Stephen Kuhl is the Co-Founder and CEO of Burrow, a furniture company for the modern age that delivers the most convenient customer experience in the industry.

They started out by making beautiful modular couches that come in easy to carry boxes that more or less snap together without tools. They have since expanded their product line to carry all types of more intelligent furniture. You can basically buy your entire living room on their website. It’s an awesome company and Interplay is a proud investor.

Stephen shared a ton of great insights into the world of manufacturing, which includes some crazy stories from the early days of Burrow.

If you’re building a DTC business or a company that relies on manufacturing this is worth a listen.

Show Links

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• Guest Links: Burrow‍
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Transcript (this is an automated transcript):

MPD: Stephen. Great to see you, buddy. Thanks for being here today, 

Stephen Kuhl: Mark. Thank you for having me excited to be here. 

MPD: Awesome. Would you mind giving us a quick overview of your background? 

Stephen Kuhl: Yeah. How far back?

MPD: Whatever you think is relevant for the story, but like the thirty second to one minute version. 

Stephen Kuhl: Well, I was born in the small town of no, I D I grew up in, in Syracuse, New York spent a couple of years in Raleigh, North Carolina when I was very young in, then moved back to Syracuse, probably the only family that did that, and then went to Cornell for my undergrad. I rode crew there, which took up most of my time.

And then study finance. Got a job in 2009. When I graduated by the time I actually graduated that job was no longer there. And so kind bounced around in a couple of places, started a small business in educational consulting with a friend of mine. And then finally landed into strategy consulting.

And a couple of years later at Accenture did that for a little bit, then went to a place called common fund capital, which is a private equity venture capital fund. And then business school and business school is really where I started my current career, which is starting the company. That's awesome.

MPD: You want to go ahead and give us an overview borough? 

Stephen Kuhl: Yeah. Borough is the only interesting part of my professional experience. Really

MPD: interesting. 

Stephen Kuhl: So what do we like to say? Borrow? We make it radically easier for people to settle into their. By designing innovative furniture that makes everything about furniture from shopping to shipping, to living, to moving more convenient. And we, you can find us online at.com. We have one showroom in Soho currently, we're going to open a dozen more the next three years.

And yeah, that's what we do. 

MPD: Why did you create this company? You know, and you listen to your narrative, your backwards. Yeah, you're you know, went to a good school, worked in finance and then started furniture company. How did that happen? 

Stephen Kuhl: At the very beginning of business school, I took entrepreneurship.

And as for that class, you have to start a company or start the idea for a company makeup pitch deck. I think a business plan, et cetera, into being of class. The professor holds up a deck for company called Jan which stood for Jeff Andy Neil days, which eventually went on to become or be Parker.

I know, that company very well. And professors, the professor said, Hey, you could work on a company that's fake, or your company could turn into a real business. Like what happened with Warby? And so my co-founder Kabir and I were both in the same class. We'd gotten connected through a mutual friend.

Mike, one of my best friends from high school went to college and McGill with Kabir. So she got us in touch and we were in the same class and we were brainstorming a bunch of ideas. Furniture seem to be a huge opportunity. We were kind looking at the rise of Casper at the time and direct to consumer mattresses.

And we thought, furniture in general is painful. It's not just mattresses, but shopping for furniture, socks, getting it delivered to your home takes forever. And then there's all these delivery fees. There's gotta be a better way to make furniture and sell it to people online. And then get into their homes more conveniently.

And so he's just started doing some research into the space and fell in love with the opportunity the furniture's over a hundred billion dollar market in the U S alone. It's super fragmented and there's just not been a lot of innovation. And so that just really attracted us. And also the idea of making a physical product brand is really appealing to me.

And in consulting, I'd always found. I think in Kabir agreed. He was the same way that he had previously been a consultant that if you're no matter how cool the project was, if the actual physical product that the company was selling was boring. I wasn't that interested in it. And I had done this really cool operating model redesign for this huge business that made basically like the infrastructure data center.

And I couldn't get that sentence out without putting myself to sleep. Even though there was a lot of really cool, interesting work going on behind the scenes from an account management and org structure perspective. And so, so I always liked working on physical products. You could just go and talk about with people.

It started out as that was the interest in it. And then over time it's grown for me because I really get jazzed up in the morning. Coming up with ways to solve problems for people and incorporating that into a design process that creates unique, innovative products. And it's just something that, you see the tangible results when customers get your product in their hands.

And they discover these little, convenient or functional benefits of the product. And then come back to you and say oh my God, I discovered this other little thing. It's so cool about this coffee table. That's what gets me going. And I never would have thought that previous previously in my life, in fact, if you had told me entering business school, that I was going to be selling French, Anytime soon.

