Walk the streets of New York City around the first of the month, and you’ll see the symptoms: orphaned couches, credenzas, and swivel chairs that were left behind after a move. The problem, according to Daniel Ramírez Yunqué (MBA 2015), is that the average American moves about a dozen times before buying a home, and all too often the bookshelf purchased for one apartment isn’t needed in the next. As a result, about 10 million tons of furniture go to landfills every year, Ramírez says. He and Aditya Khilnani (MBA 2019) founded the online furniture rental company Mobley to offer an alternative: an affordable way to furnish a home with stylish, quality pieces with a lease of 3 to 12 months, without the burden of ownership.

Mobley’s entrée to the $230 billion market for furniture and home goods is a direct-to-consumer (D2C) channel where consumers (usually young professionals) select pieces from curated collections on the company’s website—think Scandinavian, mid-century modern, or industrial looks. Within a week, a white-glove team delivers preassembled pieces and arranges the room. When the lease is up, the customer can opt to buy the pieces or have Mobley cart them away.

The concept resonates with Mobley’s target customers, who for now are in the NYC area (where the company is based), although its service areas will change to keep pace with shifting demands, Ramírez says. “The ownership generation was one that stayed in the same job and the same house for a long time, and in that world it made sense to own the same sofa for 10 years. The new generation has been forced to buy fixed assets even though they know they’re going to be moving before long. For them, the furniture system is broken.”

As the founders look to scale, they see three options: First, they could double down on the D2C side, which helps get the brand out there quickly, although it is subject to more competition and acquisition costs. The second option is to integrate with real estate companies. Imagine signing a lease on a NYC apartment, then having the building manager project on a tablet what your apartment would look like furnished by Mobley. The furniture ultimately becomes a line item added to your monthly bill. That kind of B2B2C play is easily scaled, Ramírez says, but it’s a much longer selling cycle and comes with an added technology build. The third option is a hybrid approach, where Mobley fine-tunes the brand and product and at the same time starts that B2B2C channel in an effort to leverage both. Which route should they pursue: D2C, B2B2C, or both?

I would do both. Ramírez mentions that he needs to invest more in technology for B2B2C, but I suspect he will have to do that anyway. An app would be important for keeping in touch with customers and dealing with any problems in both business models. Mobley could think about partnering with building management companies as well as real estate agents. A further suggestion would be to expand their service to DC, which is very transient and should be a good opportunity.
—Susan Holliday (AMP 187, 2014)

My advice is D2C, since the connection to the end customer is hugely valuable. But to scale, they should advertise with moving companies, among other channels. There’s no need to give these firms a share of the revenue because there are many ways to reach the end customer.
—Sergio Rattner (MBA 2001)

I believe the solution is to pursue the hybrid option. My reasoning is that D2C is working and generating income that can assist in funding the B2B2C approach. Adding B2B2C marketing will be an attractive option for customers because it provides one-stop shopping convenience and should increase exposure to more potential customers. This latter element will undoubtedly require some revenue sharing with the agents.
—Phil Erickson (AMP 83, 1980)

I would go with the D2C option, mainly because speed is of the essence to establish a market position before someone else does. I would consider partnering with real estate companies but worry that they’d want to capture some of the value or put too many restrictions on Mobley. Plus tech development is costly.
—Simon Pellas (MBA 2019)

I’ve spent quite a bit of time on the B2B2C model in this industry. There are many stakeholders: Brokers will only adopt tech that will change the listing price or their fee structure. A free SaaS tool with marketplace revenues built on top is the only thing they “buy” easily, but that’s a very expensive customer acquisition cost (CAC). Building managers are employed by a property manager who only cares about their 2 percent management fee. Landlords care about tenant experience but are pretty far from the actual tenant. Building management systems providers are typically willing to add you to their options, but this requires a lot of tech to integrate upfront. D2C is expensive, but partnerships or even referral codes to brokers could really lower your CAC. B2B2C feels like nirvana, and companies like RigUp seem to have cracked it by going really cheap SaaS first for 18 to 24 months, then turning on the marketplace later. When they did, valuation quickly followed. It’s a risky strategy, but what isn’t.
—Wil Eyi (MBA 2019)

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