‘The power of subscription is to unsubscribe’

In 2011, when former Goldman Sachs executive Ajith Mohan Karimpana was relocating from New York to Bengaluru, he had to sell $5,000 worth of his furniture for $300. This got him thinking about the struggle of the relocation of furniture and he began to wonder if there is a service that can take away the pain of the process. He did not find the solution, which prompted him to create it himself. This heralded the creation of Furlenco, an online furniture rental company, in 2012.

Seven years on, growing at a CAGR of 130% year-on-year (Y-o-Y), the company has crossed the Rs 100 crore revenue mark the June quarter this fiscal.

“The act of selling-moving-buying is a very expensive process,” says Karimpana. “We started as a rental company, but I think of it now as a subscription company,” he said, describing subscription as a “way of life”.

Karimpana, who believes furniture to be a liability says, “The vision of the company is that you shouldn’t own this product at all.”

Renting, he explains, makes financial sense. “If you set-up a house, with basic items, it will cost you around Rs one lakh; If you rent the necessary products, you have the option to invest that money in other places. Circumstances change, lifestyle changes- you move houses, change mobile phones, vehicles, then why does your bed have to stick with you forever?” he says.

He points out that while the average cost of relocating within the city is around Rs 10,000 while moving cities could set you back by about Rs 50,000.

Furlenco, says Karimpana, fixes issues that come with furniture. However, he adds, when you buy, you got to take care of it by yourself. “Unlike car servicing stations, there are no furniture servicing stations.“.

Asset-light model

More than 85% of the revenue of the company comes from millennials. Comparing itself with Swiggy, Karimpana says that Furlenco banks on the millennial lifestyle. “Our parents never ordered, eating out was considered bad. Millennials order every second day; it’s the freedom not to cook. People like flexibility and that’s why they are buying our products,” he points.

Karimpana himself lives in a rented house. “The yield on a house is very very low,” he said. “People do many calculations when it comes to deciding whether to rent or buy; ‘If you rent, you’ll spend this and if you buy, you spend this’ is the thinking. Often, people commit the mistake of this one-dimensional thinking, losing out on profits.”

“The subscription argument is the flexibility of life: Be Asset Light; millennials aren’t investing in assets,” he added, “The power of subscription is to unsubscribe.”

On average, the company furnishes around 5,000 houses every month.

“We don’t give single products, We give packages. The bedroom packages lead the pack, generating 35-40% of the revenue, followed by the living room,” he mentions.

Investment

Initially, the company was bootstrapped and he had put his own money - Rs 50 lakh. He raised a couple of crores with the help of family and friends and survived for 3 years. In 2015, they got funded. The company till now has cumulatively raised $40 million in equity and $40 million in debt and is closing in on Series D fundraising round.

The big players

Describing Furlenco and Rentomojo as Uber and Ola of the furniture business, Karimpana says, “We hold market’s 80% share, then there are smaller players, but there’s a 10x difference in size.”

“We are neck to neck, but we cater to different audiences. We have a better premium value. The audience that comes to us is on the premium side, including families. 40% of our audience is 30 plus,” he adds.