Furniture isn’t exactly the industry that finds itself under ArcticStartup’s looking glass on a daily, or even monthly basis for that matter. However, there are signs that indicate the birth of a new global brand and that in the very centre of the signs we see the acquisition of a Finnish start up you might remember from Slush last year: One Nordic Furniture Company.
Now, signs and suspicions are no more; the furniture e-commerces are soon joined by a new brand, Hem, which is a result of a long strategic business expansion led by online design giant Fab and joined by MassivKonzept and One Nordic.
But how did One Nordic end up being the last missing piece of a furniture coalition made up of cash-stacked startups? Did they just happen to be in the right place at the right time or does it all come down to exceptional entrepreneurism?
One thing is sure: One Nordic had already made a name for itself since its establishment in 2012, greatly thanks to its new business reformations, such as the faithfulness to minimalism, easy assembly designs as well as its e-commerce approach to sales, which is considered to be a blink of new light within the otherwise so conservative furniture industry. And if this was under debate before, such is not the case anymore, a fact proven by the major Fab acquisition a few weeks back.
The newborn Hem will launch in September 2014 simultaneously in more than 30 countries and will be a 'full-stack' design company, meaning it will be taking on everything from design to product development to manufacturing to technology and logistics. The One Nordic assimilation to Hem will open a huge and unforeseen channel to spread One Nordic’s message of affordable “luxury Ikea”.
The launch comes shortly after the aforementioned One Nordic’s acquisition by Fab, which was followed by a good deal of speculations as to what the deal stood for. The details of the deal have yet to be fully disclosed, though One Nordic did mention that “the acquisition is a combination of cash and stock, valued in the tens of millions of dollars” and that “the One Nordic team will own 5% of the combined company with the finalization of the transaction”.
If that still leaves too much place for your imagination, consider the following: a year ago, Fab was valued at roughly $1 billion. Though the valuation could be less than that, since in 2013 Fab was struggling with problems and layoffs, even the lowest estimates would still produce a significant, eight figure sum.
Whatever the final numbers are, Joel Roos, Ex-CEO of One Nordic, puts the deal value in good perspective: “If we think of the deal in regards to the Finnish design industry, its clear that the deal was immensely significant. It really shows that Finnish and Nordic design is globally greatly appreciated and sought after”, he says.
Roos agreed to meet over coffee and discuss the deal as well as One Nordic’s future as part of Fab after they announced the acquisition. His first expression could’ve told the entire story without words, as it was one of excitement and relief you only see on men and women who’ve thrived through a long and probably stressful internal battle.
Geared up with caffeine, Roos started by stating that the Fab deal was nothing short of a “match made in heaven”.
“The initial process of the deal started in early spring when we were looking into a financial round. We pitched the case to [Jason Goldberg, Fab’s CEO], [Goldberg] said he wouldn’t invest, but instead he was willing to buy the company and from there on it just took speed. On many levels it was a match made in heaven; it just sort of happened. [Goldberg] was transferring his business from a third party service into a brand label. Now [Fab] has a magical supply chain, with large activity in Poland and Germany in this context.”, Roos explained.
Back in 2012, One Nordic came into the markets with modernized ideas and visions on furniture design and sales, a mentality which stuck on when seeking the capital investment itself. Roos says their idea was to go all-in from the very beginning, knowing that in order to keep their products brand faithful to their promises, they would need to scale up quickly and avoid staying in the low repertoire furniture business as much as possible. Minimizing risks by scaling carefully would’ve lead to high production expenses, damaging the company’s philosophy of affordability and eventually taking their vision of a global design company to the limbo-land of specialty products known to selected few.
Therefore, big capital was needed, but as entrepreneurs know well, capital isn’t always easy to get.
“We did some cooperation with Tekes which was helpful. Other than that, it was difficult to get normal tier funding from the domestic sector. The design and furniture business is not something that investors feel too comfortable with, and their approach is very careful. Once you go abroad on the other hand, boldness increases which means easier capital”
While Fab was already on the loop, spring brought more confidence into light in the form of a Swedish angel investor by the name of Magnus Dimert, founder of Adlibris and a man with 20 years of business experience. Roos speaks warmly of Dimert, who according to Roos, turned out to be a tremendous asset as a solid advisor to the One Nordic team.
But now that the Fab deal is closed, there remains only one question: what happens now?
“The deal will lead us towards an entirely new brand with the industry pre-launch happening the following September and website launch in October. The brand, Hem.com, will be much bigger than One Nordic and a bit more global and wider than the previous brand’s spectrum. It will stand for good quality but reasonable price, just like One Nordic used to and since the set up will be so much bigger, we will be able to squeeze the prices even lower.”
Roos is clearly hyped about what lays ahead, and perhaps for a good reason: he successfully sold his start up to a company that seeks pretty much the same values in terms of business. Fab, or Hem if you will, will have the muscle needed for IT, sales and production in offices located in India, New York and Poland respectively, while the new HQ will be in Berlin. The R&D side will be led by the One Nordic team from Helsinki and Stockholm.
In the end, the facts are as follows: One Nordic shall cease to be, and their concepts are to become one with Hem. The progression is quite interesting, but perhaps most of all for Fab, which in less than five years transitioned under Goldberg’s leadership from being a gay social network to an e-commerce platform, and from there forward to what it is today, a furniture brand.
Roos and his partners Stefan Mahlberg and Petrus Palmér will now begin to fulfil their share of the deal, which is leading the creation of credible design for the new furniture giant. The rest, as they say, is history.