Not long after graduating from Cornell back in 1995, Niraj Shah and Steve Conine decided to compare their meager bank accounts. Both fresh-faced engineering students who liked talking business, they possessed highly analytical minds and more than their share of pluck and will. But little else. At the time, Conine was up several thousand dollars and so rubbed it in. But Shah was blas?. “We’re going to be so successful,” Conine recalls him saying, that “the difference in our savings today will be irrelevant.”
The nascent dotcom boom was beginning to reveal a vast Internet landscape, and Shah and Conine followed the money. In short order, they built and sold an IT services consulting company and a mobile development shop, earning enough to self-fund, circa 2002, a humble-sounding venture called RacksandStands.com out of a spare bedroom in Conine’s house. It offered anything you could ever want to hold your stereo. They learned quantitative marketing via Google AdWords and bonded with suppliers and distributors. They handled customer service themselves, did their best to ensure that shoppers received their orders on time, and measured everything they could. “In four months, we became one of the largest online sellers of entertainment furniture,” Shah says.
So they replicated the model across 250 or so almost comically vertical segments. JustSouthwesternRugs.com. EveryCuckooClock.com. AllBakersRacks.com. HolidayDecorationsDirect.com. “We spent nine, 10 years building the systems and infrastructure and worried less about the front end until we had operational consistency,” Conine adds. “It’s easy to start an e-commerce site and build a sexy front end. It’s very hard to durably deliver the experience you’re promising.”
Today, Shah and Conine are the CEO and cochairman, respectively, of Wayfair, the world’s 12th-largest online retailer. With $6.8 billion in sales, Wayfair is still well behind Amazon and Walmart, but ahead of Best Buy and Costco, according to the research firm Digital Commerce 360. The company sells a whole lot of furniture and then some, from kitchen islands and bathroom vanities to throw rugs, bunk beds, and hot tubs. Nearly all of its goods are delivered for free (even the 350-pound sectional sofas) and typically within a few days. Like its progenitors, Wayfair offers nearly unlimited choice, measures everything, and commits to making customers happy at all costs. That formula hatched in -Conine’s bedroom has showered the cofounders with a collective net worth of more than $4 billion and vaulted their brainchild onto the Fortune 500 for the first time.
By almost any measure, Wayfair is killing it. Annual revenues have increased sixfold since the company’s 2014 IPO and are growing 40% annually, to $1.9 billion in the most recent quarter. The company employs well over 12,000 people in Boston; Berlin; Ireland; and various U.S. cities, with dozens more “Wayfairians” joining each week. The number of active customers, defined as having made a purchase in the past year, also jumped nearly 40% year over year, to 16.4 million, and the company is approaching household-name status. According …read more