Phoenix Outdoor Furniture Company Neighbor Sees Bright Future

PHOENIX, AZ — A trio of Phoenix-based entrepreneurs decided to launch their dream company during the height of the COVID-19 pandemic.

The company in question evolved over time into outdoor furniture retailer, Neighbor, which was launched by Nick Arambula, Chris Lee and Mike Fretto in 2020.

The company's creators worked together at Phoenix mattress company, Tuft & Needle, and decided they wanted to put their knowledge of the furniture sector to good use, forming Neighbor.

Neighbor has already expanded its selection of products, with a new line of outdoor dining tables and chairs, joining the company's line of products, which include outdoor chairs, love seats, sofas, sectionals, ottomans and coffee tables.

Patch recently chatted with Arambula about the company's first year of operation, and why the trio chose Phoenix as the company's headquarters.

Below is a transcript of that conversation, edited for clarity and length:

Q: Could just take me through first question, just the background on neighbor and how you guys got started in the first place?

A: So Mike, Chris and I all met, working at another direct to consumer furniture company. And over time, through our entrepreneurial interests, product interests, and just working relationship, we gravitated towards each other and wanted to explore doing something entrepreneurial together.

And I think outdoor furniture was something that spoke to us. In the midst of the pandemic, people were spending time outside to escape their homes, which had become in some sense, a gym, a restaurant, a daycare, job, all the things that you used to escape your house to do.

And so, we found ourselves coalescing around this idea, of 'how do we make our outdoor spaces a little bit more habitable.' Building great product with really high quality materials and bring it to customers at a little bit more of an affordable price than what something comparable would typically be sold for.

Outdoor furniture is something that hadn't had many new entrants in it for quite some time. We sought to bring a little bit of a different perspective on a category that is typically dominated by national retailers that treated as kind of an afterthought.

And what I mean by that is brands like, Pottery Barn, West Elm, Williams & Sonoma, they typically sell outdoor furniture, but it's not the primary component of their business. They focus on indoor, and then outdoor is just something that they have.

And we really liked the idea of saying that we're going to be an outdoor furniture company and an outdoor furniture company only, and really focus on building great products.

And so that was, I think, where the inspiration came from. And obviously, the pandemic might be to many people a rough time to start a company. But I think by way of the fact that most people were at home and investing in their homes. So it ended up being a great time for us to launch a business like this, because of the fact that it was a great deal of demand for our product in the market.

Q: You guys have a couple new options that are available [July 1]. Take me through the new options and how you guys decided to add those to your collection?

A: The first thing that we brought to market was the lounge collection for obvious reasons. We just wanted something that could be ubiquitous in the sense that many people are looking for outdoor sofas, and creating what we call their living room outdoors.

But a natural extension to that was the table, right? People convene, and eat outside and sit around the table and talk to others and build memories with those that you love.

And I think it was a natural extension of this first collection. To say we want to be able to help someone outfit their dining area outdoors as well. So when if you look at the products, obviously the lines in the material are both correlated and inspired by what we had done with the initial collection. It's meant to be an extension of the collection and to also create some beautiful visual aesthetic.

And then a chair is, I think a cool interpretation of the wishbone chair that many people are familiar with. But it's our take on that and it's a great piece that will last customers for a very, very long time made is again all great a FSC certified Teak wood.

Q: I know you guys opened a showroom in Phoenix recently. Take me through kind of that process and how you decided to open the showroom where you did?

A: I think the interesting thing is that we leased a small office space in Phoenix and serendipitously, just adjacent to our office was about a 600-to-700 square foot patio. And so naturally, we saw that we're like 'well, we're going to build this out and put our furniture out here and and tell people to come down and check it out if they want to.'

And a lot of that was inspired by our experience at Tuft & Needle. For me specifically, I started at Tuft & Needle as head of retail and then help them expand from one to 10 physical stores, and I think that, especially for our price point, there is a lot to be offered to the customer to give them a physical space to come and try the product.

