OCTOBER 22, 2015
EVERYTHING FOR HOME RENOVATION
• 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 •
DEBORA H W EINSWIG E x e c u t i ve D i r e c t or H e a d of G l o b al R e t ai l & Te c h n o l o g y F u n g Bu s i n es s I n t el l i g e n c e C en tr e d e b or a h w e i n s w i g @ f u n g 1 9 37 . c o m U S : 64 6 . 8 3 9. 7 0 1 7 H K : 85 2 . 61 1 9 . 1 7 79 C H N : 8 6 .1 8 6 . 1 4 2 0. 3 0 1 6
DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.
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OCTOBER 22, 2015
Everything for Home Renovation 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
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
Series D
Source: CB Insights
Figure 2. Home Improvement Sites: Total Funding, by Company (USD Mil.) Pinterest 1,320.0 Houzz 213.6 161.6 Angie's List Porch 99.0 Handy 58.8 Source: CB Insights
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.
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:
DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.
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OCTOBER 22, 2015
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.
•
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.
DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.
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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.
The total home improvement market in the US alone amounted to $303 billion in 2014. A nd, 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
Houzz.com
DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.
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OCTOBER 22, 2015 Figure 4. Houzz’s Competitors Company
Headquarters
Description
Investors
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
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.
Handy
New York, NY
Pinterest
Porch
Year Founded
CEO
Cofounders
1995
Scott Durchslag
Angela Hicks Bowman, William Oesterle
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, Chri s Maguire, Hai m Schoppik
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
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
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
Source: Crunchbase
DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.
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OCTOBER 22, 2015
Adi Tatarko, Co founder of Houzz, shared her ambition for international expansion at ICON
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 nd Network (ICON) 2 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
DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.
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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
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Marie Driscoll, CFA
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John Harmon, CFA
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Aragorn Ho
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John Mercer
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Shoshana Pollack
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Kiril Popov
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Jing Wang
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Steven Winnick
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DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.
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