The Rise and Fall of Design Within Reach

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OUT OF FASHION: "It throws people off," says ousted CEO Ray Brunner of his white-stocking style. So did his controversial reign. Then-CEO Brunner said that DWR Kitchen was ahead of plan. That "plan" must have been extraordinarily conservative. Only one person purchased a DWR kitchen in 2009. | Photograph by Clay Patrick McBride

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WELL-FOUNDED FEARS "DWR was a profitable, audacious business until the evil forces of mass-market retailing took over," says DWR founder Rob Forbes. | Photograph by Clay Patrick McBride

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In June 2010, this article won the Deadline Club Award for Business Feature Writing. The judges commended writer Jeff Chu for demonstrating, "a great nose for news along with persistence and dogged analysis. He exhibited the highest standards of journalism by identifying his subject and convincing key players to reveal hidden facts."

The Wigan Garden Spade is a thing of verdant beauty. Its hunter-green steel and sunny ash-wood handle evoke the pastoral fantasias of an aspiring gentleman farmer -- a dwarf maple in your yard, perhaps, around the base of which you can, with Wigan in hand and Wellies on feet, conquer weeds and plant petunias. It's got history too: Smithies have been handcrafting tools at the same Lancashire forge since King George III sat madly on England's throne. Thanks to Design Within Reach, it can be yours for the queenly sum of $95.

Or it could be mine: I now want one, and I don't have a yard or even a potted plant. It's that combination of storytelling and compelling design that has propelled DWR from a Web-and-catalog-only startup 10 years ago into a major nationwide home-furnishings brand today.

Once upon a time, way back in the 1990s, America was a land of design philistines. Dwell and Domino didn't exist. On TV, people didn't trade spaces, nor did straight guys have queer eyes to help them remake their post-frat-boy apartments. Many of us still thought Ray Eames was a man.

According to the genesis story of Design Within Reach, it wasn't really the people's fault. We just didn't know. The finer things in life, which the enlightened residents of Europe had come to appreciate over decades of Danish-designed, Italian-made existence, weren't available to most of us. They were cloistered in showrooms open exclusively "to the trade"; only interior designers could give us the golden keys.

Along came a San Francisco-based revolutionary named Rob Forbes. He decided to seize those keys and share them with all of us ... who had the money. (The name Design Within Reach was never meant to suggest that we'd all be able to afford the lovely things.) In 1999, he launched a low-overhead business featuring an online store, an email newsletter, and a direct-mail catalog. These were more than just sales tools -- they were the three main components of a nationwide introductory course in modernist design. He and his company became educators and tastemakers.

The branding was genius and so was the timing. Americans were ready to trade up in all aspects of their lives -- from their takeout coffee to their homes to the furnishings inside. DWR rode this wave of consumer spending, splashing onto the stock market in July 2004. After its first day, the market valued the company at $211 million, an optimistic 70 times its 2003 net earnings.

Five years later, Design Within Reach's brand remains strong, but its business is a mess. Once a pioneering online retailer, it looks today more like an old-fashioned brick-and-mortar operation. Its past year has been unequivocally horrible, from hiring investment bankers in February to explore "strategic options" -- corporate code for "we're in trouble" -- to closing stores for the first time in its history to voluntarily delisting from the Nasdaq in July to seeing its market cap dip to just $4 million. In August, DWR got a much-needed lifeline $15 million in capital from fund manager Glenn Krevlin's Glenhill Capital Management, in exchange for 92% of the company. In October, the new leadership fired CEO Ray Brunner, who had presided over a series of failed attempts at renaissance.

Before his ouster, Brunner had painted the company's current woes purely as a product of the economy. But while DWR's sales did plunge by a quarter in September 2008, this isn't a story about the recession or even a simple corporate parable about overlarge appetites. The truth that has emerged from months of conversations with company insiders, former employees, design collaborators past and present, and founder Rob Forbes -- in his first public comments since breaking his ties with the firm in 2007 -- is that DWR has been a victim of its own unintelligent design. It veered from one ill-advised strategy to another, ranging from a craven knockoff program to a baroque pursuit of brand extensions, including an accessories boutique called Tools for Living, where you can buy that Wigan spade.

"We want to make DWR great again," Krevlin says. "We're doing everything we can." For a guide of what not to do, he only has to look back at the company's recent history. Given the depth of its woes, the tool for living that Design Within Reach's new leadership could really use most is one that it doesn't yet stock: a huge shovel.