The Houzz She Built and What Can We Expect in 2020

Adi Tatarko is kind of a celebrity in tech and home design worlds. She is requested for speeches at conferences and for pictures afterwards. The Israeli born Tatarko is the only one female at the steering wheel of the world’s largest 25 private technology companies, the co-founder and CEO of Houzz.

What us Houzz?

It was launched in 2009 as a website and later an app for everything home: ideas, inspiration, professionals, guidance, and lots of products. Shoppers browse through hundreds of room models, they can save the pictures they like, contact designers behind the complete décor, and order furniture piece by piece by clicking on it. It’s simple, but innovative enough to be a breakthrough. App users can take a picture of something they like in a store somewhere and then run a search online to find similar items. Finally, there is a virtual reality tool to place an item in your space and see how it looks.

Houzz has become a lot more than just home décor website. It currently has over 2.4million designer portfolios, 19 million pictures with designs, 10 million products, and 20,000 participating retailers. Not surprisingly Houzz has become an expert for trends and even a market research tool. Many architecture and design schools use the website for their educational needs and the company’s television channel about home renovations has a growing number of subscribers.

Many app users are not even actively renovating or redecorating, they simply love to stay in the know about trends and watch before and after pictures. So in these cases Houzz is almost like a hobby and a social community.

The company employs 1,800 people all around the world and in the Tel Aviv’s complex. The current evaluation stands at $4 billion with the last financing round of $615 million. Such high value makes selling pretty hard and at this point IPO is not being considered.

Houzz never had any problem raising funds partially because it was started as a family side project when the couple bought an old house in Palo Alto, California in 2006. It needed a total overhaul. Doing all those projects showed how difficult and wrong the process was. Professionals were hard to come by, it took a year to draw a plan, and the budget was exceeded. Cohen decided to create a virtual place where potential clients and professionals could meet and discuss their plans. Tatarko gathered 20 parents from their children’s preschools who were thinking about improving their living space. The rest is history.

Tatarko was working at a small investment company with plans to manage it once the owners retired at the time. Cohen was a senior development manager at eBay. The family had two kids. After kids were in beds they answered emails from users and tried to help them solve problems. Users desired more services and growth was exponential.

By the time Tatarko understood the scope of her hobby, the site had 350,000 users and thousands of active professionals. At one preschool meeting Amos Vilmai, founder of professional maker MMC networks, heard those numbers and warned the couple that if they won’t raise capital and grow fast, someone else will take this idea and run with it.

This model of growing business from ground up with only family resources until certain valuation point is now called bootstrapping. The couple started it and now many startups try to follow this model. If they succeed, the company gets higher initial evaluation based on financial resources and founders get to keep bigger share of ownership.

This model answers two very important questions all investors want to know – if the product has market and if founders can win with their idea. The success like that of Houzz shows that the project is going to make it and is worth investment risk. Tatarko is a leader who comes from a long line of women who succeeded at what they put their mind to. Her mom was a teacher in Israeli before switching to real estate. Her grandmother was a fashion designer and flew abroad to fashion shows before it was accepted for women with children. Tatarko was inspired by both of them and today promotes women in her company. In fact, about 50% of her employees are female.

Tatarko credits part of her success to a great union with her husband whom she met on a bus in Thailand during a trip there in 1996. After 15 hours on the bus side by side they immerged a couple. It’s not very common for a couple to co-find a successful startup, so they are a great albeit rare example.

How does Houzz make money?

They sell annual subscriptions to active professionals who then get focused advertising opportunities. There is also income from company advertising and 15% commission from product sales. Finally, Houzz also sells project management tools to designers. Houzz is available in 15 countries worldwide and grow there happens organically. For example, the company entered Japanese market in 2015 when over 1,000 professionals accumulated on the site offering service to Americans who were interested in Japanese style design. In Japan it was not a tradition to acquire an older home; people bought brand new homes from builder monopolies and never had any interaction with contractors or designers. 14% of older homes stayed vacant and many young couples couldn’t afford to buy new properties. Finally tax reform was enacted granting tax breaks for those who buy older homes and Houzz suddenly got lots of business there. Current world trend is renovation and recycle, so Houzz is going to continue growing, there is no doubt about that.

Let’s take a look what is trending on Houzz for the upcoming 2020:

1. Colorful kitchens

Safe colors are going away and shades of blue, green, and purple are entering mainstream kitchen cabinets. There is even a trend for yellow kitchens, so forget white and go cream.

2. Sustainability

This is a growing trend in the face of climate warming and environmental concerns. 15% off all renovations included green materials in recent renovations. ‘Eco’ was the most researched keyword on Houzz and it’s not likely to stop in 2020.

3. Black interiors

Black and dark are definitely in now, even in the kitchen and bathroom, so we expect to see lots of combinations with black or entirely black walls and frames.

4. Bamboo

Bamboo is very versatile and extremely sustainable, so it is becoming extremely popular. Bamboo is a fast growing grass and can be used for flooring, furniture, dinnerware, and even fabric.

5. Green schemes

Green color is a must next year, so make sure you incorporate it somewhere. Kitchens, bedrooms, and bathrooms are going green. We think it’s safe to call green the new grey in 2020.

6. Statement bathrooms

Bathroom updates are on the rise and all white schemes are on a decline. Bathrooms are becoming a place for retreat and for showing off. Expect to see luxury finishes, tiles, and bold colors next year.

7. Navy bedrooms

This is not entirely new, but the color is going even darker than before. Navy blue is moving from living rooms and kitchens and taking place previously occupied by Scandinavian minimalism.