EVERYTHING FOR HOME RENOVATION OCTOBER 22, 2015

  OCTOBER 22, 2015               EVERYTHING FOR HOME RENOVATION • Houzz  is  an  online  home  remodeling  community  that  connects   homeowne...
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  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  

[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]  

    HONG  KONG:   10th  Floor,  LiFung  Tower   888  Cheung  Sha  Wan  Road,  Kowloon   Hong  Kong   Tel:  852  2300  2470    

LONDON:   242-­‐246  Marylebone  Road   London,  NW1  6JQ   United  Kingdom   Tel:  44  (0)20  7616  8988     NEW  YORK:   th 1359  Broadway,  9  Floor   New  York,  NY  10018   Tel:  646  839  7017      

FBICGROUP.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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