Deidre Woollard: Hello, real estate investing Fools. I'm Deidre Woollard of Millionacres, and welcome to another Millionacres Spotlight. I am chatting today with Alex Ryden. He's a known Emmy Award-winning creative, who has a long history of consulting for top brands like Lyft, Amazon, Facebook, The North Face, and Oakley. He's bringing together retail and real estate, my two favorite topics, with a new company called Guest House. Hi, Alex. Welcome.
Alex Ryden: Hi, thanks for having me. It's awesome to be on here.
Deidre Woollard: Well, I'm excited to talk with you because I feel like staging is something that I saw when I was working in luxury real estate brokerages in Los Angeles. Pretty amazing houses that were really beautifully staged. I saw how much work it was for the agents, for the stagers they hired. How does Guest House simplify this process?
Alex Ryden: Absolutely. At the end of the day, our secret sauce is technology. We're really focused on building a tech platform that makes it more transparent and turnkey for real estate agents or homeowners to request staging, get updates on their scheduling, be able to have transparency in the process. Then on the design side, we work with over 40 contract designers that are talented interior designers, giving them the tools to be able to plan homes without having to walk through a warehouse and visibly pick things out. Our inventory is in the sky and in the cloud, and in our platform, so our technology just allows them to plan a home from their sofa quite frankly. We believe that the time and the focus we're investing into our technology and our development team and our product vision, the net goal is to make staging a lot more accessible to agents and homeowners and a lot more enjoyable hopefully for the designers.
Deidre Woollard: I love that, and I think I've noticed well-staged houses people walk into them and they just think, I want it all, I want all of this. Are you seeing that the agents that you work with are having buyers who are like, "Okay, give it to me? How much does it cost? I want it to look exactly like this."
Alex Ryden: Yeah. That's why we built the business. I think that had been an age-old question. When you tour a home and say, "Where are the stools from, and what about the sofa is that for sale?" There's a big disconnect between real estate and the products that were inside homes in the market and then retail, where the [inaudible 00:02:32] actually purchased those products. We're just marrying those two worlds really with our model and creating marketplaces inside real homes. Whenever you tour a Guest House home, you can purchase the entire home. You can purchase an office, a bedroom, everything is clearly marked on our website as far as the prices go, the brands that are producing the items, and the process to either have the items stay or if you're touring the home, how it can get shipped directly to your own property. We're definitely seeing a lot of people engaging around that, especially when they're seeing products are from Crate and Barrel or Joybird. I think a big shift from maybe a year ago, even, was I think before people were more interested out of convenience and just desire to own the piece. Now people are actually motivated in purchasing a home turnkey or purchasing a bedroom turnkey because of the crazy lead times we're up against.
Deidre Woollard: Yes.
Alex Ryden: I think with the ports and manufacturing and how COVID impacted offshore manufacturing, we're in a really privileged place to be able to have this high-quality localized inventory that you can access instantly. When you purchase a home, a lot of people are running into these 15, 20-week lead times for something they really want. But if they are able to at least have a bedroom purchase, or an office purchase, or a dining room purchase, they can start living in that home day 1 while they wait for the rest of their items to arrive.
Deidre Woollard: You mentioned Crate and Barrel and Joybird, but I think one of the things that you do is interesting is that you also work with individual craftspeople and makers. I was looking at your site and some of the things that you've got going on there. There's a little bit of an Etsy feel to it as well.
Alex Ryden: Absolutely. The business started, believe it or not, with 100 percent locally made furniture or goods inside of our staged home. For the first year, we really didn't work with any larger brands. Everything was made in Denver, Boulder. We were purely a marketplace for the makers and really focused on giving them a better venue and a physical venue to showcase their goods instead of just online on Etsy. We continue to embrace that audience and that network that we had built. We work with over 500 makers today, and we continue to see huge value for them, whether they're showcasing inside of our homes and getting a physical touch-point when they don't have access to a lot of retailers in that area. Or they want free photo content, which we capture with every single home and give them with full usage rights, so now they can go market their products online. We're all about building the community that's helped us build the business, and it's something we continue to invest in. I think today we have this magical mix of amazing furniture and upholstered items from brands you trust or brands you're learning about that are direct-to-consumer. But then original artwork, handmade ceramic pieces, pillows, throws that are maybe imported from Africa or something by a local importer. We're really excited and I think the net result is a home that you truly want to live in, and it doesn't feel necessarily manufacture or dare I say, staged. [laughs] It's authentic in our opinion because that's what a home is. It's a collection of all that type of stuff.
