Houzz recently leaked a new funding round of around $400 million to continue to scale. That puts their valuation at around $4 billion. How they've done that, going toe-to-toe with home improvement monsters like Home Depot and Lowe's, while also countering interfaces from digital destinations like Pinterest, is a big lesson in creativity and focus.
Houzz is built more by play than playbook.
Adi Tartarko founded Houzz with her husband Alon as a side project. They were Israeli immigrants settling into a new home in the Bay Area. They wanted to remodel it into their dream home. "My husband and I felt it was a pretty miserable process to renovate and design our first home ever," she shared. Houzz became a local community project to aggregate ways go to from inspiration to execution. Turns out, many of the couple's neighbors in Silicon Valley had the same kinds of challenges. The idea that became Houzz "started exploding organically."
That's right--no focus on making money, raising a round, or getting "the right team" at the table. At least, not at first. They spent 18 months boot-strapping before they even considered bringing on investors. They didn't start with a digital sales approach but did lots of in person connecting and conversing. They asked the right questions.
"The business grew based on the demand from the community," says Adi. "We didn't start as a business. We tried to solve the user problem." Today, 40 million people a month use Houzz and it has over 8 million photos of home products you can purchase.
Creative founders should have a tight focus on solving the customer pain--which is often their pain, too.
Meanwhile, lots of other companies are taking aim on connecting home owners to inspiration execution, too. Think of the whole range of solutions, spread out on the continuum of business models-- from Craigslist and Angie's List, say, to Facebook or Google re-targetting you relentlessly after you peek at Crate & Barrel online.
"I think the big advantage of going very deep in such an enormous vertical is you can create an end to end solution that is not easy for copycats or others to grab parts of it. You have a robust community. That ecosystem is very important to us,
she said in a Shoptalk interview. (See the full interview below.)
Creative founders have purpose and passion. They find the tech.
Adi and Alon set out to build something that works, for themselves, and their neighbors. They solved for remodel projects of a certain scale--not people looking for just a part, like a new tub. It's a process approach that relies more on creative insight to create it than technical insight, something that creative founders should note. It's also key that they leaned into the scream of a frustrated community with capital to spend on substantial project sizes. Houzz quickly became one of the most visited web sites in the U.S. Much of their latest growth has been fueled by the company learning how to monetize the hunger they tapped into early, including forays into deep learning.
"When people get access to the right technology and tools, now they can think differently about designing and remodeling," she says. As an example she points out that U.S. homeowners have changed their perspective on remodeling since Houzz was launched. "It's no longer just about resale value. When we started running these surveys recently, the top priority in the US was, we need to remodel because of resale value. That went down. Now, it's about quality of lifestyle and improving functionality for my family."
Adi and Alon are seeing some progress in the project that inspired them, too. "After so many years, we just finished our very first house last year," she says.