Adam Sandow has been writing for magazines like Interior Design, Luxe, and Metropolis for the past few decades. From that business, he got the idea for a marketplace for architectural, design, and building materials that could make the old way of dealing with samples easier, faster, and more tech-savvy.
Today, Material Bank, his startup, is the latest fast-growing marketplace that investors love. Sandow told Forbes in a video call from the company’s new warehouse in Olive Branch, Mississippi, that the company, which has offices in New York and Florida, raised $100 million in venture capital at a nearly $1 billion valuation. Material Bank has now raised a total of $157 million, thanks to the new investment led by General Catalyst. Sandow says, “Investors told us that we have built a one-of-a-kind business.”
He says that Material Bank is using the new money to grow its core business, look for acquisitions (two deals are expected to close this year), and start new brands under the Material Bank umbrella that could bring the company closer to consumers. Last year, sales tripled, and this year, they are expected to go over $50 million. Sandow says that there aren’t a lot of companies in the area. “There aren’t that many companies in gaming, AI, crypto, or electric vehicles.”
Sandow, who is 52 years old, grew up in Miami and has spent the last 20 years building up his own media network. He started from scratch with Luxe in 2005 and bought Interior Design from Reed Elsevier in 2010. “I love design,” he says. “As a kid, I read design magazines all the time.” But after a long time in the news business, he was ready to try something new. Even though he still owns all of Sandow’s media business, he has stopped running it day-to-day.
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He started Material Bank in 2018 with the goal of making it easier for designers and architects to find the materials they need. In the past, architects and designers had to ask manufacturers for samples of carpets, tiles, and wall coverings. There was no easy way to keep track of or update those samples. When samples were late, projects were late, which often cost a lot of money and caused a lot of stress.
Material Bank, on the other hand, brings together materials from hundreds of different sellers, so users can find exactly what they want in minutes. Holly Maloney, a managing director at General Catalyst, says that Adam understood market inefficiencies better than anyone else. “We were keeping an eye on whether or not he was going to spend a lot of time on this since he was already very successful in the media world and it would take a lot of work.”
Sandow says that when he first talked about the idea with brands and designers, they liked it but didn’t think anyone could handle tens of thousands of SKUs. “These brands would say, ‘We can barely do it alone. How are you going to combine a thousand of us?'”
“We thought we’d go to Memphis to hire a logistics company, but we couldn’t find one. They thought we had gone crazy.”
The answer, of course, was technology, such as a huge database with close to 100 million data points that users can search to find exactly what they want. Today, nearly 400 manufacturers, like Sherwin-Williams (paints) and Mohawk (carpets), list their products on the platform, and 60,000 designers, architects, hotel firms, fast-food chains, and other types of users have signed up. Sandow used a secret weapon to get those users: his own design publications. He says, “The media side of the business has definitely given us an unfair advantage.”
Manufacturers and vendors pay a monthly fee in the thousands of dollars to be part of the marketplace. When their items are ordered, they pay extra fees. The service is fast and free for users. Material Bank has a warehouse in Olive Branch, Mississippi, close to FedEx’s Memphis sorting center, and an army of robots. If you order by midnight (East Coast time), you’ll get the samples in one box by 10:30 a.m. the next day.
Sandow says, “We thought we’d go to Memphis to hire a company to handle logistics, but we couldn’t find one.” “They thought we had gone crazy. They asked, “You want to have half a million SKUs in a building, get an order at midnight, and put it on a plane at 2 a.m.?” So we said, “Let’s figure it out in an old building that’s empty in Memphis.”
Material Bank’s first building in Memphis was a small test site. As the company grew, it moved across the state line to a larger, newly-built building. At the nearly 400,000-square-foot warehouse, people work with robots that have bright yellow spines with the company’s name on them. The people pick items off shelves that seem to go on forever and put them on the robots, which take them to the next step until the order is finished. Sandow says, “On any given night, we send out tens of thousands of materials to the industry.” “Without robots, we couldn’t do it.”
These robots are made by Locus Robotics, a leading warehouse robotics company that was recently valued as a “unicorn” because of the growth of e-commerce. Material Bank was one of the first companies to buy Locus’s self-driving mobile robots, which the company calls “LocusBots.” In 2018, it bought ten of them as a test. Today, 150 of them work at the plant, and Sandow is planning to hire another 50 soon. Sandow says that the two companies have grown at the same rate. “Our paths have been very similar. He says, “They raised, and so did we.” “It seems like our valuations and ways of getting money have been the same.”
Even though the robots make Material Bank hire fewer people than it would otherwise, Sandow pays his workers a starting wage of $17.50 an hour. This is much more than the state’s $7.25-an-hour minimum wage and more than what he says is usually $12 an hour for a warehouse worker. The building, which opened earlier this year, is already home to more than 200 people. The logistics are very hard to figure out here,” he says. “That’s how we’ve grown,” they said.
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