everything for home … and... · 2016-09-06 ·...

1 DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY

[email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.

OCTOBER 22, 2015

• Houzz is an online home remodeling community that connects homeowners with design inspirations and home professionals.

• The six-‐year-‐old startup is poised to disrupt the billion-‐dollar home improvement market

• Its business model is driven by community, content and commerce. Since 2014, the company has expanded to 15 countries outside the US with localized websites and content.

• Recent acquisition of Gardenweb solidifies Houzz’s status as the leading community for home remodeling

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D E B O R A H W E I N S W I G

E x e c u t i v e D i r e c t o r H e a d o f G l o b a l R e t a i l & T e c h n o l o g y

F u n g B u s i n e s s I n t e l l i g e n c e C e n t r e d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m

U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9

C H N : 8 6 . 1 8 6 . 1 4 2 0 . 3 0 1 6

EVERYTHING FOR HOME

RENOVATION



OCTOBER 22, 2015

E v e r y t h i n g f o r H o m e R e n o v a t i o n ABOUT THE COMPANY Houzz is an online home remodeling community that connects homeowners with design inspirations and home professionals. Started in 2009 by Adi Tatarko and Alon Cohen, a young couple frustrated by the traditional ways of remodeling homes, the online platform has grown into a community of 35 million unique monthly users, including 80,000 active architects, designers, contractors and other home improvement professionals.

Figure 1. Houzz’s Funding History

Amount (USD Mil.) Date Investors

Series D 165 Sep. 2014 DST Global, GGV Capital, Kleiner Perkins Caufield & Byers, New Enterprise Associates, Oren Zeev, Sequoia Capital, T. Rowe Price

Series C 35 Jan. 2013 Canvas Venture Fund, Comcast Ventures, David Sacks, GGV Capital, Kleiner Perkins Caufield & Byers, New Enterprise Associates, Sequoia Capital

Series B 11.6 Dec. 2011 Amos Wilnai, Don Katz, Gary Ginsberg, Oren Zeev, Sequoia Capital

Series A 2 Nov. 2010 Amos Wilnai, Don Katz, Gary Ginsberg, Jeff Fluhr, Oren Zeev

Source: CB Insights

Figure 2. Home Improvement Sites: Total Funding, by Company (USD Mil.) Source: CB Insights

ONE-‐STOP SHOP FOR HOME PROJECTS: COMMUNITY, CONTENT AND COMMERCE Houzz’s success is attributable to its focus on building a community of homeowners and professionals to exchange ideas and complete home projects in the most efficient manner. Homeowners can find inspiration from over 8 million home design images and pin useful pictures in their “ideabooks,” which are similar to Pinterest boards. In addition, homeowners can use Houzz to:

58.8

99.0

161.6

213.6

1,320.0

Handy

Porch

Angie's List

Houzz

Pinterest

Houzz’s success is attributable to its focus on building a community of homeowners and professionals to exchange ideas and complete home projects in the most efficient manner.



OCTOBER 22, 2015

• Interact with a large online community of other homeowners and home improvement professionals

• Find designers, architects and contractors to complete their projects

• Read inspirational content and learn about the latest trends from home renovation professionals

• Explore and purchase new products, from materials to furniture to home decor

ACQUISITION OF GARDENWEB SOLIDIFIES HOUZZ’S STATUS AS THE LEADING COMMUNITY FOR HOME REMODELING Houzz received $165 million in series D funding from investors in September 2014. In August 2015, the company announced its first acquisition, of GardenWeb, NBCUniversal’s online home and gardening community. The addition of the 20-‐year-‐old GardenWeb website gave Houzz access to millions of participants in 2.8 million discussion threads and 14 million discussion posts covering nearly 400 discussion topics.

BUSINESS MODEL DRIVEN BY USER DEMAND While Houzz does not disclose actual sales figures, industry analysts estimate that it could reach $1 billion in annual sales by 2020. The company generates revenues in three ways, all of which stem from organic demand from the established community:

1) Targeted brand advertising: Houzz works with almost all of the largest brands in home categories, and it charges manufacturers to advertise on its sites. Brand marketing on Houzz is particularly targeted, as it leverages 35 million monthly active users (90% of which are homeowners) who are actively involved in home improvement projects. Sponsored ads are embedded in inspiration photos and categorized by style. Consumers are likely to click on the sponsored pages because they are already interested in a similar home style on the page they are browsing.

