When you think of innovation and cutting edge tech, you may not immediately think about outdoor furniture. But that’s going to change when we tell you this story about Outer, an outdoor furniture company focused on providing a seamless direct to consumer (DTC) experience. Sure, high-quality products are a given, but their success is a result of focusing on what matters most: the little things.
Founded by Jiake Liu and Terry Lin in 2018, the company has become profitable in just year two of operation, a rarity in the DTC space. We caught up with Terry to talk through what inspired him to take the startup leap.
LA StartUps (LAS): Tell us a little bit about your Genesis Story and how you started. What inspired you to create Outer?
Terry Lin (TL): I’m the co-founder and chief design officer of Outer, the first direct to consumer brand in a fast-growing outdoor furniture category. It’s a $9 billion a year market in the US alone. Outdoor furniture may appear to be a snoozer category, but actually, there’s a ton of opportunities here that we’re really excited about.
For example, we realized early on that while there’s not a whole lot of disruption going on with furniture, the shopping experience is incongruous with what you’re buying. So there’s a ton of improvement possible here. We also know that there are incumbents out there, but no one can think of their brand names. That means there’s a fractured market with no brand recognition. There’s our opportunity, and that’s why we started.
LAS: And how did you hook up with Jiake Liu, the other co-founder?
TL: Well that’s the interesting part. It was on June 30th, three years ago. I know because that’s my birthday and Jiake, who is also the CEO of the company, reached out to me cold on LinkedIn.
When you think about LinkedIn, it’s a great place for networking, but you know you have to filter through all of the people that reach out to you. People will send all kinds of messages and if you’re not careful you can really open a can of worms. It could go great, or it could not go great (laughter). And in this case, it went great.
So Jiake sent a cold LinkedIn message and it said something like: Hey, I was really interested in your background. I’ve been thinking a lot about this one concept. And essentially it was: I want to create the direct to the consumer version of Casper for outdoor furniture. And he said he had started a marketplace on Wayfair just to test it out. He wanted to see what the category was like.
After a few more messages and emails, he convinced me there’s a big opportunity in this space. And that we would have a bunch of things going for us. The first is his family owns a furniture factory, so we’re already set-up there. And my e-commerce brain saw great room for SEO, scanning for keywords like ‘furniture design’, ‘outdoor furniture’, ‘ direct to consumer’. I saw what Casper was doing. So all those things hit the mark. My background in running the online business at Walmart seemed to be a great fit for his vision.
When Jiake reached out to me the first time, I just sensed something. I responded to him 11 minutes later. Three weeks after that, he flew up to San Francisco and we spent the day together. We had an all-day founders date (laughter). I felt we got along pretty well over the phone, but you never know in person it could be very different. But it clicked. We hear from investors all the time that we have really good complementary skill sets.
We incorporated the company in November of 2017, and by December I jumped on a plane to head to the factory in China to supervise the design of our first line of furniture. Our genesis really was serendipitous.
LAS: How did you go about managing the Chinese manufacturers?
So part of the allure of the conversation with Jiake is that his family has an outdoor furniture factory already. They understood the supply chain that was needed to pull this off. So all I had to do was design something and then really fine-tune it, with high quality at the forefront. I believe that’s different from most manufacturers.
One of the reasons there’s very little innovation in furniture is that everyone just cares about efficiency. How do you do it faster and cheaper? And then one manufacturer sees how another does it, and they just copy it. So everyone is doing the same thing, over and over again.
I came in with a different approach. I was like, okay, let’s not think about efficiency. Let’s think about the quality and what is the best thing we can create for our customers. That’s how we’re different.
LAS: Can you go back and tell us about how you raised the initial capital?
TL: We initially raised a couple hundred thousand dollars with friends and family round. That allowed us to get the first prototype done.
Then in the spring of 2018, we basically had three rounds of seed funding. We’ve raised a total of $4.3 million. The first round was a little over a million and it grew from there.
I have to give 100% props to Jiake. You can try to get the institutional investors and they’re going to look for a great deal. Or you can search for individual investors and people that are really interested. Over this entire journey, we always made sure that we had the right investors interested in our long term vision. We know investors looking for quick wins litter the graveyard of DTC brands, so we wanted to be different. If you’re trying to grow fast at all costs, it’s going to come back and haunt you.
So when we were raising money, we always made sure to share the vision of what we’re trying to do, and it wasn’t growth at all costs. It was really measured growth that could be sustainable. So with all of our investors, they realized we are focused on the slow and steady.
LAS: What’s the difference between the Fortune 500 and startup culture?
TL: Most of my entire career up to that point has been in big companies, big organizations, big groups that handle certain things. That’s good and that’s bad. It’s good because things get done and it’s like a finely oiled machine. Once you’ve done your part, it gets handed to the next team and you don’t have to worry about it anymore.
In the early days, it was just Jiake and I trying to figure it all out. For me, it was like, I know how to do this in theory, but now the hardest thing was rolling up my sleeves and trying to figure it out in real-time.
