Inside Homepolish's Stunning Collapse and How Its CEO Noa Santos Lost Millions
By: Courtney Rubin
Tags: Failure, Homepolish, Interior Design, Startup, Business

But what had more important ramifications for the company’s future was Santos’ singular focus on press, with nearly all profits in the early days going to marketing. That’s not unusual in a startup, but at Homepolish it happened, ex-employees say, at the expense of building out the company’s infrastructure. It’s unclear how much of Santos’ focus on PR — and his success getting interviews — can be attributed to his then-boyfriend (now-husband) Ross Matsubara, vice president and style director of luxury brand marketing firm Nike Communications. (In 2012, Matsubara, who I don’t know personally, sent me an email pitching me a story about Santos, when the company was two months old and had “70 clients on the waiting list.”) But Matsubara was a regular and commanding presence in the Homepolish office, and Homepolish parties were often stocked with the premium liquor brands he represented.

Even as Homepolish was buying a full-page color New York Times ad — some $150,000, before you add the color — its wait times for furniture quotes were up to two weeks, an eternity in a world where clients are used to pushing a button and having something delivered. Designers say there was no way for them to check orders; there was no direct office contact to call, and follow-ups had to be done by email. Problems with orders abounded, say multiple designers, including furniture orders that simply didn’t get placed and items that showed up at the wrong address. The entire system, says former Homepolish designer Erica Riha, “gave me nightmares.”

“These guys have been growing 100% year over year, they’re profitable, their growth has been nearly 100% organic, and customers love them,” Hunt told Forbes at the time.

Meanwhile, Santos got very into the weeds of anything marketing-related. The marketing team often was caught between his lofty vision and what they knew the company could realistically deliver. “There was a lot of couching what we could say we could do versus what was actually feasible,” says one former employee. A 2014 version of the website said that Homepolish had “a network of vetted contractors” that were screened “for quality, hustle, and dependability.” This disappeared in later versions to say that designers were happy to recommend a contractor, but that all contractors were third party and Homepolish couldn’t “guarantee their work.” (Ex-staffers from multiple departments say there were often clashes about Santos’ overpromising; three designers and two employees independently referred to both his promises and the company as “smoke and mirrors.”)

Still, employees hoped the kinks would work themselves out. Many had backgrounds in design and believed strongly in the company’s “design for all” ethos. “It was one of those communities you responded to because of how excited everyone was,” says an early former employee. Adds a second one, wistfully: “It was like magic.”

In January 2016, Homepolish announced it had raised $20 million in venture capital. Santos told interviewers that Warby Parker’s Andy Hunt had been the one to approach him to invest. “These guys have been growing 100% year over year, they’re profitable, their growth has been nearly 100% organic, and customers love them,” Hunt told Forbes at the time. He took a seat on the board, along with Rent the Runway’s Hyman.

Santos was similarly upbeat: “We also have no plans for becoming unprofitable,” he told the New York Business Journal. “I think unlike many startups we’re not looking to get on that fundraising treadmill.”

Santos and Nathan argued about how to use the infusion of cash. Santos wanted much of it to go to marketing; Nathan thought it should go to coders to strengthen the back end. But within six months of the funding announcement, the arguing stopped — Nathan left.

Santos and Nathan gave themselves raises to $250,000 a year apiece, compared to the $98,000 they’d made prefunding, according to a former employee who saw the figures. But they argued about how else to use the infusion of cash: Santos wanted much of it to go to marketing; Nathan thought it should go to coders to strengthen the back end. But within six months of the funding announcement, the arguing stopped. Nathan left quietly — an employee who worked closely with him said it had always been his plan to move on post-funding. He promptly bought a loft in Soho as well as a building in Bisbee, Arizona, that he turned into a hotel. (He stayed on the board until 2019, and now lives in Los Angeles.) Says one ex-employee who had Homepolish shares as part of their compensation: “Will is the only person who came out of this well.”

