Shanna Tellerman on tech and interior design

Rob Goodman

Shawna. Welcome to the Now What? podcast.

Shanna Tellerman

Thanks for having me.

Rob Goodman

Yeah. So great to talk to you. We have known each other for many years. Now, we have talked on the mic before a few years ago, midway into your journey with Modsy, and I'm very excited to talk to you about the topic of evolution and change and what you have been through over this past year. And what's coming for Modsy in the future.

Shanna Tellerman

Sure. It's an exciting topic. Excited to be here.

Rob Goodman

Let's talk about Modsy. Why don't we start off and if you can describe the service for folks listening.

Shanna Tellerman

Yeah, absolutely. So Modsy essentially is an accessible way to design your home. Interior design is really expensive, inaccessible and a little bit old-school in the way that they actually show you kind of vision boards and mood boards. So when I went about designing my home, I experienced that point where you're like, I can't imagine how anything is going to look in this space. And I was like, there has to be a better way. And so Modsy was born to basically help you envision how your space will look and connect you to an affordable interior designer.

Rob Goodman

Yeah. And so I've used Modsy a handful of times now in my new place, I've used it in a bunch of rooms and hopefully didn't give your stylists too much of a headache and some of like uh, you know, uh, revisions that I needed. But, uh, it's, that's their job. They love that. Yeah. But it was just an amazing process, you know, shooting all of the images of the room, sending it into Modsy, having this incredible, you know, life-like rendering, 3D rendering of the space. And then based on the quiz I took and the questions I answered, I got all these amazing recommendations for how to use the space and, you know, types of couches. I could get artwork and all different things like that. So when you see my space, it's pretty close to what Modsy recommended.

Shanna Tellerman

Oh, that's so awesome. Yeah. We're going to have to do a customer testimonial. Yes. Yeah. Let's, let's do love showing that. Yeah.

Rob Goodman

Amazing. Yeah. So it's really an incredible way, as you were saying, to bring that accessibility of this kind of high-end home decorating, you know, styling to so many people. Talk to me about the Modsy business. What is the makeup of where you're focusing the business and in terms of revenue, you've got people subscribing for the service offering. Then you have people purchasing furniture through the platform based on the recommendations, like what is the pie of the business?

Shanna Tellerman

So you pay a service fee upfront. It's just a one-time fee and it's per room. You can buy multiple rooms if you choose out-of-the-gate and people get to do that often and get a discount when they buy a handful at the beginning. So you pay a service fee at the beginning, but it's very affordable. So it starts at $150 a room, our Lux service, which is really a, you know, a premium high touch service is only $499 a room. And we're comparing to typical interior fees, which would be several thousand dollars just for the service fee. And so that's a flat fee. You pay it upfront and it includes unlimited revisions. The discussions with your designer will be back and forth. There'll be an intro call with the designer. So everything is included in that. And then for us there’s a small fee.

Shanna Tellerman

So as a percentage of revenue, that's a relatively low percentage. But in terms of the unlock, the offering, that's really where a lot of our attention and a lot of the value is, is the designer's experience working with the customer, the effort that we take to deliver an incredible experience, the designers, communications, the interactive rendering that you get that shows your room, lifelike, like you would describe. And every product in the design is something you can interact with. You can swap out, you can actually see things rerender in real time, you can go into an editor and make your own changes, or you can work with the designer and the designer can make iterations as well. So that small fee unlocks a lot of service and a lot of value. But then we really monetize off of the purchase of merchandise and furniture that happens on the other side.

Shanna Tellerman

So the customer hopefully has a delightful experience and they've gone through their couple of revisions or edits. And they're like, okay, this is it. And even along the way, they might be making some decisions. Like we know this is the sofa, but now let's, like, really get the right rug. And so they'll purchase and we have a fully integrated marketplace. They can check out, in our experience, across multiple retailers, as well as vendors and brands that people haven't heard of. So they're emerging smaller brands and they check out in one place and we then do all of the ordering across all of these different brands, all of these different retailers. In some cases we can even add on an installation service so we can aggregate and actually install everything for the customers who order like 50 items, a hundred items. And so for us, that's the majority of the revenue, almost 80% of our revenue comes from the merchant.

