Niraj Shah - Developing Every Skill

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money.
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**SPEAKER_2** (1:41)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:07)
My guest today is Niraj Shah, the CEO and co-founder of Wayfair. Wayfair started life in 2002 as a collection of independent websites selling category-specific home furniture but became a one-stop shop for the home category in 2011 when at $500 million in sales, the team consolidated their 240 websites into wayfair.com. Today, the business offers 22 million products from 16,000 suppliers to more than 30 million customers.
During our conversation, we discuss how the competitive frontiers in e-commerce have changed, what it was like to build out a proprietary logistics operation and what makes the home goods market more attractive than other physical goods markets. Please enjoy this great conversation with Niraj Shah.
So, Niraj, we're going to talk a lot about Wayfair, of course, and its unique, interesting history and the landscape of the business today. But there's a couple bigger picture issues, one topical, one a little less so, that I'd love to begin with. Those two are the supply chain in the world today, in late 2021, and also sort of the physical goods market, more generally speaking, and then we'll get to Wayfair. It's impossible not to ask you this question off the bat, given your purview on the world. Maybe just give me your impressions of the world's supply chain issues today. This feels like something no one's ever thought about until now, and now everyone's thinking about it and talking about it.

**Niraj Shah** (3:25)
What I would say about supply chain is, obviously, supply chain has always mattered. It's such a big component of the cost of goods. It's such a big component of global trade, and optimizing it certainly has proven to be advantageous for those who've been good at it. I'd say what you're seeing right now is COVID was convinced in how they transpired, took everyone by surprise, obviously.
And at first, the onset of a pandemic, everyone reacted the way you'd expect, which is they worry that demand is gonna fall. So the first thing that happened, obviously, is that COVID happened and started in Asia, and so production got slowed. But then as it appeared in the Western world, everyone gets worried demand is gonna fall. So all of a sudden, people are cutting orders, then the opposite happens. People are at home and demand actually does the opposite. They can't spend money on entertainment or services. They spend it on goods, and demand just goes through the roof. You say in hindsight, it's obvious, but the truth is it was unexpected by almost everybody. So all of a sudden, it's been this race to catch up. Folks ordering goods and wanting to get them into the countries in the Western world.