The influx of funding and Nathan’s departure was not a good combination. There was more “disposable income,” as one manager put it, but “less intelligence about how the funding was being used.” Suddenly Santos, who had primarily focused on marketing, found himself struggling to manage the nuts-and-bolts of running the company. As one former employee — who remains sympathetic to him — put it bluntly: “He was never a business person, and he was never really positioned to handle that.” (Another employee says she heard someone refer to him as “the junior CEO, because he was still learning how to do it.”)

The funding was supposed to go, in part, to building out a tool that would power the company’s in-house ordering service. The tool had pretty branding, “true to Noa form,” says a former employee, but it lacked some necessary technology features, and Homepolish hadn’t made the hires needed to build or maintain it. “Instead of doing that when we had a lump of cash on hand, we got a fancy office and had a lot of marketing parties,” says a former employee who saw the numbers. “By the time we realized we needed it, all that wiggle room had been blown through.”

Like many startups, Homepolish had tried and discarded a lot of things in its first three and a half years, but the pace accelerated. Instead of strengthening existing offerings, a series of new programs were rolled out and then almost immediately shelved as unsustainable, leaving employees wondering how much thought had gone into them in the first place.

It didn’t help that many of them were things the company had already tried before. For example, Homepolish had launched with a small marketplace — “champagne accessories on a beer budget,” was the slogan — that was quickly abandoned. But in post-funding 2016, the company scrambled to assemble a team and then debut an e-commerce store called “H marketplace,” which included a Homepolish candle with scents of amber, sandalwood, and freesia. That marketplace was gone three months later. The same happened with a plan to bring designers on as full-time employees. Homepolish had attempted this with about 15 designers early on, and tried it again in 2016. It was almost immediately shelved as unsustainable.

Things changed so frequently and so abruptly that employees held their breath when Santos passed their desks, not wanting to get looped into his latest idea, which would be full speed ahead before promptly being dropped a couple of weeks or months later. “You’d have to settle him and make him happy, and then two weeks later it would be over and you’d be back to your regular job, two weeks behind on work,” says one. If employees tried to push back, Santos shut them down. “He’d say, ‘I’m not interested in hearing your opinion on this. I just need you to do it,’” recalled one ex-staffer. (Two others recalled similar wording.)

Several months after the funding, Santos also stopped sharing details about the company’s health. According to five former employees, stats like how many hours were sold and how many designers they had signed up had been shared at weekly all-hands meetings. (In one of the company’s early offices, they had even been written on the wall, near the company’s core values: “Be the Solution,” “Dream Smart,” and “Keep It Fun.”) But according to ex-employees, this stopped suddenly in 2016, and the all-hands meetings themselves became much less frequent. “Everything got a lot more secretive,” says one ex-employee.

In May of 2016, Homepolish signed a 10-year lease for a brand new 11,306-square-foot office. The asking price was in the high-sixties per square foot, according to the Commercial Observer, or roughly $750,000 a year. Homepolish had plans to scale, but the space was triple the company’s previous digs and more than twice the size Homepolish actually needed for the number of employees it had, estimates one former Homepolish commercial designer who saw the space. It was decorated, appropriately, as a showcase for the company’s talent. One often-photographed room was the kitchen, designed like a residential one, featuring striking deep blue cabinets with brass hardware. Above the stone-top island hung a bubble chandelier with brass fixtures. Only, it was a knockoff with cheap fittings, metal painted to look like brass. “It just seemed kind of consistent with the idea of saying you’re going to deliver something that is glamorous and impressive but is actually a cheap stand-in,” says the designer, who left the following year.

Homepolish CEO Noa Santos. Photo: Mark Sagliocco/Stringer/Getty Images

At the time, the company was an industry darling. “Game changer,” wrote the influential design blog Design Sponge. “Rad and disruptive,” said Goop. The staff at Details magazine wrote of their “obsession” with stalking the Homepolish website to see photos of the best company offices. Clients were pouring in faster than Homepolish could handle, and the long waitlist was ruining the company’s Yelp rating. Santos wanted more designers across the U.S., and fast. “We just need bodies,” he told employees, vowing that there would never be a waitlist again. This was one of the increasingly rare times employees pushed back against Santos, with at least three of the company’s senior managers warning him that quality and service would suffer. “There were a lot of people telling him to be careful,” says one ex-staffer.

