Latest Trending Marketplace Material Bank Raises $ 100 Million to Source Architectural and Construction Products With Help From Robots
ADam Sandow has spent the past decades building a portfolio of publications, including Interior design, Luxury and Metropolis. From this company he came up with the idea of ââa market for architectural, design and construction materials that could bring technology, research and ease to the traditional way of processing samples.
Today, his startup, Material Bank, is the latest fast-growing marketplace to get the love of investors. The New York and Florida-based company has raised $ 100 million in venture capital for a valuation of nearly $ 1 billion, Sandow said. Forbes in a video call from the company’s new warehouse in Olive Branch, Mississippi. The new investment, led by General Catalyst, brings Material Bank’s total funding to $ 157 million. âThe feedback we have received from investors is that we have built a unique business,â says Sandow.
With the new funding, he says, Material Bank is expanding its core business, pursuing acquisitions (with two deals slated to close this year), and launching new brands under the Material Bank umbrella that could bring the business closer to consumers. . Sales tripled last year and are expected to exceed $ 50 million this year. âThere isn’t a hotbed of businesses in space,â says Sandow. “It’s not gambling, AI, crypto, or EV, where there are so many businesses.”
Sandow, 52, grew up in Miami and spent two decades expanding his eponymous media network, including launching Luxury from scratch in 2005 and buying Interior design by Reed Elsevier in 2010. âI love design,â he says, âWhen I was a kid I grew up reading design magazines. But after a long career in the media, he became anxious to try something else. Although he still owns 100% of Sandow’s media activities, he has taken a step back from day-to-day operations.
In 2018, he started Material Bank with the idea of ââhelping designers and architects find the materials they need. Historically, architects and designers had to request samples of carpets, tiles and wall coverings from manufacturers. There was no easy way to track these samples or keep them up to date. Delayed samples meant delayed projects, often at enormous cost and frustration.
Material Bank, on the other hand, aggregates materials from hundreds of vendors, giving users the ability to research exactly what they want in minutes. “[Adam] knew the inefficiencies of the market better than anyone, âsays Holly Maloney, Managing Director of General Catalyst. “We were looking at whether or not this was something he was going to devote his time to, as he was already very successful in the media space and considerable investment would be required.”
When Sandow first started pitching the idea in test conversations, brands and designers loved the idea, he says, but didn’t think anyone could handle tens of thousands of SKUs. âThese brands would say, ‘We can hardly do it on our own, how are you going to get thousands of us together? “”
âWe were thinking of going to Memphis and outsourcing the logistics, and we couldn’t find a company to do it. They thought we were crazy.
The answer, of course, was technology, including a massive database with nearly 100 million data points, which users can search to find exactly what they want. Today, nearly 400 manufacturers, including Sherwin-Williams (paints) and Mohawk (rugs), list their products on the platform, while 60,000 designers, architects, hotels, fast food chains and more have registered users. To obtain these users, Sandow relied on a hidden advantage: its own design publications. âThe media aspect of the business has definitely given us an unfair advantage,â he says.
Revenue comes from manufacturers and sellers who pay monthly fees in the thousands to include in the marketplace, as well as additional fees when their items are ordered. For users, the service is free and fast. Order by midnight (EDT) and Material Bank will get you the samples in a single box by 10:30 a.m. the next day, thanks to its warehouse in Olive Branch, Mississippi, near the FedEx Memphis sorting center, and an army of robots. .
âWe were thinking of going to Memphis and outsourcing the logistics, and we couldn’t find a company to do it,â says Sandow. âThey thought we were crazy. They said, âYou want to have half a million SKUs in a building, get an order at midnight and put it on a plane at 2:00 am? So we said, ‘We’re going to take an old empty building in Memphis and find it out.’ ”
The original Memphis building was a smaller test site, but as Material Bank grew, it crossed the state border to a new, larger facility. In the nearly 400,000 square foot warehouse, robots with bright yellow thorns bearing the company name work alongside people who collect items from seemingly endless rows of shelves and place them on top of the robots , which carry them to the next step until the order is complete. âEvery night, we process tens of thousands of materials for industry,â says Sandow. “We couldn’t do it without robots.”
These robots come from Locus Robotics, a leading warehouse robotics company that recently achieved a unicorn valuation thanks to surging e-commerce sales. Material Bank was one of the first customers of Locus’ autonomous mobile robots, which it calls âLocusBotsâ, in 2018, when it bought ten as a test. Today, 150 of them are working in the facility, and Sandow plans to add 50 more soon. The two companies developed in tandem, notes Sandow. âWe had very similar trajectories. They lifted, we lifted, âhe said. “It’s like we’re in the appraisals and raising capital at the same time.”
While Material Bank employs fewer people than it otherwise would because of the robots, Sandow pays workers a starting wage of $ 17.50 an hour, well above the state minimum wage. $ 7.25 an hour and a premium at what he says is more generally $ 12 an hour. for a storekeeper. More than 200 people are currently working at the facility, which opened earlier this year.
âThe logistics here are extraordinarily complicated,â he says. âThis is how we were able to evolve.