Rob Goodman

Okay. And I was reading. I'm not sure if it, if it still exists, is there a Modsy line of furniture as well?

Shanna Tellerman

There is. We have a couple of things. So we have a lot of direct relationships with manufacturers where we have developed private label brands and exclusive brands. But we have actually developed one of our own product lines where we have an in-house product developer who's been in the industry for her whole career. And we saw, kind of, the white space as we were hearing, especially in the main seating. So we were hearing like, we need things that are kid-friendly, pet-friendly, but we want style and we want elegance, and we want the performance fabrics, but we don't want the kind of, like, sagginess. So there was a lot that we were hearing. And so we took that as an opportunity to say, ‘Hey, let's work with a manufacturer. Let's actually build this unique product line directly with that customer's feedback.’ And it was a huge success out of the gate, outside of this year's logistics issues, which has been real right with COVID, but I'm sure we'll talk about it. It's been really cool to see how a new product line can flourish.

Rob Goodman

It's amazing because you work on so many different aspects of the business. It must be interesting to decide where you draw the line and where you keep going around the full circle. Like I love that notion that through Modsy, you can have somebody basically install your home or your room. You can, you know, have certain pieces of furniture designed and made. Are you thinking about steps in the future where, well, if you can design your room, could you design a piece of furniture? Could you design, you know, other aspects, like where do you see the handoff and where do you think, hmm, maybe we should fold that into the business at some point.

Shanna Tellerman

At least at this point, we sort of see our, you know, sort of central value add in our central competitive advantages as the technology. And so we're really good at 3D rendering. And so where does visualization aid and the experience of homes and home design. And then the second piece is really around that design element. It really is about improving our lives through our environment. And so if we put those two things together that ends up centering most of our business decisions. And so we have had some early areas of expansion. We're actually working with Lindar right now. And we co-created a virtual tour that you can take of a home that is not even constructed yet, but it gives you a sense of like, what is this home that I might buy? What is it like to walk through it just like you would take, you know, a virtual tour of an open house where somebody is photographing it.

Shanna Tellerman

But if that model home doesn't exist, how do you take a virtual tour? So Modsy was able to do that with VR, but obviously for us, it really becomes an entry point to that home buyer's journey. And so we hope that we can then follow that customer all the way through to then buying that home and ultimately designing that home. So that's like one area that was a natural expansion. We're also in beta for a renovation service, which is kind of an obvious extension. We've had customers asking about kitchens and baths and fixtures and finishes, and we sort of drew a hard line mostly because we weren't sure yet we wanted to go into that area from a designer perspective. And it's a different commerce model. We're not going to sell you a bathtub online, at least not right now, but we found we were turning away so much business that eventually we said, okay, well, I'm sure we can come up with a different service model where we charge a higher fee. It's higher touch. We don't sell the skews. We direct to partners, but we can also help furnish, you know, the remodel as it comes to life with all of the elements that really are furniture and decor. And so, you know, we've kept it pretty tightly within that circle, but who knows what's in the future.

Rob Goodman

That's amazing to hear. And let's talk a little bit about the past year. Obviously this has been so challenging for so many people, so many businesses. I know that Modsy early on made some really tough decisions around staffing, making the team a bit leaner at the start of things. And then I know kind of in the second half of the year, you started to notice that things were going well, people were spending time at home and they wanted to make their homes and their spaces as beautiful as possible. So talk to me a little bit about this past year from a business perspective of, of what was impacted, what surprised you and how you lead through that?