2) Sales commission fees: Houzz added a commerce element to its site in 2014, and now carries over 1 million products from 1,000 vendors. Demand for products grew in tandem with the number of inquiries from community members about products featured in Houzz’s design photos. Houzz charges listing merchants a 15% commission fee. The online marketplace allows customers buy furniture and home accessories from manufacturers such as Hamilton Beach, Black & Decker and Viking Cookware without leaving the Houzz website.

3) Premium listing for home professionals: Since 2012, Houzz has offered listings services for home professionals such as architects, designers and contractors. Professionals are given the option to highlight and customize their online images in order to better engage with community members.

The addition of the 20-‐year-‐old GardenWeb website gave Houzz access to millions of participants in 2.8 million discussion threads and 14 million discussion posts covering nearly 400 discussion topics.



OCTOBER 22, 2015

HOUZZ IS POISED TO DISRUPT THE BILLION-‐DOLLAR HOME IMPROVEMENT MARKET The company is revolutionizing the way people complete home improvement projects. The total home improvement market in the US alone amounted to $303 billion in 2014. And, according to IHS Global Insight and the Home Improvement Research Institute, the US market will grow at a rate of about 5% over the next five years, thanks in part to an improving job market and falling gas prices.

Figure 3. Market Size and Growth Rate of US Home Improvement Market, by Segment 2014 Market

Size (in Billions $)

Growth Rates

2010-‐2014 2015 2016-‐2019

Consumer Market 221 3.6% 5.9% 4.8%

Professional Market 82 3.8% 5.0% 3.6%

Total 303 3.6% 5.7% 4.5%

Source: IHS Global Insight/Home Improvement Research Institute

Due to its unique one-‐stop-‐shop business model, Houzz does not have a close competitor in its overall business, although it does compete in terms of separate service and product offerings:

• Design images: Houzz has the potential to disrupt the home improvement magazine business, which includes titles such as Handyman, Home and Home Improvement. Its ideabooks put it in direct competition with Pinterest.

• Products: Houzz is well positioned to take market share from traditional home improvement retailers such as Lowe’s, Home Depot and Ace Hardware. On the e-‐commerce side, furniture e-‐tailer Wayfair.com and handcraft marketplace Etsy offer similar product categories.

• Services: Online review website Angie’s List provides ratings of home improvement services providers, among many other categories. Handy is a site that allows users to schedule household services, such as cleaning or repairs. Home improvement network Porch gives homeowners direct access to a personal Porch Concierge who can help find the best professionals for a particular home project

The total home improvement market in the US alone amounted to $303 billion in 2014. And, according to IHS Global Insight and the Home Improvement Research Institute, the US market will grow at a rate of about 5% over the next five years, thanks in part to an improving job market and falling gas prices.

Houzz.com



OCTOBER 22, 2015

Figure 4. Houzz’s Competitors

Source: Crunchbase

Company Headquarters Description Investors Year Founded CEO Cofounders

Angie’s List Indianapolis, IN Angie’s List operates a local services marketplace and consumer review site in the US. The company provides a marketplace to research, shop for and purchase local services for home, health and automotive service needs.

Cardinal Equity Partners (John Ackerman), Citadel Advisors, Citadel, Cross Creek Advisors, John Hancock Investment Management Services, Lighthouse Capital Partners, Prism Capital, Redpoint e.ventures, Schwarz Partners, SSgA Funds Management, T. Rowe Price Associates, TCS Capital Management, TD Asset Management, Tri Ventures, Wasatch Advisors

1995 Scott Durchslag

Angela Hicks Bowman, William Oesterle

Etsy Brooklyn, NY Etsy is a website that focuses on handmade and vintage items, as well as art and craft supplies. The items include art, photography, clothing, jewelry, edibles, quilts, and toys.

Accel, Acton Capital Partners,Albert Wenger,Caterina Fake,Glynn Capital Management,Hubert Burda Media,Index Ventures,Joshua Schachter,Judson Ain,Manatt Venture Fund,Sean Meenan,Spencer Ain,Stewart Butterfield,Union Square Ventures

2005 Chad Dickerson

Rob Kalin, Jared Tarbell, Chris Maguire, Haim Schoppik

Handy New York, NY Handy (formerly Handybook) is an online platform that allows users to find, schedule and pay for household services. Visitors can use the site to schedule preapproved service providers such as housekeepers and handymen to handle specific jobs at specific times.

