Despite the pandemic and the economy’s fall, spending on house improvements grew from $406 in 2019 to $433 billion in 2021, according to the Joint Center for Housing Studies of Harvard University.
People began modifying their houses and gardens to create comfortable locations for work and study as soon as the lockdown began and the majority of enterprises shifted to remote employment. Additionally, they could now use the money they would have otherwise spent on vacations and entertainment to renovate and decorate their home.
Homeowners searched online for ideas and delivery services because they couldn’t physically visit hardware and furniture stores. Not to mention that online platforms for house improvement were thriving even before the pandemic. Houzz is among the most well-known in this area.
This post is a great resource for anyone interested in adapting the Houzz business model to develop comparable software for a different market or a nation where Houzz is not yet available. A ready participant?
Houzz’s History: How A Side Project Evolved Into a Multi-Million Dollar Company
Many businesses began as a result of a founder’s personal needs. A project of this kind is Houzz.
In 2009, Adi Tatarko and Alon Cohen, two Israeli immigrants, made the decision to remodel the ranch they had just purchased in Palo Alto, California. They stumbled into an undiscovered market for a startup while desperately searching for design ideas for their home in publications that would work with a $2000 budget.
The terms “House” and “Buzz,” which are two related words, were combined to form the moniker “Houzz.” Adi and Alon wanted to put a stop to the disorganized hunt for design solutions and gather merchants, homeowners, and designers in one location so they could work together.
While Adi was in charge of the material, Alon, who at the time worked as a programmer at eBay, created the Houzz website in his own time. Only 20 users, largely their Bay Area friends, were there when they first started. However, the site soon attracted the attention of other architects and designers who sought to market their products and creative concepts.
By the end of 2009, Adi and Alon felt that they could no longer regard their idea as a side project because it was growing so quickly. The platform needed both a monetary infusion and technical know-how. Twenty servers were already required by Houzz to store the photographs of the design projects. Thus, the fledgling business owners dared to ask for assistance from investors after a year and a half of bootstrapping.
They raised $2,000,000 in 2010. They were able to start an iPad app because of this. The Houzz app allowed designers to store and present all of their ideas to clients, allowing them to forget about paper-printed project presentations entirely. The next phases of Houzz’s growth involved going global and luring new investors. They raised more than $613 million over the course of the following few years while also making constant platform improvements.
Houzz is currently the most popular platform for remodeling homes globally. The business is still run by Adi and Alon. This is how Houzz will appear in 2021:
- $500 million annual revenue 40 million users,
- 90% of whom are homeowners
- 1.5 million professionals
- 11 million uploaded photos
- 10 million products for sale
- 1,500 employees
- $4 billion value
Let’s now examine the main business principles that propelled Houzz to such success and how Houzz generates revenue.
Houzz’s Business Strategy
The project’s creators, who funded it out of their own resources, did not anticipate the platform’s rapid growth. Let’s look for the indicators of their success:
- An Answer that Satisfies the Demand
To a big audience of people engaged in home improvement, Houzz offered a timely solution. Members of the audience included Adi and Alon. They suffered from the lack of available home improvement websites, thus they fully appreciated the discomforts of renovating.
- Prioritize Usability Before Profitability
The creators of Houzz are sincere enthusiasts that prioritize quality and ease of use in all aspects of their company. Anyone may use it thanks to the design’s simplicity and intuitiveness.
- Rapid International Development
The startuppers charted a course for rapid expansion. After receiving their initial funding from angel investors, they hired programmers, released an iPad app, and went global. With locations in the United States, the United Kingdom, Japan, Australia, Russia, and Germany, Houzz has grown to be the leading global platform for home design and renovation. Platform localization, which made it seem natural and trustworthy to locals, was the secret to success on a global scale.