I would've been like, okay, I don't know what happened. I got kicked out of business school and lost all my money and I'm selling furniture now, but I can't imagine doing anything else now, but 

MPD: You brought life to the industry. Um, and I think about the innovation in furniture, there's exceptions, obviously a lot of it's just been around design aesthetic changes.

You guys went to a whole nother level. You changed functional characteristics, attributes of the product. How did you guys go from being in a class? Hearing the Warby story, and it's fascinating to continue hearing how much generational impact Warby has had on the kind of the Northeast New York tech scene, which is awesome.

They have a lot to be proud of. You came out, you got this, you got in the class, you had the bug. How did you get from that to. Furniture is a big market to let's do something really interesting. What was the idea? How did you put this twist on this? It 

Stephen Kuhl: started with Kabir and I being actual customers in experiencing the pain points ourselves.

So we. Uniquely qualified to at least I don't want to, I want to say solve the problems, but at least uniquely qualified to identify the problems. And so were a lot of the students in our class. Normally they say don't create a business for your business school classmates, because business school students are a very unique, small subset of the population.

It's not a normal, it's not a representative sample of any large group. But in this case it was because it was people in their late twenties, early thirties who were entering that next phase of their lives, where they're not just buying a Kia or the cheapest furniture possible. They want nice stuff, but they have all these expert rising expectations about what it means to buy products from.

And you want there to be, you don't want to wait for delivery, you want it to be convenient. You expect more out of your pro out of your products. Customers are becoming or consumers in general becoming more pragmatic. They want to know that there's real value built into the products.

And so, you we have these same expectations and we identified the pain points of buying and receiving furniture. And so we actually did have this unique perspective of well, why can't we solve any of these things? And, we also recognize that the making, furniture's not rocket science, right?

Like it's, it's a physical product that you can, there's ways to make it work. We fit, we kind of thought we could figure out how to take a sofa. Break it up into different components that ship in different boxes that the customer can assemble at home. Can we engineered ourselves? No, but I'm pretty sure we can hire somebody and describe what we want and have them make that and work with them on creating, a product that, that fits the consumer experience that we're trying to deliver on.

Now, why was 

MPD: taking a sofa and turning it into kind of pieces that you can almost to. Why was that such a revolutionary important concept for the supply chain, for the customer experience? Why did it matter? 

Stephen Kuhl: So furniture is big and bulky, right? Like a whole sofa. If you buy sofa from I'm making it up crate and barrel it goes, it's not being made by crate and barrel.

It's being made by one of their contract manufacturers. Korean girl probably didn't even design it. They just went to a factory that makes sofas and. Do you have something that looks a little bit more like this latest trend that we've seen in the market? And then they buy that sofa, it gets manufactured and then it gets shipped in a container from wherever it was made, whether it's Mexico or Vietnam or China or whatever.

And it gets shipped to. A warehouse in the us and you can't fit that many sofas in a container because again, they're big and bulky. Then it sits in that warehouse and then ships the local retail center. And it's big and bulky still. And then they have to deliver it to the customer, which you can't just ship with ups.

So it takes longer. You have to use an LTL carrier. And then you require signature on delivery or special insurance that they're going to come up above the second floor and customers have to pay for all of this, or they can pick it up in the store themselves, but who has a truck big enough to fit sofa?

So it's just the entire model's built on this. How do we work around these big bulky pieces? And we took the opposite approach, which is how do you take that big bulky item and make it not big and bulky, make it fit into boxes that can ship with ups, which means we could make it anywhere in the world, pack more boxes and do a container which reduces costs reduces the carbon footprint.

Warehouse it for cheaper, fulfill it for cheaper. Any three PL could handle it. We don't have to build our own distribution now. And then we can ship it with ups, ground shipping, which gets to the customer faster is more convenient for them to receive because they don't have to take four hours off of work to be home during the delivery window.

When the furniture company says it's going to arrive, and then all we have to do is engineer it so that people can easily put it together, on their own no tools. We want it to do the opposite of the Ikea experience, we're not trying to optimize for the smallest box possible. It just needs to be.

Under the dimensional weight guidelines that we can ship it ups. But after that point, all the optimization is, how do you make this thing as easy and simple and intuitive to put together? And then from there it was so that was the whole like operational business model, but then there's all these other benefits from it too because we sell components.

So meaning like if you buy three seats, sofa, you get three seats and then a set of arms and together it makes the three seats. We can hold less inventory and turn it over faster because you're just making the same components over and over again to make all these different variations and versions of the sofa.