General Catalyst Partners (Joel Cutler, Nitesh Banta), Highland Capital Partners (Jeremiah Daly, Robert Davis), Revolution Growth, Sound Ventures, TPG Growth

2012 Oisin Hanrahan

Oisin Hanrahan, Umang Dua

Pinterest San Francisco, CA Pinterest is a place to discover and save ideas for projects and interests such as cooking, travel, home improvement and more. Ideas are handpicked by users.

Andreessen Horowitz, Bessemer Venture Partners, Betaworks, Brian Cohen, Fidelity Investments, FirstMark Capital, Fritz Lanman, Goldman Sachs, Hank Vigil, Industry Ventures, Jack Abraham, Jeremy Stoppelman, Kevin Hartz, Rakuten, Scott Belsky, Shana Fisher, SV Angel, Valiant Capital Partners, Wellington Management

2009 Ben Silbermann

Ben Silbermann, Paul Sciarra, Evan Sharp

Porch Seattle, WA Porch is a home network that is free for homeowners and home professionals. It enables homeowners to make smart home improvement decisions by giving them the information they need to find the right professionals, get inspiration and manage their home.

Battery Ventures, Bill Lee, Capricorn Investment Group, Chamath Palihapitiya, Charles Moldow, Founders Fund, Geoff Entress, Javier Olivan, Jeff Skoll, Lowe’s, Panorama Point Partners, SV Angel, Ty Pennington, Valor Equity Partners, other undisclosed investors

2012 Matt Ehrlichman

Matt Ehrlichman, Ronnie Castro



OCTOBER 22, 2015

HOUZZ IS BECOMING A GLOBAL COMMUNITY FOR HOME RENOVATION Five years after its launch, Houzz decided to expand internationally in 2014. Unlike other companies, Houzz expands to areas that already have a vocal Houzz community. During a keynote speech at the Israel Collaboration Network (ICON) 2nd annual meeting in October 2015, Adi Tatarko shared her ambition for international expansion. Houzz aspires to create a global community with localized services. So far, Houzz sites have attracted users from 200 countries. Its international offices account for about 35% of its revenues. The company has created localized websites and mobile apps, and it has physical offices in 15 international locations in Europe, Asia and the Pacific region outside of the US as of 1Q 2015. The sense of community is also reflected in Houzz’s corporate culture. The founders still interview every candidate before they are hired and share thank you letters from clients in company meetings.

Figure 5. Houzz: Key Corporate Developments

Date Key Development

Feb. 2009 Founded by Adi Tatarko and Alon Cohen

Nov. 2010 Launched new iPad app, raised $2 million

Aug. 2011 Created a database of more than 170,000 home design photos, sorted by room, style and geographic location

Jan. 2012 Announced strategic marketing relationship with Lowe’s

Dec. 2012 Reached 5 million app downloads, a 400% increase over the previous year

Mar. 2013 Launched the Pro+ Dashboard, an analytics tool that helps professionals participating in the Pro+ local marketing program track and analyze their exposure to homeowners

Jun. 2013 Introduced Android tablet app

Feb. 2014 Rolled out Site Designer, a free website design and publishing tool for listed professionals

Jun. 2014 Announced Houzz Affiliation Badges in partnership with some of the industry’s leading trade associations, nonprofits and academic institutions

Jul. 2014 Launched Houzz.co.uk

Aug. 2014 Launched Houzz.co.au

Nov. 2014 Launched Houzz.de and apps for iOS and Android, and opened its German office

Nov. 2014 Launched Houzz.fr and localized apps for iOS and Android

Dec. 2014 Announced its expansion into the rest of Europe and into Asia, starting with Japan

Mar. 2015 Launched in Russia

May 2015 Launched My Houzz, a video series that follows people as they renovate the home of someone meaningful to them

Aug. 2015 Acquired home and gardening community GardenWeb from NBCUniversal

Sep. 2015 Launched in Denmark

Sep. 2015 Launched in Sweden

Source: Company website and FBIC Research

Adi Tatarko, Co founder of Houzz, shared her ambition for international expansion at ICON



OCTOBER 22, 2015

Deborah Weinswig, CPA Executive Director—Head of Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: 852.6119.1779 [email protected] Filippo Battaini [email protected]

Marie Driscoll, CFA [email protected]

John Harmon, CFA [email protected]

Aragorn Ho [email protected]

John Mercer [email protected]

Shoshana Pollack [email protected]

Kiril Popov [email protected]

Jing Wang [email protected]

Steven Winnick [email protected]

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everything for home … and... · 2016-09-06 ·...

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