// conversationS 

Storefront.

We interview Mohamed Haouache CEO, and Joy Fan CCO of Storefront.

August 11th 2017 | New York City, NY

AUDIO

video

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Raad Ahmed:
Thank you guys for joining me at Founder Collaborative. If you guys want to just go ahead and introduce yourselves and talk about what you're building, what you're working on, what your roles and responsibilities are. That could be a good way to start off. 

Mohamed Haouache:
With pleasure. Thanks for inviting us. I'm Mohamed. I'm the global CEO of Storefront, and this is Joy.

Joy Fan:
Hi.

Raad Ahmed:
Nice to meet you.

Joy Fan:
Great to meet you. I'm Joy. I'm basically Mohamed’s right hand for the U.S. I run the U.S. strategy. Yeah, that's who we are.

Mohamed Haouache:
Storefront is technically the world’s largest short-term retail marketplace. We've been compared as Airbnb for retail.

Raad Ahmed:
Okay, excellent. Who would be an ideal person that uses Storefront, and what is the problem that you're solving for them? 

Mohamed Haouache:
That's a very good question. We launched this marketplace with the idea of helping e-commerce players to approach your offline market, meaning the physical world with access to retail spaces. The idea grew bigger than expected, and as of today, we work with fashion designers, e-commerce players, artists, traditional retailers trying to test the market, launch a new collection. The idea of Storefront is more or less to give every idea a physical space for their realization.

Raad Ahmed:
Can you give us a sense of how large Storefront is now from a presence standpoint or a location standpoint or a customer based standpoint? 

Mohamed Haouache:
I'm going to answer half of the question, and Joy will answer the other one. As of today, Storefront is the world’s largest retail network. We have a physical presence in the U.S., in France, in the UK, Netherlands, Hong Kong as of today, and we're just about to launch Italy and also Morocco. We have this vision of making retail access globally. Why? Because our customers are global. The big fashion designers, the big e-commerce players no longer think about frontiers. They only have the idea of making their idea travel globally.

Joy Fan:
Yeah. I would say that we are global by way—Mohamed is always traveling. He definitely has a global presence, but I think that because our network is used to being able to purchase globally, that we are able to provide them with the best service on a global scale. Being able to launch some of the best e-commerce brands, Indochina was one of them, and they launch a global market very soon and was able to have a brick and mortar presence. Those types of brands who are digitally native and are then able to have an entire network of individuals working on their behalf to provide a marketing strategy in place for them to launch their brick and mortar store.

Raad Ahmed:
When you expand to a new country, number one, how do you figure out where to go? And number two, who do you go after first? Is it the retailers and the actual physical property? Or is it the clients and the businesses that are looking to rent it out, and why? 

Mohamed Haouache:
The famous chicken and egg question. We decided early on to go after the supply, meaning the number of listings available in a platform. Why is Storefront global? Because once again, our clients are global. We decided to match the fashion week circuit, and therefore if you look at Storefront as a marketplace, we are available wherever there is a fashion week. Two, we've been looking at what are the characteristics of a city. We are looking for city full of tourists, with a high price per square meter, very low vacancy rate, and therefore there is a need for Storefront, and historically strong fashion activity.

Raad Ahmed:
Right. Just to shift gears a bit, a lot of our listeners are early stage founders looking to start their own technology company and grow and raise venture capital. What was it like during the early days of Storefront? Were there any mistakes that you made when selling this company that you would advise other people to potentially avoid making that same pitfall? 

Mohamed Haouache:
The list of mistakes is long.

Raad Ahmed:
Let's stick to the top two.

Mohamed Haouache:
I will tell you that we've been shy at the beginning. Why? Because nobody believed in the idea of disrupting retail. When we launched the company, we decided to speak to professionals, commercial broker, retailers, and most of them told us that the idea was bad, the timing was off, and that nobody in the industry will believe in this vision of creating a marketplace for short-term retail. Therefore, when we started the company, we were a little bit too cautious and we did not act aggressively at the beginning. Maybe Joy has some other mistakes to share.

Joy Fan:
I think that in the same light, we were very operationally focused in terms of growth. Sharing the story, being able to provide, again, the success stories from a very intimate and human level was also missed. I think that if we had followed the journey of many of our success stories from the beginning, we would probably be able to share that today, after more than four years of success stories. We're seeing that now, that it became something that we intimately know, that we hold very closely to our learnings, but we weren't able to share with the public. So much of the time, you're so focused on being able to ensure the success of the company by way of the consumers or the end user, but so much of the time, you're not necessarily saying, oh, we have to Snapchat this opportunity because it almost feels unattached if we do that, expose them so quickly. But that's the way that people share opportunities today. I think that's why Mohamed is so interested in your little setup, because it's a way to be able to express to everyone, hey, this individual went from an early stage entrepreneur and now, they actually own about 10 stores. We have a great example of that. I don't know if you know the tea company Boba Guys?