Undeterred, Santos nearly doubled the number of designers from about 300 to 500. In the process, the vetting of designers — which previously involved having them design sample rooms with limited time and budget — was relaxed. A customer service manager noted an uptick in complaints from both clients and designers, the latter of whom grumbled about not getting enough work.

The founders could be “intimidating and scary” to the young employees who worked for them, says an early former employee. Santos frequently raised his voice and “would openly threaten people, saying, ‘If you don’t do this, we can replace all of you.’”

It didn’t help that Santos seemed to constantly change how he felt about the designers’ place at the company — whether they were just workhorses in service of the client, or whether Homepolish’s mission was to be an agency that supported and promoted them. His flip-flopping put the company organizational structure in perpetual flux, with people being reassigned to jobs with little notice. “It was kind of whiplash-y,” says one former employee. When designers left to pursue their own businesses, he treated it like disloyalty.

By the beginning of 2017, there were already signs Homepolish was not performing as expected. On Valentine’s Day, around 15 people (about 15% of the company) were summoned to meetings at restaurants and coffee shops near the office and fired. Some were specifically told it was because they “weren’t contributing to the profits of the company.” Among those culled were four of the most senior, longest-term employees — ones who sometimes disagreed with Santos. Soon, not a single staffer from the early days remained.

In 2017, Santos also made four fateful decisions: The first was to quietly begin pursuing a strategic partnership with Modsy, an online interior design service that had raised $11.75 million over the previous year and half. The second — because of the relentless pressure to scale quickly — was to take out a loan “in the millions” from Silicon Valley Bank, according to a former employee. “Day number two [after the raise in 2016], I was like, ‘We need new money.’ It’s just kind of the nature of the beast,” Santos later told the design journal Business of Home.

The third big decision was to shift Homepolish toward a higher-end customer. Out with the $500 and $5,000 projects, and in with the $500,000 and $1 million ones, as it were. (As the marketing department put it, “Olivia Wilde” would replace “Jennifer Lawrence” as Homepolish’s ideal client. Wilde was elegant and sophisticated; Lawrence made headlines for pizza-stained evening wear. “You could have a drink with either one of them, but only Jennifer would get drunk,” one ex-employee says, recalling a marketing presentation.)

It had become clear to the management team that just getting more small-budget customers wasn’t going to help Homepolish hit its growth targets. Small stop-and-go projects often frustrated designers, required a lot of client management time, and, says one ex-staffer, “ended up refunded” because of the company’s “happiness guarantee.” An employee who worked in operations remembers two successive COOs, neither of whom stayed long, “always yelling that the sky was falling.”

But this situation didn’t get communicated to the rest of the company, who were left to bemoan that catering to the 1% was not the mission they had worked for with that near-religious startup zeal. Nor was going after luxury clients a viable business proposition. Santos “started to alienate the people the brand was built for in order to chase people that realistically this company was never going to get,” says one former employee. High-end customers didn’t actually need Homepolish; most interior designers catered to them already. And the plan for getting these clients didn’t seem completely thought through. “A whole team was hired for high-end sales, and then were shuffled to other jobs,” says an ex-employee.

By employee estimates, 75% of the leadership team that started in 2018 didn’t end 2018 with the company.

Santos’ other critical decision that year was also aimed at generating more revenue: A new line of business called Build, through which Homepolish would collect a 15% commission when clients used Homepolish-vetted contractors for home renovation. The program was hastily concocted, according to one former employee, because Santos wanted the marketing copy to say something like, “You hire Homepolish and you sit back and we’ll hire all the contractors; it’s seamless.” The problem was: At the time the company didn’t typically deal with contractors. So they had to start in a hurry. “It was the perfect example of what always happened there: ‘We have an idea, we haven’t fleshed it out, we’re going to rush it to market, and we’ll figure it out along the way,’” says one ex-staffer. Many designers I spoke with said they didn’t want to use the service because they saw no evidence that Homepolish had actually vetted any of the contractors (one former employee says Homepolish saw samples of the contractors’ work and customer reviews).

