Houzz raising $400M at $4B valuation
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As an interior design enthusiast, I come across Houzz all the time. It's one of my least favourite sites in that regard, after Pinterest. The problem for me is that it mostly serves to obscure. It's full of pictures of furniture and other design objects that are usually impossible to source -- just like Pinterest, which itself is one step down from design blogs that rampantly steal each other's photos without credit. It's so hard to source design. Most of the time, what you come across isn't even a product, it's some concept work by some designer in Spain who has no plans to manufacture whatever it is, or it's a custom job. Or some super high end Italian product with a price that's firmly in the "if you have to ask, you can't afford it" category.
Sure, valuable for inspiration, but annoying if you're looking to buy, say, a modern coat rack. (Which is surprisingly difficult, by the way. The US has still, for the most part, not caught up with modernism when it comes to interior design.)
Houzz does have a shop section, but it's not great. Mostly there's confusion about what mode Houzz is currently in; when landing on Houzz from Google I'm usually unsure if I'm looking at a product page, a lookbook or an ad for some interior decorator.
[1] https://www.zillow.com/digs/modern-master-bedrooms-669100191...
I admit I'm partially susceptible to this siren's song but in realizing that this is a staged picture of many of a curated ideal then I feel more comfortable with reality.
They got professional lighting!!!
I have to rely on the sun and whatever nonsense the previous owners put into my place which at this point is a fair amount until I get around to changing it.
Just a vote of confidence from somebody who cares about not having shitty lighting at home :)
I get your frustration but keep in mind that you're running up against the intended ethos of the Houzz website.
- Pinterest photos are mostly about "things" and a social network of sharing "collections".
- Houzz design photos are about "professionals" -- even though they usually don't have people in the photos. Notice that the vast majority of design photos are uploaded by professionals such as architects, interior designers, and home builders. Those business people are showcasing their portfolio. This is why the individual "things" in the photos are not easy to source.
Some users do attempt to source the products by submitting a question to the professional contractor that uploaded the photo such as, "where did you get that table and sofa?"
Sometimes the professionals will reveal the source such as "got it from Crate & Barrel" but most of the time, they'll respond something like, "it was purchased from our design studio" -- which is a roundabout way of way of telling the prospects to contact them for professional services. This is the way Houzz is intended to work.
Another website analogy would be Soundcloud. Imagine if users were frustrated that after listening to the music clips, it was not easy to "source the brand of guitars or drums". Well, most soundcloud music is uploaded by musicians and not music gear manufacturers. It's intended to showcase their songwriting and not whether the guitar used in the song was a Gibson or Fender.
Yes, Houzz does have some overlap with Pinterest for "things" (e.g. Shop by Department tab) but the original motivation of it was a portfolio of professionals' work. Or, to restate it in terms of another website analogy, it's a photo album version of Angie's List professional remodelers.
>Most of the time, what you come across isn't even a product, it's some concept work by some designer [...] or an ad for some interior decorator.
Yes, that's exactly what the Houzz design photos are about: Professionals not products. (Again, similar to the glossy monograph books from architects and interior designers you can buy from Amazon. The books' photos showcase the "look" but don't itemize the individual products.)
(However, that doesn't stop Houzz from evolving with their AI deep learning efforts to become more of a "products" buying portal rather than a marketplace for professionals.)
This analogy does not hold because nearly any musician will jump to the opportunity of sharing their gear and setup. It was pieced together passionately over a decade, after all; the proud basis of the musician's success.
They'll share info on music gear forums[1] but not on Soundcloud. One could visit 10 rappers' soundcloud page and leave a comment asking "what microphone did you use for your rap vocals?" and you usually won't get a reply. That's normal. A lot of musicians upload their music but don't engage with the comments left by users. Musicians aren't being secretive on Soundcloud; they simply don't view it as a Q&A platform.
In any case, what I meant by "items not easy to source" for Soundcloud analogy is that there is no "add to cart" or url for the products you hear in the song. E.g., there is no button that says "Buy the Shure SM58 vocal mic you're hearing". In contrast, Pinterest has direct and obvious hotlinks to retailers' websites.
Therefore, getting frustrated that SoundCloud "doesn't make it easy to source the music gear you're listening to" is to misunderstand what SoundCloud is about.
[1] gearpage, harmonycentral, gearslutz, etc: https://www.google.com/search?q=music+gear+forum
Or simply that many SoundCloud listeners aren't themselves looking to buy gear / make music; many Houzz users are indeed looking to DIY.
Yes, you're right. The user-interface to Houzz website does not make the "professional marketplace" distinction obvious.
Houzz does get revenue from both product companies like IKEA furniture, and Viking and LG appliances, etc. They also get revenue from professional contractors to show up in listings when people search photos for "ideas".