Shanna Tellerman

It was a year of two halves. Absolutely. We, um, started the pandemic and, you know, both being a venture backed company, but also being in the furniture industry, we looked at all the signs and signals and it was like a recession is coming in the past. The furniture industry has declined by over 30% during historical recessions. And so we were like, this is not going to be a discretionary area where people are spending. If their jobs are impacted and we're a venture back company, we’ve got to pay attention to the bottom line. We've got to survive through whatever winter is ahead. So we sort of took a pretty big cut on our marketing. Actually we took almost a hundred percent cut on marketing, stop spending, stop trying to acquire customers and said, we're just going to kind of hibernate through however long this is. And that did mean that, you know, we expected a pretty big drop in our customers.

And so there was an equivalent drop in our number of service providers on the platform and then operational staff that support that. So that was kind of the beginning and it was super tough. We did it in stages because we knew that we would have our existing customers to kind of follow through over the course of months. And so by May, June, even, we were just sitting there like, you know, jaws dropping as we were like, the sales haven't stopped. We had stopped all of our marketing, but the sales didn't go away. Like when are they going to go away? Is there just a really long lag effect? And with each week that passed and they kept coming in, we were like, huh, maybe they're not going.

Rob Goodman

This was around the summertime. Is that what you said around there?

Shanna Tellerman

Yeah. Early summer is when we saw the sales hadn't declined. So I mean, the good news is that we actually kind of in the outer waves of people that we had told we were going to unfortunately have to let them go. We ended up retaining quite a bit and we even rehired some of our prior designers and operational staff, not everybody, but certainly a good number. And then, you know, it was sort of June, July, August, we kept watching and we were like, okay, this isn't a blip. This isn't like, you know, sort of what they were calling the initial, like frenzied shopping that was happening for the home that, you know, really there was kind of like Black Friday in May of last year. And we felt, like, pretty confident at the end of August that actually, you know, with every other means of discretionary income, essentially cut off through travel and you know, other spending and with everybody stuck in their homes and then rethinking the home and the way they're working from the home. And they're, you know, doing learning from home and then moving at unprecedented levels, as people suddenly felt unlocked to move to new locations and to make different kinds of life decisions. We were like, I guess we're in a boom we're, we're one of the industries that's benefiting, but it was just, it was not an obvious path. It was not like, you know, we weren't Clorox where it was like, everybody's buying that on day one.

Rob Goodman

Right. So how did you show up for your team and how did you show up for yourself over this past year? Because you have to play both roles, right? You have to somehow find ways to refuel your tank and you also have to create and lead in the culture of the organization.

Shanna Tellerman

In terms of my team, the biggest thing has really just been transparency. And I feel like it's sort of like a secret weapon of leadership, is that at the end of the day, if you're just really open and honest with people, it's actually much easier for you and it's much easier for them. And so, rather than telling people any kind of cheerful stories or pretending I knew what was coming, I, you know what, just show up everyday and say, this is really awful. And I don't know what's around the corner, but I do know we have a great team and I do know that we're making the right moves right now. And I do know that we're going to be open and honest with each other, and that we're going to make every decision that we have to, to get through this. And so that was the only place that I could go through.

Shanna Tellerman

All of this is just honesty, just like brutal honesty. And I felt like the response was so positive to that. The team, they'd feel sad. They would feel all the emotions, but people really felt like they trusted that they knew what was going on. And they trusted that. Like we, as a team, we're going to find a way to get through it. And thankfully we did, for me personally, actually working from home, was it pretty big unlock? I did that for a short period when my first startup was hybrid, it was in Pittsburgh and I was in California and I would work from home, but I didn't, like, choose to do that. It was kind of a factor of the situation. And I felt like I was missing my team because they were all in person and I was separate, but the experience of working from home and when we all moved to a virtual one, I felt, like, connected to the entire team in a different way.

Shanna Tellerman

There's some people in the office and some people that are remote, but for me, my use of time just became more efficient instead of having 30 minutes between a meeting or 15 minutes and, you know, walking around and chatting with people, which was really nice in a social way. But like, it was hard for me to focus and get anything done. Like during the day I just would, like, knock out little things all day long. And then all of a sudden my evenings were open and I didn't spend like two and a half, three hours at night getting through all those tiny little things. And so actually that's just been a giant transformation for me. I have had more time to spend with my husband. We like, you know, especially at the beginning of the pandemic, we have, like, binged on Netflix, like everybody else. And so much time with my son, we would go for walks at the end of the day and, like, go to the playground when it opens and just like spend a lot of time playing. And so for me, that was just like really recharging. Yeah.