By all accounts, 2018 was a blur. Turnover was high: By employee estimates, 75% of the leadership team that started in 2018 didn’t end 2018 with the company. “The higher you got, the harder it was to work at the company,” says one.

The year was also notable because Santos, who often worked in the office until late, was gone for unusually long chunks of time: First because of a back problem, and then for his June wedding in Hawaii. The event took its inspiration from the Alfonso Cuarón remake of Great Expectations — with wild greenery and custom-made green tuxedos for the grooms — and was featured in both Vogue and the New York Times. Pantone cards had been sent to wedding guests to guide outfit selection and Santos’ husband had hunted down the exact shade of black-green Nars nail polish worn by the “warrior army” of bra-less, ivory-suited bridesmaids. (Later, Santos spent 20 minutes of an all-hands meeting showing photos of the affair.)

But when Santos returned, he struggled to prove to investors he had something that could scale. The company introduced a new project management tool for designers that sourced, tracked, and managed buying furniture and accessories from brand partners — but there was little incentive for designers to adopt it. “It seemed to be adding multiple steps to something that’s already kind of complicated,” says one designer. “And to explain it, there were 12-page documents. I was like, ‘Why is this so hard?’” Former employees say the tool revealed how little Santos actually understood designers. (“He always told designers he was one of them, but he worked for a design firm for a year,” says one.)

By January of 2019, it was becoming clear to employees that Homepolish was floundering. About 15% of the company was laid off on January 3 — days before the three-day “2019 Kick-Off” in New York City, the first time the entire company would all be in the same room. Remote employees were responsible for any luggage charges with their economy basic flights. They were asked to stay with friends, Homepolish employees (the COO hosted three people), or as a last resort, in shared hotel rooms. The company skimped on catering for the delayed holiday party held on January 10 — a cost-cutting move which backfired when last-minute pizzas had to be ordered because employees had been downing copious amounts of donated booze (from Matsubara’s clients).

Despite these signals, the atmosphere at the kick-off was upbeat. The 75 employees left had their tarot cards read and listened to presentations, which shared a consistent message: “We want to make our operation as lean as possible to continue to attract the types of fundraising conversations we want to be having and keep the terms in our favor,” as one former employee described it. But by the end of the month, Homepolish would find itself embroiled in a massive PR crisis that would lead to its undoing.

On January 31, Ilana Wiles, who runs a popular blog called Mommy Shorts, posted about a botched Homepolish renovation of her Manhattan condo. She included more than two dozen photos of the renovation — wonky bathroom tile, sloppy finishings, a kitchen light that prevented her from opening the top cabinet. She also posted the photos on Instagram, where she had some 160,000 followers.

Wiles’ followers swarmed Homepolish’s Instagram feed. “Go fix The Wiles apt before posting more over exposed photos that don’t show the workmanship defects,” read one comment. Some included the hashtag #fyrefestofhomerenovation. Santos met with Wiles February 7, but the issue continued to drag on, with him telling her on April 16 that he was conducting an internal investigation. By May — three months later — Wiles was fed up with waiting. She posted an update to her blog, saying she had realized that Santos was punting. “GUYS. WTF,” she wrote. “You can tell Noa and Home Polish [sic] what you think of this response and the work they did on my apartment on their beautiful Instagram account.” (Wiles did not return emails seeking comment.)

By June, the story had been picked up by national media, including Today.com and House Beautiful. As time passed with no resolution — and as almost every day a new and impossibly beautiful image appeared on the Homepolish Instagram feed — the Mommy Shorts brigade grew angrier and angrier, posting comments faster than anyone could delete them. They also trolled the individual feeds of the designers, whether or not those designers had anything to do with the Mommy Shorts project. Designers like Riha no longer wanted to appear on Homepolish’s Instagram. “We were like, we don’t want our photos on there because we don’t want to be dragged under,” she says.