara Goldin 18:16
So you’re a big fan of affiliate marketing, can you explain what you think are the prospects for, for it for 2020? For not just for you as couch.com, but also just for the overall industry?

Alex Back 18:31
Yeah, absolutely. So there are a few reasons why I think I’ve been very bullish on on affiliate marketing for a long time. And I’ve been doing it for the last 10 years, pretty heavily with my former brand and and we found a lot of success with it. Ultimately, it’s a very efficient form of marketing. Why? Because the affiliate marketing space is 95%, or performance based advertising model. So there, I think CPC and cost per click is getting more prominent. But generally speaking, affiliate marketing is set up to incentivize publishers across the internet, to talk about your brand or your products and influence people to buy them. And when they do, and they help create a conversion, then they get a commission percentage that you have previously negotiated. So that’s really the essence of affiliate marketing and in explaining that, I want to highlight the fact that it is truly performance based as if you had a salesperson doing work for you. And it’s something that is very, you know, very accepted practice in retail, but people aren’t as comfortable with affiliate marketing. So, ultimately, it’s a very efficient form of marketing when our budgets are super tight. And we’re looking for efficiency. I don’t I don’t know of any other Have other forms of of advertising that are as efficient as that. Really

Kara Goldin 20:04
interesting. So how you see AI and technology playing a role in the future of couch.com? Yeah,

Alex Back 20:12
in many ways. So I think, you know, AI is sort of, in home furnishings is, is taking a few very big leaps forward right now. One is visualization, right? People need help visualizing furniture, or any big items in their, in their space. And I’ve been on top of like the, you know, for as an ecommerce brand operator, you know, I’ve been on top of all the visualization tools that had been out there, and they haven’t been great, right? When AR came out a few years ago, everyone’s just sort of like trying to put these cartoonish sofas in their room. And it just, it didn’t, it didn’t really hit, it did help with conversion, but it didn’t help with engagement, very few people engaged with that, that type, but these days, you can with AI technology, it can literally take a picture of your room, remove your current sofa and stick in a realistic image of a new sofa, showing you different options of of types of couches in your actual room that look very realistic, it’s a little goofy, so your couch may have like five fingers coming out, or whatever, with AI imagery, you never know. But that’s one way. And the other way is just with just AI, conversational chatbot technology is moving so quickly. And we all see that when you play with GPT, or any of the the related tools, how smart it can be at giving you information and had in a very conversational way. Selling somebody couches, you have to understand what they’re looking for. And then you cater to those needs, like I described before hot pink couch, good for kids, I need it next week. That information normally comes after the customer does like three weeks of searching and discovery on their own. And they finally start chatting with a live a live chat agent on cowash.com, we want to start that right away. Let’s figure out what the lead variables are for this individual. So we can point them in the right direction and ultimately help sell them a great piece of furniture.

Kara Goldin 22:29
So you’ve built a company before and now you’re a glutton for punishment, you’re doing it again. So what’s the most challenging aspect of building a company? Would you say?

Alex Back 22:44
Well, what I’m living through right now, I think is pretty relevant, which is a map and that of phase of of this company’s development where I am, we’re, we’re not monetizing it yet, at all. We’re doing a lot of testing a lot of building. But we’re at this point where we’re spending money, and we don’t have anything coming back. And that requires a major, major leap of faith. Maybe some medication for some people. But, but it requires a lot of patience and trust in yourself. And that’s that’s something that’s really hard to do. Yeah, even I have had to like, and I’m sure you can relate, because you’ve done this, yourself. There are times and building a business that you’re just you really have to You’re really questioning yourself and whether this is the right move for you. You know, I have two young kids like am I making the right decision? Am I putting myself in a bad place financially by taking such a big risk? And then something great happens? And you’re like, Nope, I’m right on target, you know, so it’s very, very, very tricky to trust yourself through that beginning process, I think.

Kara Goldin 24:00
Yeah. And I, I would also say that, you know, when you’re when your assault or your assault founder, correct? Yes. Yeah, in this process, I think that that’s what makes it also less challenging and more challenging. Because you’re, you know, you’re sort of talking to yourself about this and, and making these decisions and it’s hard. It’s super, super hard. So I hear it all the time on this podcast in particular, again, in all different industry is and you know, all different stages of development too. I think people think okay, if I get my business to 5 million, everything’s gonna be perfect. And then you’re like, Okay, now I need more money. Now I you know, how do I get to 10 million and so there’s all these cliffs along the way that I think you’ve got to keep doing that. And it’s, it’s super, super challenging, but I think you know, the key thing that I See to though is when you start to get those customer emails back. That’s that’s such a key thing because you know you’re on to something and you know that you’re doing something, right. Maybe it’s a little early a couch.com? Maybe not. But what about the What about apartment to B? Do you remember any emails that you got from customers saying, oh, gosh, this is like, thank you so much for being there. And, and showing me exactly that. What I needed?

