When a Startup Hitches a Ride on a Giant Like IKEA, Is That Good News or Bad? | Maybe Europe Has the Answer, Part 6

In the startup stories below you'll find more than new ideas about home design; you may also learn something new about how small companies handle their relationship with the giants of their industry.

Almost every small company wants to be mentioned in the same breath as the big ones in its field.

New social apps are forever announcing that they intend to build the next Facebook or WeChat; an aggregation platform will usually pitch its vision somewhere between Amazon, Taobao and Tmall. In home furnishings, the name that comes up again and again is IKEA. Internet furniture brands say they want to be the "IKEA of the internet," and even real-estate agents like to sell their listings this way: a two-bedroom flat done up in IKEA style.

Hitching a ride on a big company — especially one with real pull as a brand — makes it easier for a young startup to be noticed by shoppers, and easier for it to define itself. There is almost no risk in doing so, and nothing but upside.

But in the Nordic countries, some young furniture brands have found that if you truly build your business on top of the world's largest furniture maker and retailer — genuinely tied to it, not just working the edges of it in your marketing — the trick works at first, and the trouble comes soon after.

Design magazines around the world have written about several of these brands. They are proof of the DIY and maker wave rising everywhere, and of the way people now shop: more personal, more deliberate. They put design first, and their character is hard to pin down in a few words the way IKEA's is.

Bemz was founded in Stockholm in 2005. It sells slipcovers for IKEA sofas online, at $500 to $700 apiece. Textiles are considered the category most likely to produce something new, because the craft is relatively simple. Nearly a decade later, IKEA itself would start telling its own personalization story from the same place.

Bemz and companies like it all call themselves IKEA fans — while also being, in a slightly avant-garde way, unsatisfied with what IKEA sells and how it serves them. In their startup stories you'll find more than new ideas about home design; you may also learn something new about how small companies handle their relationship with the giants of their industry.

1

Jana Cagin, of Stockholm, has no doubt that Bemz founder Lesley Pennington pioneered this kind of business. When the two met at a women's forum a few years ago, Cagin realized they had each seen a different side of the same problem. She was planning to design "legs" for IKEA sofas, tables and chairs, though at the time she wouldn't have dared imagine that Bemz, the older company, would one day style its own products with Prettypegs legs.

By the time Jana started her business online, architecture and design firms in Sweden had already been taking small private commissions from clients who wanted their IKEA and other-brand furniture altered, so it would look a little different from the neighbors'. Around the same time, Stockholm became the city with the most billion-dollar startups per capita in the world.

Jana Cagin used to be a psychologist; her husband, Peter, is a creative director at an advertising agency. Once they saw clearly that people wanted to "put their own personality, energy and style into their furniture," the two decided that a business making nothing but "legs" for IKEA furniture still had "a lot of potential." IKEA controls furniture costs tightly, and by the time the budget reaches the sofa legs there is very little of it left; legs are usually the most standardized part of all.

Four years ago Jana and Peter both quit their jobs and became two of Stockholm's newest entrepreneurs.

This kind of business has a built-in marketing advantage. No editor dislikes a newcomer that is both more interesting than a big brand and attached to one. In the line editors keep returning to — that big companies are losing young shoppers — a story like this always has a place.

Online media covered the business first, and after that Jana and her team put their marketing into cheap social platforms. Prettypegs now has 13,500 followers on Instagram; next to IKEA USA's 828,000, this accessories brand still counts for little.

By varying color, material and style, Jana and Peter have designed about 130 products, and the number keeps growing; they plan to pass 300 in the next few years. By Prettypegs' own figures, these sofa, table and chair legs bring in about 1 million Swedish kronor a month (roughly 790,000 yuan).

A quarter of that revenue comes from the United States, Jana says. "It's a huge market. In the US people want to be different, but they don't want to spend a lot of money." That, she says, is why they like this sort of $50 item — "simple, cheap, and it changes one detail."

Jana Cagin plans to start meeting investors this summer so she can spend more in the US market. In the deck she shows them, Prettypegs sets itself against a range of brands on target market, distinctiveness and value for money; as you would expect, most of the companies held up for comparison are large ones, Hästens and IKEA among them, though the list also includes pure DIY brands.

How a small brand that grew out of IKEA's business should position itself, though, may be messier than the deck suggests.

"We've always struggled with this. It looks like we can do anything, but sometimes we get confused about who we are," Jana Cagin says, in a cluttered showroom at 40 Sibyllegatan, more than half of which is used as office space.

