The millennial focused online furniture retailer wiped out $20 million in funding
In what I can only describe as a refreshingly honest interview this morning, Dot & Bo CEO Anthony Boohoo said that the reason the San Francisco millennial-aimed online furniture retail closed is because it simply did not work as a business.
“I know in Silicon Valley you are always trying to look on the bright side and you tend to put you head in the sand who things don’t work out,” said the former head of CBS Interactive’s entertainment division. “At the end of the day, Dot & Bo just failed.”
Indeed so, sucking away $20 million in venture investment with it and wiping out its valuation of about $60 million completely. Dot & Bo backers included Trinity Ventures and Oak Investment Partners.
Dot & Bo put up a sudden notice on on its site Friday afternoon that is was done, which read in part:
“It is with a heavy heart that we must share that Dot & Bo will be ceasing all operations as of the end of the day Friday, September 23rd. We were in deep discussions to be acquired by a prominent public company, but ultimately the partnership did not come to fruition. We are humbled to have had such loyal customers and are extremely proud of the impact we made on the home furnishings market, but ultimately we were unable to find backers with the necessary vision to help us achieve our mission.”
Thus ends the effort to mesh media with e-commerce, with a splash of native advertising, designed to prompt customers to buy based on engaging in stories around products. While it sure was cool-looking and slick, that was not enough to beat the massive costs and capital outlays required that a tight-margin furniture business required.
“We were trying to build a media company on Day 1, but wanted to get away from the ad model by selling things,” said Soohoo, taking his inspiration from all the inquiries that he got at the broadest network from viewers who wanted to buy furnishings they say on various CBS shows.
Sounds like a nifty idea in concept, offering a private label line and using sites like Pinterest and Houzz to generate buyer interest. But getting shipping costs to be reasonable for larger and bulkier types of items, as well as developing a regular flow of buyers, proved tough. A recent effort — which typically goes under the tiresome tech euphemism called a “pivot” — to provide consulting to companies on their work spaces also did not gel.
As one investor notes: “The capital requirements to fund the supply chain and working capital commitments proved to be greater than originally anticipated and more than the VC market had the appetite for especially with the backdrop of how much out of favor ecommerce is at the moment.”
Yes, the dreaded winter in the e-commerce market, highlighted by the high-profile closing of home decor flash sales company One King’s Lane, that sucked up $100 million when it went down in a sale of less than $30 million to Bed, Bath & Beyond. That awful outcome chilled the Dot & Bo bidding process, even though the exits of Jet.com (to Walmart for $3.3 billion) and Dollar Shave Club (to Unilever for $1 billion) ended up looking great.
“At end of the day, the market was frozen over and the sector was out of favor, which is why we went the M&A route,” said Soohoo, noting that Dot & Bo got to a letter of intent with a possible retail buyer he decline to name since they will might buy the assets of the shuttered startup. “Unlike a lot of tech companies, these buyers look at Silicon Valley e-commerce companies as a vendor and not a way to attract digital talent into their business.” (Soohoo declined to name the possible purchaser since it might buy the assets of the shuttered startup in the future, but I will add when I find out — and I will!)
Boohoo added that while he thought Dot & Bo was a great effort, at the end of the day the it would be “roped into the list of e-commerce companies that failed.”
Yes, indeed, because startups are hard. “Sometimes ignorance is bliss, but as you get into a business more, you realize that maybe some of the challenges get pretty impossible,” said Soohoo. “And then you feel like shit.”