After selling the UK’s first, quintessential Web startup, Lastminute.com, to Travelocity in May 2005 for £577m ($1.1bn dollars), some might have forgiven co-founder Brent Hoberman for kicking back and enjoying his rumoured £26m payday. But Hoberman has done anything but that, remaining an active seed investor in the UK startup scene (most recently MoveMe). But the real question was, when was he going to return to the startup fray?
The answer came in May last year when rumours of mydeco.com began to leak out. He duly admitted the site would be about home decorating, and the media, duly sated, went off looking for another target, thinking the site would launch late last year. But it’s taken longer for mydeco to reveal its true colours than many thought, and the reasons why are about to become clear, as the site today launched it’s first beta incarnation today.
It would be easy, on first glance, to discount mydeco as a simple home furnishings intermediary, but speaking to Hoberman, I realise there is going to be a lot more to this site going forward. By their own admission they aim to be one of the largest technology start-ups in Europe, and plan to kill off the interminable and fruitless trips to furniture warehouses. The prize is a slice of the £20 billion home decor market in the UK, and eventually the US as well.
But first, a word about the backers. The investors are many and high profile (and I gather there are even more who have not been disclosed). SPARK Ventures, chaired by Tom Teichman, were the lead investors. They were joined by Lord Rothschild’s family interests, Edward Atkin (founder of Cannon Avent), Marc Worth (founder of Worth Global Style Network), Yoo Ltd (the property branding, design and investment company lead by John Hitchcox and Philippe Starck) and Arts Alliance (the venture capital firm which backed Lastminute.com), represented by founder Thomas Hoegh. Then there is Marc Samwer (co-founder of Jamba and the European Founders Fund), Jez San (founder of Argonaut Software, ARC and pkr.com) and Atomico Investments, co-founded by Niklas Zennstrom and Janus Friis, founders of Skype and Joost.
The mydeco team is pretty experienced. Brent Hoberman is founder and executive chairman. David Kelly (the ex-COO of eBay Europe and Lastminute.com) is chief executive. Brent’s Lastminute co-founder Martha Lane Fox (also on the Board of Marks and Spencer and Channel 4) will be a non-executive director. Paul Chudleigh (ex-head of software development at lastminute.com) is CTO. Pia Munden (ex-Studio Manager at Laurence Llewellyn-Bowen) is design manager. John Hitchcox (CEO Yoo Ltd) is another Non-Executive Director and Tom Teichman is also a non-exec.
As for the site itself, mydeco is highly ambitious, aiming to become the No.1 go-to site for designing and furnishing your home, a market worth around £14bn a year in the UK alone, even in credit-crunch squeezed times. Around 500 retailers are aggregated into a site offering over a one million products. These include The Conran Shop and John Lewis. Others include the upscale Heal’s, Furniture Village, Graham and Green, OKA, Alessi, Marks & Spencer, Andrew Martin, Lombok and even the the budget-friendly Argos. Seedcamp entrant, ArtFlock is also a partner.
How did retail partners arrive? They came on board, but mydeco will take any product from any retailer right now and aim to be lead by the customers. The only preferential terms kick in for partners when they want to do more with their products on the site, which could come in a variety of forms like greater 3D rendering. The site will also take traditional advertsing banners. Cash-strapped furniture stores may view mydeco as more saviour than devil if it can raise their sales and improve customer acquisition. Then again furniture makers may be in for a shock. Mydeco users are bound to expose a badly made or over-priced products.
But mydeco is not just a simple shopping search engine or just a community. The idea is to plan and visualise your room in 2D and 3D in a Flash-based application using actual products you can buy. Alongside these products, mydeco has assembled over 1,000 pre-configured room ‘looks’ to choose from, which can be tailored to your specific budget. There is also editorial content in the form of advice and style tips from leading designers such as Sir Terence Conran, Jade Jagger, Kelly Hoppen, Andrew Martin and Tara Bernerd.
And mydeco has an additional Etsy-like, micro-affiliate model. Any small interior design business or an individual can upload a room design. If someone buys a sofa from that design, that designer will get a small revenue share from that sale. Or if you are a small supplier you can upload your products and sell them, as the site will have an e-commerce solution.
Mydeco will also allow people to build community around home decorating. You can create a profile and upload images of your designs or your actual rooms (there are privacy options for what you want to make public or keep private). Online community users can swap ideas and see other people’s rooms. Users will be able to ‘publish’ their rooms to other sites, such as to their Facebook profile or MySpace page with widgets (however the site didn’t enable this when I tried today, but I gather this facility will be live soon). As Hoberman tells me, the site is very “Web2” in that the site will improve as more customers arrive and there is more co-creativity.
I used the Flash application (which employs PaperVision 3D technology) to furnish a room and it does have a pretty sophisticated feel to it. Furniture – real furniture which has been laser-scanned in 3D for the site – can be rotated and moved in perspective. You can fly around and view rooms from all angles. There are a lot of options including drawing floor plans from scratch, applying colours, wallpaper and flooring, or the ability to pick from 20,000 3D models of real furniture. There a few home decor desktop applications that can do this as well, but you can’t add real products you can buy or visualise them this way, which makes the mydeco process rather more exciting.
Users can also upload photos of their rooms and have the mydeco app change the colour schemes. Right now it’s possible to get this service from specialist sites, but typically it costs around 30 Euros or more. Mydeco will offer it for free, and render the room over 24 hours to give you a crisper image.
You can also ‘buy the look for less’ by making a room slide up or down in terms of the costs of the items in it, while still keeping the overall look. Fancy a room that looks £10,000 worth, but actually cost £2,000 to create? The site also employs technology from Imagini (another Hoberman investment) which will let you build your visual and style “DNA”. The site was built by a core technical team in London with more development outsourced to Latin America and Eastern Europe.
Marketing and PR of the site kicks in this week with co-promotions on Ocado, Lastminute.com, Conde Naste’s home style magazine sites, Boden. A big SEO budget and lots of viral campaigns are planned.
A key demographic for mydeco will be women. Hoberman told me over the phone: “iVillage and similar sites have targeted women in the past but we’re only now seeing how massive this audience is and its not that well served.” It’s also about playing the 800 pound gorilla in the middle: “When I looked at the home decor market, it was clear it was a very fragmented market with no really good intermediary. Each of the market leaders only have a small share each.” With a high margin on product but only incremental customers, retail stores in theory should be very interested in a big aggregator like mydeco, and willing to pay to get in front of people when they are thinking about decoration.
He’s right, in that historically web startups have steered clear of furniture as it limited them from creating scale – hence the gap in the market for a decent intermediary. In the US furniture is around 10% of e-commerce, which is well over a $100billion market. In the UK the market is worth £20 billion for furniture, appliances and contractors, so if 10% goes online, mydeco aims to grab 2.5% of that in two or three years’ time, or £500m worth.
The UK is the first launch market after which mydeco plans to expand into the US and other territories. Says Hoberman: “Lots of people have done bits of this, but no-one has pull it all together, and that’s hard to do, harder than we thought. It took eight months to build this and 100 people working on it. At times we almost thought we were crazy. The exciting thing is how much better it will get over the next few months. 360-degree images are very rare online but the technology will get more sophisticated as we move on.”
Did Second Life have any effect on mydeco’s direction?
“Second Life was an inspiration and a warning. They have a heavy application to download and people don’t use it much after the first time. But it shows can have an engaged audience prepared to invest time in 3D,” he says. So how much more investment will people put – compared to a game – when it’s their own home they are investing in, argues Hoberman.
We’re about to find out.