Unlike hobbyist IKEA hackers, brands like hers have to balance a customer's wish for something personal against a clear style of their own. They have to build a small, novel system of their own alongside IKEA's vast, complete one, rather than simply standing by to satisfy whatever a shopper feels like this week. Jana thinks this is the hard part. Hitching a ride on IKEA was quick; "figuring out who we are takes a long time."

There is another problem. Some Swedish multi-brand furniture stores would rather not carry Prettypegs, because stocking it feels like promoting IKEA. And to serious furniture enthusiasts, IKEA can look a little beneath them. "But that's changing," Jana adds.

This is part of the bind these small companies are in over the long run. They depend on IKEA, and they also want, up to a point, to get away from it.

Prettypegs' main customers are women aged 25 to 35, most of whom own IKEA furniture. But another group is growing, Jana says: people who come simply because they love DIY.

Asked about Prettypegs' relationship with IKEA four years on, Jana says: "IKEA is still very important to us. IKEA is where we started, but we also have the whole DIY market, other brands." And those other brands, she says, are "surprisingly numerous."

2

The choices made by another company, Superfront, show that businesses hatched out of a giant are not mainly driven by devotion to the brand. Put plainly, they are not self-appointed fan-club presidents. "We could make the cabinet boxes too, but the price — IKEA is so big that they can push prices very low, and the quality is good. Our doors would end up costing much more than the boxes," says Superfront founder Monica Born.

Superfront also makes small pieces like legs and handles, but it is best known for its cabinet doors. It holds no stock of them; the factory builds to order. Monica Born doesn't think that is the real difficulty in the business, but the fact remains that until the customer base multiplies several times over and they find better suppliers outside Sweden, production costs won't fall much further.

IKEA's cabinet boxes solve part of the cost problem for these small, design-led manufacturers. Superfront's panels are made mainly for Metod, IKEA's mid-priced kitchen system, which has the advantage of coming in many sizes and of being available without doors. (The panels fit other lines, such as Faktum, too.)

Customers go to IKEA first to choose the boxes, then bring their kitchen plan to a Superfront home architect to work out matching doors. That takes a customer about 10 days, and another seven or eight days for the panels to arrive.

Since it was founded in 2012, Superfront has kept its production line lean. It has turned down large orders from other companies and makes only doors that fit IKEA cabinets. That also helps hold costs down — "and IKEA's business is plenty for us to handle."

Even so, Monica Born says in an interview that she wouldn't call Superfront a modification first and foremost, and wouldn't use the word "hack" about it. "We just happen to build our design business on top of IKEA's products, which lets us offer good design at a relatively low price — but not the (cheap) high-street kind of designer furniture," she says.

In some ways Superfront works hard to keep its target customers from thinking about IKEA at all. They are probably people who care about design and have money to spend, the sort who in the past would never have bought IKEA. And for other, more conservative Nordic households, who also dislike IKEA as a mass-market maker of lightweight furniture, a "modification" is only a compromise with that feeling. What they want is a new brand they can trust.

That is why Monica has never tried to open an official conversation with IKEA; the idea has never crossed her mind. "Why would we? I don't want my customers confused either. They come to us because they don't want to buy IKEA — they want to buy something else." She is sure of this: the moment they did it, "we'd lose the magic."

Superfront's prices run somewhat above IKEA's; apart from a few simple cabinet options, a full kitchen plan usually costs $1,000 to $1,900. A team of 12 carefully puts out the brand and the design sense behind it. Monica Born and her husband came to home design from advertising, yet Design Milk writer Jaime Derringer wrote that the work is "really great," and that "the biggest problem is that I can't pick which combination I like best." Even someone outside the design world can see how much effort has gone into making the pieces look like one family. Superfront has 19,900 followers on Instagram.

Most of Superfront's customers live in Stockholm. After seven months of running a pop-up, the company opened its first showroom — roomy and orderly — on Tegnérgatan in Stockholm in October 2013. Seventeen kilometers to the southwest stands the oldest IKEA store still standing anywhere in the world.

That is a safe distance. "Does criticism of IKEA affect you? Not on the question of mass taste — changing that is exactly what we do. On quality, at least in Europe, I think people are slowly realizing that IKEA's products are very, very good."

Still, following a big company this closely has its risks.

Superfront opened a second showroom in Oslo, but the Norwegian business has not grown as fast as expected. "That's a signal too. If you're going to put a lot into a market, you can't assume too much," Monica Born says. Their earlier research had shown that the IKEA store on the edge of Oslo was one of the chain's best performers.

3

Big companies, of course, are not sitting this wave out.

But their standard position has more or less always been this: we welcome fans, but don't try to make money off our name, and don't damage the image we spend a lot to maintain.