So there's benefit there and then it's just way more convenient for customers. And then, because we are engineering these products from the ground up, we can make them better, more functional for consumers. So asking them again, what are your additional pain points for, upfront talking to a lot of our business school classmates, we learned that sofas.

Often it was blocked the only outlet on the wall. And when people have to charge their phones all the time, it was like, okay why don't we just include a charger in the sofa, like an outlet. And you can plug that into the wall, but then you don't have to like climb underneath the sofa to plugin, to plug in your real problem, history of box.

So these are like all my things and it's all that stuff that like when you see car commercials and they're advertising the cup holders or Bluetooth. You'd like, does that really matter? Not really, but what that communicates is that this car manufacturer understands who you are as a consumer and understands what your needs are.

And if they've got everything down to the couple there they must have the entire car. And so those things actually do make quite a big difference, I think, in the overall like furniture experience. So we are a company that actually listens to consumers cares about what does comfort really mean?

What does stain resistance mean? What does durability mean? Modularity is this thing easy to move is easy to receive. All those things become really important as part of the overall package. And if you're going to build the best furniture brand of the future, You should incorporate all those different pieces into it, as well as providing, next level customer service.

And we think that's a winning formula for building the next multi-billion dollar furniture brand. 

MPD: When I, when I hear the story of the supply chain and you're talking containers, not full and sitting in warehouses, I think all I really hear to be honest with you. Empty space in a container cost money sitting in a warehouse, even though may not seem obvious someone's paying rent for that square footage for that period of time.

How much of a typical couch that we would go to buy it as any of the other stores? What portion of that price is really a function of shipping costs. It's all baked in there. So what is that? 

Stephen Kuhl: The last mile piece is not even big. So most furniture companies, if you buy their stuff online or in store again, unless you were picking it up yourself, you are paying a couple hundred dollars to have that delivered to you, 

MPD: right?

So it's the price they quote plus a few hundred bucks. 

Stephen Kuhl: So you always have to add a couple hundred dollars. So whatever you're seeing at most marsh replaces, and then what the piece you're talking about, the shipping and freight and warehousing and everything. It's several hundred dollars. All in for a $2,000 sofa probably costs $600 worth of logistics fees.

And we can do that. And for like half, although lately ocean freight is obviously skyrocketed. So it costs a lot for everyone. But yeah, relatively we can save a couple hundred dollars, which is allows us to actually sell the same quality. For the same or slightly less money, but then not actually charge anything for shipping.

So better 

MPD: experience, lower price point all in. Yeah, it started out with, 

Stephen Kuhl: go ahead. No, I was saying it should be a no brainer. 

MPD: You guys started out with with couches, obviously you've gone far beyond that. You're targeting, the whole. W what other product lines have you rolled out and where I've been other areas where you've found material innovation, whether they're noticeable to a consumer or not.

Stephen Kuhl: So we've done the rest of the living room, which includes coffee tables, side tables, pillows, throws rugs, credenzas, benches wall shelves. And we're about to do the whole home. We're planning on doing it sooner. But as you mentioned, supply chain Vietnam, which is one of our major locations for manufacturing has been shut down or was shut down for about four months this year which made it difficult to get products made and she can imagine But, uh, so where does the innovation come from?

It's the same process and this is where I've we've been honing this over time and just refining our process to make it crystal clear for everybody in our company. What, what makes borough different? How do we approach making things different and better? And it comes down to this process of doing customer research.

So I'll give you an example. It's, it's different for each product line. But for, for wall shelves, for instance, we're looking into shelling and we do all these surveys and we do, small focus groups and talk to people and people don't buy wall shelves in our target market because they're afraid it's going to destroy them.

They don't know if that you define the stud in the wall. They don't know if they have the right, wall anchors or screws to hang it properly. Isn't going to rip out of the wall. They're going to lose a security posit. How high do they even hang it? It's a pain to make sure it's level, there's all sorts of reasons that just go into this immensely that's friction.

And so you'd say I don't like friction, I'm just going to buy something it's freestanding, but that might limits your options aesthetically. And so we thought what if we made wall shelves that include all the hardware you possibly need? And we make them the easiest to hang wall shelves.

And the way that we did that was by including dislike template poster. That is the exact same size as the wall shelf unit. And you hang that on the wall because that you can adjust piece of paper, you tape it on the wall, you can adjust as many times as you want, get it level wherever you want. And then there's spots for you to tap in these wall anchors that we give you.

Then you take the poster down, put the screws into the wall anchors and hang the books in the wash pump itself takes 10 seconds to put together. And then you hang that on the wall and wallah, you have a wall shelf that has not destroyed your wall and was super easy to hang and it's modular. So you can do all these different configurations of it and whatnot.