Deidre Woollard: It sounds like your platform has grown organically. Can you share with us a little bit about what that journey has been like?
Alex Ryden: We started the business really focused on, believe it or not, retail first. We're very focused on this alternative solution for smaller businesses, where a lot of small boutiques we're closing doors pre-COVID, just the challenge of selling online and the challenge of running a local store. We really wanted to continue to embrace local businesses and help them sell. We saw real estate as the sustainable model of creating showrooms monthly through the demand of staging. We don't pay for showroom space or for retail space, so we can continue to grow and thrive and give makers and brands a great venue to sell products. Because of the high-quality inventory we're offering inside of our homes and working with a select group of realtors, we started to get a larger demand for staging and started to shift three years ago, asking ourselves, what is the big problem with staging and why are we getting a bigger and bigger demand to grow this business with our marketplace model and really just uncovered early on, there's a huge need for higher-quality inventory or homes that people actually would want to live in, or could basically picture themselves living in because they see a magazine they love or a pillow they really love, or a sofa they've been looking for from Burrow or something like that. Really grew the business from the foundation of retail into this larger need around a high-quality inventory within staging. Then started to learn about tons of other needs within staging related to transparency in the process and easy to order solutions and quick delivery and lead times and an amazing designer that arrives at your doorstep to put it all together and then have slowly built out features for realtors around the staging vision features for our designers that are supporting the process and they continue to build features for the makers and brands that gave us the original foundation to grow. Again, started in retail and has slowly grown into real estate more and more. I should add that the very first home that we ever staged was my own home, we had a house in Denver, an old Victorian. I was the maker at the time. I had a bag brand and I was frustrated with the nuances of working with wholesalers and buyers and a slow burn of growing a business that way so we decided to sell products ourselves in our own home and sold their bags. That was the first Guest House. We didn't even know what Guest House was at the time. We were just trying to sell our bags out of our own home. People came in and they said, "Well, the bags are cool, but what about the sofa? What about the rug? What about the coffee table? Is all that stuff for sale too?" I said no, but maybe it could be. So we made our whole home shoppable. That was the first Guest House, had some friends in real estate request us to do that and another home and another listing they had. Then quickly learned, wow, there's a demand for this high-quality marketplace model across the broader real estate landscape. That's a little bit of the backwards evolution.
Deidre Woollard: [laughs] Like other stages, do you have to have a warehouse where you're holding all of this stuff or how is that working for you?
Alex Ryden: Yeah, absolutely. I like to think that we can operate at 10 times the size with the tenth of the footprint just because so much of our marketplace and so much of our inventory comes from this network of makers and brands that are constantly adding new products to our inventory in the platform. They store it in their studios or their warehouses or their homes, and add it to our platform as available for staging. Then our designers can actually request it and they get info about when to bring it, where the home is, things like that, and they store it and drop it off. We don't store a lot of the art and the decor and some of those local pieces, instead we lean on the community so they can have access to it to showcase in galleries or a flea market if something's coming up, but then also accept a request to showcase it in one of our homes if that's something exciting to them. We're continuing to engage more and more makers to add lots of inventory to our platforms. We have lots of options and they have lots of opportunities to get into different designs we're planning. But then on the flipside, we're definitely scaling up our owned inventory around furniture that we're purchasing from brands: sofas, dining tables, dining chairs, bar stools, and things like that. But for the most part, we're able to operate very, very scalable business from about 12,000 square feet and then we're moving into a warehouse in the coming month actually that is more like 15,000 square feet with some office space. My vision with the warehouse is, I don't want the warehouse to feel like the back of the kitchen, but I actually want it to be almost like a chef's experience where we have a very approachable presence with the warehouse where people can come and actually shop pieces that may be aren't in rotation in homes. It's like a hybrid of a showroom, but they can see a little bit behind the scenes of like how Guest House stores things and how the experience is for designers. It feels very inviting. We wanted to be a much of a warehouse and distribution center as a community hub in place to engage with our customers long term. I think this next phase of where we're moving in warehouse space in Denver can be the first prototype of that, and we'll continue to refine that iterate it, test it in new markets like San Diego and upcoming markets we're launching and I think really re-imagine what a warehouse can be because I don't think it needs to be this dusty dirty place, but instead can be some place that builds value for everyone, not just our company.