Rob Goodman

Do you think that Modsy will ever go back to a hundred percent office or do you think this unlock is going to stay kind of open?

Shanna Tellerman

It's absolutely going to stay. We were actually 60% remote when the pandemic happened. And so we were fighting against what was already kind of the natural evolution of our company, which was to be just mostly remote. And so we had this San Francisco team that, you know, it was the early team and, or the leadership team, but certainly by no means like all of the team members and we had an office and it would be at like a third capacity any day because people live all kinds of crazy places in the Bay area and the commutes are horrible. So we were sort of like, what is the point of this office? Like, why are we renting this office and why are we, like, sitting in these rooms together when, like, we also have five people on the video call. And so all those questions were coming up before the pandemic and just to have like a rip the bandaid off moment and like go virtual overnight.

Shanna Tellerman

I think it allows us the flexibility to kind of re-approach it and say, when we do have space, the space is going to be used specifically for social gatherings, right? Like it's going to be used to help people connect and bond. And do you know the happy hours in the old world ceremonies and other things that we do that are fun. And, you know, host, when people come in town, have little team off sites and get togethers and maybe a key meeting or two, but for the most part, we'll be working remotely and people will not be in.

Rob Goodman

So thinking about the future of work and remote, and you talking about Modsy, staying remote, you are very connected in this technology world. Are you seeing that more and more startups and tech companies are going to start moving into this model of remote working? What are you seeing kind of in the space or do you think it's going to evolve to a hybrid or people are going to crave connection and crave, you know, being shoulder shoulder again and go back into the office. What do you predict there?

Shanna Tellerman

I think I predict it's going to be less extreme than people are predicting right now. I do not think we're headed towards a fully remote and fully virtual environment. I do think people like working together. I think people do like the social aspect. I do think there are certain kinds of brainstorms or off-sites or meetings where that in-person connection builds a lot of trust or a lot of momentum that carries you through the conversation and carries you through the day. That's hard to get in a video setting that said, I do think that the flexibility, like the comfort level with the idea of we don't work in the office when we don't have to, right. Like we're here for the days that it's important to be here. We're here for the meetings that it's important to be here. We use this space in a different way.

Shanna Tellerman

I think that is going to be more a part of companies and they're going to all be on a spectrum. I think some companies are going to be like, yeah, we're going right back fully to the way that we used to work as soon as we possibly can. And then I think you're going to see a lot more that are in the middle of it or saying, you know, actually most of our team members choose to work from home two to three days a week. They're in the office one to two days a week. And I think you're, you are going to see more on the fully remote spectrum as well. Cause they said, ‘Hey, you know, it costs a lot of money to have an office. And these offices, we could translate that same capital towards a hundred other uses in our business. So like let's just shed that constraint and hire amazing talent wherever they are and figure out how we get together renting spaces when we need it.’ And I think we're going to have that

Rob Goodman

Spectrum. Yeah. In some companies I've heard, it's like, what would you rather be in the office all the time or twice a year, go on, you know, an extravagant bonding trip to, you know, some tropical location and have an offsite and do all those things. And it's kind of like, okay, well give me, give me some of that.

Shanna Tellerman

Absolutely. Yes. Our team has been putting in their votes for a team trip to Hawaii, which I told them there's some financial goals that we have associated with that team shirts.

