It’s not so much that I want to say, “I told you so.”
Of course Homeplish, the online design site failed, leaving designers, clients, vendors, and bankers angry and out of cash. That much I’ve been trying to say for over two years. Larry Ellison, founder of Oracle recently called Uber “worthless.” (To add a little color, he also said the only asset they own is an app that his ‘cat could have written.‘ Got to love Larry!)
Well, I don’t know if Uber is worthless or not, but I know that Homepolish is. I’ve known it for a long time but as with any venture capital venture (the founders having no background in design) there’s always the hope of a white knight before bankruptcy… So, when founder Noa Santos got on the conference call with over 200 designers, the final stake was driven into this fantasy with the words, “We’re not continuing operations going forward.”
Millions in bank loans were defaulted on. And since the banks have seniority in their loan agreements, whatever cash that can be squeezed out of this corpse will go to the banks and not designers who are owed fees, nor will they be paid for the hundreds of projects currently in the works.
The Designers Were Left Holding the Bag…Of Course!
And the designers? Well, some are owed as much as $13,000 and it is now on their shoulders whether or not to try and salvage projects that they have no hope of getting paid for, just to salvage their reputations. Of course they’re angry and feel betrayed. And they were…or were they?
Yes, I’m a cynic because I’m not an interior designer; I’m a business school professor who has himself raised venture capital in the past. Unlike the interior designers who signed on with Homepolish, I fully understood they were run not for designers, but for their very greedy investors who knew nothing of design. I knew they were bleeding cash and that there was no real scenario in which they could ever make a profit. I predicted their imminent doom.
But I realize the temptation of something that looks pretty online and companies that have millions to spend…at least for a while. I don’t blame designers for getting caught up in this and other online design sites, especially if they fall for the line that someone else may do their marketing for them. Sorry, but that just ain’t happening.
The worst case scenario is when designers see the glitz and glamour of a Homepolish and think, “We’ll, I’ll just do that myself” and they throw out their traditional interior design practice in favor of trying their own online design concepts. The truth is, these have a better chance of working than something like Homepolish because of the near zero overhead that can be put into place.
Still, trying to imitate a failing business model is not, I wouldn’t think, the surest way to success.
I’m advising several Edge members right now about creating online design packages. There are ways to make it work…but I warn them that the margins and marketing have to make sense. And I always say, as one who encounters dozens of successful designers every month the same thing I’ve always said.
No matter how much the market has or is changing, the designers that are making fabulous incomes look a whole lot like they looked 5, 10, and 20 years ago. The more things change, the more they stay the same…