Deidre Woollard: That's fantastic. You mentioned photos earlier. Obviously, real estate is incredibly photo driven last year more than ever. People are selling houses on Instagram without people even going through them. How do the photos play a role? Do you hire photographers? How is that connected to what Guest House does?
Alex Ryden: The photos are the heartbeat of the business. Just being totally transparent about our story, we started the business 100 percent on consigned inventory. We didn't have the capital to go out and buy some of our homes in the beginning were $30,000, $50,000 worth of product to make it look that good. It wasn't the traditional like, okay, go to Target and cobble together an interior. The inventory we had to grow the business was really high-quality. To be able access to that inventory and not go to Target and cobble things together, we definitely were looking at solutions to really engage makers through a consignment model. We were consigning that inventory and consigned pretty much all of our inventory for the first year. The trade-off there was, "Okay, we're going to help you sell, we're going to give you showroom space, we're going to host events in here, we're going to post about you on our social accounts. We have 29,000 Instagram followers and thousands of email subscribers, so help launch your business and products and brands to the world, but we're going to give you photo content." That's the one thing we can control every time. We can't control a sale necessarily, or can't control someone reaching out to you for a big build out my brewery type of order if you're a furniture maker, but we've helped facilitate a lot of those things for sure, but we can't control those. But on a unit economic basis, what can we control every time that helps makers and brands move the needle? I just remembered the stores that we were in with our bag brand, we would ship these products and do the consignment model, but nothing would sell. Then all of a sudden we're paying for shipping back and it didn't feel like we've got any traction out of that opportunity. With Guest House my goal is, makers and brands, every time they feel the traction that they deserve out of each opportunity and that comes in the way in the beginning of photos. We said bring your pieces, we're going to showcase them, but bare minimum, you're going to get amazing photos out of this that would cost you thousands of dollars to produce if you had to get the location and the stylist, and the photographer and the retouching. From day 1, we've been very focused on capturing interiors beautifully to distribute those to makers. Believe it or not, we didn't even offer those photos to realtors for the first two years then we suddenly realized, well actually photos for makers are just as helpful for realtors, and maybe they want to showcase in the listings so we started to say, "Hey, do you want to showcase these in your listings as well?" We'd show them to them and they're like, "This is exactly what I want. Actually just go shoot this empty room, or go shoot the backyard too and shoot the front of the house and I just want to use these for my listing photos," because we saw this movement away from just big wide angle images and blown out photography to images that tell the story of a property and are a little bit more vignette and a little bit more editorial in style is a big word that a lot of realtors are using. We've been focused on generating editorial photos since our conception and today we offer that as part of our package, which is we photograph the entire interior the day after we stage it. We generate over 2,000 images per month. They are all retouch, distributed through our platform to dozens of agents and hundreds of makers. Those all come from us, so there's probably images you've seen on Etsy maybe if you're scrolling on there. We may have been the originator of that content. That's the vision as we grow is to continue to have content at the heart of the business because there's so many people in our ecosystem that benefit from that, and we have an amazing roster of photographers. We have in-house editing team and an approach that's very consistent and scalable. No matter who shoot your home with Guest House or shoot your product with Guest House, it's that same quality and brand expectation you had with us since day 1. I think the net result is definitely makers growing their businesses online, especially during COVID, needing more images to standout and ship their products to people. But then on the flip of it, seeing all these home sell side on seeing and using images online as a conversion tool. I think that's something we've helped a lot with, but also helping realtors be a lot more targeted with their marketing online and supporting them with building their Instagram accounts or printing brochures or whatever the marketing need is. I think when it comes to staging, we're usually the first one you talked to before you line-up the photographer and the videographer and the 3D tour person and the drone person maybe you have a shortlist of them. But if we can say, "Hey, we're going to stage your house, but we also can make your life really easy and schedule all this other stuff for you too. Do you want to add it on?" It's similar to booking a flight or something like that in Southwest, helping you with other things like hotels or rental cars and things like that. We just want to make the lives of our customers easier at the end of the day, and I think our content helps them standout and our process and our team helps make it turnkey as well.
