Kreos Insights

Interview: 60 Seconds with Stefan Smalla, Founder and CEO of Westwing

By 19/01/2015June 4th, 2021No Comments


Kreos Capital IV portfolio company Westwing is a leading home and living e-commerce company; its biggest markets include Italy, Germany, France, Spain and Brazil. With over 17 million members worldwide and significant financing under their belt, Westwing is continuing to invest in its global growth and has impressive ambitions for 2015.

Kreos Capital committed €10m of growth debt financing to Westwing in Q2 2013.

What’s the biggest driver of growth in your business?

Westwing is a leader in the home & living e-commerce market, so we benefit from three important growth drivers: 1. e-commerce penetration, coming from a low level in this nascent home & living e-commerce market, is growing in all our geographies. 2. We are heavily marketing in online channels like Google and Facebook, as well as Display, and increasingly on TV – so we generate new customers via these means. 3. In addition, our customers are extremely loyal with >70% of our orders coming from repeat customers every month.


What’s the biggest challenge for your business?

Our biggest challenge is building a company at the rapid growth rates we are experiencing and continuing to execute well across all dimensions. Balancing between marketing, customer experience, operations, technology and style – and executing well Рwhile improving across all dimensions at the pace we are driving Westwing is the major challenge for us.  The key driver for success here is the hiring and retention of great team members, which we focus on relentlessly.


What have been your key learning experiences so far?

We have had both positive and negative learning experiences. Good experiences include the confirmation of our strategy as attractive in a nascent fast-growing market. If we execute continuously on it, a great company can be built and growth be achieved. We have also learned the hard way that executing on the operational basics of a retail business across three continents with seven warehouses and products that are complicated to ship is tough, and requires constant focus and never letting go of any detail. Retail is detail: as clichéd as that sounds, it’s completely true.


How big can Westwing become?

Potentially very big. The way we think about it is  that the offline home and living market in the 15 countries we serve have >700m people in them is sized at €150-200bn. If e-commerce will only achieve 20% penetration in the coming 5-10 years in our market (and I believe it can be potentially more, where for example  the US  fashion e-commerce market is already >10% of the overall market today and still heavily growing), then we’re talking about an addressable market of €30-40bn. If we can be the market leader in that market, well, that should be one sizable company. But we have to build the company correctly to capture the opportunity, so we don’t think about market potential too much; we recognise that the market is plenty big enough to build a massive, multi-billion company and focus on the day-to-day of building the company.


What advice would you offer to other growth companies about how they finance their businesses?

Raise capital when it’s available – in the end you’d rather have a large pie and possibly a smaller piece in it, than having limits to building your company because capital might be scarce when you need it. Choose the right financing partners, as they have to walk with you through good and bad times (and there will be bad times). And last but not least, aim at a financing structure which retains your flexibility. We did that when in addition to equity capital we took on Kreos debt that helped us through a particular period in our company’s lifecycle.