Rob Goodman

Yes. Yeah. So you've worked in, in 3D and VR for so much of your career. You started at Carnegie Mellon, you got your master's degree in entertainment technology. You went on to intern at EA. You went on to start Wild Pockets, which was acquired by Autodesk. You went to Google ventures as a venture capitalist, and then started Modsy after that. But you have a really unique perspective on 3D on VR over the past decade, plus a couple of decades. And I'm curious about your take on where VR, AR, 3D is today. You know, a few years back there was this, like, VR moment where, you know, everyone was investing in building and you know, this is going to be the thing, new headsets and all of that. And I was totally there for it. I was like, yeah, this is the next big thing. Which VR has had many moments of being the next big thing. But from your perspective, as someone who's worked in this space for so long, are things kind of further along than you would have expected, are they kind of lagging behind? Would you have pictured adoption being greater than it is? What's your kind of state of VR AR 3D, the pulse of it in your estimation? Yeah,

Shanna Tellerman

I guess because I've spent so long in the industry and working in 3D, I come at it as a skeptic because I sort of, like, rode that enthusiasm curve in my early, early career and actually in graduate school where we were doing VR work and it was like, everything is possible. Anything could be in VR and then you actually try to build the experiences and you put real people in and you realize all the limitations from like the seasick feelings and motion sickness to the constraints of like you have your eyes fully covered and you can't really move around comfortably in the real world. And you start to realize that it's very point specific. So I do believe in VR for games and gaming, and I think it is a form of entertainment. I think we will see it in arcades. And I think people who like gaming at home will have VR headsets and there will be experiences built specifically for that, that are really great for that.

Shanna Tellerman

But I don't think it is more widespread than that. And I think it's a really cool immersive technology, but I don't think that this is like the transformative moment where we suddenly all have a VR life alongside our normal life. I am a much bigger optimist, I think, for where AR plays a role. But again, not like I don't think it's a game changing technology. And I think that people are over-hyping in some ways what they think it can be. I do think that it's very useful and practical in terms of informational overlays in the world. So like navigation, I think in certain working professions, it's very useful, but I guess I'm a believer that the form factor that's going to really accelerate AR specifically doesn't exist yet. And it's, you know, it's not Google glass that didn't quite work out.

Rob Goodman

I think we're both there. I think

Shanna Tellerman

About Google glass moment. Yeah. So I don't think that that's it. I don't think glass is actually RA because not everybody's going to want that kind of covering for their face. I think that at some future scifi moment, we have something like a contact lens that sits in your eyes that does overlay the world. That gives you information that's way safer, by the way, than like picking up our phone while we're driving and, like, texting or like looking at, even looking at the map and directions. So I do imagine that like both, you know, surfaces in the world will display information, but that will have some kind of form factor in our eye. Or I don't know, it'll be a computer chip in our brain or whatever, but like that, that is a future where we're going to figure that piece out. I think until then there's no magical unlock in this space. Like, after many, many, many years in this space, my biggest conclusion as a 3D lover, like I love 3D and I love graphics, was that the best use of 3D is in the background to create 2D representations. And that computer graphics itself is just this incredible computational unlock to create incredible imagery, incredible visualizations, incredible constructions of spaces. But if you can put it into an easier-to-digest, usable format of 2D video, et cetera, that you have way more opportunities to get in front of consumers and to scale something.

Rob Goodman

Yeah, it's so interesting because anything's possible. Modsy could make an iPhone app where you just move across your room and you just see it, right. And it just shows up. But if people don't want to use it and they're not going to adopt it, then the investment in it and the kind of showing off nature of what is possible with tech, ultimately, it's not going to make a difference to the business. You have to make those decisions and say, yeah, it's possible, but it's not applicable.

Shanna Tellerman

Exactly. I mean, and I think with consumer businesses, you always have to look at that kind of investment to reward benefit from a consumer lens and consumers are not going to spend a lot of time learning something new and figuring out how something works. They're going to expect it to be easy and expect it to be intuitive out of the Gates. And so there's paradigms like 3D editing, moving through 3D worlds that are learned behaviors. You have to learn how to do it. That's why gamers become very advanced and figure these things out. But your everyday person, we like to flip through images on Instagram. We like to send a quick text message, right? We're not going to go much further.

Rob Goodman

We get mad when, like, the post button on Instagram is moved to the corridor. So maybe turning it into a virtual world off the bat is not going to be the most inviting scenario.