Raad Ahmed:
Yeah. I've heard of them.

Joy Fan:
Yeah. They launched in San Francisco using our platform.

Raad Ahmed:
Wow.

Joy Fan:
Now, they have 10 stores coast to coast.

Raad Ahmed:
That’s amazing. It was all done through Storefront’s platform? 

Joy Fan:
Many of the stores that they originally tested were through Storefront. I can't say all of them, but as a good friend of Storefront, he'd probably say that it was a great way for him to search. I think that if we had maybe followed him from early on, just getting the opposing side and seeing him as a tech entrepreneur in many ways and better understanding what were some of his barriers and how we were able to either support that or help it, we could have used that to our advantage. I think that's one of the pieces we probably would see differently now.

Raad Ahmed:
What would you say are some of your best growth channels today in terms of marketing, getting the word out, increasing brand awareness? What's some stuff that you think has worked for you guys and some other potential channels that hasn’t really worked that well? 

Mohamed Haouache:
We are every day testing new channels, by the way, and we are very data driven company. Timing really depends on what's the new thing. As of today, we've not been exploring Snapchat as a social media channel to acquire our customers. We've been historically very conservative, meaning that our best channel as of today remains Google AdWords. More importantly, given the reputation of Storefront, word of mouth is our biggest asset. People use Storefront and are very happy and satisfied with what we are offering, because as of today, there is no real alternative to Storefront. Why? Because we have the largest number of listings available. We have this global presence. Therefore, when a brand is using Storefront, they tend to recommend Storefront to their network. At the end of the day, once again, there are plenty of channels that we could explore. Time is also a bottleneck for us. We should try to leverage Facebook, Twitter, Instagram, but our biggest issue is that, given the fact that Storefront is a B2B marketplace, we're not convinced as of now that this is the best leverage for our marketing channels.

Raad Ahmed:
I could share that similar sentiment with LawTrades as well, since we're a B2B platform. We've experimented with different social channels, and I think that it's been difficult to use those social channels as a direct, cold acquisition versus using it to remarket to your existing audience that you already have and people that you already know love the brand and give them content, which I think is a much different approach than something like AdWords, where it's a very high intent potential buyer who is searching for a very specific solution to a very specific problem to acquire them. The word of mouth growth must be amazing. Do you guys use an NPS score? How do you track the word of mouth? 

Joy Fan:
For our word of mouth, I think referral base has been the highest traction for us, not only for supply, but especially for demand. People are able to share success stories without our full visibility. You're not necessarily walking into a popup and saying, hey, this is Storefront, though many people attribute their growth to us, if you speak to whomever the right person is who’s running the show. We see it on two sides, where we provide more and more referral programs that we're able to share across the board from both supply and demand.

Raad Ahmed:
Interesting. Do you have an actual feature built out for this referral program? Is it a link that you share that you get a credit for when someone signs up? Or is it just more, it just spreads on its own? 

Mohamed Haouache:
It spreads on its own. On top of that in terms of part of the equation, we have an NPS program put in place. It's quite new, and it's quite interesting to get this score visible on your platform, and you understand which customers were happy, which ones require a follow up. More importantly, we tend to be hands-on, meaning that we try to speak to our customers or landlords, and we never hide, meaning that when someone is not happy for them and make follow up with them in order to make sure that their customer experience is at the top.

Raad Ahmed:
Yeah. I think if you avoid customers in any business that you're doing, whether it's brick or mortar business or even an Internet company, you run into some more long-term issues in terms of building that customer trust and repeat usage. I do know that Storefront has raised some money. Do you want to talk about that experience a little bit of how it was? You talked a little bit about the early days of people not believing in the idea and they didn't buy into it. Did you experience more of that in the seed round or the Series A round? 

Mohamed Haouache:
You have to definitely find a way to approach the VC community or business, and depending on the size of your company and the market traction you have. Back when we launched the company, we had to explain to VCs and business angels what the idea was. Basically, the first part of the story was to explain to them what we were doing and the vision. It was painful. Why? Because when you look around, back four to five years ago, the retail market was more healthy. The brands were testing the water with popup stores, but it wasn't becoming this huge important phenomenon. It was, I have to admit, very painful. Today, it's probably the first story.

Raad Ahmed:
You have the traction now to back it up.

