Interview With Carlo Badini and Anand Chowdhary
Describe your product or service:
“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 $20,000 of new furniture with $0 upfront and monthly payments for up to four years.”
Describe your company values and mission:
“Our mission is to democratize beautiful living. When we asked our friends why they live in apartments with awful interior, they 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.”
How are you funded? I.e. venture capital, angel investors, etc.
“In the past few months, Pabio has raised a pre-seed round of $1 Million from top investors including Session.VC and Swiss Startup Group. Pabio was also one of the first Swiss startups [that was] part of Y Combinator, Silicon Valley's top startup program, who also invested in the pre-seed round. Pabio's Y Combinator partners are Michael Seibel (YC CEO, co-founder of Twitch), Tim Brady (YC partner, CPO of Yahoo!), Calvin French-Owen (co-founder of Segment), and Diana Hu (co-founder of Escher Reality, acquired by Niantic).
Angel investors who participated in this round include Christian Wenger, who previously founded Swiss Startup Invest (the largest investor platform for Swiss growth companies); Blue Lion, a startup incubator in the ICT and clean tech space; and Alan Frei, the "minimalist lifestyle" entrepreneur-investor who founded "Uber for tutors" platform Nachhilfeportal.de, ecommerce companies Amorana and LOOKSofLOVE, and the University of Zurich Startup Center."
How big is your team? Tell us a little about them (I.e. co-founders, freelancers, etc.)
“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 your startup idea? How did you decide to actually act on the idea? What gave you confidence that you were on the right track?
“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.”
How did you come up with your company name? Did you have other names you considered?
“We were previously named Koj because Carlo came up with the short and sweet name we all loved. As we started to grow and tell people about our brand, we realized two major issues with it: first, Koj is pronounced like "koi" (as in "koi pond"), so people didn’t know it’s spelt with a "J" (like the Europeans do!); and second, we didn't own the .com. This meant that if we tell people — even specifically — to go to koj-dot-co, they would still end up going to koj.com, which we didn't have. We tried buying the domain, but no luck.
As we started brainstorming new names, we had over 100 options until Anand found Pabio, a name that was as friendly as us! Although people still pronounce it in different ways — we like to say ˈpɑːbɪəʊ (rhymes with "Pablo"), though some of our Americans friends like to say ˈpæbɪəʊ (rhymes with "patio"), but however you say it, it's friendly and memorable … and when we say we work at Pabio, they always go to Pabio.com!”
What is the greatest challenge you faced in starting your business, and how did you overcome it?
“The first challenge was to pay for all the furniture. As we offer a full-apartment interior design service, our customers end up with furniture that costs tens of thousands of dollars but only pay us small amounts at the end of every month. We partnered with a financial institution that provides credit to us as soon as we sign a contract, so we can buy the furniture upfront.
After that, we had to scale our sales process as we started to get more sign-ups on our website. Our personalized interior design service still needs some manual work, so we formalized our onboarding process for freelance designers through documentation, and now we're ready for as many leads as we get. It's also not easy to scale marketing efforts from thousands of dollars per month to tens of thousands of dollars while keeping a low cost-per-lead, so we're working with digital marketing agencies to optimize our growing pains.”
Who is your product or service made for? Who is your target market?
“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.”
What's your marketing strategy?
“For now, we are focused on targeted digital ads, and it's working very well for us. 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 $1,000. By selling full interior designs 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. We also have big plans of harnessing network effects and offer a referral program and want to continue to invest in peer-to-peer marketing.”
How did you acquire your first 100 customers?
“We started by sharing our website and product with our friends and family, and our first few customers came from there. Since we raised our pre-seed round early on, we had enough cash in the bank to start growing via digital ads, so most of even our first customers found us online, liked our value proposition, and decided to rent their furniture.”
What are the key customer metrics / unit economics / KPIs you pay attention to to monitor the health of your business?
“We like to think about growth through a pyramid of metrics, where at the top we have MRR (monthly recurring revenue, i.e., how much cash we're getting every month for furniture payments), and this is supported by other metrics like the total contract value sold and our customer acquisition cost. As of today (August 2021), our MRR has been growing at 100% month-over-month since we launched in March 2021.”
What's your favorite entrepreneurial book and podcast?
“Very early on, we started thinking about culture and what we want to stand for. One of the core pillars of our culture is honesty and transparency. For this, we highly recommend Sam Harris' book ‘Lying,’ and for culture, Ben Horowitz's book ‘What You Do Is Who You Are’ and Reed Hastings' ‘No Rules Rules.’ We also really enjoy the podcasts ‘Acquired,’ ‘The Tim Ferriss Show,’ and ‘Hello Internet.’”
What is the biggest lesson you learned during your journey?
“We learned that we should talk to our customers! Just [by] asking people, we've had a lot of questions answered and have improved our offering. For example, we moved away from pure furniture rental to rent-to-own, so all monthly payments go towards ownership. This was a highly requested feature from customers, and we listened. We recommend that every early-stage startup spend their time talking to their customers.”
Who is your support system?
“Our friends and family and networks of founders such as our Y Combinator batchmates and Entrepreneurs Organization members.”
How do you stay motivated?
“We are extremely passionate about the problem we're solving — to democratize beautiful living.”
Did you have to develop any habits that helped lead you to success? If so, what are they?
“We set goals and track our progress towards them, and we have an all-hands meeting where we brainstorm ways to reach our goals. We use the OKRs system extensively and plan ahead.”
What are you most proud of as an entrepreneur?
“Our first magic moment is when customers see our photorealistic renders and they don't have to imagine what their new apartment will look like. Our second magic moment is when people actually enter their new apartment and find it fully furnished, looking almost identical to the renders they saw. This means so much to them, and that feeling is what we're most proud of.”
More on Pabio
Anand Chowdhary and Carlo Badini, the co-founders of Pabio, a subscription-based interior design startup, believe there is a way to democratize good interior design.
We were fortunate enough to hear some valuable insights during our interview with Carlo Badini and Anand Chowdhary of Pabio that will inspire, motivate, and teach aspiring and established entrepreneurs alike.