But that was just for. For rugs. It was like, people want nice hand-woven rugs, but they hate how much rugs shed or that rugs are very difficult to clean. And so we're like, okay, how do we make an woven rugs in India where everyone else makes the high-end rugs, but use materials that don't shed and are easy to clean?

It turns out recycled plastics are the materials you need to use to do. And it's a no brainer then, because it's like for the same price or a better price, you can get our beautiful rugs that don't shed and are super easy to clean, but nobody knows it's made of recycled plastic because it feels super soft and like it looks premium.

So it's these different insights across different product lines, but we're just trying to uncover what are those one to two key insights that we can build a standalone brand around and launch them all under the borough umbrella. 

MPD: It's amazing. This hasn't been done before. It seems like if everyone was awake in the furniture companies, they would have been tackling all this.

Stephen Kuhl: The reason why they're not is because the people selling furniture for most of the industry, you're out the ones. And it's not like they're designing a bunch of things and going to them and saying I want you to make this new concept or whatever. They're going back to them with the aesthetic driven things, make this coffee table that looks more like this, but it's still constructed the same way.

And the manufacturers don't care how it's constructed because they're just getting paid for the product. They actually don't even care how it ships because they're not paying for it shipping either. They're just like you tell them what you want. I'll make it. And so there's not really a lot of.

Cross-collaboration there to say is this easy for a consumer to receive? Is it easy for them to put together? And if not is it hard to make it that way? Or is that going to be super expensive? And so no, one's having that conversation because they don't have to. And so we're, that's our point of differentiation.

We just have to hold ourselves to that standard with every new products that we offer. 

MPD: When you guys launched there, it was in the e-commerce wave, Warby Parker, Bonobos, everyone. Re they had made e-commerce acceptable in the venture community. Again, they had brought it back to life. It was a taboo word for awhile and VC capital started flowing in e-commerce.

And any product that you can imagine was then being sold at a new company. We saw them all and the shtick was most of the con most of the new startups were just simply taking an existing product that was sold in the store and they were moving it online. And optimizing for kind of delivery channel and cost of acquisition and getting the math, right?

That those models haven't been created as much value as companies like yours, which really caught our eye because you were making a structural change into the fabric of the industry. By changing the way the products were made, cutting out costs, changing the whole experience of the customer. It was more than getting the same napkins you could buy at best buy via web.

'cause that'll get all get cannibalized and eaten up by Amazon. It became specializing in making really awesome vertically integrated, differentiated product set. And there's not that, it's only a subset of the companies that came out of that vintage that have really achieved that. And those are the ones who are obviously breaking away from the group.

Stephen Kuhl: I appreciate you saying that and it's true. I think it's, it comes down to how you approach building a brand. And do you approach building a brand from what industries have not seen a winner Adidas? Which, some people that's how they approached it, right? Well, we haven't sold tos or something else online or something.

So I'm going to launch this specific thing. She was a bad example. Cause all birds, just IPO and is worth three and a half billion dollars. But you get the point versus for us. And I see this internally to our team all the time. Like we are competing against furniture. That is who are our customers are not thinking about toothbrushes when they are buying furniture.

If they're thinking about other furniture companies and other furniture brands. And so that's who we're competing with. So we have to be better than them and create a differentiated experience from them. If some of our creative looks or feels similar to that of other direct to consumer brands is because we're appealing to the same customer, but that's okay because when they're shopping for a furniture.

They're shopping for furniture. And so it's we got to take people out of the mindset of we're a direct to consumer company. We're not, we're a furniture company. And I think that often gets lost definitely in the media always talks about it. Like they'll say, oh, direct to consumer companies.

Didn't work out. Why do you think you'll be different? It's I'm not competing with them. They could all be successful or I'll say, oh, and it literally has no bearing on my business. Other than maybe if they all die, then Facebook marketing becomes slightly. 

MPD: Okay. But the, one of the interesting things, people don't talk about a lot or when they're new to the industry don't know is when we hear direct to consumer, we're thinking about purchase online, receive product through mail, but increasingly it seems like it's very important for the direct to consumer brands to have showrooms, to have real life spaces you could walk into.

Can you talk about how important that is for your business and why direct consumer and e-commerce entrepreneurs should be thinking of. 

Stephen Kuhl: So I think they should be thinking about physical locations, if it makes sense for their product and for furniture I can say does matter. And apparel does too, right?

Because like you want to try on clothes. A lot of times, not every time it is very easy to recharge the clothes online. But that does reduce friction by being able to try it on in person, same is true for furniture. Some people just want to sit on the sofa, see if it's comfortable. They want to feel the, that.

