Furniture startup breaks traditional framework
They are quick to find out what kind of handbag their favorite character was carrying or what type of table the most popular fictional family had in their dining room.
When the latest episodes conclude, many instantly look up the brands and products that caught their eyes and add them to their shopping list. Businesses are eager to capitalize on this trend and are often willing to pay a small fortune to the producers of television shows or drama series to go toward product placement.
But that’s not the case for three 20-something art school grads who started a small furniture business in 2010 out of a rented office in Hongdae, western Seoul. The young entrepreneurs contend it’s quite the opposite, actually: television producers come to them looking to sponsor their furniture.
Perhaps only a select few may have noticed that the current KBS show “The Human Condition” as well as the action flick “The Divine Move” both feature furniture manufactured by the trio’s company, Kaare Klint.
Their products already appeared in the hit television drama series “Reply, 1994,” “Gentleman’s Dignity,” and “My Husband Got a Family.”
Q. The company is only four years old, but its growth is surprising.
Jeong: We started when we were still in college. All three of us majored in woodworking and furniture design so we had a lot of interest in hardwood furniture. As the trend in furniture has moved toward a more northern European style, our products under that category seem to have grabbed consumers’ attention.
Tak: Maybe it’s because we started off without much knowledge about running a business. I think we level with consumers, not producers. We just designed furniture that we thought would be great to have. It’s difficult to find furniture that has great wood, a nice design and a reasonable price. And although we saw a lot of high-quality furniture, we thought there was something missing. So we’ve started off thinking we’d make furniture that we would use and selected good wood, designed to suit our tastes, and set prices we were willing to pay. I guess that worked.
Ahn: Because we were all art students, we didn’t know anything about business management. The reason why the prices for Kaare Klint products are lower than other hand-made wooden furniture is because we weren’t really knowledgeable of distribution. To maintain the price, it was impossible to supply to retail stores or department stores. That’s why we came up with the idea of opening up a furniture cafe - to remove the distribution stage and maintain the unit cost. Our weakness actually worked out as an opportunity.
Can you tell us about the furniture cafe?
Ahn: Existing furniture businesses usually distribute their products through retail stores. If so, the retail margin is at around 30 to 40 percent. So the producers decide to raise prices or lower the quality of materials in order to balance the budget. Kaare Klint only uses AA-level Estonian birch, but a table made out of it only costs around 300,000 won. To maintain that cost, we had to lower the retail margin. So the solution was the furniture cafe. We advertised to those interested in opening up coffee shop franchises, Kaare Klint Cafe.
All the cafes will be filled with Kaare Klint furniture, from the chairs the customers sit on to the shelves for cups. The franchiser owner gets the profit from the cafe while we get to introduce our products to customers. I think the furniture cafe existed before us - operating a furniture store and a small cafe next to it - but we were the first to operate a cafe using the products as interior goods and expanding it with franchises.
Many of your strategies don’t follow those of existing furniture businesses. Weren’t you anxious?
Tak: Not at all. I think it’s because none of us have any work experience. We just jumped at it without much thought. Of course, we did a lot of market research before starting up and found that there were hardly any furniture businesses in the country that followed the business model of producing 100 percent local hand-made wooden furniture.
Because it was a new kind of positioning, we needed to strike a road in distribution methods. We also lacked capital. Each of us brought in 2 million won that we had earned from working part time. So 6 million won was all we had. So we had to advertise and promote the brand on our own by operating homepages and blogs on the Internet. We decided to reveal in minute detail on our homepage the production process and how we select woods in order to attract customers.
But shouldn’t such production processes be disclosed as part of your strategy and know-how?
Ahn: We didn’t see it coming, but many imitation products were instantly distributed in the market. Because we reveal every step, from selecting the wood to designing and producing it, many manufacturers began to copy exactly what we did. The outcome, of course, looked very similar and of course it’s similar because they copied our every step. We were infuriated at first because people were stealing the designs that were conceptualized during late nights and through our own collaboration.
How did you counteract that? Did you pull down the information from your website?
Tak: No. In fact, we revealed even more. Instead of disclosing it, we decided to raise the degree of completion for our products. If many people have a similar concept for a piece of furniture using the same wood, the winner will be the one who makes it better and prettier. As we continued to raise the degree of sophistication, the imitators had to continue to copy us. So at this moment, being the first one to have the best design and best quality that others continue to copy, we feel confident.
Ahn: To make the best products, we collaborate with other businesses in different fields that share a similar philosophy. For example, we collaborate with the UK-based Harris Tweed for hand-woven fabrics for our sofas, and with Alufus, a local aluminum brand, for our tables. As for revealing information, we went even further. Before it was posting photos and text, but now we upload video clips of the production process.