Shanna Tellerman

Yeah, exactly. I mean, you can create virtual worlds, but then you create simple ways to experience them. That can be video, that can be 2D, right? Like there's all these different metaphors for interacting. Everything doesn't have to be 3D. In fact, like our brain simplifies the world around us to make it easier for us to understand right. By removing some of the visual noise and our understanding of, like, the depth around us. Right. And so we have to take that to heart. When we think about new technologies, which is, people are only going to process kind of a small component of what you're putting in front of them.

Rob Goodman

I'm curious what you think about e-commerce and in real life experiences with digital, with, you know, online shopping and then the connection between them all, maybe it's 3D, maybe it's AR, or maybe it's just background systems, as we've been talking about that, do a better job of kind of cross connecting the systems by which you shop online and you make decisions in the real world. Where do you think that is going? Where do you think e-commerce is going both for the consumers? And then maybe even on the backend.

Shanna Tellerman

Primary problem in e-commerce is really sorting through the noise, right? As a consumer, and even as somebody trying to sell, what you want to do is put the best possible thing in front of the customer that is most likely to buy it fastest. Right. And to give them the information that is most likely to convince them to purchase it, right? Like that's what both parties actually want. And so I think that the world is headed towards personalization, which I know has been a topic for a long time, but I think that the data we have available and the way we use that data to really understand what the consumer's looking for and to put the right product in front of them is going to continue to have a lot of legs as we move into the future, versus, like, I've curated my site, and these are the 10 products that I put at the top of the page, right? Like that might not be the right 10 products for you. It might be the right 10 products for me. I think that is still going to be a big opportunity. I think the other piece that kind of plays into the world we're in is this kind of expert lens over top of things, right? Like, as a consumer again, like, I don't know, I go on Amazon and I searched for, like, a water bottle and it's like, there's 500 options.

Rob Goodman

And they all have like five star ratings and 500 reviews. Yeah.

Shanna Tellerman

The pictures look great. And the comparison charts, I'll say the same thing. You're like, so which one do I buy? Right. So I think there's room in the world, whether it's, again, personalization technology, whether it's an expert, like there's just this room to, like, declutter the world and tell you this is the product. Or maybe these three, here's the three options. Like we've gotten rid of all the other noise, like this one's the best for the world and the economy. And, you know, and the people who made it are really, like, good people. And like, it's not going to break on you. And it has a good warranty. Like all of the things have been checked, but now there's still three. And then you have some element of choice, but like, you're just not completely overwhelmed. And I think e-commerce today is super --

Rob Goodman

Overwhelming. I love that sense. I mean, as a consumer that makes me feel like more at ease, you know, even what you're describing, it's like, ah, please, yeah. Make this easier. You know, don't overwhelm me with information. It's great. But I mean, that's what Google did. Right. They made the information accessible and useful. It's like, we need that for everything. Exactly.

Shanna Tellerman

Yeah. So I guess I'm a bigger, I'm the biggest fan of AI, right? Like I think that algorithms and the power of algorithms and the power of modeling off of the data that we collect is like, we're only in like inning two, maybe, right? Like there's just so much more we can do with the power of data. Yeah.

Rob Goodman

Yeah. I love that. Right. And operationalize it, use it at scale. So that works for everyone, but it's still personalized based on signals that we're generating and we're all living so much online. We're generating so many signals that can be used to help us make better decisions. So that's great. How about lessons learned over these past couple of years with Modsy? So it's been, is it over five years?

Shanna Tellerman

Yeah, we just hit our sixth anniversary.

Rob Goodman

Sixth anniversary. Wow. Congratulations. And your first startup, I think it was two years before you were acquired by Autodesk.

Shanna Tellerman

When I hit the five-year mark at Modsy, I was like, wow, we're going to go even longer than my first company. It was a very long journey.

Rob Goodman

So at this stage of the company and scaling it, building it, what have been some of the lessons that maybe, yeah, you've never experienced with your first go as an entrepreneur and founder, that kind of surprised you that they may want to share.

