When we first spoke with Chris Stanchack, Co-Founder & CEO of Loveseat, the team was focused on providing an ecosystem for selling vintage furniture.

Vintage furniture has been an untapped e-commerce opportunity because of the cost and complications of moving large, old pieces of furniture across the country.

Essentially, the team would identify vintage furniture in a local market, buy it from the seller, and then turn around and sell it at a markup within one of their local warehouses to a nearby buyer. 

While lucrative, this was a business model that proved to be laborious. It involved identifying the right furniture, buying it and then holding it in company owned inventory until the team could sell it. Through these frictions the team realized the business model had inefficiencies and limitations that needed to be overcome.

Loveseat has moved its focus away from being a curated provider of vintage furniture to being a comprehensive furniture and home decor online liquidation auction operator.

Instead of carefully acquiring unique vintage pieces of furniture and managing the inventory, Loveseat is moving to provide an e-commerce platform that enables sellers to simply list all of the furniture they want to sell, receive bids online and quickly find verified buyers. Most inventory sells within a week. A once inefficient process of trying to move large quantities of furniture can now happen in no time at all.

If you have ever moved or have unfortunately had to take care of a loved ones estate, you know the challenges of having to sell large quantities of furniture from home quickly.

You may have just ordered a dumpster or donated it all away. Or you went through the friction filled experience of trying to sell furniture online via sites like Craigslist, where you are forced to deal with countless phone calls, scheduling issues, no-shows, and low-ballers.

Loveseat rids the selling process of all these issues, while allowing you to generate sales proceeds that can help with your current life situation.

Since Loveseat’s launch of the online auction platform in September of 2018, the team has averaged 2,000 pieces of furniture sold per month, across 52 auctions (39 in San Diego and 19 in LA), which each generate on average $10,000 in gross sales and $7,000 in pocketed revenues for the company. 

As Loveseat moves forward the team will work to provide remote auctions that completely disinvolve Loveseat at all in terms of handling inventory, which will improve the unit economics for the business and enable greater scalability for the company. 

Despite the major pivot in 2018, the company still maintained revenues near 2017 levels at ~$2M, while improving the bottom line with a reduced loss to the prior year. Management is taking the right steps to pivot the business to this new broader focused furniture auction model with clear product market fit and improving bottom line financials. 

As the team begins to scale this business to more cities (outside of SoCal) in the coming 12 to 18 months, we think there will be significant uptake in revenues during 2019 and beyond. 

Looking at the current burn rate of the team, it stands at ($14,000) per month, which is more than reasonable for a high-growth tech business at this stage of the game. 

The company is also projecting profitability in 3 months. While this is likely an overly optimistic projection, there is clear lines to profitability in the next 18 to 24 months with this new asset light business model. 

Moreover, this is an indicator that management is effectively deploying and managing investor capital. 

Loveseat has little direct competition. While online auction site like OfferUp or LiveAuctioneer do enable sellers to post furniture, they are not positioned to help sellers liquidate large lots of furniture fast.

Providing a niche platform focused on the furniture market and its unique needs is how Loveseat is winning and differentiating from competition. The fact that they can move most inventory in less than a couple weeks is a further differentiator. 

While companies like Amazon and ebay could get into this game, that is really not their focus. Furniture is hard to move and manage. If ebay did decide to get into this game, it would most likely be through acquisition rather than building out the capabilities in-house. 

This is a positive for Loveseat from a potential exit standpoint. 

Loveseat’s team might be their biggest asset. 

Loveseat main contributors are CEO & Cofounder Chris Stanchak and CTO & Cofounder Jenny Stanchak. Chris Stanchak is a serial entrepreneur with 14 years of ecommerce experience. He was the founder of Ticketleap, a ticket sale and event promotion website that generated millions in revenue before being acquired in 2017.

Jenny Stanchak is a former investment banker and self-taught software engineer who was the #7 employee at Venmo as lead customer service & fraud protection engineer. 

They both boast Wharton Business School degrees and are deeply experienced in founding, building and exiting tech companies. It’s that experience that has enabled the smooth transition of Loveseat through this recent business model pivot. 

In terms of investors, one worth mentioning is Gabriel Weinberg, the Founder and CEO of DuckDuckGo, a highly successful alternative to Google that doesn’t track you or your information, and author of Traction.

Much of his approach to building companies and finding product market fit are frankly undertaken by Jenny and Chris in their building of Loveseat. In short, we think this is the right management team to bring investors a nice exit over the next 5 to 10 years.

Why We Continue To Like It: 

1. Margins: Loveseat generates 65% revenues on each sale and will be in the ballpark of 70% gross margins when fully operational. The team is already nearing profitability in just one city with few scaled efficiencies yet baked into the business. This is a positive sign for future financial strength of the business. 
2. Retention Rate: Loveseat has a very high retention rate of buyers with about 61% of bidders repeating monthly. Sellers also consign in 3+ auctions 25% of the time. The loyalty of their customer proves that they are providing a high-quality, sticky business.
3. Expansion Plans: Loveseat’s expansion seems to be very promising. With just two cities the team is already generating $2M in annual revenues. Expanding to even 5 to 10 more cities could 5 to 10X those revenues. Proceeds of this raise will be used to fuel expansion into these new markets with a model that has proven to work. When you invest in this round of capital raising, you are investing in capital that you know can have a direct and quantifiable growth impact on the business.