CustomMade, With New Bucks Under Its Belt, Revamps Online Model for Customization

9/28/11Follow @gthuang

First of all, please don’t call CustomMade a “mass customization” startup. That phrase refers to the cluster of companies, many of them in the Boston area, that specialize in offering consumers personalized goods online—everything from clothing to jewelry to artwork.

No, CustomMade is different. At least that’s what co-founder and CEO Mike Salguero would have you believe. The Cambridge, MA-based startup runs a website that connects consumers with expert makers of furniture, ceramics, home décor, glassworks, and more. That’s different from sites that let consumers configure products or browse through umpteen permutations of features before ordering them.

“Where we play is the service, not the product,” says Salguero. “There’s no configurator. This is custom on a whole different level.” (As an aside, “The Configurator” sounds like either a great nickname or the next Jason Statham movie.)

Salguero and fellow co-founder Seth Rosen were building their careers in real estate development when they bought CustomMade.com for $140,000 in early 2009. The site had already existed for years as a custom woodworking site and was getting modest traffic, about 500,000 unique visitors a year. Salguero and Rosen raised about $2 million from friends and individual investors, rebuilt the user interface, and have grown the site’s traffic to more than 3 million uniques a year. The company currently uses a subscription model; its 2,500 makers and craftspeople pay an annual or monthly fee, says Salguero.

The company has just raised an additional $2 million from unnamed investors. The new money is being used to continue its growth, Salguero says. But the startup isn’t saying anything more specific about that yet.

Nevertheless, here are a few more reasons why CustomMade is interesting (and about to get more interesting):

—The company is moving to a transaction-based model (it will still make money on subscriptions as well) in which it will take a cut of each purchase made through the site. And just for reference: Etsy, a prominent online marketplace for handmade goods, has an average transaction value of about $25, Salguero says. CustomMade’s average is $2,000.

—As part of the shift, the company will roll out a new interface for consumers and craftspeople to interact. More on that coming down the pike.

—CustomMade has been hiring, and is now up to 22 employees. The firm recently recruited Michele Pearl, a well-known exec from BzzAgent and Monster.com, as its chief product officer.

—Locally-made and handcrafted goods are a multibillion-dollar market that can conceivably compete on price and selection with medium-to-high-end retailers. The question, of course, is how much of that market can be captured if the process is made simple and efficient.

—Perhaps more than mass customization, CustomMade fits into the trend of online communities that connect experts with paying customers who want specific jobs done, through a social interface. See GrabCAD, Kickstarter, IndieGoGo, and Quirky, for instance.

Stay tuned for more on this company…

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

By posting a comment, you agree to our terms and conditions.