Deidre Woollard: Interesting. Do you consider yourself primarily a stager or primarily a retail platform?
Alex Ryden: Right now, today we're bringing technology to staging and a component of that is a retail experience that benefits the eventual buyer of the home. I wouldn't say Guest House is the biggest and best marketplace that you should go to and shop instead of all these other great places you're shopping today, but in a few years we could definitely be in that position with the interest we have from brands and makers signing up and the experience we're creating online. But I think today our number 1 goal is to stage lots of homes and help people sell for five percent more and 40 percent faster, and then have the ability for our home buyer to be able to purchase a bedroom or an office or the entire interior if we can help them there. I think if you log on to our website, you'll see our marketplace is on there. We're very committed to continuing to be a great curated place to shop Etsy-like makers without having to filter through all of the stuff on there that may not necessarily appeal to your aesthetic. Everything is vetted by our design team and our marketing team to make sure that our makers align with what we believe is great design and making sure that we can help customers find the right products a lot faster. To answer your question, right now we are hyper-focused on staging, but we're continuing to invest in retail. The way we look at it, each home that we stage is like opening up a store. If we can open up hundreds of stores or thousands of stores a year, we're able to increase the retail footprint and be a much bigger player in the retail space.
Deidre Woollard: Excellent. Is this mostly for luxury properties, or is it all across the market?
Alex Ryden: That's the great thing about Guest House. When we started the business, we were focused more on luxury. We weren't white glove, but we were in Denver between a million to five million. Today, I would say we're much more in Denver between 500 to five million and starting to service a lot of homes under a million dollars that are either flips or condos or homes in suburbs that just need to stand out and need to have differentiation against some of the other options out there. While we continue to stage lots of luxury properties and match the right inventory to those properties, our breadth and depth of products allow us to now go after and support a little bit of that 500 to million-dollar category where we're able to really allow those homes to pop and stand out. I think our overall goal is to make staging approachable to anyone. We don't think it should just be reserved to a million-dollar listing. We think everyone can win from the benefits of staging, and I think through technology, through our brand relationships, through matching the right brands and designers with the right price point of home, we can have a sliding pricing system, we can have a sliding solution that feels very consistent no matter where you are in the price point, but makes it affordable to work with us whether you are selling a five-million-dollar million home or $500,000 home.
Deidre Woollard: Excellent. Last question for you. You just mentioned flips, what advice would you give for house flippers on staging houses. What are you seeing right now as far as trends?
Alex Ryden: Man, I think as far as giving advice around finishes and fixtures, there are much bigger experts than I am and we love anything as far as interior goes. That's bright, has lots of light, feels very inviting as far as welcoming warm space. Our goal with staging is to be able to showcase the lifestyle that you can live in that property. As you take a property that may be a little bit more dated or older or in rougher shape and you bring it to life with this moderate interior, our job is to continue that story with products that are really inviting to sit on brighter colors if you're going with a little bit of a wider background. Some place you can picture having that dinner party or that backyard barbecue or hosting your in-laws, whatever the goal is. We want to be able to help and partner with home flippers and continuing to tell that story that hey, this was an old house, but it's a great neighborhood. I'm telling a contemporary story inside the space that you can imagine yourself being a part of. Our goal is just that, is to support, the interest of buyers that are looking at that home through inviting vignettes that tell a story, tell a lifestyle and brand and makers that they may recognize or fall in love with so they can spend some time there and picture it. I think the counter of that is, "Okay, we have a new space that we've flipped and we want to have a stager come in. We just want them to fill the space so people can picture having a sofa in here and the sofa fits or the twin bed fits." We don't want to just show that stuff fits, we want to show that you'll love living there, and that's the ultimate goal.
Deidre Woollard: Fantastic. Yeah, I completely agree with that. I think that's one of the ways that real estate has evolved in recent years. It's much more about the story. Well, thanks again for your time. This was fantastic. Listeners you can learn more at guesthouseshop.com. It's really beautiful, so check it out. You can shop directly from the site, check out the makers, they've got some really cute stuff. Stay well and stay invested. Thank you.
Alex Ryden: Thank you.