It's a very tactile experience. And so by providing them that experience that helps convert those customers. Now, we don't think of it now. You, they're not walking out of the store with a sofa. They're still getting it delivered to their home, but it's just another way to interact with and experience our brand.

We view it as we want to create the best customer experience holistically for people. Which should include for some people, they want to chat with someone or text with someone, or they, some people just want to get on the phone and talk through space planning. Some people want to go to the store in person and see and try it.

And some people would just are completely comfortable reading reviews and seeing pictures and videos online and in buying it. Also knowing that they can return it if they don't like it helps, for us. It's pretty big. We have a very low return, right? I think partially because we do a really nice job, but mostly because it's, you want to be pretty sure that you want this thing, if you forget to return it for two weeks, it's sitting in your living room. It's pretty big, right? You forget to return a t-shirt, it's not the end of the world. 

MPD: Okay. But do you, when you think about your showrooms, do you think of them more as a cost center or a revenue driver? Are they marketing for you?

How do you bucket them? Psychologically? Because I think a lot of people look at those as expense 

Stephen Kuhl: mean. We think of them as a revenue driver. But we. Try to build the economics so that they are profitable on a four wall basis. Meaning the revenue from people who checkout in the store or on the phone with a, with someone from the store who they, if they went to the store, tried it out and then had scheduled a call with somebody from the store later on, it still counts as the store.

But if the revenue from that offsets store salaries, rent, everything. That's what that's, what our goal is. And our store in Soho does that. And that's how we're planning on rolling that out to two additional markets. We do also measure the overall lift though. So for instance, when we opened up our first showroom in New York city sales in New York city doubled, even though at the time revenue only grew 50%.

In that, in that span. And so that would tell you, okay, they didn't all check out at the store, but having a store makes you seem more legitimate. People know they can check it out. They know that there's an actual physical person. They can go complain to, if something goes wrong, there's just all these extra benefits from having a physical location where people are even if they don't actually go to the store.

So we do measure the overall revenue later. From having a store in a certain market and we will continue to do but we do also at the same time, try to manage it so that you know, a marketing channel is of sorts that pays for itself. And then the way to measure that is by actually treating it like it's, it has its own PNL.

MPD: Now you mentioned Vietnam shut down for a long time. I think a lot of people across a lot of industries know that obviously because of. How else did COVID impact her business? When the lights first went out on a lot of the supply chains and everyone was panicking. What changed for you in a direct consumer business?

Stephen Kuhl: No, initially it was really scary because we weren't sure that any of our products were going to be able to get made or fulfilled. And then once it became clear that. People are going to be able to keep the lights on. And our main factory in North Carolina that produces a lion, the lion share of our seating.

They were also making equipment for hospitals. So that was really nice that they, so they were allowed to stay open even the very early, like darkest days. That was lucky. That was very lucky. And then everybody was just sitting at home, you still making them. Some of our customers were getting the stimulus checks from the government.

But for those part, people are just staying at home. They're not spending money going out to eat. They're not spending money falling out. They're not spending money traveling. So they're accumulating more wealth and they are then acutely aware of any pieces of furniture in their homes. They don't like, or if they want to upgrade.

And so the entire industry boomed now, this all happened. So for the first year of like first 12 months after the pandemic, Everyone in furniture looks good because you just wanted to buy it. Especially in e-com. Every people were just clamoring who has stock of anything I'll buy it. And so our business, boom, just like everyone else's did now, I think we grew at a faster rate.

We were growing at over. We more than doubled two years in a row. So that's, that was faster than we had been growing and also fashion the rest of the industry group. Because we were uniquely positioned for this, right? Like you're buying it online. It's delivered in boxes. You don't have to interact with the person delivering it.

They're dropping it off, like in your lobby or at your front doorstep, and then you bring it inside and set it up. So we were a really, really great case for COVID. But then the supply chain problems. So there are all these, when everything shut down, there were material shortages, freight shortages, right?

Everything started piling up and then demand skyrocketed. And then there became these massive backlogs where you just couldn't get anything made and we're still dealing with it. And it's causing prices to soar. Labor has gone up significantly, especially in the U S. Raw materials have spiked. The cost of wood and lumber has more than doubled.

Foam has gone up by 30 to 50%. Our, even our fabrics, they become more expensive. Everything has just gotten to be way more expensive and in short supply, which creates very real cost pressures. And then when ocean freight like quadrupled from where it used to be. All of these pressures are, this is what's causing inflation right now.