Mohamed Haouache:
Exactly, but we can be glamorous company with no KPIs aligned with the traction. Thankfully for us, we are also company with a business model, with an ability to generate revenues, with real traction. This allows us to be approached by VCs and investors. We no longer have to explain to them this vision of Storefront, this definition of Storefront. Right now, the angle and the challenge for us is to tell them that Storefront is a viable, long-term solution for the retail market, and what we're observing today is not fashionable trend, but a secular trend, meaning Storefront is technically building the future of retail. This is where more or less there are still some question marks about Storefront. Are we offering a fashionable opportunity for retailers? Are they going to move into long-term lease when the market comes back into its new normal? Or is the new normal popup stores and the short-term lease? That's the biggest question mark we have.

Raad Ahmed:
Where do you see the future of retail or the future of Storefront 10 years from now? How do you see a person with an idea that wants to open up a shop, going through that experience and becoming a successful entrepreneur based on your—what does that future look like? 

Mohamed Haouache:
I'm going to let Joy answer the question.

Joy Fan:
I love the future of retail. I think that the word that's commonly used is omni channel sales. We provide this opportunity already by being able to bring e-commerce into the brick and mortar space, and then being able to track the usage or the revenue, and then bring it back into the e-commerce space. I think that being able to provide omni channel opportunities is one way of seeing it. We see accessibility as a big word in the retail space as well, and we've been testing and working with many partners that provide either one-hour delivery of products. Really, what we see is that a market value for accessing retail straight from your phone, being able to say, hey, I think I want to be able to sell this inventory at these locations and maybe do a launch party and see if a Kickstarter into a launch of an everything, share the sales, be able to punch the numbers that comes from a distribution center. People are able to receive it from their happy homes. Then, they've probably Snapchatted or Instagrammed all of that, capture all of that information. They're able to create an experience. They share it with friends. Those individuals get captured and then we're able to then further the experience from online to offline back to online. Really, capturing all of the momentum between e-commerce brands into a brick and mortar experience and then further that engagement down the road.

Raad Ahmed:
It seems like it's a complete, end-to-end user experience of someone from an ideation to validation to actually growing their business, which is really interesting, because I feel like now, most marketplaces that are thriving are creating these verticalized solutions to problems and focusing heavily on the user experience. It's not just good enough to just post a job or post and you get a couple of bids coming in. It's this whole experience combining the SasS solution with the marketplace dynamics. 

Joy Fan:
Yes, and because we're so data driven, as a global brand, we're able to bridge all of that analysis from consumer behavior back to what is going to be trending in the next 10, 15, 30 years. That's exciting to us, because we're not just seeing it based on the focus of consumers in the U.S. versus in the UK versus in France. We're seeing it in terms of behavior from fashion 15, 30 years ago to how it is today, and people are very much in the world of accessibility. They want to be able to touch the brand and the product, and be able to purchase it with their phones and be able to snap a photo with them holding it, and seeing some star wearing it as well. It's very much omni channel driven.

Raad Ahmed:
Yeah, and maybe a good testament to that is Amazon’s latest move. 

Joy Fan:
Yes, absolutely.

Raad Ahmed:
Come back to retail and acquire something like Whole Foods and build out their whole future of grocery shopping, which is just come in and out, grab whatever you want. Whereas maybe 10 years ago, people would be like, no, everything is e-commerce. Everything is online driven. No one’s going to be brick and mortar stores. 

Joy Fan:
Yeah. I think the idea that we get to create an artisan experience globally, we always say, we provide the opportunity to shop local globally, which people actually can meet the entrepreneur. They can meet the individual who started the Kickstarter campaign or they can meet the maker who actually created these knits. Then, we're able to then push that out and do popups all over the world. It's very much key, because it's a strategy that people have been wanting to do, but we are able to provide them with the solution for that.

Mohamed Haouache:
I would love to say something about what Joy just explained to you. Technically, as of today, Storefront is more or less a platform which offers retail as a service. In the next 10 years, we believe that retail will be on demand. It's a slight transition, but we believe that through technology, education, fantastic on boarding that our company’s doing with landlords and clients, the market is going to move into this experience part of the business, meaning that we will be to activate spaces directly through smartphone. As of today, obviously, there are physical and technical constraints, but we believe that in the next two to three years, we will move into this idea of retail on demand.

Raad Ahmed:
For folks that have closed their seed round, and in the process of raising their Series A, should they focus more on profitability or growth? And why? Is it easier to be a self-sustaining business and focus on profitability? Or do you just want to grow and figure out the unit economics later? 

Mohamed Haouache:
It's a very good question. I would tell you it depends on your business model and the competitive pressure you are facing. We've been lucky enough to generate revenues early on. The question for us was to assess the growth trajectory and make sure that we grew fast enough, despite profitability. My belief is that a startup has one target, growth, and should not focus on profitability. Only when they feel that there is a viable market and only if they feel that VC and business angels’ community will be responsive to the growth trajectory. It really depends on your business model, but clearly growth over profitability for me. Maybe Joy’s going to disagree.