I remember we were sitting on the bullet train and I was trying to figure out how to do the packaging. So I was on my computer typing up assembly instructions and this is the first time I’ve ever done that. But it got done. It was fine. With a small team, it’s all on you. You have to figure all these things out. With that comes mistakes and growth. The buck stops here. Our investors appreciated that we were all in like that, and that’s led to their confidence in the long-term value of the company.
LAS: So you were wearing all the hats? What was the next step?
TL: Jiake and I were wearing all the hats, yeah. We set a high bar for ourselves. You hear this idea of direct to consumer brands and how they live and die by how good their first product is. If it’s not good, you’re going to know really quickly because the customers are not going to be happy and you’re not going to be around very long. Right?
The inverse is this: if you do something people like, it gives you permission to do the next thing. So that’s why we won. We didn’t have the resources to do more than one thing because of the costs. We just knew if we were going to launch a brand, we would have to do that one thing really well and show people that we are the best of the best. So that’s where the product-market fit comes in. People wanted it. And more importantly, there’s a product-market satisfy factor. We make our customers really happy.
LAS: Tell us about something that inspires you.
TL: This is going to sound crazy, but watch Seinfeld. I say that because what he does is observational comedy. It always starts out with a customer observation: Hey, have you ever noticed this or that?
I remember there’s one episode where George says something like ‘why is it that the doors on public toilet stalls don’t go all the way down to the ground. It’s like if you want privacy?’ So that becomes a joke. It becomes an insight, those things that other people overlook. Good companies notice those observations and address them.
So for Outer, the thing that has gotten us on the map is something called the OuterShell. It’s an integrated cover that allows you to quickly protect your outdoor furniture, keep your cushions dry and move them if it’s going to rain or if you’re not going to use them. This was based on our customer insights, research and talking to customers. The design itself is not very complex. It’s a piece of fabric. It’s got a zipper on one end and Velcro on the other. And it took about five minutes to come up with the idea. But the impact that it’s had, the light bulbs that have gone off in people’s heads, it’s really what has helped with our growth.
That example is not such a huge innovation, but it’s a pain point that customers have that no one else has thought about, and it’s not hard to do. We are able to get a patent on it. So rather than think big, think small, because thinking small is where you’re going to have more opportunities. And this will lead to solving bigger problems in the future.
LAS: What other companies do you admire in the DTC space?
TL: Rather than just DTC, I think it goes beyond that. The company I most admire is Patagonia. Yvon Chouinard is a hero to me. He’s amazing. He never set out to become a businessman. His first loves were climbing and kayaking, blacksmithing, and fly fishing. The thing I love about his story is that it was never about the money. It’s about continuing to follow his values and his passions. His integrity. And it has thrived. Everything he has said, he has stayed true to.
So from the premium quality products that are responsibly made, to the way they’ve created their supply chains, to how they’re actually using their profits, it’s a great model. They are not thinking about planned obsolescence. They want their stuff to last forever. They even say in their advertising “Don’t buy our stuff. You don’t need more stuff. The Patagonia jacket you bought before is just fine.’
That’s amazing. They’re so true to their mission and it just resonates with people in a way that they probably weren’t expecting. It’s hugely successful, and something we want to emulate.
LAS: What pisses you off the most?
TL: I wouldn’t say it pisses me off per se, but you know, like in any company you have different personalities. Some people want to move really fast. Some people want to move really slow. Both have their inherent benefits and detriments.
Moving fast means you can learn something quickly and iterate but might make mistakes, moving slow means you are concentrating on details like quality but might miss an opportunity. Therein lies the problem. How can you do all of those things in a way that feels right?
LAS: So what pisses you off the most is you haven’t quite solved this problem?
LAS: What inspires you the most?
TL: Haha – solving the above problem. That would make me very happy.
LAS: What do you want people to take away about Outer?
TL: We are tackling a category that needs to be tackled. We’re doing it both in the product as well as the customer experience. We think we have a lot of tailwinds.
We’re also building a new retail model. It’s called the ‘Neighborhood Showroom.’ And the idea is that we can build a customer crowdsourced physical showroom, where we’re using our customers’ backyards to show off our furniture. Those hosts allow prospective customers to come to see, touch, sit and experience our furniture in real life. That’s what has really gotten us on the map and it’s especially important.
The whole retail landscape is really hungry for innovation. What’s happening in retail is that you see these 100-year-old brands going under, you see bankruptcies left and right. There are the big winners that have already won like Amazon and the big mass-market players, and then there are the Mom and Pop stores that are struggling to survive.
And then there’s this middle ground, and that’s where we’re playing. We’re not trying to compete for head-on. And that kinda goes back to the idea of don’t go big, go small. Come up with innovations that are small. So a big part of what we’re doing is trying to rethink retail in a way that is relevant to how customers shop today. We’re a small company, but even a small company can make a big impact.