MPD: How about on the demographic side, did you see a shift in which types of demographics were engaging with purchasing online furniture when COVID hit that change or 

Stephen Kuhl: they changed there? The average age of our customers increased so older cohorts, I mean our sweet spot was, and still is people in their mid thirties.

It's kinda you know, 30 to 45 is like our best customer range. And that kind of shifted to 35 to 50 during the pandemic because younger people were just more comfortable and used to buying online and then, other cohorts of people or other demographics. We're forced to, you had to buy furniture online.

If you want to buy furniture with being in the pandemic. And then once they experienced it and realized like, oh, Hey, this is actually pretty convenient. Those people aren't going back. And so what that did was caused this massive increase in an e-commerce conversion. So the percentage of furniture that's sold online is, pre pandemic, I think it was like 20% and post is something like 30, which is really a huge job.

And. It expanded the market. 

MPD: And so you're seeing those demographics continue to buy, even after vaccines are out and 

Stephen Kuhl: oh yeah. Oh yeah. That has not changed. And we've been monitoring it. It's just expanded it and change who our best customers are. There was also the impact of people moving. A lot of people moving to suburbs out of cities.

And when they move to bigger spaces, they have to buy more furniture which is great for us. So we saw like the average basket size increase for us because customers, instead of buying on average, a three seat sofa with a lounge or a chaise lounge or abdomen, they're buying a five piece section or a six piece sectional.

And so that's, that's had a huge impact on this as well. People are just buying more furniture like per house. 

MPD: And I know you mentioned when you did your bio earlier on that you did you did some consulting work and you had started a small company, a bit small business before you went to professional career, but this is really your first large venture scale play.

I'm sure it's been totally different. How did you find the kind of zero to one phase, the really early days of the grind when you were cutting putting your company together? What was that like for you? It was. 

Stephen Kuhl: In the early days, not that it's still fun. But, uh, the early days are really fun because it was just kinda like you just put out fires or jumping on opportunities or whatever you just were in reaction mode.

There's this thing that we've got to do by next Friday, or else we fail or we've got to get this one contract signed or we've got to get this one investor to come in at or whatever it is. Everything is like life or death. Which you can't be, you can't have that kind of a situation forever, emotionally and psychologically.

It would just drain you. But in the early days, you're fresh, you've got all this energy and and enthusiasm and it, it's, it's fun, um, in one it, and what we've learned from that early on was you just have to be able to say yes, like we can do it to everything. There will be no shortage of challenges that seem well, sorry, this is it.

You're just going to have to accept a fee. And if you just always say actually, no, I'm not going to accept that. There's gotta be a way to do this. There's always a way to do it. Even if it's not scalable or sustainable or whatever, like for right now, we can make it. 

MPD: Is there a story that comes to mind that kind of brings us to life for you?

Oh yeah. 

Stephen Kuhl: There's, I we have, we have tons, but the one that stands out the most is when we first started the business we were producing in Mexico, this very small factory, just north of Mexico city. And we were preparing for shipping 15 ish sofas to the, to Brooklyn for a photo. Some of those sofas were going to be delivered as pre-orders to customers.

But some of the sofas we just needed for the photo shoot, which was going to create, be used to create assets for our website, for our launch coming up that April. So this was in December and so, so we're down at, down in Mexico and we have the frames of the sofa made and they'd been upholstered.

But the custom hardware hasn't arrived yet, but we said, you know what? We have to ship this stuff out by Monday. In order to make it to New York by the following Friday to be prepared for the next Monday photo shoot. But we said, okay the frames are made. We know how to attach the hardware ourselves.

So if the hardware comes in late, we'll just air, overnight it from Mexico to New York. And we only need like a small box worth of this hardware to finish off these sofas. We'll take care of that ourselves. All we gotta do is box these things up. So Friday morning, we're like, all right, let's box these up in shifts.

Our box supplier gives us a call that Friday morning and says, Hey, we're going to be late with the boxes. And we're like, okay, how late are you going to be? And they said about a month. And we were like, whoa, what he's talking about when I talked to you on Wednesday and we were on schedule, which shouldn't mean they're like made in a truck here.

How are you just learning now that it's a month late? And they're like, I don't have to tell you it's just, it's gonna be Monday. So we were like, okay, we gotta find boxes ourselves. Finding large boxes with the right corrugate, like thick enough corrugate to how to safely hold. Like seats is not easy to come by.

There was, there was, actually a packaging factory across the street from us cross street from our factory. So we went over there and we turned them down cause their pricing was too high. And I said, Hey, if you can give us the right pricing or if you can make us these boxes for these 15 sofas, like we will go with you.