Yes, it's not obvious that 99% of the idea photos that people bookmark into their ideabooks come from professionals to advertise their "services" and not product manufacturers to sell "stuff".
Often architecture and design firms aren't interested in answering questions about products on Houzz because the people asking for the information will almost certainly never be a client of theirs. Plus depending on the size of firm, they aren't staffed to sit around answering questions from random people online.
In addition, it is often the case that the products used in custom homes or projects can't be sourced and purchased easily online which makes it difficult to earn any sort of affiliate revenue. This is likely why many photos on Houzz show similar products but not the exact product.
The fact that professionals also use it in new and different ways, to showcase their work, doesn't hold to your Soundcloud analogy.
Additionally, houses are an absolutely massive market. Housing is the largest expense of most people I know, and there's a ton of price weirdness. A kitchen remodeling might cost $14k, and that's not something you can buy on Amazon, and it's not like you can get your kitchen remodel done in China for cheaper (well, unless your house is in China.) If you were planning on $15k for your remodel, and a local contractor would offer $14k, but Houzz sends you to a "Houzz professional" contractor that offers $16k, you'll probably trust Houzz and accept $16k without questioning too much.
That's two thousand dollars from one kitchen remodel right there. Of course, that's not how Houzz's business model works right now, but there are lots of ways they can make money. You're also not going to accept that price discrepancy from any other consumer-focused things. Say, a laptop: if the new Macbook was $1600 in Best Buy and $1400 on Amazon, almost everyone would just buy from Amazon.
Additionally, they have a surprising amount of name recognition among the wealthy. I know a decent amount of wealthy people, and a few ultra-wealthy people, and I've heard maybe 25% mention Houzz. If you can get even a tiny portion of the ultra-wealthy-house-spending market, you're golden. Remember, the ultrawealthy have most of the world's wealth, and they spend a lot of that on ridiculously fancy houses with no care about cost.
Finally, there's no "bomb factor". Maybe there'll be a scandal tomorrow about Facebook selling your photos to some evil actor. Maybe Snapchat will get a massive lawsuit about its storage of millions of inappropriate pictures of underaged people. But how are you going to get angry at Houzz?
But most of the attempts refuse to take on any liability for themselves, and half the reason to use such a company would be accountability and reduction of personal risk.
For the various home projects I've done before, it always feels like such a gamble with a ridiculous amount of information asymmetry, although thankfully the internet has made great strides in fixing that part of the equation.
Some great gentlemen who realized that for skilled-tradesman, the real bottle-neck is lead generation. And more importantly, they respect and treat their partners and customers with the utmost of care and regard.
UT picked them up for a major "refreshment" of thousands of units of campus housing and they've completed some stunning work in the short-term-rental market here in Austin with investment properties.
The last time I talked to one of my friends over there, they were focused on the short-term-rental/AirBnB reworks of investment properties as it was lucrative and exploding.
They've only experienced organic growth from what I know which is really remarkable considering their success so far. I'd love to see them meet up with a formidable equity partner and see what they could do at an even larger scale...
[0]https://www.yelp.com/biz/quick-residential-rescue-austin-2
The market for contractors is basically a market for lemons. There's 10 bad to downright criminal contractors for every good one, and most customers have no way to judge the actual quality of the work until it's months later and something falls apart.
Once you have the hub relationship with homeowners, you can add however many spokes as you please.
We're hiring for a large range of engineering roles including some more specialized positions in research (writing classifier models and machine learning operations) and 3d (computer vision, photogrammetry, rendering). There's a lot more behind the scenes than just pretty pictures.
http://houzz.com/jobs and mention HN
While I enjoy content on Houzz, I have zero interest in splitting that information across platforms as I keep all of that in Pinterest and share boards with my wife.
Frankly I find it very off-putting how blatantly it is blocked, and it makes me want to engage with Houzz less because I fear what else you might do in the future that is anti-user. With a massive round of funding comes massive investor expectations. For an advertising/affiliate model like Houzz has, that obviously means the users are the product and not the customer, so I see this as magnifying those existing concerns.
How can you be sure my story is accurate? For all you know I might have given them the wrong number or some other error on my part.
Hopefully you'll expand that, until then no interest in returning to the Bay Area.
Still, I find their professional market section to be a extremely frustrating and they will need to figure out how to scale that down market if they want to continue growing. None of interior designers or "architect/contractors" listed on there would get back to me unless I promised to spent at least $50k on a project with them. Then once I finally found a couple "interested," they were flakey and never got back to me.
I must have exhausted the list on their platform before I moved over to Yelp. Right away I found all the help I needed and everyone was so courteous and followed through. Such a world of difference from the 2 platforms. I do think Yelp's open review platform keeps businesses way more honest and it shows. Any project I start now and I'm asked where I learned about the business, I mention Yelp :).
