Dec 14, 2018 · 55m · y-combinator
Starting a Startup After Business School - Reham Fagiri and Kalam Dennis of AptDeco · Y Combinator
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In this Y Combinator interview, AptDeco co-founders Reham Fagiri and Kalam Dennis share how they built an end-to-end online furniture marketplace by transitioning from corporate careers, validating their delivery model, and scaling operations with data-driven logistics and growth strategies.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The partners as informed peer 2.9 Guest teaching 3.3 Guest disagreement 0.0 The partners pushing back 0.6
speaking balance: gold is the partners, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 49:00 Playful disagreement over product shoutouts
In a very collegial interview, Dennis playfully pushes back on Fagiri's reluctance to give Looker free publicity on air.
Hardest push from the partners ▶ 16:56 Challenging the anti-MBA startup dogmaTan challenges the popular startup premise that business education is a waste of time, pressing the founders to highlight concrete MBA skills that actually drove company value.
Biggest teaching moment ▶ 11:10 Clarifying the entrepreneurship landscape in SudanFagiri reframes Tan's assumption about entrepreneurship in Sudan, explaining that widespread small business ownership makes parents prefer the rare security of a corporate role.
The partners hold their own ▶ 33:34 Identifying organic search dynamics behind brand queriesTan demonstrates his technical domain knowledge by immediately identifying that brand-heavy merchandise portfolios fuel high-intent organic search acquisition.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The partners as informed peer | Guest teaching | Guest disagreement | The partners pushing back | Why |
|---|---|---|---|---|---|---|
| Introducing AptDeco: Marketplace for Furniture | 3 | 3 | 0 | 1 | Tan asks about unbundling Craigslist and how the founders validated the opportunity early on. The founders explain their initial A/B test duplicating Craigslist listings with and without delivery included. | |
| Transitioning from Business School and Corporate Careers | 2 | 2 | 0 | 1 | Tan points out that extensive market research is a traditional business school approach rather than a standard YC startup path. Dennis and Fagiri agree and discuss leaving traditional corporate tracks at L'Oreal and Wharton. | |
| Overcoming Fear and Validating the Delivery Model | 3 | 3 | 0 | 1 | Tan probes the psychological hurdle of quitting stable corporate jobs. Fagiri clarifies that Dennis had already resigned before they were officially accepted into YC after seeing instant product traction. | |
| Family Expectations and Cultural Perspectives on Risk | 2 | 4 | 0 | 1 | Tan asks whether Sudan has an entrepreneurship culture. Fagiri educates him that small business ownership is actually the norm there because large corporations are scarce, which is why her parents favored stable corporate positions. | |
| Business School Trends and the Shift to Tech | 3 | 3 | 0 | 0 | Tan observes the broader macro trend of MBAs pivoting from banking to tech. Fagiri explains how peers at Wharton consulted her for tech insights after the financial crisis, while Dennis reflects on being completely removed from Silicon Valley before YC. | |
| Applying Corporate and B-School Training to Startups | 3 | 3 | 0 | 1 | Tan challenges the startup trope that business school is useless and asks what classical management skills transferred over. The founders emphasize financial scenario modeling and people management as critical disciplines startups often ignore. | |
| Team Communication and Performance Review Systems | 3 | 3 | 0 | 1 | Tan drills into the mechanics of performance reviews and conflict management. Fagiri and Dennis explain their 360-degree review format and how leadership feedback is made publicly transparent to the entire team. | |
| Founder Best Practices for Conflict and Firing | 2 | 4 | 0 | 0 | Dennis and Fagiri outline where startup founders fail at firing, emphasizing that a termination should never surprise an employee if expectations are consistently managed. Tan listens as they share lessons learned from corporate management. | |
| Unit Economics, Pricing Iteration, and Demographics | 4 | 4 | 0 | 1 | Tan asks detailed questions about negative unit economics and pricing elasticity across different metropolitan areas. The founders explain how raising take rates and testing price tolerance reshaped their customer demographics. | |
| Brand Merchandising and Acquisition Channels | 4 | 3 | 0 | 0 | Tan notes how brand merchandising naturally powers organic search acquisition. Dennis explains that recognized furniture brands make up nearly 70 percent of sales and served as their initial growth lever. | |
| The High-Risk NYC Subway Ad Campaign | 3 | 4 | 0 | 1 | Tan digs into the financial risk of spending a large portion of early capital on subway ads. Dennis explains how building a zero-warehousing logistics system from scratch allowed them to handle the surge without traditional storage costs. | |
| Learning from Product Failures and Paid Marketing | 3 | 4 | 0 | 0 | Tan asks about failed product hypotheses, leading Fagiri to detail failed add-ons like professional photography and cleaning services. Dennis explains how revisiting old ad campaigns taught them to focus deeply on single winning channels. | |
| Data Analytics and Enterprise BI Integration | 3 | 3 | 0 | 1 | Tan asks about their internal analytics stack. Dennis playful prods Fagiri to name the software platform they use, prompting Dennis to highlight Looker as the key to transitioning from manual SQL queries to real-time dashboards. | |
| Y Combinator Insights and Advice for Founders | 3 | 3 | 0 | 0 | Tan asks what advice the founders would give to incoming YC batches. Dennis and Fagiri emphasize managing up during weekly partner meetings and fully committing to unscalable customer interaction tasks. |
Statements from this episode (21)
Dennis: Furniture was Craigslist's fifth most popular category
“The other thing we, when we did our research, we saw it was the fifth most popular category on Craigslist. Furniture. Furniture was the fifth most popular category.”