Raad Ahmed:
That’ll be interesting if you guys disagree on that.

Joy Fan:
Well, I think that we're probably at different states—there's global growth, and then there's local growth. The way that we see it on the ground is definitely profitability, but I think that you always have to have the yin and the yang to be able to see both sides. Whereas there will always be global vision. We're on the ground providing operational strategy. We have to be able to see what works day-to-day, and we're iterating every moment. We're working really closely with our product team to ensure that something is working. We're getting feedback straight from the clients and the customer. That drives us to be able to say, is this going to be profitable by way of success and customer experience? That will be our primary focus. While Mohamed is saying growth, I think that he at the end of the day, is probably looking at me saying, it's profitability. Raad Ahmed: It seems like you guys both had that good balance—

Mohamed Haouache:
We try, yeah.

Raad Ahmed:
The artist versus the operator and the yin and the yang in terms of growth and focusing on two very important metrics that I feel like a lot of early stage startups wrestle with, because it's like, do we just grow as fast as possible? Or do we actually try to control our own destiny and become a self-sustaining business within ourselves? Obviously, there's different things in play.

Mohamed Haouache:
It also depends on the KIPs you're observing. In our case—

Raad Ahmed:
What are your KPIs?

Mohamed Haouache:
Number of bookings. We have four revenues. We never looked at the number of users, the traffic, the number of listings. Even though the market has been looking at Storefront from a listing point of view. Given the fact that as a marketplace, the leading marketplace takes it all, the market has been observing the growth trajectory of Storefront in terms of number of listings, because basically, it gives an indication of the kind of traction we might expect. For us, it comes down to revenues.

Raad Ahmed:
Right. I guess revenue doesn't lie, right?

Joy Fan:
Revenue does not lie, no. I think the key piece of that is that we see it further and we dive into if it's repeat business. Clearly, when we do see repeat business, that's the highest metric for success, because we're doing our job. We're actually creating happy customers that multiplies into referrals, and then they become happy customers. It's much easier to have a community that does our work for us, which we've been very fortunate with.

Raad Ahmed:
Yeah. I can imagine that would also save the company a ton of marketing money. 

Joy Fan:
I think that's why we haven’t focusing too much on it, but I think that we have now a set situation where so much of the expectation is to have a marketing pull, and we're seeing ourselves from the outside. As other startups start to rise in general, people are asking us, where do we follow you? How can we find out XYZ? We're really seeing a reflection of where we can start putting some energy in.

Raad Ahmed:
Right. Really awesome. Just to wrap it up, I have one open-ended question for you guys that I like to ask every guest, which is, what is your definition of success?

Mohamed Haouache:
What a challenging question.

Raad Ahmed:
I can't let you off that easy.

Mohamed Haouache:
I'm going to come back to the basic of Storefront. When we launched the company, nobody believed in us. For me, as of today, the definition of success is to be surrounded by talented people believing the same idea of Storefront. The same vision that Storefront is a disruptive marketplace, giving access to the top retail space across the globe. When I'm surrounded by all these people and I'm responsible for all these people, it makes me happy. For me, it's the best definition of success.

Joy Fan:
I would say, from an entrepreneurial perspective, I would love that someone has an idea and while they're on Shopify trying to create a website, they're at the same time, have a tab open for Storefront because they know that that's going to be their way to grow their idea. To me, being able to see people have it on their phone, just searching through, seeing where the next popup is because that's going to be the new shopping model of what's new and what's cool. I see many partnerships for us in play where in part of being partnered with Urban Renewal, be able to provide new social impacts by way of providing space in a new and different way. I think that we're the chicken and the egg story, that we'll be leading in terms of thought leadership on how cities will grow and will be creating their map of how retail will work in the future. That, to me, is being invited to maybe cities that are going to be changing and shifting, for them to say, hey, how would you build this city by way of retail? I think that would be a good area to start.

Mohamed Haouache:
So, two definitions of success. One is to have an impact at the team’s level, and the other one at the industry level. I'm fine with that.

Raad Ahmed:
All right, great. I think that's a good point for us to put a stop there.
 
Mohamed Haouache:
It was a real pleasure.

Joy Fan:
Absolutely.

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//QUOTED

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"When we started the company, we were a little bit too cautious and we did not act aggressively at the beginning."

-Mohamed Haouache, CEO Storefront

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"A startup has one target, growth, and should not focus on profitability. "

-Mohamed Haouache, CEO Storefront

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August 2017 | NYC