Room & Board Plays Impossible To Get

By all conventional standards, Room & Board should be bigger than it is. The Minneapolis-based furniture retailer, which runs just nine stores, has a devoted base of customers who rave about its hip design and customer service on message boards and blogs. Its sleek styles, priced between the highbrow midcentury classics at retailer Design Within Reach (DWRI ) and the flat-pack furniture from Ikea, are often featured in magazines alongside brands several times its size. It's popular among private equity and venture capital investors, too: Founder John D. Gabbert says he receives at least one overture a month. But investors haven't been able to persuade Gabbert to take their money. "We don't want to grow faster," he says. "So the conversations are usually incredibly short."

Why would a hot retailer shun the fast track? Gabbert believes it's the best way to maintain the company's customer-focused culture. He also worries faster growth would strain his ability to work with the small U.S. manufacturers that supply Room & Board with about 85% of its products.