Shanna Tellerman

I'll mention two. Cause I literally have, like, infinity number of learnings from this company, but it is at a scale and at a size and you know, it involves so far beyond my first company. My first company was 12 people when we were acquired and we're now 120 full-time employees plus hundreds of designers. And so it's quite a bit different and we barely made any money, my first company and this one we've had pretty steady and wonderful revenue growth. So yeah.

Rob Goodman

Congratulations, Shanna. So it's so awesome. You know, because I've known you for years now just to know that like, this is the trajectory and the growth and the organization you've built. It's so exciting.

Shanna Tellerman

It's been really fun. I think that, you know, maybe that's one of the lessons alone is just like, when it feels like it all clicks, like, you know, the product you want to build and you know, that domain you're in and you have a strong vision like that really does mean something to building a company. And I feel like that vision and that clarity has been constant and stable through all of the craziness of a company. And it's allowed us to create something valuable in the world that people really wanted. And I didn't have that level of clarity with my first company. So that has felt very, very different. The most important one to me really has been learning how to hire and manage leaders. And I didn't really even know how to manage people in my first company, barely. And I did a terrible job.

Shanna Tellerman

Um, and so over the couple of jobs I had in between, and then, especially in Modsy, I have learned from the people that I work with and learned from the people that I've led and managed how to be a better leader and that kind of constant feedback loop. I've worked with a coach. I've gotten feedback directly from my direct reports. Like I have made an enormous number of mistakes, but I've learned more this time because I've been asking the question and because I've been looking for those insights and I really started to realize like, what does it take to work with super talented and excellent people? Really the same secret is what I said before. It's complete transparency and honesty. It's like showing up and saying, ‘I don't know how to do this.’ Or, you know, ‘I don't know what you need, like tell me what you need or like, I'm not sure if I'm doing my job well, give me some feedback.’ Right. And being able to be that level of open and that level of honest and create that level of trust with the people I work with. That's been my biggest lesson, learned it, my biggest unlock.

Rob Goodman

Amazing. Yeah. Creating that culture of openness of transparency and that mindset that you have of staying humble, open to growth and learning. That's amazing

Shanna Tellerman

As a leader, realizing like people might expect you to know everything or want you to like look a certain way or act a certain way, but like it's actually kind of nonsense and that for you and for everybody else, it's more comfortable when you show up and you say, I know how to do this, but I don't know how to do this. Or I don't know that word you've put into that financial deck. What does that mean? Like I know that I've seen it before, but I'm not sure what that means. And so getting comfortable with my actual level of knowledge and experience, and then not trying to pretend anything further than that has allowed me a tremendous amount of freedom, but I think it also builds a lot of trust.

Rob Goodman

Yeah. And then the whole team can kind of relax their shoulders and be like, ‘well, you know, if Shanna isn't up there trying to know it all, then maybe I don't have to be that way either.’ And then you can see more clearly gaps in the organization or where people need to level up or where there's opportunity for growth. And there's not these like facades and kind of layers on top of things that you have to, oh, you have to investigate and see what's really going on. You can move faster, you can make decisions and patch things up. So I'm really curious cause you said, okay, well we cut the marketing, you know, and things still went well. So for people who are listening in and are running e-commerce businesses or e-commerce leaders, talk to me a little bit about what's happened with marketing since that moment. And then what has worked well in terms of getting the word out in terms of, you know, direct to consumer marketing tactics that Modsy has taken that have helped you build the brand build awareness, but also build trial and conversion.

Shanna Tellerman

The first point is probably what any great marketer, you and anybody else who's a talent in the industry, wants to hear, which is we really just stopped paying Facebook and Google all this money. And, like, turns out that really, it was the, you know, the talent of the marketers on our team that was driving most of the business. And so I think that there was a moment in 2018 to 2019 where, you know, sort of the spend and the pace of spend into paid channels and the ability to get clarity on the efficiency of that spend was really murky. And it was a drug, right? And, like, one of those drugs where you're like, I can't afford to take a month off because we might miss our targets, right? As a high growth company. And so the pandemic gave us this once in a lifetime opportunity to say, like, cut it all off.

