Interview with Coterie Founders Sara Raffa & Linden Ellis

Summary

Finding elegant supplies for special occasions like bridal showers and birthday parties can be surprisingly difficult. Stores like PartyCity can be overwhelming while online retailers like Amazon or Etsy make it difficult to find matching decorations.

Coterie Party is looking to disrupt the massive party supply industry by becoming the online go-to for finding stylish supplies that can be delivered straight to your door. We sat down with founders Sara Raffa and Linden Ellis to talk about how the two met, how ready the party supply industry is for disruption, and where Coterie is going from here.

Interview

Can you give us a brief elevator pitch for your company?

Sara: Coterie is disrupting the $10 billion dollar party supply industry by designing and delivering stylish party supplies for any occasion. All of our party supplies are designed in house and exclusive to Coterie. We also offer a seamless and elegant shopping experience, from tailored content to website design to lightning fast shipping – things that are all still unheard of in the outdated party industry.

What inspired you to take the leap and build this company?

Linden: We met on the founding team of Daily Harvest. We both viewed Daily Harvest as an opportunity to start a company with training wheels and ultimately always had wanted to start our own company. The idea for Coterie arose from Sara’s difficulty in trying to decorate for her sister’s baby shower. She spent hours scouring the internet trying to find cute decorations, nothing matched across different sites, and packages arrived too late for the party. It was a terrible experience — but it should have been a really fun one — so we both wondered why there wasn’t a better solution for party supplies.

After digging more into the industry, we became convinced that there was a huge opportunity. It’s a $10 billion dollar industry dominated by Party City, but no one actually likes going to Party City. The remainder is highly fragmented with no clear runner up. Now is the time for Coterie because Party City is seriously struggling. Their stock dropped 67% after their earnings report last November — way before COVID hit — which detailed major company issues and huge store closures. And this isn’t due to a failing industry. In fact, the industry as a whole is growing. Instead, it’s due to Party City’s inability to serve its customers. One look at their Yelp reviews and you’ll see endless unhappy customers. Consumers are looking for a more curated, easier shopping experience, and none of the current players in the industry have been able to adapt.

What past experiences prepared you to start, build, and lead your company?

Sara: We both have extensive experience in ecommerce. Linden worked at Birchbox for eight years and Daily Harvest for two years before starting Coterie. At Daily Harvest, she was the second employee and ran Marketing. She helped grow the company by 50x in under two years. I got my MBA from the University of Chicago with a focus on entrepreneurship and started a sustainable fashion line while there. After school, I joined Daily Harvest as the fifth employee where I ran all the operations and set up the logistics and supply chain. For both of us, these experiences have been crucial in helping to start Coterie — from knowing how to tackle tactical problems like customer acquisition and fulfillment to handling administrative problems like taxes and payroll to effectively leading small teams. 

What is your vision for the future of the industry you are operating in?

Linden: This industry is poised for disruption. In the same way that Away, Casper, and Warby Parker upended their respective industries, we want to do the same to the party supply space. We’re taking an outdated industry with overwhelming, terrible product assortment and creating a solution that is modern and curated. In other words, we are making it easier to get together with your friends and loved ones by providing a beautiful, curated selection of decor items on an easy-to-use website and delivering everything right to your door. The modern consumer is looking for convenience without having to sacrifice aesthetic or budget, and we are providing just that.

Who is on your team and how did you come together?

Linden: Currently our team is just us and a handful of amazing contractors. As mentioned above, Sara and I met at Daily Harvest and had always wanted to start a company together. We’ve been working on Coterie since June 2018.

Do you have any competition, if so, how do you differentiate?

Linden: While there are a few different types of competitors in the space, we believe that no one is offering the full package — high quality products, available online, and delivered to your door. There are a few brands that are making nice quality products, but these brands are all very wholesale focused and don’t have the background to build out or optimize their online shopping experience. Additionally, because of this focus on wholesale, these companies have limited brand recognition and don’t offer a full line of party supplies — instead focusing on tableware only or just balloons so it is difficult to outfit your entire party.

On the other hand, there are brands that offer the full suite of products and do so through their store, but the majority of these brands don’t make their own product — they buy from the above mentioned brands. This greatly impacts margins and the overall brand experience. 

Finally, there are big box retailers (like Walmart, Target, Party City), plus Amazon and Etsy. These retailers can’t offer a curated shopping experience and also struggle to create authentic party brands. Through our best-in-class social media presence, we meet our customers where they are shopping and have a growing community of obsessed followers who come back to order again and again.

What brought you to equity crowdfunding and how do you intend to use the money you raise this round to scale the business?

Sara: We’ve built a really amazing community of followers, and equity crowdfunding is a great way to continue to build out this community. It gives us access to an entirely new pool of investors and allows anyone to become a part of our brand and be a brand evangelizer. Our brand is also very visual and fun to engage with, so it makes a lot of sense for crowdfunding. Our current investors have been so helpful in getting us to where we are, and we firmly believe that having more people on our team is a good thing. We plan to use the funds from this raise to scale marketing, payroll, and product development — and get the brand to profitability.

What do you want potential investors to know about you and/or your company?

Linden: We want to continue to highlight the massive opportunity to disrupt this industry. As we mentioned, the Party Supply industry is a $10 billion dollar industry fueled by customers who are shopping regularly and reliably. Bridal showers, baby showers, kids birthday parties plus all holidays and your monthly book club. There are endless reasons to throw a party each year and across all life stages. If we can become the shop of record for our customers, they will come back to order from us again and again throughout each year. And we’re already starting to see this. Our repeat rates and annual spend are higher than our competitors and other occasion-based brands. And our return rate is <1%. No one enjoys the current offerings, so by providing customers with an easy way to shop for beautiful party supplies we can take market share away from big box retailers and corner this huge market. 

As you think about the business 5-10 years down the road, what do you see exit opportunities looking like? Have you set any future goals for the company?

Sara: We are focused on building a sustainable company and loved brand, and that is always our primary focus. With that said, of course we think about potential exits.

The majority of big box retailers don’t have their own party lines, and many have already told us that this category is a huge area of focus for them in the coming years. And as we mentioned, there is a massive opportunity to take market share away from Party City. By creating a loyal following and authentic brand, we will be an invaluable asset to any company looking to compete in the industry. We could become the in-house brand for one of these retailers and leverage synergies and operational benefits to become major players in the space.  

We at KingsCrowd are excited to see where Sara and Linden take the company. Coterie Party is currently raising on SeedInvest.