By David Ranii
Thad Tarkington and Kevin Barry were undergraduate business students at N.C. State University in the spring of 2013 when they face a crucial career choice. Their fledgling startup, an online subscription service for home air filters, had been accepted by a business accelerator based in Greenville, S.C. But to take advantage of the $20,000 in seed funding and mentoring offered by the accelerator, the duo would have to drop out of school and relocate to the Palmetto State for several months.
They decided to go for it, reverting to a “freshman-in-college lifestyle for a year” and concluding they could resume their education if their business, FilterEasy, didn’t work out, Tarkington says. The bet has paid off: “So far, we haven’t had to come back to college,” says Barry, now 26.
After roughly tripling its staff in 2017 and doubling last year, FilterEasy has about 130 employees. About 100 work in North Carolina at its headquarters in downtown Raleigh, where it is rapidly running out of space, and at a fulfillment center in Wilson. This year, it expects to add another 50 to 70 workers. FilterEasy doesn’t disclose revenue specifics but says growth has been on par with the expansion of its employee roster. To date, the company has raised $18.3 million in funding, including a $6.9 million round in October led by Raleigh-based One Better Ventures. An undisclosed portion of that money enabled FilterEasy to acquire three smaller competitors.
“We love the team,” One Better partner John Replogle says. “They may be young in age, but they have learned a lot. There are a lot of people their age today who got their college degrees, may have a master’s in business, and don’t have nearly the business experience these guys have right now.” Tarkington, 27, is the CEO. Barry is the chief operating officer.
Cofounders Capital, a Cary venture capital firm, first invested in FilterEasy in 2015. When he met the founders, general partner David Gardner wanted to test their mettle. “I gave them a bunch of ideas and stuff they needed to do to test out the assumptions in their model,” he says. “We got together [again] in a week or two, and they had done everything we had discussed and they were pushing me for more. That’s a really good sign when you’re dealing with entrepreneurs.”
FilterEasy’s goal is eliminating much of the hassle of regularly changing air filters for heating and air conditioning systems. Customers use the company’s website to select the number of filters needed, the size and the filter grade at prices starting at $11.97, which includes free delivery. Filters can be delivered monthly, every other month, quarterly or on a custom schedule to allow more frequent changes during pollen season, for example. A delivery serves as a reminder that it’s time to switch.
FilterEasy wasn’t the first company to offer air filter subscriptions, but the company touts that it has become the largest by far. “What they have figured out is how to keep all the complexity away from the consumer,” Replogle says. “So, if I’m a consumer, my user interface, my relationship with FilterEasy, is super simple.” It also helped that, from the outset, FilterEasy opted against charging the premium prices some competitors favored. “FilterEasy is just simply a great value,” Replogle says.
So, what’s so complex about the air filter subscription business? Consider that, when you add up the various sizes and grades of air filters, “we have 380,000 SKUs that we can sell,” says Barry, a Massachusetts native who came to Raleigh to attend N.C. State. Still, by working with a variety of filter manufacturers as well as producing air filters in-house, adds Tarkington, “when you sign up, we generally ship your first order in one to two days.”
FilterEasy’s founders have become evangelists for the virtues of regularly changing air filters. Tarkington, who grew up in Charlotte, ticks them off one-by-one: lower heating and cooling bills by 5% to 15%; reduce HVAC maintenance and repairs; and improve indoor air quality.
Although it focused exclusively on consumers at the outset, in 2015 FilterEasy entered the commercial market, selling to restaurants, hotels, gyms and other businesses. It also has partnerships in which companies such as Austin, Texas-based Resideo Technologies Inc., a Honeywell spin-off that produces Honeywell Home brand products, markets FilterEasy subscriptions.
FilterEasy has been headquartered in Raleigh’s center city since the summer of 2015, and the founders see the location as a key ingredient in their ability to recruit talented people. Downtown is where “the best of the best of the people working in Raleigh want to be,” Tarkington says. He also stresses that the company places a premium on hiring people with a competitive streak. “We are a growth-stage company going into a large but old market. We really need to work hard and be competitive in order to win. We are looking for people who are aggressive. They want to win.”
Tarkington and Barry talk about expanding into new categories over the next year and a half but aren’t providing details. Replogle says he’s been preaching the virtues of staying focused and that the company shouldn’t “go too far afield too fast.”
“But I will say,” he adds, “that the most exciting thing that is coming is a radically new filter. … We’re not at a point where we can share [specifics] yet. But they are bringing true innovation to an otherwise pretty commodified category.” ■