(Chris Devlin) #1

131


FEEDBACK LETTERS@FORTUNE.COM FORTUNE.COM // JUNE .1 .19


they age into staging their living rooms.
Meanwhile, Wayfair’s work to improve
fulfillment is already bearing fruit. Accord-
ing to the company, it has poured “hundreds
of millions of dollars” into its CastleGate lo-
gistics unit to help deliver goods at the pace
that consumers have become accustomed
to, thanks to Amazon Prime. It’s a bet that
by handling more of the fulfillment, Wayfair
can benefit financially and increase custom-
er satisfaction. Currently, “a meaningful and
growing percentage” of the roughly 30 mil-
lion packages it sells are delivered through
the CastleGate network. The dollar value of
small parcels shipped through CastleGate
doubled in fourth quarter 2018 over the
year prior. For large parcels, it rose 14%,
and the company expects that to increase.
To understand how CastleGate works,
I visit one of the newest centers, an
874,000-square-foot facility alongside the
highway just south of Dallas. Site direc-
tor Jim DeSimone points out the various
sizes and shapes of the shelves designed
to accommodate irregular objects. Small
parcels average three cubic feet and 30
pounds. Large items come in at 80 pounds
and 22 cubic feet, on average. He in-
troduces dozens of workers tasked with
moving things around. They zoom by on
electric forklifts and lift products onto a
custom product mover that’s purpose-built
to handle odd-size objects. The gleaming
steel structure is 15 feet tall and features a
51-inch-wide conveyor belt that circles back
on itself over the course of traveling a third
of a mile. From a distance, the edifice might
pass for a county fair roller coaster. The
packages travel beneath a series of overhead
sensors that scan bar codes and assign them
to a particular truck. A mechanical arm
pushes each package down one of the 15
lanes and into a shipping container.
This facility is where Wayfair’s rubber
hits the road. If you’re picturing a highly
automated scene with robots, that’s the
wrong company. For all the technology
and sophistication in Boston, fulfilling the
promise to deliver oddly shaped and often
heavy goods rests primarily on the shoul-
ders of dozens of humans.
David Bergman, for one, appreciates
the effort. The CEO of Butler Specialty


Co., a furniture manufacturer that designs, engineers, and sells
accent furniture like end tables, chests, consoles, and cabinets,
has been running his Chicago business since buying it from his
father and his father’s partner in 1998. Pre-Wayfair, his biggest
sales problems stemmed from brick-and-mortar retailers. They
had only so much display room and little ability to predict demand.
He relied on sales reps to push for new orders and space on the
retail floor. Wayfair has flipped the script with an unlimited ability
to show long-tail goods and an unprecedented ability to measure
and tweak demand. “They’ve built a partnership with vendors that
pretty much never existed in home furnishings. It’s extremely un-
usual, and because of that, we buy into everything they’re selling—
whether that’s CastleGate or promotions or whatever,” Bergman
says. “Niraj has a clarity of vision that I’ve never seen in my career.
He’s the kind of person you just want to follow.”

I


N OUR FINAL MEETING, the cofounders are seated in one
of the many conference rooms dotting Wayfair’s open
office. Conine is windblown from a bike ride. Shah is es-
pecially relaxed. “I thought you’d be sick of talking to us
by now,” he says. The duo have made a 24-year journey from nearly
broke students to running a Fortune 500 company. I ask if they’ve
ever been to founders’ counseling. Conine laughs: “No! Though in
the early days, I’d think, I can’t deal with this guy, and walk around
the Charles to blow off steam. But we’d always work it out.”
As with any relationship, it’s difficult to know what happens in
private, but outwardly, they still seem close. It’s not that they finish
each other’s sentences. Shah’s rhetorical style doesn’t allow for it.
But they intuit what the other is thinking. “We agree like 95% of
the time,” Shah says. “When we disagree, well, that’s really interest-
ing. You think, why? There must be something I’m not seeing.”
The cofounders and their families still own 32% of the company
they created, as well as voting control. And while things may have
started out a bit uneven with their bank accounts, it’s been 50/50
ever since. Equal partnership, Shah says, was one of the biggest deci-
sions the duo ever made—because just as with a marriage, it’s crucial
for a long-term business relationship to start on a stable footing.
“Although I like to joke that I’m still running behind,” he says with a
laugh. “I’ve always been better at spending my money.”

Jeffrey O’Brien (@ jeffreyobrien) is cofounder of the Bay Area story-
telling studio, StoryTK (www.StoryTK.com).

DAVID BERGMAN : CEO, Butler Specialty Co.

SAYS ONE CUSTOMER OF


CEO SHAH: “HE’S THE KIND


OF PERSON YOU JUST


WANT TO FOLLOW.”


FORTUNE 500