When it comes to Yelp, though? I just don't trust them -- no specific reason, just enough "negative" publicity that I'm unsure. The first thing I look at, primary even, are the 'hidden' reviews. They tend to tell a better story than the reviews shown, especially when only a medium-to-small number of reviews are present. That's a bit troubling to me.
To each their own, glad to hear you've found something reliable though -- I suspect locality may make a world of difference, too.
I don't think this is true. There are tons of Ikea kitchens in Houzz. We got a lot of inspiration from Houzz when renovating our apartment. I really like that it has a mix of high-end and Ikea, because many times those high-end ideas can be implemented with cheaper alternatives.
It will be interesting to see Pinterest build these direct relationships with sellers rather than build their own affiliate or else advertising platform. The big open for me, but probably not investors valuing them at 10B+ is will they be able to capture all that purchase intent themselves, or will they ossify like craigslist unable to deliver on any of their vertical specific values while slowing being cut up by competitors like the Knot, Houzz, and others. From what I read in their press releases and articles about the company, the Pinterest team seems miles ahead of craigslist at the same point in their development.
The interesting dynamic here for me is what happens as purchase intent advertising shifts from Google and web-search to Pinterest and others. Seems obvious that pictures are more accessible and valuable than text but I'm sure there is an army of statisticians at Google who can argue otherwise with me.
Also, it's really validating to see Houzz raise so much money at such a good valuation. The team there has been working hard in the shadow of the bigger companies and has created a real competitor in their vertical. They are here to stay.
Though from my perspective, it seems hard to tell what their main focus has been over the last year or so. I've talked to friends and coworkers and they all seem to know about the site, though mostly only know it for the great interior photos. Many seem to miss the fact that many of the products in the photos are also for sale.
I haven't seen many improvements in the seller tools over the past year, and their service team seems very manual. Example: It can take days for them to respond to processing a return request. Something that I can by myself on many other platforms. I feel bad for my customers who need to deal with a return or support request from them as a lot of what I can do to help instantly is simply not available. I hope with the additional resources they can direct some of it to customer support improvements soon.
That all said, maybe the store on the site is just an afterthought and they have some other grand scheme at play.
Zillow is chasing down $1.x billion in sales for the next four quarters. Seems remarkable as well.
Just did a big remodel, spent tons of time on haozz and none on Pinterest due to that one fact.
Don't know that I bought anything I saw there but certainly saw more ads there than Pinterest
I would akin Houzz to being a cross section between Pinterest and Amazon in the upper market home development.
As a text description of what it does, PLEENQ[1] allows individual objects within images to highlight when you hover them, and directly link to the object (in this case, kithen products). Here's a much better demo version of PLEENQ's technology: https://youtu.be/tf4pE0xtYTo
Before these white rectangles over the images, they used to have "price tags" that you could hover over, but the UX was all wonky, since the price tag triggered a popup which prevented you from seeing/hovering over other price tags.
I'll probably add a feature for my users like the product options they have below the images, though -- I like that a lot!
>"The newest funding round, which Recode reported is being led by Iconiq, comes on top of more than $200 million that Houzz had raised from investors that include Sequoia, New Enterprise Associates, GGV Capital and others."
Does anyone know what the valuation was on the previous $200 million round?
They must be pretty big though. I just went to their website, and they say that I can search through over 240,000 "professionals" in my city. That's great market penetration for a town with a population of fewer than 40,000 people.
If you ignore the fact that it's actually a full e-commerce platform, and ignore the machine vision categorization ("AI") and augmented reality aspects to their product, you also have to realize it's not a site, it's an ad platform that does probably just shy of $1B in annual revenue. Not so simple!
It's also not just some "site" that has a dev team of maintainers. Houzz is a full-on sales and marketing corporation. They'll likely be 2,000 employees soon. Only a small fraction would be software engineers (my guess, probably 70 growing to 100). There are likely a few hundred employees in the sales organization. A sizable marketing team. Maybe 500 account managers. A design team. An operations team. An editorial team. A non-trivial HR and recruiting team. An administrative support team.
At a guess, $400M is probably one year's payroll expenses for them.
I have no affiliation with Houzz and am actually ambivalent about them, FWIW. Just wanted to demonstrate that these things aren't so simple.
Would love to hear why you think the bubble is all to real.
When the market turns, which it will, profitability is what counts in determining who survives and who doesn't. When we start measuring performance using metrics other than profit, which is quite common now i.e. revenue, non-GAAP profit, users, and so on, we are ignoring what really matters and this allows for situations like the dot com bubble and the current bubble to arise.
These companies are raising cash with ease now, and burning it just as easily. There will be a day, I think sooner than later, when it's not so easy to raise such enormous sums of money. When I see something like Uber losing $3 billion last year, and funds still lining up to invest, I can't help but think that we're in the middle of a bubble. These tech firms are selling hope more than anything else to investors.