Five years ago, Petrus Palmér was well on his way to a comfortable life as an industrial designer. In 2005, he’d cofounded the studio Form Us With Love straight out of design school in Sweden. By 2012, FUWL’s clients already included Ikea, Cappellini, and Muuto. It was hard to imagine how things could go better. Unless, of course, you were Petrus Palmér. He felt a nagging discontent in what he was doing: either designing for the biggest mass market imaginable, or for the 1% who could afford a $10,000 couch.
It was obvious that the market was missing out on a swath of demand somewhere in between. “Because of how production has evolved in the last few decades, it’s a race to the bottom to reduce quality, price, and sophistication,” explains Palmér. And so, in 2012, Palmér set out to create an online-only furniture brand called Hem. “I had seen so much that I wanted to change,” he says. “Instead of being a designer making things, I wanted to be a designer making things happen.”
Five years later, Hem is both profitable and growing–despite a tumultuous, short-lived acquisition by the e-commerce site Fab.com, which had intended to turn Hem into its in-house furniture brand. But while Fab shared a vision of democratizing design, it never could build a sustainable business model selling. Against all odds, Hem has done so, with only a few dozen staff members, no sales staff other than Palmér, and just a few million in seed capital, as compared to Fab’s $150 million. But it’s still not the mass-market brand that Palmér envisioned. That’s why 2018 seems likely to be a decisive one for Hem.
The logic behind Hem’s business is the same as that behind Everlane or Casper. To reach consumers, traditional furniture brands must deal with middle men in the form of retailers or wholesalers. Each one takes a cut, so that by the time a piece of furniture reaches the market its retail price is upwards of 500% of wholesale. Most manufacturers respond by cutting costs as low as possible to preserve at least some margin. The result is a $4,000 couch that might have cost $500 to make. Hem–as well as Everlane and Casper–cut all those middle men out by selling online and handling distribution from their factories. As a result, they can produce nicer goods by increasing costs and, at the same time, lower prices to consumers. A massive corner sectional from Hem costs $3,200, while a similar couch from Muuto or Hay–two relatively new Scandinavian houseware brands–goes for $6,000.