Alex Back 25:33
Yeah, that’s a great question. And I think it’s like a milestone that we all search for sort of, sort of, you know, true proof of concept, right? When, when you see your idea come to fruition and actually work in an apartment to be early on, we really had no idea what we were doing whatsoever. I mean, we were just piecing it together. There was no playbook for ecommerce furniture at that point, like we were just really just trying a lot of different things. But one thing that was that held true is that every single customer more or less that received the product from us. And experienced our service was very satisfied, we got a lot of positive reviews, a lot of emails from customers, thank you so much. My Space looks amazing. I can’t believe it’s so nice, I was nervous. All of that stuff is very, very validating. And I think throughout our early days in the truck, you know ups and downs, we knew that we had our product, our product was a service, curating and selling couch, couches and other furniture to people. They really liked it, they liked our service, they liked our product, they thought it was a good value. So I mean, the bones were always there from like our first sale. And that was really inspiring and just really kept us going even when we had to borrow money from a friend to keep the lights on or whatever else we had to do to, you know, to keep going.

Kara Goldin 26:55
So last question, What’s the best advice that you would give to a founder, someone thinking about starting their first DTC company in today’s world that we’re living in? What do you think you would say, oh, gosh, I hope they know this.

Alex Back 27:16
I would say that, it’s really important to be aware of what’s going on around you. Because there’s so many moves, this business is moving so fast in E commerce, and direct to consumer brands, it’s moving so quickly, that if you if you keep your finger on the pulse of things, you’re likely to stumble into a great opportunity, or to be the first to try something or an unlock that you didn’t know was there. And I think a lot of a lot of founders can get so insulated into their idea and just their to do list and executing what they set out to do. And don’t spend enough time networking, listening and reading things about your industry. These types of things. Even if you don’t talk to anybody, you’re actually network just reading a Slack channel, a mastermind group like ones that I’m in or, or a Facebook group, I’m in a amazing networking group. They’re just just seeing what people are talking about gaining contextual points is so important, I think to guiding you know, your yourself as much as it can be painful to like, have to pivot after hearing something that you thought was a good idea or just maybe anxiety provoking to hear about other people’s successes if you’re struggling, but ultimately, being around other people feeling like there’s a community and seeing what they’re doing is a great way to kind of keep your head straight, and make sure you’re opening yourself up to great opportunities.

Kara Goldin 28:49
Yeah, definitely. I couldn’t agree with you more. I will also say to that I realized this later on in life that having kids you know, we’re always challenged right with, with the, you know, putting so much time and effort into a startup but then, you know, we’re wondering if it’s the right things, I think that the teachings that go on for for kids watching parents go through building and starting from nothing and growing it is you just don’t really know what they’re learning from it. But I I tend to think that most of it is pretty good. So based on what I’ve seen from a lot of a lot of other founders and stories from them, too. So

Alex Back 29:39
yeah, not to be cheesy, but when my my boys are like seven and 10 and when they reference something about cash sakam or business or like to see that they’ve picked up on something like absolutely some of my most proud, tearful, joyful moments when they just out of the blue we’ll talk about I don’t know, supply and demand or sign or who knows what these kids say. But when they talk about business or like or talk about me, as you know, building something, it’s it’s proof positive that they’re paying attention. And I think it’s extremely valuable to them. And it’s valuable to me to to see that they’re like, you know, learning something and just kind of feel a part of it. Very cool. That’s

Kara Goldin 30:23
awesome. So Alex Beck, founder and CEO of couch.com, thank you so much. We’ll have all the info in the show notes. Really appreciate you coming on and sharing all of your stories and lessons and really terrific and best of luck with everything.

Alex Back 30:41
Thank you so much. It was a pleasure to be here.

Kara Goldin 30:44
Thanks again for listening to the Kara Goldin show. If you would, please give us a review. And feel free to share this podcast with others who would benefit and of course, feel free to subscribe so you don’t miss a single episode of our podcast. Just a reminder that I can be found on all platforms at Kara Goldin. I would love to hear from you too, so feel free to DM me. And if you want to hear more about my journey, I hope you will have a listen or pick up a copy of my Wall Street Journal, best selling book undaunted, where I share more about my journey including founding and building hint. We are here every Monday, Wednesday and Friday. Thanks for listening and good bye for now.

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