Jeong: One can’t make better furniture than us by copying us watching the video clips. It’s been a long time since we stopped worrying about the possibility of copycat products overtaking us. In fact, the time when our company saw rapid growth in sales coincides with the time when so many copy products came pouring out into the market. When one or two businesses copied us, our sales went down. But as the market for wooden furniture grew, customers managed to pick out the best out of them. In the end, it was the copycats that helped us grow.
Didn’t you think about a lawsuit?
Jeong: We sometimes feel the need. We indicated on our website that “those who steal our design and production techniques will be legally liable.’ But I don’t think it’s effective. Three of us started this business by renting a semi-underground office in Hongdae that costs 600,000 won per month. From there, it took us exactly six months to move to Cheongdam-dong, which is the new head office. If there was a key to rapid growth, it was continuing on with our work of producing quality goods. If we spend time running around chasing copycats and filing lawsuits, we’ll never have time to renew our product.
Tak: The business grew, and we are still running the business, but our root is design. We believe creating new designs is the fastest way to success. In fact, our design has already been acknowledged by many customers. We still produce furniture with our initial designs and they still sell well. We’ve never received a complaint for damage or had to provide after-services. We really believe the key is in the design.
Jeong: When we were still in the underground office in Hongdae, we received a sponsorship request from a film production company for “Don’t Cry, Mommy.” Furniture businesses usually don’t sponsor films. Compared to television programs, they lack attention from viewers and hardly have the same kind of publicity. So the story was, after a number of rejections, we were on the next list for the film production company. For us, just the fact they knew us and wanted our products was amazing, so we went for it. During the production, we often visited the film set and tried to add anything that we thought was missing that wasn’t asked for. Once we overheard Kim Hong-han, the director of the film, saying that it would be great if there was an Irish table. We designed a new product, made it and sent it to him. We even requested a script so that we could read it together and brainstorm what kind of furniture would be needed. Maybe the director thought it was laudable, he began to introduce us to other television drama producers and film companies.
Ahn: After that, we also sponsored the 2012 film “Eungyo.” All the furniture in actor Park Hae-il’s room was ours. We did many television drama series as well and we are still sponsoring two to three programs per season.
Tak: Unlike other businesses, we weren’t really calculating when it comes to sponsorship. I think that kind of attitude opened up new opportunities. We just appreciated any offer that came to us and took it. That started a road to new and better opportunities.
There’s a saying that you shouldn’t start a business with a friend. Did you have any trouble?
Jeong: We’ve never had an argument ever since we started this business. We were already like brothers since college and knew each other so well.
Ahn: We lived together when we just started the business. I think that helped. We were literally stuck together in a gosiwon [a one-room apartments for students], spending the whole day together. That way, we came to know each other so well. After the business took off, we decided to move out of the gosiwon. But that time, we just got different rooms in the same officetel building. All three of us love motorbikes, so we also often spend weekends together riding.
Tak: Recently, I grabbed a drink with one of my juniors in college who just started a business with a friend. He was complaining that he is at odds with his business partners. I told him that the mistake he’s making is the fact that he’s drinking at that moment with me and telling me about it, rather than his partners. Often, business partners complain about one another to other people. But that aggravates the problem. Whether we are on good terms or not, the three of us try to solve issues within our circle.
You are all from Seoul, but why did you live together in a gosiwon?
Ahn: We just thought it was best to stay together to do something together. Because we didn’t have an office at the time, we went into a book cafe in Hongdae with our laptops, ordered one cup of coffee and stayed the whole day, working.
Tak: The problem was money. It was running out so quickly. All we were spending was on coffee and rent for the gosiwon. That 6 million won was gone in just two months.
So what happened?
Tak: We decided to do whatever we could to bring in 10 million won each within a week. If any one of us couldn’t do that, we decided to exclude that person from the startup.
Ahn: I mean, who would lend 10 million won to a college student? I borrowed a little here and there and just barely made 10 million won. After three days, we found we had 40 million won on our hands.
Jeong: Now with debt, we got a little scared and had no choice but to work hard. It was December when we got together again and got ourselves that basement office right by our gosiwon. We buckled down on designing new products, making blogs and websites and looked for factories. Until we finally established the business, all three of us never took a day off.
What’s the business philosophy of Kaare Klint?
Tak: There’s nothing profound. And we don’t have our own secrets or know-how. I think that’s why we are where we are today. We offer hand-made wooden furniture at a reasonable price ... Maintaining such sincerity, I believe, will be our homework.
Jeong: It’s just as simple as continuing to produce quality products that are prettier each time you look at them and maintaining that attitude of always working hard.
Ahn: When we first decided to start a furniture business, we wanted to do it because I couldn’t think of any names when people asked me to recommend to them a good designer brand for furniture. I want our product to be the answer.
BY PARK HYUNG-SU [email@example.com]