We'll take the price. You said you quoted us. That's fine. You went up, you'll win our business. And they're like, we'd love to, but we're having our holiday party right now. And all of our excess boxes have been used to make us stage for this band that's playing. And I was like, you gotta be kidding me.

I'm like, just take them off. Or I don't go prototype make, can somebody make these boxes? No, we can't. And we're like, okay, we have to make boxes. And so we're calling around all these places to find boxes. Nobody sells the right size boxes that we need. So I was like, we can make the box.

Let's just find someone makes cardboard, I kid you not. I Googled cardboard like on Google maps, search for it. And like a bunch of places in the area of pop-up I'm having the CEO of the factory call all of them to see if any of them have the right corporate for us finally finds one. And I'm like, just send a truck there, pick up as much as you can and bring it back.

We, we took a big sheet of wood and made a CNN CNC, routed the guidelines for the boxes. So that way we could, which by the way, the CNC router wasn't big enough. We had to do like half of a box and make two of them and glue them together. And then we, once we have the cardboard shift, The workers were all done working.

I was like, guys, I will buy you all beer and pay sours myself. If you just stay in and make these boxes. And so we had these, box cutters and we would have a giant trace and we're trying to carve out the dial lines for these boxes to make them, which if you've ever tried to cut fit cardboard before, it's, it's not easy.

You're saw. Um, and so we made the 60, some odd boxes required to ship 15 sofas and stayed up all night in the factory, like cutting the cardboard on the floor. We finally get them all made and they're glued together. It looks like trash, but it works like the seats fit in. 

MPD: Th those moments aren't sexy, but they're what you look back on after, you're ringing the bell, taking the company public.

You're an old man. Those are the moments. 

Stephen Kuhl: It didn't even stop there though. So we ship the stuff out and then they they get hung up in customs. So then we have to literally set, like bribe with gifts, the the FedEx team that works in Laredo, Texas to take it off of the FedEx system.

And put it into, so once it did clear customs, when we've got the right paperwork sent, there wasn't enough time to like to get it to the photo shoot in time. And we couldn't afford to reschedule the photo shoot. And so it was either like pay for air freight, which we could not afford. That was like 15 grand or go by ground, which wouldn't get there in time.

And the woman that we were talking to in, in Laredo, Texas, that FedEx was like, we could hot truck it there. And we're like, I don't know what that is. She's it's these small teams of people will take turns driving so they can drive for 24 hours straight and doing things like small trucks and they could truck it from Texas to there, but we can't actually take it out of the system once it's in our system.

What do you like to drink? And she likes scotch. I was like, I'll send you a nice bottle of scotch, please. Just take it out of the system and just put this side of the road next to your facility. And I will find a hot trucker to come pick it up. And as you can imagine, how trucking systems are not.

Those companies are not like necessarily legitimate or a super reliable, like the website has like Eagles and American flags and flames, and it's Joe's hot tracking. And so we found one and they trucked it to Brooklyn. And then something happened with the parts, the custom hardware arrived, but then it got, there was a snow storm and that was going to get delayed to not make it in time.

So we had to pay for the CEO of the factory who were close with to personally fly to New York city and bring all the hardware in on his carry on. And so that's how we finally got it all worked out, but it was just like one thing after another going wrong, and this was going, this is all happening while Kabir and I are in business school.

So I'm like stepping out of class to take a call with FedEx. 

MPD: But that's what it takes. That's what it 

Stephen Kuhl: takes. Yeah. And so it was like, if you can do that, there's not much we can't do we can figure anything out. We can figure out how to get the cells to the heat last, since. 

MPD: And so that's another piece of this, right?

Like you're dealing with manufacturing. Those people, are coming from kind of finance backgrounds, consulting backgrounds, or the MBA program. They don't have a lot of manufacturing experience, but it's something that a lot of people need to deal with. They're going to run their own company. Do you have a set of tips, top three, four or five things that you think entrepreneurs should know about manufacturing things you learned along the way.

Stephen Kuhl: You have to meet with a bunch of different manufacturers to, find the right one we had to, and we got lucky with our first one, but they were so small that within the first couple of months we outgrew them. And so to find our current largest manufacturer in North Carolina, we had to meet with over a dozen manufacturers in North Carolina and Mississippi and all over the Southeast us.

So it just takes time. You got to meet a lot of people. Everybody makes promises that they can not, hold and, and so it's just takes time up front. Another thing is you need to be on the ground with them and send people from your team to check it in QC the products and track their error rates, their defects.

Fulfillment errors, et cetera whatever you can track, you need to track it with data and report it back to them and make sure you have a tight contract to ensure that, they're doing it. Um, and I ultimately it's I don't know. I couldn't tell you how to make our sofa from start to finish, but I've been to the factories enough times where I can tell you arts in the process that are broken or not working and then need to be improved.