Shanna Tellerman

And I think us and many companies, you cut it all off. And then all of a sudden you're like, oh, it wasn't as bad as I thought it was going to be. And then we, you know, we have built it back up. We're certainly not off of paid marketing. And it is definitely going to go back into the hands of Google and Facebook and others, but with a lot more efficiency, because we were able to take that moment to build much more in-depth attribution models and systems to really understand the impact of different channels, kind of the, you know, the cost of an additional customer and to truly understand our baseline, like what comes to us on an organic basis, what comes in a word of mouth basis? And we had invested for years in our blog, in our content, in our recommendation systems, in SEO, which we kicked off really actually now almost two years ago, very late into the company, but it was one of the best impacts we've had on the business.

Shanna Tellerman

And it's still paying off. I mean, it's growing at a phenomenal rate, still. And so I think we just reminded ourselves how important the kind of free, organic, unpaid half of marketing is and how much you need to kind of nurture and continue to develop that side of your business. And then you kind of need to manage paid and then grow paid at a sustainable rate alongside, and then really understand the incremental cost of a customer. Like at what point are you paying too much for that customer? And so we went through that. I believe a lot of companies have gone through that this year. And so as we've turned back on paid marketing, it's at almost a third of the spend and now we're beating revenue from every quarter, for year over year, revenue is at a higher and higher rate. And so to be able to sustain growth, but actually have slashed, our marketing is pretty incredible. Yeah.

Rob Goodman

So you took that moment to basically hit pause, study it, and now you're, like, stronger, more optimized, more focused. And you know, when to turn the dials up and when you're kind of throwing money out there that you don't have to. Absolutely. Yeah. And I love that you found these ways organically through SEO and content and just nurturing the audience and community. You have to build the business.

Shanna Tellerman

That's fantastic. It's been the best unlock for the business, which, it takes a long time. We've been investing in it for years, but it turns out it's a really meaningful baseline.

Rob Goodman

Let's change gears. And I'm really curious what is giving you energy and excitement these days? Like we're still, you know, in our homes a lot and are now fairly limited. What is giving you energy, making you motivated? I mean, I know you love this business and I know you wake up energized to build it every day, but anything, your favorite Netflix show, are you running a lot? Is it time with Sky and your husband? Give me something that just kind of gives you that energy.

Shanna Tellerman

Yeah. I mean, ironically, it's been home projects.

Rob Goodman

Right. Okay. Maybe that's radical. That makes sense. It makes sense, right? Yeah. You're like we're using Modsy in every room and you know, not at the beginning

Shanna Tellerman

Sky's room, but then we actually moved down to her. So then we moved beyond what Modsy does right now. Um, although I did kind of, like, twist the arm of our team and I got them to do some Modsy designing.

Rob Goodman

Well, because we, we have a roof deck and I did ask, so no, we don't,

Shanna Tellerman

We don't have enough furniture to sell. So we haven't built that merchandising yet, but yeah. But yeah, we built a deck that's behind me. We like my husband and I have just been envisioning things. And so we, like, sort of redid our entire backyard. We ripped out the old deck, which we hated. We built this new deck. We're actually getting like a studio shed workspace still it's out

Rob Goodman

There. So excited about one of those like office kind of setups in the, in the backyard. Totally. Exactly. Is that going to be your space?

Shanna Tellerman

We're going to share it. We actually shared this space too. Yeah, it's cool. It opens on both sides. So it'll open up to like the grass area and it'll open up to the deck and yeah. So that's been really fun. We designed that. And then we actually had been thinking about buying a house as well, that we're going to move into in a couple of years and ended up finding the house of our dreams. And so we did that too. And so we ended up buying a house like we're hitting every cliche as a, as a, you know, a couple that was staying at home during the pandemic.

Rob Goodman

Shanna, thank you so much for your time and your insights and sharing so much with us today. This was really wonderful.

Shanna Tellerman

I really enjoyed it. Thanks for having me.