How Design Cafe is looking to disrupt the $20B home solutions space with design and tech
Design Cafe is a D2C startup that offers end-to-end solutions for designing homes starting from designing, manufacturing home accessory products to installing them.
By 2015, designers and architects Gita Ramanan and Shezan Bhojani had realised one thing - they wanted to go beyond merely designing to build a whole home solutions ecosystem, and this led to the birth of, a D2C home solutions brand in the same year.
The startup has so far raised $57 million in total funding, and counts the likes of Fireside Ventures, Westbridge Capital, and Sixth Sense Ventures as its investors.
Design Cafe is over 900 employees strong, has a revenue run rate of Rs 180 crore, and is targeting a run rate of Rs 600 crore in booking value in the next two years. It has helped design and deliver about 150 homes per month in Bengaluru, Mumbai, Thane, Hyderabad, and Chennai.
The startup has over eight experience centres, and a 35,000 sqft factory in Anekal, an industrial area in the outskirts of Bengaluru. By this quarter, the team is expanding to Pune and Mysore as well. They are also looking at new centres in existing cities, as well as expanding to Delhi NCR and some Tier II cities (10 cities in total).
Pandemic and its impact
The pandemic-led work from has democratised and opened markets for the housing and home solutions sector, thanks to the work-from-home culture catching up.
“With people now spending a significant portion of their time at home, they are looking at revamping their home spaces. This holds very true even for Tier II and III cities. We were looking closely at those markets since we had started receiving a critical mass of enquiries,” says Shezan in a conversation with YourStory.
The startup follows an omnichannel model that helps consumers build the homes that they want, in the style and specifications they feel most comfortable with.
Design Cafe does this by offering end-to-end solutions starting from designing, manufacturing products to installing them.
Technology has helped the startup provide a wholesome experience to their customers, by providing more options in a timely manner within their budgets. Virtual reality (VR) specifically, helps customers visualise the designs in their private spaces.
Design first approach
While Design Cafe is not a first mover in the space, and has competition from players like Livspace and Homelane, what sets them apart is the designer point of view.
“We always wanted to do what we did at a large scale, and we realised the best way to do that is to merge our expertise and skill set along with technology,” says Shezan.
He adds they were aware that the skill sets of interior designers and architects weren’t simply available to everyone. “We knew if we were to set up a home ourselves, we wouldn’t be able to afford our own services,” explains Shezan, adding that hiring a good designer is not only tough but also expensive.
Also, while designers struggle to execute on the clients' needs and requirements, it is equally frustrating for customers to get what exactly they wanted.
“This meant a large problem needed to be solved and it rightly matched our ambition,” says Shezan.
Working five years in advance
In retrospect, the whole idea of Design Cafe was created by Gita in 2010 during her Indian School of Business (ISB) scholarship stint. “I was laughed out of the room as many believed this to be an unviable idea that they said was unscalable,” says Gita. This nevertheless did not stop the duo from starting their architectural firm.
“We realised entrepreneurship is something we definitely wanted to explore,” recalls Gita. Subsequently, they went on to design over 500 projects across the country in sectors across residential, hospitality, retail, commercial, and institutional design. This continued for the next 10 years, which helped them develop a comprehensive understanding of the market.
The turning point came in end 2014, when a customer came to the couple and requested for a home to be built for Rs 15 lakh. “We also started realising that people we had initially worked for were no longer coming to us because by then our work had been published in architecture magazines and journals. We had started doing homes worth Rs 2 crore to Rs 5 crore, and they were giving references,” says Gita.
Expanding the consumer base
By the time the duo realised that they had skill sets that could create incredible value for people with smaller homes, that client bracket was suddenly elusive.
The couple also realised that the industry was standardising. Builders themselves were looking at ways and means to create properties that were catering to the new evolving and emerging middle class. They also saw that there was rapid digitisation and the number of people in the middle-income group was significantly rising.
“We decided to create a standardised module on the backend and bring in our design sensibilities to the forefront. With that idea, we brought in a few tech people to build the module and the prototype,” says Gita.
The first product the team had built was a tech solution, where consumers could design their own rooms, kitchens etc. They could pick modules, finishes etc. They could pick a layout of the room they were designing in a minute.
Building a scalable platform
It was this prototype that the team took to Kanwaljit Singh, Managing Partner and Founder of Fireside Ventures, in 2015. Speaking of his investment in Design café, Kanwaljit says,
“To be successful in this space, there are many factors in play. The founders needed to have strong design sense, the ability to engage and understand what the customer wants and also understand the life cycle of building a home.”
The key factors that played a role here was the ability to execute and build large scalable platforms. “And we saw all of this in the founders of Design Cafe.” Kanwaljit explains also the pandemic has democratised the market and the industry, making it easier for people to look at brands and options online.
"The consumer wants newer options, better options that suit their needs in every way possible," adds Kanwaljit.
While the team raised their first round of funding based on this prototype, they knew they had to change the product. After close to 300 meetings with customers, they realised that while consumers wanted a solution like this, they also wanted a final approval from a designer or an expert.
Moving the model around
“We shifted our model such that the designer would meet with the customer to understand what they wanted, and later feeded that into the system,” explains Gita.
By 2017, the team realised they needed their own setup. “We knew that to scale and grow, we needed to manage end-to-end,” adds Shezan.
However, the market has its challenges and there are several moving variables and parts. Shezan explains it was then they realised that to give a complete end-to-end experience and solution, they need to manage the different elements like designers, artisans, workers, plumbers, electricians etc.
“This means standardising and training them, making them realise and understand what the customer wants and needs. This meant building standardised modules and ensuring that the people are trained well. It is about providing all kinds of labour with the right job security and decision-making skills,” explains Shezan.
The market and the future
A 2020 RedSeer report states that the Indian online furniture segment is pegged at $25 billion, growing at a CAGR of 15-17 percent on the back of increased digitisation, newer business models, and rapid urbanisation. In fact, the online furniture industry in India constitutes only 15 percent of the organised market, growing bullishly at 80-85 percent.
This shift is also because online-first (D2C) brands have gained over 30 percent share of ecommerce, which will grow to 45 percent by 2025. Shezan says,
“The pandemic has shown us that we can manage processes, teams and work in an online and hybrid environment. Design Café was an early entrant in the space of creating designer homes with a touch of exclusiveness and class. Home has now become the centre of work and family life, and this is where every consumer is looking for the best options when it comes to doing up their dream homes, this is the edge that the founders have focused on. We are confident that the need for good homes is here to stay forever and the fact that Design Café blends all aspects of home design with tech, is why they have grown and built their large client base across India."
The team is now working to expand its base and presence across different parts of the country.
Edited by Anju Narayanan