And that, or it could be solved a better training or better materials or whatever it is that they need. So it's just, and you only get that by going there and being in person. It's not to say once you have factories in as many places as we do. I haven't been to all the factories now, but we have teams of people that have been to all the factories and go frequently enough that they are monitoring things.

And when things go wrong, then manage it and whatnot. But it's not, I don't know. I don't think it's all that complicated factories all deal with the same issues. There's labor issues. There's efficiency issues. There's no whatever, but you just have to go and it's just look for constant steady improvement and managing them.

MPD: There's some sort of KPI or rule of thumb ratio for how many people you need per location. 

Stephen Kuhl: I think you need at least one to two people per factory or like group of factories. So in, in, in, in Eastern Europe, for instance, we work with a group that acts as like an extension of borough and they're managing a bunch of factories that are making different products for us.

So you know, they, and they probably have a team of six people to manage five different factories. Over there versus in, in Vietnam, we have our own people on the ground and it's probably one person for every two factories versus, you some of the larger factories. And like in North Carolina we have, probably two full-time resources that are working with them.

Sometimes on the ground sometimes, in, in New York. But they have calls with them on a, sometimes daily, sometimes weekly basis. 

MPD: Got it. Got it. Now I've always been super interested in how the psychology of entrepreneurship plays in the founders. And one thread that kind of comes up in a lot of these conversations that I've had on the pod is about the mindset of an athlete.

Now I know you're a super big skier. How have, how has skiing and sports played into your thinking as a founder? Yeah. 

Stephen Kuhl: So I think athletics in general are helpful. It's not necessary obviously to start a business, to have an athletics background, but it does teach you the, the art of hard work and not giving up and pushing through the pain.

Again, you don't need to have experienced that in sports to appreciate it. I think there's other, opportunities in life to learn. But yeah, skiing you're spot on. That was a big one for me, not just regular skiing, but the first time I did a back flip on skis, so I used to do a freestyle skiing.

So think like jumps and rails and all sorts of dumb stuff that has caused me to have multiple concussions and shattered my kneecap and do all sorts of things. I really regret now. But the first time I did a back flip on skis was fairly transformative for me and my mindset. It's something I had seen many of my skiing idols do before.

And even some of my friends do. But I'd never done. I had done thousands of backflips on trampolines and diving boards, et cetera. And I'd been hitting jumps on skis for years but this was new. And you know, the reason why stands out to me. You can do all the preparation in the world for anything, but at some point you actually have to do it.

You have to execute and to commit for that, to do a backup. You have to commit to it because if you don't, there are very real consequences. If you bail out of a backflip and then as you're taking off the jump, you will land on your head and you could break your neck and die. There are very real consequences there, versus if you fully commit to it, you may not land it, but you'll be fine because you'll fully rotate all the way around and you land on your feet ish and you should be okay.

And the first time I did that, it helped me cross this threshold of. I've seen people do this. I think I can do it. I'm going to do it. And the only way to do it is to fully commit to, and not dip my toes into the water and see if maybe it works out or whatever. And I feel like that's true for entrepreneurship is you do some preparation, obviously you have to prepare, but at some point you just have to take action and do it.

Which sounds like a Nike ad, but like it's true. Like you have to just. And, and that's been, it's changed how I approach anything in life where it's you do a little bit of research, a little bit of analysis, whatever. And then it's okay, let's test and learn. Like we got it. We got to go.

MPD: I love that. I was, I had a drink with a friend from business school last night, and we were talking about the psychology of kind of entrepreneurship in that business school era. I was out there trying to start stuff. And there was a moment where he had said he had asked me, he's like, why do you think you can do this?

And I was like, why wouldn't you think that I realized, and we were talking about it last night, but recap. It's been a long, a lot of years that there's a lot of people who have tremendous talent and capability, but they just don't ever think they're going to do that backflip. They think it's for someone else, but they could just go and try.

And if they try it, they'd probably nail it. And that psychological hurdles, that huge leap, some of us don't think about. Some of us probably think about it too much, but have guts and do it. And other people just watch others do backflips. Our are alive. Thanks for being. It was awesome having you 

Stephen Kuhl: thank you for having me.

MPD: It was awesome to have Steven on and to hear his story, a lot of little nuances and founder tips in there is where I asked you to help out the podcast. If you give us a star alike or whatever, And while other people are more likely to discover the show, you can find me on Twitter at MPD to hear more of my conversations with innovators, subscribe on YouTube, Facebook, or any major podcast platform.

Just search for innovation with Mark Peter Davis.

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