One Kings Lane
Age of co-founders: 38 and 58
Most recent estimated valuation: $440 million
Lesson: Better than a deal on flatware is the perfect set delivered to your in-box.
The name emblazoned on the outer wall of 1355 Market Street, an Art Deco building in San Francisco completed in 1937, is a tribute to the past, not the present: Western Furniture Exchange and Merchandise Mart. As late as 2005, the premises housed 300 furniture wholesalers. By 2008, the number was down to 30, and the developer, brandishing city tax credits, made the sensible decision to reinvent the space for techies. Twitter moved in, followed by Microsoft-owned Yammer. Also came a company that can lay claim to the building’s former identity: One Kings Lane, an online purveyor of furniture and home accessories that is now projecting $300 million in annual revenue.*
When I met the company’s co-founder, Alison Pincus, in One Kings Lane’s offices in late August, this historical symmetry went unmentioned. It wasn’t, I’m certain, because she was unaware, but rather because from the outset, she said, “we thought of One Kings Lane as always trying to be more than furniture.”
Her husband is Mark Pincus, co-founder of Zynga, the now-struggling online social-gaming company. Since it went public in 2011, its shares have plummeted from a high of $14.69 to less than $4. Mark stepped down as CEO in July with an estimated net worth of around $800 million. But Alison and her co-founder, Susan Feldman, started One Kings Lane on the cheap in 2008. They invested less than $100,000 of their own money and worked out of their respective homes before blue-chip investors Kleiner Perkins Caufield & Byers and Tiger Global Management chipped in.
“When she started the company, people may have thought, Oh, it’s just so-and-so’s wife starting the company,” said Alison’s friend Randi Zuckerberg. “She’s proved to be a real tour de force.”
The business model, at first glance, was derivative: One Kings Lane followed the flash-sale apparel model—offering discounted items for a short period of time—popularized by Gilt Groupe and other companies and applied it to home décor. Today, more than 8 million members receive the company’s morning e-mails. As competitors flood the online home space with flash sales—LuxeYard and Joss & Main, as well as Gilt, Fab, and Rue La La, which have branched out into home goods—One Kings Lane is trying to position itself as an upscale brand. According to CEO Doug Mack, “we’re like going to Tiffany.” But unlike Tiffany, One Kings Lane produces very little of what it sells. Rather, it’s in the curation business, and its multibillion-dollar aspirations hinge largely on the founders’ tastes.
The original idea for One Kings Lane was Feldman’s. She worked in apparel, launching new lines for Ralph Lauren and consulting for Liz Claiborne Inc. In October 2007, Feldman participated in her first flash sale. “I was blown away at how much product we were able to sell in a 24-hour period,” she recalled during my recent visit to their Tribeca offices, which, a publicist gleefully noted, are across the street from Jay-Z and Beyoncé’s apartment. Feldman and her husband, Bob, a management-consultant executive, had just purchased a West Hollywood home. “I was obsessed with decorating it, and I realized there wasn’t anyplace online to shop for great product,” she said. Around that time, she was introduced to Pincus, who had worked in digital media for, among others, NBC and Walt Disney.
One Kings Lane launched in March 2009 with 5,000 “members” culled from the founders’ web of social and business connections. (As with most flash-sale sites, the sole requirement for membership is submitting an e-mail address.) Feldman’s daughter, then in high school, took some of the early product pictures.
The recession was a good time for flash-sale businesses, and One Kings Lane advertised deals at 70 percent off retail. But it wasn’t just $20 decorative candles that sold well. In their first month, the founders posted items from the Rug Company, an English outfit that produces handcrafted rugs. “They sold out in less than 30 minutes, and they retailed from between $5,000 and $7,000,” says Feldman. “It demonstrated there wasn’t price resistance if we had the right product and presented it properly.”
It was a valuable lesson: The company realized that it could expand into high-end retail and offer a wider range of price points while still growing its customer base. Today, many flash-sale businesses are having trouble. “Any time you do a discounting model, it’s a race to the bottom,” says Milton Pedraza, CEO of the Luxury Institute, a research and marketing group. “I can’t think of anyone that’s used the flash-sales model to build a sustainable business. Groupon has struggled. And look at Gilt, where’s their IPO?” One Kings Lane still applies the flash-sales philosophy: It lists discounted items and generally pulls them from the site after three days. But it also benefits from a lack of consumer savvy. While it’s easy to find out what a Dolce & Gabbana dress retails for, it’s a lot harder to find out the retail price for a specific couch, especially when, as is often the case on One Kings Lane, the brand name is not provided. Thus the site itself, not necessarily the specific brands carried, becomes the draw. Says Feldman, “One Kings Lane is the brand.” *The original version of this article stated that One Kings Lane has $300 million in annual revenue. It has been corrected to show that $300 million is the projected annual revenue.
The company also learned that saving a few dollars may not be the primary motivation for One Kings Lane’s customers. Of the 803,000 unique visitors to the website in July, 51 percent had household incomes exceeding $100,000, according to Andrew Lipsman, a vice-president at comScore, an Internet research company.
People now come to the site not just for a lamp but for an aspirational experience akin to flipping through the pages of a design magazine. “We wouldn’t just sell you that mint-julep cup,” Mack says. “We put it together with several other pieces and inspire you to say ‘I want this in my home.’ ”
A big step in the company’s evolution came in 2010, when they acquired the design firm Helicopter, where Joshua Liberson (and his co-founder Ethan Trask, who also joined One Kings Lane) had helped launch Domino and Radar magazines.
“It’s one thing to say that we curate products, and it’s another to say we invest in the imagery that brings curation to life,” Liberson says. In New York, the creative hub of the company, employees spend the day steaming cashmere throws and painting sets for photo shoots before heading to the office’s late-afternoon happy hour. It’s hired full-time photographers and stylists and can shoot products in India and China. Photographs now incorporate more natural light, and styling has become increasingly rigorous. The company’s offerings have also diversified. It launches 2,500 new items for sale each day, selling everything from $45 salad-plate sets to $5,000 antique settees. According to Mack, “scaling the business isn’t the challenge.”
This fall, One Kings Lane will offer two proprietary bedding and bath collections. In 2014, it will launch Hunters Alley, a companion site where individuals can sell their furniture directly to one another. And it’s rumored that, for the past year, the company has been more cautious in its spending in preparation for either an acquisition, possibly by Scripps Networks, which it is currently partnered with, or an IPO.
“I think there’s an opportunity to build a true lifestyle brand as an online business, and no one’s ever done that before,” Mack says about the company’s future prospects. “And what I mean by a lifestyle brand are those companies like Ralph Lauren, or Nike, or Michael Kors, where you build deep, deep customer loyalty.”
That’s typically a challenge for flash-sale sites, where Pedraza likens the shopping experience to “one-night stands.” So it’s not surprising that of all the numbers—membership growth, sales figures—the one executives at One Kings Lane find most promising is that 80 percent of sales is repeat business, lending some credence to their motto, “Design is never done.”