Why did Interior Design Startup, Homepolish, Fail?

Before Covid hit, a well-funded interior design site, Homepoilsh, hit the skids and folded. CEO Noa Santos planned to simplify and democratize the fragmented interior design landscape, making it affordable to the masses. “We’re restructuring the client and designer relationship,” he told Racked in 2014. The company also planned to be the site for handling all the designer's needs, helping them find new clients and becoming the go-to for billing, ordering, and other administrative tasks. It sounded good, right?

Five years later, Homepolish ran out of cash, unable to make payments on a 2017 bank loan, and unable to raise more financing. Designers were left holding the bag losing hundreds to thousands of dollars. Others were in the middle of Homepolish projects where they could keep working without knowing they would be paid or have to abandon their clients.

1. Loss of Focus

Homepolish was founded in 2012 by Santos and Will Nathan, an early Buzzfeed employee. Homepolish was one of the first startups to offer interior design online. The company grew out of a service Santos created called “50 for 50,” a 50-minute design consultation for $50. The partners built an online platform to connect clients to designers from this concept, focusing on an underserved demographic: young professionals who had enough money to spend on a project but not the budget to hire an established designer.

The site caught on with designers and clients. Homepolish offered an opportunity, especially for new designers: a pipeline of projects, marketing, and the support of a back office. Though some designers worked far beyond the hours they were paid for, many built up a portfolio of work through Homepolish to go out independently.

Enter a $20M round of funding and a valuation of $100M, and the pressure to scale the company. The focus at the company shifted away from the core business of connecting designers to clients and supporting that relationship. New initiatives came quickly and seemingly haphazardly. Expansion into additional markets. A project management tool called Collection. A purchasing support team dubbed Concierge and a Homepolish for general contracting service called Build. They rolled out an e-commerce platform called H Marketplace which failed quickly. Lastly, they tried Agency, an attempt to move into the higher end of the market and tackle more significant projects. But also a way to guard against a common occurrence: designers build a reputation, work through Homepolish, and then leave.

What started as a simple idea, connecting designers with clients, which was profitable, went off in all directions to scale and eventually imploded.

2. To live and die by Instagram.

Even more now than before Covid, Instagram is a significant factor in business. 90% of Instagram users follow at least one company. Business accounts post an average of 1.6 times a day. 1 in 2 people has used Instagram to discover new brands. The average engagement on Instagram business account posts is 0.83%, and 44% of people use Instagram to shop weekly.

Cue Ilana Wiles, New York City mommy blogger. Ilana hired HomePolish to redo her family's apartment. She heard about the site from many people and started following them on Instagram. She was impressed by their right out of Architectural Digest page and number of followers. Ilana was happy with the quote she got from HomePolish, $75K versus $400K from traditional renovation companies. Can we say you get what you pay for (in NYC anyway)? You can tell people how bad service is, but showing them how bad is a whole different story, especially when you have a following. At this point, Homepolish was laying off workers and then eventually folded.

3. WeWork Playbook (What Not To Do)

On a much different level, but still, some very similar characteristics can contribute to a startup's downfall. According to employees who worked for him, Santos was an inexperienced CEO whose obsession with image led him to alienate his staff, designers, and customers. They said it was a fear-based culture where "sound strategy couldn’t flourish, and where the pressure to grow led to reckless decision-making."

Also, Santos was very focused on press, with nearly all profits at the beginning going to marketing. This tactic came at the expense of building out the company’s infrastructure. Santos’ focus on PR is often linked to his then-boyfriend (now-husband) Ross Matsubara, vice president, and style director of luxury brand marketing firm Nike Communications. Matsubara was a regular and imposing presence (Adam Neumann's wife?) in the Homepolish office, and their parties were often stocked with the premium liquor brands he represented.

Near the end of the company, when most employees had gone a whole month without pay, Santos’ husband Instagrammed a photo of a six-bedroom, $1.6 million home the couple had just bought in East Hampton, complete with two ponds, a tennis court, and a Jacuzzi.