Retrospective: Fireside Chat with Niraj Shah, CEO of WayfairOctober 16th, 2020
On October 8, the Center for Digital Strategies hosted Wayfair co-founder and CEO Niraj Shah for a fireside chat with the center’s Faculty Director, Professor Alva Taylor (you can watch the video in its entirety below).
It was a very informative conversation that covered a lot of topics and some key takeaways are highlighted below:
- Maintaining culture gets more critical the larger your company gets, but is harder to implement. Wayfair’s culture emphasizes an intense focus on the customer, being comfortable taking risks, and believing in data. Niraj credits this culture for fostering a collaborative and ambitious environment at Wayfair. The Wayfair culture is also a crucial component to a successful shift from working in the office to working from home during COVID.
- Digital business models with complex value chains, low margins, and high degrees of competition demand what Niraj characterized as “well-rounded athletes” to be successful. Teams with broad skill sets and excellence in different functions is critical. As Niraj noted, these businesses demand an “aggregate moat” by being strong at multiple key functions (logistics, operations, customer service, marketing, etc.).
- Building a great team pays off in times of crisis. You have to be prepared even if you don’t know what you are preparing for. In the case of Wayfair, they’ve always focused on building an exceptionally talented, creative team. Throughout COVID, one of Wayfair’s greatest strengths has been its team.
- In the “Build versus Buy” debate for tech and tools, Niraj emphasized prioritizing building tools which unlock value for your organization; otherwise, buy other necessary tools that are important but which do not unlock value.
- Niraj doesn’t think of Amazon as a competitor. He knows Wayfair’s business model and how it differs from those of potential competitors’ models. This creates a stark competitive advantage that Wayfair knows how to take advantage of. In the case of Wayfair competing with diversified E-commerce platforms like Amazon, they understand that Amazon’s business model is optimized for the 60% of the dollar volume that is in general merchandise. With the acquisition of Whole Foods, they are expanding into the 20% of grocery. For the home and fashion markets (markets with more nuance) it is hard for Amazon to compete, and they don’t necessarily want to because you can’t optimize for that as well as general merchandise.
- Wayfair prides themselves on working together and sharing information with their suppliers that might not have the same scale and capabilities as Wayfair. Sharing information and being a good partner to your suppliers and other members of your value chain who may not have the same scale or capabilities your organization has is a wise business decision. Your success depends on the health of your value chain and providing support and information to these critical partners. It also strengthens your partnership and makes your business more resilient in good times and in challenging times. In the case of Wayfair, they have seen extra benefits from this practice during COVID and have been able to help their entire value chain make their business more resilient via a strong, trusted partnership.
Niraj’s advice to MBA students is to find what you enjoy doing and giving it your all is critical to your success. He encouraged Tuckies to go somewhere that is growing and where new opportunities are being created.