Posted on Friday, Oct 13th 2017
According to eMarketer, the online market for home furnishings is expected to double from $27 billion in 2015 to $55 billion by 2020. Benefitting from this growth is Billion Dollar Unicorn Houzz, which recently raised a massive round.
Palo Alto-based Houzz came about when designer couple Alon Cohen and Adi Tatarko realized how frustrating the process of remodeling a house can be. The lack of a network for connecting and collaborating with design-focused professionals compounded the problem. The duo started Houzz in 2009 as a website focused on the DIY home remodeling community. Soon, it became an online portal offering a design community focused on social network, content discovery, and an e-commerce site for consumers. It also has an augmented reality tool called View in My Room 3D that was recently upgraded to include half a million images of home furniture and items.
Today, Houzz has grown to over 40 million unique monthly users and 1.5 million home professionals in 60 categories. Its marketplace, launched in 2014, has more than 9 million products from more than 20,000 sellers. It sells a wide range of products from tools, cookware, furniture, home decor items, home improvement items like tiles and building material, outdoor furniture, and lighting fixtures.
It has expanded to Tel Aviv, London, Berlin, Sydney, Moscow, and Tokyo. It has localized platforms in 14 countries including the UK, Australia, France, Germany, Russia, Japan, Italy, Spain, Denmark, Sweden, Ireland, Singapore, New Zealand, and India. Houzz is facilitating a community and marketplace for global design with access to products, talent, and expertise from all over the world. About 3% of projects received by design professionals via Houzz in 2016 were outside of their country.
In 2015, Houzz acquired GardenWeb from NBC Universal at an undisclosed sum. GardenWeb is a garden and home community discussion site. At the time of the acquisition, it was hosting over 14 million posts across 400 discussion topics and 2.8 million discussion threads.
Houzz earns revenues through the advertising of products, premium listings for local home professionals and service providers, and a marketplace commission of 15%. Houzz does not disclose details of its revenue.
For Houzz, focusing on building local content and community comes before monetization. This has been its strategy while expanding to any market, within US as well as the international markets. As a result, I believe its monetization is not very high.
The company was bootstrapped till 2011 when it raised their first $11.6 million funding round from Sequoia Capital at an undisclosed valuation. Overall, Houzz has raised $613.6 million from investors including Iconiq Capital, 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. It last raised $400 million in June this year at an estimated valuation of $4 billion. In an earlier funding round in October 2014, it raised $165 million at a valuation of $2.3 billion.
With the latest round of funding at such a high valuation, its exit options have become limited. Chances of an IPO in the near future remain bleak.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. 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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