Fagiri: Online furniture marketplaces must offer delivery and full-service convenience
“You have to offer delivery, you have to take care of everything, you have to make it simple”
Fagiri: Post-2008 Crash, Wharton MBAs Shifted from Banking to Tech
“There was definitely a shift where more, I went to Wharton, and there were more, my class, there were more people talking about tech. Versus going into banking and finance. So like, the market had crashed a few years before, and, you know, a lot of people are …”
Dennis: Corporate Experience Does Not Translate to Early-Stage Startup Skills
“When we started as we said, listen, we have a lot of business experience. We work at great companies. We've worked at great companies. We can just apply that knowledge and start this company. And it's the furthest thing from the truth. I mean, we, you know, ju…”
Dennis: Startups Often Implode Due to Poor People and Conflict Management
“And that's a huge pitfall for startups is that they don't know how to manage people. They have a lot, you know, they implode because You know, because they don't know how to deal with conflict.”
Fagiri: Early-Stage Startups Need Structured Weekly Meetings Despite Small Team Size
“Early on, sure, you're a tiny team, maybe you're like three or four people, and people sort of dismiss the idea of, oh, we don't really need structure, we can just talk to each other all the time, but having regular checkpoints, like weekly meetings, and you k…”
AptDeco founders share their raw 360 performance reviews with the entire team
“And then we review it, and then even Colm and I, ours are public, so the whole team gets to see, because we have to hold ourselves accountable as well, so we find, you know, transparency is very important, so we share with them the raw feedback.”
Fagiri: Surprising an employee with their termination is a management failure
“If it's a shock, that means as a manager you're doing something wrong. If they're surprised, that means you're doing something wrong.”
AptDeco successfully raised its marketplace transaction fees from 10–15% to 19–29%
“Our fees were just so low, we were charging, I think it was like, 10 to 15% transaction fee, versus now it's like 19 to 29%.”
Dennis: Operational execution reveals costs that financial models always miss
“I don't care how many amazing models you have, how much experience you have, there's, when you do it for the first time, there's gonna be some things that you're gonna uncover that you weren't expecting. And you gotta be able to, you know, modify and change fo…”
Fagiri: Optimize pricing and margins only after proving repeat customer demand
“Early on, You can't, like, you have, you can't be optimizing just yet for margins, but, you know, it doesn't mean that you offer your product for free, because you still don't know what goes into it, like, what are the different variables, but once you've esta…”
Dennis: Just seven US furniture brands drive 65–70% of AptDeco's sales
“Yeah, so around 65, 70% are the top seven brands here in the US.”
Dennis: Word-of-mouth drives 45–50% of AptDeco customer acquisition
“Probably 45, 50% of our customers are through word of mouth, friends and family type stuff.”
Dennis: AptDeco web traffic tripled from NYC subway advertising
“I mean, when we launched it in, I mean, our I mean, our traffic tripled.”
Fagiri: AptDeco bet 10% of its cash on a single subway campaign
“It was definitely less than 500 K. Yeah. Yeah. That's a big chunk. Yeah, exactly. It was a huge risk. It was like 50 K for just one, you know, one month advertising.”
AptDeco placed a single ad format across 1,000 NYC subway cars
“There's 6000 subway cars in New York City and we were in one in six. With one ad in those subway ads.”
Dennis: AptDeco executes hundreds of same-day deliveries across three states without warehousing
“So the way that our model works is so we don't warehouse anything. So we only, we pick it up and deliver it in the same day. So we're doing hundreds of pickups and deliveries across three states.”
Dennis: Warehousing inventory breaks the used furniture marketplace business model
“You can't, in our opinion, build a business model A sustainable business model by having, by warehousing everything, because you're going to always going to be capped by the space. The cost to cover it, someone is going to have to pay for it, and ultimately to…”
Fagiri: AptDeco customer photography services failed because sellers didn't want them
“Offering photograph, photographing for customers. Nobody wants to do that.”