[The Neighbor showroom at 515 E Grant Street, #109 opened to the public in mid-March. Appointments are available here.]

Q: Going forward, what's your vision, in terms of the number of showrooms you expect to open, besides the one on Grant Street in Phoenix?

A: I think I think our perspective right now is we're probably going to keep it to just this one for at least the foreseeable future. And I think in terms of how fast things are moving foreseeable future for us is 12 months.

For right now we want to be careful and cognizant of how much capital investment it can be to build out retail stores.

And so we're going to continue to see how things go in the Phoenix market with this one. And then from there, make a decision if it is does behoove us to open more of them in other key locations around the U.S., where we see our products resonating.

Q: Why you chose to keep the operation in Phoenix and what are your thoughts on the small business community in this area?

A: So all three of us live here. Mike and Chris are transplants from other states, Mike has lived here Chris has been a little bit longer than Mike. I was born and raised here.

So Arizona specifically has a lot of personal meaning to me and it's the community that helped raise me and it's one that I hope I can reinvest in as I get older.

But the three of us agreed that Phoenix is in a really unique market, and that there's a pretty employable workforce here that typically may get overlooked from some of the more what I would call like the general players of the startup communities in the United States — so the San Francisco's; or the New York's; the LA's; the Austin's.

Phoenix has a lot of really great components to start a business, the cost of living is quite a bit lower than those other cities that I mentioned. There are three really great institutions in Arizona, one that is right down the street from where our offices.

And I think we had a good experience being members of Tuft & Needle, and watching the business grow into being a hometown hero here.

We hope to do similar things with Neighbor, strategically. We believe that Phoenix and Arizona at large kind of represents the opposite of the typical weather cycle of the majority of the United States.

That being that for six months out of the year, when most people don't want to go outside in the United States, they like to be outside in Phoenix. And so, you know, our research had consistently told us that the the outdoor markets can be quite cyclical. And so our our thought was, 'well, let's invest in a market that we care about.'

But we believe to be a counterbalance to that typical cyclicality. And it will help us grow our presence here in Phoenix and hopefully create a little bit less of a bumpy sales sales curve that runs throughout the 12 months of the calendar year.

Q: What would you define as a as a successful next calendar year now that you guys have gotten now that we've all hopefully moved past the pandemic and you guys have a showroom space and you're unveiling new products?

A: We set out this year to be profitable, that was kind of our first goal. And I say that because if you look at traditional direct to consumer startup businesses that has been built over the past 10 years, many of them have sought venture funding.

And in doing that, they either opted to or probably were guided to, by way of their investors, to operate unprofitably for a period of time to try to find profitability.

And our perspective is that may not be the best model for a direct to consumer product company. It's a little bit harder to say, 'well, we're not making anything on each sale, but we'll find it someday.'

You can do that, obviously, on repeat purchase products, like a pair of boxers, or clothing or a food product, it's a lot easier there. Because you're building a lifetime value, we recognize that customers that buy from us, it may be another five to six years before they buy a product from us just by by virtue of the longevity that our products are have and the cost that they are.

So for us being profitable was kind of goal number one. And I'm happy to say that we have been profitable every month so far this year, and that's we're really proud of.

We're trying to do 15 to 20 times what we did in the calendar year of 2020. Obviously, we weren't operating for a full year, it was probably about six months. But we want to try to do 15 or 20 time this year.

And then the last thing I think that you know from a real strategic level that we're excited about is building what we call like our initial team. We've hired two people here, we have probably one or two more that will start with us in the next two to three months.

And so going into 2022, we feel really confident in the team that we built here in Phoenix, and we're ready to grow into what could be two to three times what we do this year next year.

Q: Is there anything else that you would like to talk about?

A: We're hoping to bring some more [items] to market in August and then even a couple more in the September-October time frame.

So I think the cool thing that we want to try to do is not necessarily rest on our laurels. We want to bring some other stuff to market that's going to be unique, different and complimentary to what we've released and so keep an eye out for that.