Sep 20, 2018
Why Customer Experience Matters: How UrbanStems is Disrupting the Flower Industry
Q&A with Ajay Kori, Co-founder and Chairman of UrbanStems
Ajay Kori has always been an entrepreneur, either at heart or in practice. He grew up during the dot.com boom when anything seemed possible. As a teenager, he started and sold his first business. Later in life he launched the first ever pet pharmacy for Amazon. Where others see challenges, Ajay sees opportunity. “What I really learned over the course of my career, and in building my website, is that Customer Experience matters more than everything else,” says Ajay, now Chairman of UrbanStems, “people will keep coming back if you give them a better option than what they currently have before them.”
So when Ajay and his partner decided to tackle the flower industry and deliver an experience they were proud of, they were undeterred by industry veterans and naysayers who said it couldn’t be done. “The online flower business is one place where the promise of e-commerce hadn’t taken hold. Overall, it was more expensive and the experience was less than optimal. We decided to change that.” Ajay takes us on his journey from neophyte web developer to creator of the best possible customer experience in the flower industry.
Q. You’ve always been somewhat of an entrepreneur. Why did you choose this path for your career? What do you like about it?
I started my first company in high school. I was one of those kids who wasn’t the most popular in middle school and high school. I learned to code and kinda fell in love with creating things.
I had no particular interest in starting something that actually made money, but loved creating things that thousands of people would view and interact with and would make them happy. At the time, the Internet was starting scale, so this idea of getting to thousands of people with something you created yourself was just really exciting to me. I built this website, which frankly had some pretty dumb content. It was Buzzfeed before Buzzfeed existed. But it was really popular and got around to thousands of kids my age. I didn’t know anything about venture capital, so I found other people creating viral content and brought them on my platform, did a rev share with them, and ended up growing the platform into one of the most visited entertainment sites at the time. I just kind of stumbled into creating a pretty popular website because I loved creating things.
There were two public companies trying to buy me. I went with company that offered more stock because at that time during the dot.com boom, stock only went up. But during the dot.com crash, that company ended up going out of business. The company I didn’t end up selling to ended up creating a site called MySpace and the end of that story is very familiar. It was just a great lesson and from then on cemented my love of creating things that make people happy.
Q. There’s no shortage of flower delivery companies. Why flowers? Where is UrbanStems being successful where others aren’t?
There are tons and tons of flower sites out there, but they all exist over the exact same system. Almost every flower site in the US is based on Flowerwire, including the big guys and a ton of small players. So you essentially have order aggregators who take your order. They don’t actually hold any inventory or maintain operations. They place your order on Flowerwire, which goes to nearest local florist to fulfill. The website takes a cut. Flowerwire takes a cut and obviously the florist has their own overhead costs. You end up paying a really high price because you’re paying three different people.
When you look at it from the local florists perspective, they have other orders to fulfill as well. They have people who walk in the front door of their store who are paying full price and who can become a repeat customer. Then they have the online orders coming in through the wire that are completely anonymous transactions. So they have no chance of a repeat customer and they’re getting paid less than the customer walking in the front door. So, understandably they prioritize their in-store customers first. But as an Internet consumer, you’re paying a higher price and your product is being created by someone who is incentivized to take care of their customers first, so you’re not getting a great experience.
When you think about e-commerce, that has made everything better, faster and cheaper. The reason it’s growing so fast is because it’s a better experience than what existed before it. In floral, it’s actually done the opposite. So we came in and said, we’re going to create the best possible experience. For us that means delivering flowers in about an hour, flowers that last for close to two weeks, and completely transparency on your order. So we take a photo of your bouquet as it’s being delivered and text message you. All starting at $35 with free delivery. It’s better, cheaper, faster than anything that existed, but to pull that off, we had to create the entire infrastructure to deliver on that. Everything that we do is completely the opposite of how the industry does it. We operate our own fulfillment centers, the couriers are actually employees of UrbanStems, we’re dictating what’s being grown at the farms. It’s full stack vertical integration, which is very different than anything that existed before us. But it results in the best customer experience.
Q. So why the laser focus on Customer Experience?
It’s a bit of a counter-intuitive thing, especially in e-commerce. People assume cut every cost possible and that’s the whole point of e-commerce. But it’s not. What I was lucky enough to see at Quidsi, one of the reasons we were so successful is that we were delivering a better experience. Our competitors couldn’t steal away our customers because they were so sticky. In fact, they tried to sell this group on low cost, but the Quidsi customers wouldn’t go anywhere. It’s counter intuitive, but if you spend more money up front delivering the best experience, then you move the two most important metrics in e-commerce. You decrease your cost of acquisition because your customers do your evangelizing for you. And you increase their lifetime value because they are stickier and return more frequently. So even though you may be spending more money, you’re creating the best possible experience for customers and at the end of the day your the business generates more money because your cost of acquisition and lifetime value move in opposite directions.
