Houzz - The Project That Changed How We Renovate Homes
When founders Adi Tatarko and Alon Cohen wanted to remodel their home, they found out that it could be a nightmare of a process. Finding the right people to make their ideas reality was hard, and there wasn't a unifying place to find them.
They thought, there's gotta be a better way to build or redesign a house with less effort, right?
Even before they started their renovation, they knew that finding professionals in this field was a painful and time-consuming process.
This is the story of how two regular people fixed a problem through the creation of Houzz, a platform where they could find designers and professionals, and browse photos from homes.
How The Idea Was Born
The couple bought their first house in 2006. However, it was a house from the 1950s, and it required serious renovation. They had a vision of what they wanted to do, but the most difficult part was communication, as both of them struggled to explain their ideas and concepts to architects. To make it easier for all parties involved, they started buying books and magazines for homes and clipping the photos they liked from them.
Soon, Adi and Alon found out that this process wasn't efficient enough, as they couldn't find a satisfying number of images to show what they wanted. They found the perfect design after several months of searching, but now there was another problem - finding professionals to turn their dreams into reality!
The idea was born here, out of frustration and disappointment, because every time they looked for a solution on the internet, it was a dead-end. This was at the beginnings of the 2000s, and at that time Google was at its infancy, far from the search engine giant we know today, while Facebook hadn't even been invented yet. Even though the internet was booming with startups, no one seems to notice that there wasn't a website that solved this particular problem.
An opportunity has arisen - they saw it, and decided to seize it! So, the pair started Houzz, a side project, not knowing that it would completely change the lives of millions, as well as their own.
Before The Houzz
Before the creation of Houzz, the main inspiration for renovating, redecorating the homes, and everything inside them were TV shows or interior magazines. With the rise of the internet, they were sites where people could find inspiration, but there wasn't a unified site where everything was neatly organized.
With their platform, finding the right inspiration for personal projects became much easier. When searching the web, the experience can be overwhelming and people can feel confused about what they want, making renovation a daunting task. Of course, scrolling through thousands of photos from different projects and websites, you can't really make heads or tails of them. In contrast, Houzz keeps everything organized, simple, and convenient to use.
When they launched the website in 2008, both Adi and Alon worked in different fields. Adi was working at an investment firm, while Alon was leading a developer team at eBay. The first year and a half, they were working from their home, and it may sound strange, but they were their own first customers because they were searching for a solution for their home!
The actual first customers were the parents from their children's school and a few professional architects and designers from their area. As more and more professionals were joining the site, they were starting to recommend the site to their clients, and the numbers started rising.
Adi and Alon never thought that their community would grow so large, so they never saw it coming. They thought it would be a small site for the community in the San Francisco Bay area. After six months, they got a request from customers from Chicago and New York, asking them to open new sections on their website. As soon as they saw that their website was growing, they started to be even more involved in the development of the site.
Before they knew it, they grew from 20 users to over 350,000, which was enormous growth. It prompted them to start thinking about finding funds, so they could grow even more!
In the first year and a half, while working on their jobs, they were operating the business without funding. As their website kept growing, people started telling them to quit their jobs and seek funds, so they could focus full-time on developing the website.
Before looking for investors, they realized that for a business to get funded and attract capital they would need:
- Proof that their business idea was good;
- Proof that people would use their product.
In the beginning, they focused on making the product efficient, rather than turning a profit. The company's tempo of growth showed that it had a promising future, so they knew that getting funded was a matter of when, rather than if.
In 2010 they managed to initiate a Series A funding round, gathering a total of $2 million from the venture capitalist Oren Zeev and other investors. After this, they quit their jobs and started working on Houzz full-time.
With these funds, they were able to grow unimpeded. In 2013, they saw that almost a third of the users are from outside the USA, so they decided to expand overseas. First, they hit the European market, then the Asian. By the end of 2014, the company was valued at $2.3 billion with services available in most of the world!
The high demand for their services allowed them to grow at an exponential pace, and in total, from 2010 until 2017, they were able to raise around $600+ million in various funding series, money that was used to improve the service and expand the business.
The Growth Strategy: Finding The Right People and Model
After securing the first funding series in 2010, Adi and Alon immediately set about seeking the right people to help develop their business. They were looking for like-minded people who shared their vision, and more than half of their time was spent interviewing candidates.
Their main source of income came from their marketplace, where they took 15% commission from sold products and ads paid by professionals to advertise their work. Looking back and seeing how fast the company grew, it's clear the founders surrounded themselves with the right people!
An established and famous company, Houzz's success is down to its client-centric approach - listening to clients and using their feedback to improve their service. Adi and Alon never went into the business with the intention to make money, but to make something meaningful for the community - and they succeeded! By creating a service that resonates on the internet and the real world, and making life easier for millions around the globe, Houzz has become a 'houzz-hold name' when it comes to renovation!
Their strategy is pretty simple - connect professionals with homeowners, and everyone will benefit. Their focus on the product and user experience is what allowed Houzz to grow so large.
The lesson? Their approach can do wonders for new companies and aspiring entrepreneurs, showing that profit and finances are not the most important thing when running a business. That's why more and more companies are shifting their focus from money to satisfied customers - this way, success is guaranteed!