Homevista Decor and Furnishing Pvt. Ltd, which runs online furniture and home design services marketplace HomeLane.com, has attracted marquee investors such as Sequoia Capital, Aarin Capital and Baring Private Equity India since it began operations in 2014. Last month, the company acquired online home interiors marketplace Capricoast for Rs 90 crore ($13.8 million) to expand its business. Speaking to VCCircle at his Bangalore office, HomeLane co-founder and CEO Srikanth Iyer shares his dreams for the company, the challenges he faces and more. Edited excerpts:
What did you find valuable in Capricoast?
We liked a couple of things about Capricoast—one, customer acquisition, second, the product.
They have done a very good job in terms of customer acquisition, (and) in terms of presenting digital content and information in a way which is valuable to the customer. Furniture is a high ticket-size purchase. The first thing, and the biggest thing, customers are worried about is the price. They would like to know what they are going to get, for what range. Capricoast was running a marketplace where customers could compare quotes from three different vendors.
Besides, their product and engineering teams are very strong. I found that very synergistic. We had a small team. We had done some work on the visualisation side. For example, we will give you a quote where you can visualise the whole scene online. But for the lifecycle management of the whole project, Capricoast had done a great job of building products. We found that to be very synergistic with the skills that we had.
How did this deal happen? How long did it take to materialise?
It took about two-three months. Jawad (Ayaz), the founder of Capricoast and I, know each other for quite a long time. But I also know most co-founders in the industry. At some point in time, we had scaled to a certain extent, and we were looking to scale further. So, we thought that Capricoast had very complementary strengths with us and the reason why we also chose to partner with them, is that our wavelengths also matched.
HomeLane is a full-service model. The customer places the order with us, HomeLane executes the order through its partners. But we are responsible for the final execution for the whole project. That model seems to be working well and scaling well. We were both aligned that we wanted to build a profitable business in the next two years.
Going forward, what do you want HomeLane to become?
I see us as one of the largest, if not the largest, players in the modular furniture space in India. I see us as being the brand customers come to when they want value for money. I see us as being present in 10-12 cities in the next two-three years. I see us at revenue of Rs 500 crore in the next three-four years and profitable by then. We are well on our way towards that destination.
In 2015-16, you had revenue of Rs 34 crore and a loss of Rs 52 crore. From that point, to become a Rs 500-crore company, don’t you think it is a distant dream? What challenges will you face?
No. We have focussed on two things in the last one-and-a-half years. One, we have tried to keep the growth reasonably slow. We wanted to get our arms around profitability. We are already operationally profitable, from this financial year onwards. As a company, we are not profitable, but on every project we execute we are making almost 15% of operational profit. That is a big milestone for us. Now, we need that 15% to climb up to 20-25%.
The second is to keep growing the business slowly and steadily. Currently, we make Rs 5-6 crore a month and going towards Rs 10 crore a month. We can attain profitability in less than a year. My projections (on revenue) for 2017-18 is around Rs 70 crore, which is double of what we had done in 2015-16. The market is huge. If we execute well, Rs 500 crore is a conservative figure.
How do you see competitors, even though not directly comparable, like UrbanLadder and Pepperfry?
Our competition is definitely not UrbanLadder or Pepperfry. We are an offline player with a technology platform. It is like chalk and cheese, even though both are furniture. Theirs is an inventory-led model. Their ticket size is around $200. Our ticket size is $10,000. I have zero inventory. So, we are running a very different model.
I see the unorganised market, if at all, to be our competition--the carpenter and the contractor. These are the people we are trying to replace.
Did you downsize the company in the recent past?
One-and-a-half years ago, we had a right-sizing, but we had changed the model. At that point in time, we had designers and installers in-house. We moved to a model where designers were no longer in-house. That way, we had changed the model.
How many people did you lay off?
Layoff is a wrong term to use. They were on fixed cost with us. We moved them to variable cost.
Are you raising more funds?
We are having some discussions. But nothing has finalised yet.
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