Do people still buy furniture or do they just prefer to rent it? Well, in the modern world where people prefer short term rentals to long term investments, the furniture rental industry has been growing at a good pace. Be it moving to a new home or refurbishing an existing one, customers are growing more inclined towards furniture rental.
And with this shift in customer behaviour, there have been some companies which are catering to this very niche. Pabio is one such company. Venture Mirror recently had a chat with Carlo and Anand, the co-founders of Pabio, which provides personalized interior design services and high-quality furniture rental. Here are the excerpts of the interview.
What is the startup / product / venture about? Give us a brief description of it.
Pabio offers personalized interior design with high-quality furniture rental for Europe. With our asset-light rent-to-own business model, qualified customers can get $20k of new furniture with $0 upfront and monthly payments for up to 4 years.
How many co-founders are there? Please introduce them and their backgrounds.
The company was founded by Carlo Badini and Anand Chowdhary. Prior to Pabio, Carlo founded the Swiss design agency Cleverclip at the age of 20 and bootstrapped it to 40 employees and millions of euros in revenue. He was nominated to EY Entrepreneur of the Year and listed under Forbes 30 Under 30. His co-founder Anand previously founded Oswald Labs, an accessibility technology startup, and an Indian e-commerce retailer Melangebox at the age of 19. He’s a top open-source contributor and listed in GitHub Stars and Forbes 30 Under 30.
How did you come up with the idea? What motivated you to do this?
After exiting our previous startups, we had some time on our hands and started visiting many friends at their homes for a coffee to talk about anything and everything. One thing stood out: In most cases, their apartment interior was awful — it was almost always crammed with cheap furniture that didn’t match with each other or the apartment. So, we asked our friends why they wouldn’t hire an interior designer and purchase nicer furniture that fits better, and most of them gave us two reasons: first, interior design seems elitist and expensive; and second, buying a full apartment interior is (a) too expensive, and (b) doesn’t make sense if you rent an apartment and don’t know how long you’re going to stay in it.
We figured that if we combine both things—interior design and furniture rental—we can create an affordable package for tenants that’s still very high-quality.
Who is your target market? Why do you think your product will appeal to them?
Our early adopters include DINKs (double income, no kids), expats, retirees, and recently divorced men (yes, it surprised us too!). However, we envision a world where everyone will have a Pabio apartment, because our offering is truly universal in that everyone would love to live in a beautiful home. Currently, we want to focus on the rental households in Europe who move around frequently and are above-average earners.
Who are your competitors? How are you different from them?
1. Traditional retailers like IKEA and Wayfair: We don’t think they’ll be fully pivoting to rentals because it’s a very different business model and requires lots of financing/credit setup. These retailers are motivated to get rid of their inventory as soon as possible (warehouse space!) whereas we look at furniture as assets, so we’re happy to take yours back, refurbish it, and put it in a new place.
2. Furniture rental startups like Feather and Fernish already have a rental system in place, but personalized interior design is a different game altogether, especially when you consider our proprietary rending technology which generates photorealistic renders with relatively little human effort. We think our technology will set us apart.
3. Online interior design services like Modsy and Havenly only focus on human-driven interior design. They might want to upsell you a furniture package, but they don’t have the necessary rental and logistics setup to have a full offering as we do. This is only competition for us if people want interior designers but want to buy all furniture outright (say for $20k) and our goal is a more affordable offering.
4. Depending on where you live, fully-furnished or serviced apartments are (much) more expensive than renting an apartment, so we think our value proposition is also the “rent to own” part where each of your monthly payments go towards ownership. We also have optional addon services like electricians and biweekly cleaning, so I think we’ll more directly compete with the serviced apartments space, except that it’s still your apartment and you can own the furniture if you like.
When you have an “add to cart” ecommerce furniture experience, you don’t end up buying too much stuff; the average order is less than $1000. By selling full interior designs (with photorealistic renders generated using our proprietary technology) consisting of all furniture in an apartment with several rooms (albeit as a monthly subscription), we have significantly higher ticket sizes than these traditional ecommerce retailers (by more than an order of magnitude). This, in turn, allows us to sustain a much higher customer acquisition cost and therefore outcompete them in paid ads. Additionally, we have a significantly lower inventory risk since we algorithmically push items to our customers. Overall, this is a win-win — a better deal for customers and for us.
What are the future plans with the product/startup? Any new features you are planning on?
As a result of the COVID-19 pandemic, home and living have become more important than ever. People no longer want to wait until their next vacation to feel great, they want to have that 5-star hotel comfort at home. Compare that to apartments today that are cluttered with cheap Swedish furniture. Pabio offers an alternative that transforms any apartment into a stylish home people will love, and we want to continue to scale our operations. Today, we are available exclusively in Switzerland, but in the next few months, we are working hard to launch in more locations in Europe.