People still remember the cold letter the IKEA-hacking site IKEA Hackers received in 2014. According to its founder, Mei Mei Yap (who usually goes by Jules), IKEA played the part of an old-world industry boss in that letter: hand the domain ikeahackers.net over to IKEA, or IKEA reserves the right to go to court. After several rounds of talks, Jules kept the domain but had to strip every ad from the site.

"It's obvious that I'm a blogger on IKEA's side," Jules wrote in an open letter.

But speaking to the Wall Street Journal, IKEA spokesman Niclas Bengtsson said: "It has always been important, both to us and to our customers, that the IKEA name and brand are used correctly."

At last year's Milan furniture fair, people saw something else entirely.

IKEA exhibited IKEA HACKA, designed by three students from Lund University. The three built a modular kitchen system: a frame assembled from standard units, wooden rods all cut to the same sizes, joined with metal connectors. They called it "IKEA Hacka." The piece was also installed on the ground floor of the IKEA Museum, which opened this June.

IKEA's attitude toward these outside companies and makers has plainly changed.

Speaking to Australian media earlier this year, Leonie Hoskin, IKEA's deputy range and design manager, admitted that the company's response over IKEA Hackers had been "wrong." Some people inside IKEA saw that quickly, and the site was back to normal after going dark for 24 hours. It now draws close to 26 users a month.

Part of the reason is that the world's largest home-furnishings maker and retailer is also trying to fix its reputation for not being personal enough. It wants "to become more open," said Mikael Ydholm, head of IKEA's Research in Life at Home unit, in an interview with QDaily at this year's Democratic Design Days. "A lot of good ideas come from people all over the world. Over the next decade we'll focus on co-creation."

In practice, that means, on one hand, "digging up more interesting designer collaborations," as creative director Marcus Engman put it to Dezeen last year. On the other, in Copenhagen, IKEA set up the research center and exhibition space Space10 with Carla Cammilla Hjor, who founded and runs the innovation platform Art Rebels, to run experiments and test concept products.

Superfront believes a mass-market brand ought to be glad to see these small brands appear around it. In the past, a brand like IKEA would have been unlikely to turn up in a design magazine like Design Milk. "Our target customers won't buy a whole kitchen from IKEA, but now at least they can buy the boxes there."

4

The Danish brand Reform came to this market a little late; only in 2014 did it start rebuilding whole modular kitchens for IKEA's Metod system.

Copenhagen's startup scene is thinner than Stockholm's. The startup parks and co-working spaces Stockholm has had for years have only sprung up in Copenhagen in the past few. Founders Michael Andersen and Jeppe Christensen rented a large two-story space and sublet part of the upper floor to five or six other small companies, one of them an exporter of fast-moving consumer goods to China.

Reform had to be very clear about what, exactly, it could do with its relationship to "IKEA" before it could raise its first round, about $1 million, this March.

Michael Andersen and Jeppe Christensen no longer have to worry about IKEA's official line, and demand for personal, custom products is now taken for granted; some consultancies say shoppers have grown shrewder and, with that, harder to group. The challenge now facing a brand built on IKEA's products and parts looks a lot like the identity anxiety of a Nordic brand at a moment when Nordic design is everywhere.

"If we didn't say we're from the Nordics, we'd be stupid. Nordic design is so popular in the US right now. But that isn't going to be our identity," Michael Andersen said in a meeting room upstairs — though he didn't connect the two thoughts himself.

Reform has brought in several big design studios, BIG and NORM among them, and launched three influential kitchen lines last August. Yet when Michael talks about how a small company can win by leaning on IKEA, he sounds more like he is describing a rival.

"We can do things IKEA can't. When IKEA launches a new product it needs a new factory, it takes a long time. We can launch in six months, faster than IKEA. IKEA carries stock, it has 2,000 warehouses; we don't. If we decide a product isn't right, we can stop making it tomorrow," he says.

Investors understand this too, Michael believes; what they like is that the company's core business, selling kitchens, makes good money. At the same time, the founders say they "want to build a company that sits somewhere between IT and physical home-furnishing products."

IKEA would never say a thing like that. Its attitude toward the internet is cautious and unsettled. But nearly all these companies hatched out of IKEA understood on day one that they need the internet to make a global business of this. Superfront already ships legs and handles to almost every country in the world.

Reform has no plans for now to make kitchens outside the IKEA system. Its most pressing job is to improve the checkout flow on its website; these custom kitchen parts currently take four months to arrive. "That's too long for investors," Michael says. "They're used to the fast-moving numbers of IT companies."

Images in this article are from Bemz, Prettypegs, Superfront and Reform.