Posted on Thursday, Jul 16th 2015
According to a recent IBISWorld report, the US interior design market is estimated to have grown 4% annually over the period 2010 through 2015. The market is expected to be worth $12 billion this year. As economic conditions improve, growth rates are expected to improve in the coming five years. Billion Dollar Unicorn club member Houzz is helping this industry leverage the benefits of the web.
Palo Alto-based Houzz was founded in 2009 when designer couple Alon Cohen and Adi Tatarko began remodeling their house by referring to magazines and home professionals. They soon realized that it was a very frustrating experience, not only for themselves, but for anyone wishing to perform a remodeling project. They soon realized that if they had a suitable technology and the ability to connect and communicate with the right people, home redesign wouldn’t be as challenging.
For the next year and a half, the couple bootstrapped Houzz to create a website focused on the DIY home remodeling community. Houzz became an online portal where one could browse and save home photos and even find design and construction professionals. Today, what began as a project has grown into an online social network and a discovery site that has a following of over 30 million homeowners, home design enthusiasts, and home improvement professionals. As of last year, nearly 35% of their users came from outside the US.
Houzz has been expanding their offerings while remaining focused on the home improvement section. Last year, they launched a site designer to help home professionals set up websites of their own. The service leverages the pictures and information the designers have posted on the Houzz profile to update the professional’s web page, keeping the web listings in sync. Houzz has also expanded into the marketplace segment. While they do not deal with the e-commerce aspect of the transaction, they do charge sellers a commission for goods sold through their site. They have also been growing geographically and have launched localized sites for several countries including the UK, Australia, Germany, and France.
Houzz earns revenues through advertising and through a marketplace commission. Both professionals and users can access the site and become members of the community for free. Houzz charges professionals an advertising fee if they wish to be featured as premium professionals. Houzz also charges a 15% premium on goods sold through their website. Their detailed financials are not known.
Houzz has been venture funded so far. They have raised $213.6 million from investors including Sequoia Capital, DST Global Solutions, GGV Capital, Kleiner Perkins Caufield & Byers, New Enterprise Associates, Oliver Jung, Oren Zeev, T. Rowe Price, Comcast Ventures, David Sacks, Kleiner Perkins Caufield & Byers, Paul Hsiao, Amos Wilnai, Don Katz, Gary Ginsberg, Jeff Fluhr, Mike Chalfen, and Oren Dobronsky. Their last round of funding was held in October 2014 when they raised $165 million in a round led by Sequoia Capital at a valuation of $2.3 billion. That is a meteoric rise from the $350 million valuation that they were at back in 2013.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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