How this former Lehman Brothers banker built a pandemic-proof business
Declan Ee always knew he wanted to run his own business.
But when he graduated from University College London in 2006, he saw his peers apply for investment banking and decided to give it a shot.
His first gig? Lehman Brothers.
“I liked seeing how companies operated on a global scale, so it was very interesting.”
But the collapse of Lehman Brothers in 2008 not only shook global markets, it also shook Ee.
“I was in the sub-prime mortgage division. I dodged the reporters walking to Lehman at Canary Wharf. It made me double down on leaving the bank at one point.”
The 39-year-old Singaporean eventually quit investment banking in 2016 to start his furniture startup, Castlery.
Today, the company fetches millions and its modern pieces can be found in more than 300,000 homes around the world, Castlery said. CNBC Make It finds out how.
Furniture for urban millennials
It all started when Ee came back to Singapore 11 years ago and was setting up his marital home.
His good friend and co-founder Fred Ji was also looking for affordable modern furniture.
“We shared a bond in that sense… [the process was] frustrating. We want to get the beautiful pieces but they are so inaccessible.”
This is due to factors such as price and managing multiple furniture delivery times, he explained.
That’s when they came up with the idea of selling designer, affordable furniture to “urban millennials” between the ages of 25 and 45.
“This age group, you go through a lot of changes. You leave school, you start building your career, you get married, you have a child… We are adding things to our homes,” the Castlery chairman said. at CNBC Make It.
Ee wanted to provide options for young adults who want an “inspiring space” and “something more than Ikea” without breaking the bank.
In 2013, Ee and Ji went digital with Castlery, allowing consumers to view a virtual studio and buy furniture online – a disruptor in the traditional furniture industry.
“When customers started buying furniture online, they realized, ‘I don’t have to go to 25 furniture stores anymore.’ The next time they need to buy something, they’ll do it online again.”
Learning from “Explosions”
Ee’s experience in investment banking, where he “saw a lot of explosions,” taught him a thing or two about running his own business.
When it came to funding Castlery, Ee was determined not to go the “venture capital route” for his startup.
“With the VC game, you want to simulate your assessment every 18 months. And when we started, I knew we had to spend time learning the craft,” he said.
With no experience in furniture retail, Ee estimated that it took him six to seven years to master the ropes, which is as long as the “lifespan” of VCs.
“Right away there is conflict…that’s why the stress happens – you don’t have clarity of thought, because you have to evolve at all costs.”
Instead, Castlery’s initial investments came from family members and other entrepreneurs who left their business.
“At its core, it’s about building a good foundation and a strong business that delivers value to your target customers. That will always translate no matter what, whether you want to sell or list your business,” Ee said. .
Growth accelerated by the pandemic
When the pandemic hit in 2020, Castlery had just begun expanding into the US market, outside of its presence in Singapore and Australia.
“I thought, wow, that’s really not meant to be. I was really stressed because our most profitable country was Singapore and there was also the circuit breaker.” He was referring to partial lockdowns in 2020 designed to break the chain of infection.
But his stress turned to surprise when he saw an increase in e-commerce, with nationwide lockdowns pushing shoppers to rely on internet retailers for their consumer needs.
And as millions of employees have been locked out of their offices and forced to work from home, the “meaning of home” has also changed, Ee observed.
“It’s not just a place you come back to [after work]. You do your job, you pursue your passions, you have your children. How you furnish your home is important because you spend a lot more time there.”
With more people looking to upgrade their space, Castlery’s growth “has accelerated,” Ee said.
“We were growing so fast that our faces were turning green.”
According to Castlery, the company grew “six times” during the pandemic, earning more than $100 million in the last fiscal year ending March 2022, and became profitable in 2020.
However, with or without the pandemic, Ee thinks Castlery’s biggest selling point is the design and functionality of its products.
“I talk to American customers every month and they say, ‘We love your line of washable sofas!’ I was like, ‘Okay, is this a thing?'”
“I guess being Asians, we’re pretty practical,” he said.
Ee added, “They would explain that in the US you won’t have that option at that price.” According to him, his furniture is “20% to 30%” cheaper than similar pieces on the market.
This is achieved through a “rigorous process honed over the years,” Ee said.
“Each collection is assigned a buyer, an engineer and a planner – this trio runs a well-oiled machine to ensure products get to market quickly and profitably.”
He added: “[The] the buyer finds the best manufacturers to work with. Engineers redesign inefficient processes while a planner strives to source materials at the best possible price.”
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