Q. What’s your favorite thing going on at UrbanStems right now?
We’ve got some really, really cool partnerships. One of the nice things that comes out of creating the best experience is that people want to work with you. This year, we’ve teamed up with Vogue and the Vogue editors and they are designing our high end bouquets. They could have worked with any company, especially some of our competitors who have been around for over 20 years and are multiple times bigger than us. But Vogue and their editors who really know style, wanted to work with us, a much smaller company in this space, because we do things the right way, we take care of our customers and can deliver on the vision that Vogue has.
So not only have we been able to partner with Vogue and some of the trendsetters, we’ve also done some really cool stuff with Bumble and JCrew, just some fun stuff for Women International Day which we did with Bumble and Mother’s Day which we did with JCrew. These are brands that are much bigger and ones that we look up to. We’ve been really lucky that because we deliver the best possible experience, these brands are excited about working with us.
Q. What’s the biggest challenge you face at UrbanStems?
Flowers are a complicated thing. They are a highly perishable item. Because we are vertically integrated and deliver within the city within an hour, we have to predict how much demand we’re going to have every single day. Anything over/under we either sell out or have to spoil because we’re never going to send out flowers that are old. So balancing that in creating the best possible experience while being extremely precise with our operations so that we can still make a good margin is very difficult. It takes a lot of effort. Luckily we have an amazing group of people here, an All-Star team, and we’ve been able to pull off what a lot of people thought was impossible. When we first came into this industry, people who have been in it for 20–30 years thought the customer value proposition we wanted to deliver was impossible. What we found out is that it’s not impossible, but it’s very very difficult. And that’s why you need a really strong team to be able to do it.
Q. Why is D.C. the right place to build your company?
We actually started the company here because my co-founder’s wife was working at the White House at the time. She couldn’t move. I was in New York, but there was nothing holding me in New York. So we essentially started the company here for my co-founder’s wife’s career. But it’s ended up being one of the best decisions we’ve ever made. Everyone is just so willing to help out. I was just talking with another founder, another D.C.-based founder, and all of us are so close with each other, so willing to do anything for each other. When we had some tough times earlier this year, every single one of them was there for us and helped out in so many different ways. Three of our investors came from introductions from other D.C.-based founders. So many of the investors in UrbanStems are from this area. Because the community is smaller it actually turns into an advantage where everyone is invested in each other, both literally and figuratively, and we want each other to succeed. In New York or Silicon Valley you have a much larger group of people, but they’re not all trying to help each other as you see here. I don’t think I realized this when we started the company here, but over the last four and a half years, it is absolutely one of the biggest advantages of being here.
Q. What advice would you give to your fellow entrepreneurs?
So much. If I have to pick one thing, this is an obvious one, but hire better people around you. As much as you think you can do everything, having people around you who can execute and do things better than you ever could, is the easiest way, I think, to build a really powerful company.
Rapid Fire questions: Get to know Ajay Kori
- What song/music is most played on your playlist? One of my friends is in a band called Con Brio. Their new album is phenomenal. It’s actually getting really popular on iTunes right now. I could listen to that over and over again.
- Who is your favorite person to follow on Twitter? This is really bad, but I don’t really use Twitter. In fact, I probably have 20 followers total. I’m more into Slack, which we use internally and amongst other founders in D.C.. I spend a lot of time for social media on either Reddit or Facebook. I’ve just never been a Twitter guy, even though I signed up for an account back in 2008.
- What is the first website/app you access every morning? First thing I do is check my email, which is a lame answer. It’s either email or Slack to check on what’s been going on in the hours I’ve been asleep. But the first thing I do outside that, that’s not work related, is check Reddit. It’s easy to see what’s going on in a glance.
- Three people living or dead you’d like to have over for dinner My great, great, great, grandfather was a British knight. He was a guy in India who really cared about the people and became a powerful businessman out of nothing and then spent all his resources making the lives of people in Bangalore, where he grew up, better. So a lot of places in that area are named after him. He just cared so much about people at a time when India was going through a lot of rough things. It would be so fascinating to sit down with him and learn how he was able to create such wealth and contribute back in such a significant way. The other two would be my grandfathers on dad’s and mom’s side. They also spent a lot of time trying to make other people’s lives better, especially in a place like India. They dedicated their lives to it. I unfortunately didn’t get to know them because I grew up in this country. I would love to hear their story directly from them and how they were able to do the amazing things they did.
About UrbanStems: Founded in 2014, UrbanStems is the online flower delivery company that creates a one-of-a-kind gifting experience for their customers. Unlike some in the floral industry, UrbanStems’ team of floral designers travel to Rainforest Alliance Certified™ farms and work in tandem with farmers to create fresh, unique bouquets. UrbanStems makes sending as fun as receiving with free delivery, photo confirmations from couriers, and a seamless online experience. The company offers same-day, on-demand delivery in NYC ad DC and offers nationwide next-day shipping. UrbanStems has raised over $14.3 million in funding led by SWaN & Legend, GroTech and NextGen Ventures.
