A View from the Top: Houzz CEO Adi Tatarko on running a $4bn internet startup

Frustrated with their own home renovation, Adi Tatarko and her husband Alon Cohen created Houzz 

Hazel Sheffield@hazelsheffield
Thursday 22 November 2018 10:44
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Adi Tatarko moved to the US from Israel with her husband, Alon Cohen
Adi Tatarko moved to the US from Israel with her husband, Alon Cohen

Adi Tatarko and her husband Alon Cohen bought a home in Silicon Valley in 2006. The old ranch in Palo Alto needed a lot of work, but the couple were excited about the prospect of turning it into their dream family home - at least initially. What started with big plans turned into builders sketching on the back of napkins and ended in expensive mistakes.

“It became miserable,” Tatarko says. “After a long process and a lot of time and money that we couldn’t afford, we ended up with plans that we didn’t like and we had to throw it away and start all over again.”

When she talked to friends and neighbours, Tatarko realised they were not alone. There was a huge gap between homeowners, who felt it was impossible to realise their grand designs, and the professionals who felt customers had high expectations and unrealistic demands.

Most couples would console themselves with a moan at a dinner party. But Tatarko and Cohen, two tech professionals from Israel with entrepreneurship in their blood, set about fixing the problem. They started Houzz, a place for people to post pictures of home renovations and find professionals to realise their plans. Seven and a half years later, the site is valued at $4 billion.

Houzz now attracts 40 million unique users a month - more than your average homeware or DIY shop. Its success comes from the determination of Tatarko and Cohen to employ the latest technology. Houzz provides tools for people to visualise products in their homes and to buy them from vendors all over the world in one click. It has disrupted two massive markets - construction and home furnishings - with a value that Tatarko estimates at $2 trillion across the US, Canada and Europe.

“These industries had no technology applied to it so our question is how do we make a difference to what is still largely an offline industry,” she says. “In the early days we wanted to help people to visualise what they liked. But the next stage is, ‘Well, I like it, but will it fit in my own space, with my other stuff?’ The ability to see if it fits in your own space - this is very powerful.”

So powerful, that Houzz’s visualisation tool “View In My Room 3D” makes users 11 times more likely to purchase product and materials, according to research by Houzz economists of two million users.

The marketplace tool, which was introduced in the US in 2014 and launched in the UK earlier this year, has become a second stream of revenue for Houzz. Its first was a freemium model whereby subscribing professionals, like builders and architects appear higher up in the search listings of users nearby, making it easier for them to attract work.

The marketplace function was part of the original plans for the site, Tatarko says: “In the first iteration of the website, Houzz had tags on products showing data about where it was sold,” she says. “But as the site expanded we started getting phone calls to the office saying, ‘We see the tag, but we don’t understand how to add it to the cart,’ or ‘Can you ship this bathtub to us in Hawaii?’”

It took years to connect with suppliers to make the vision a reality. The move turned Houzz into a retailer. It now has over 16 million product photos showing all the data. Tatarko herself has used the platform to buy a rug from Denmark. “I found it on Houzz Denmark, so I placed it in my room using the visualisation feature, saw that it worked and got it shipped to my house in California, from Denmark,” she says. “We hear of professionals using the visualisation tool to show clients instead of drawing diagrams on a napkin, like I got in the early days.”

Tatarko comes from a entrepreneurial family. She grew up in Israel, where her mother worked in property and her grandmother had been a fashion designer. “Because of all this I thought, wow, I don’t know if I want to have this crazy life,” she says.

She worked in a small tech company in Israel in her twenties and married Alon Cohen after meeting him on a bus while travelling through Thailand. When the couple were offered the opportunity to move to New York to work in startups, they grasped the chance. “We were young and restless, so we did,” she says. “Who wouldn’t?”

Tatarko found the energy of New York addictive. She loved the buzz of the city. So it was with some reluctance that she agreed to move to Silicon Valley in 2001. “That was end of the tech bubble, everyone was getting out of Silicon Valley and only my dear husband wanted to move to there. How he convinced me I have no idea!” she says. She made Cohen a deal: she would move to New York - but only if she could get out of tech.

He agreed. In California, while Cohen moved up the ranks at eBay, Tatarko started a new career in finance and became the chief financial officer for a boutique investment firm. Houzz happened in the evenings and on the weekends in between raising their first two sons: “At night, when we put the kids to bed, we would work on Houzz. Alon would programme and I would talk to people in the community. All of a sudden I had way more than a full time job going on, but I really loved it.”

Tatarko convinced herself she wasn’t really back in the tech world. Not thinking about it too much helped her to keep going with Houzz. But the time came when the site was too big to run in their spare time. Cohen told Tatarko that he thought they should make the leap to doing it full time - and that she should become the chief executive.

“I had to breathe for a second,” she remembers. “I said I wasn’t going to work in tech any more. I said I wasn’t going to work around the clock any more.”

Not only that, but she had imbedded herself in the finance world and invested in education for her new career. Did she want to go back? “But I realised that this is what gets me excited. This is where the opportunity is. So here we are! Working around the clock.”

The craziness continued when the couple had their third son six months before Houzz launched in international markets. She remembers flying all over the world with him to launch new offices. “I always thought that I would only have one or two kids and that with Houzz it would be too crazy, but you go and do what you truly love and you make things work.”

Tatarko is tight-lipped about whether Houzz is turning a profit amid such rapid expansion and refuses to say whether they are heading towards an IPO. But she says to look out for patents in the coming months and years as the visualisation software becomes more sophisticated.

And the ranch in Palo Alto? Finally finished, thanks to a request from their eldest son to hold his bar mitzvah in the garden when it was in no state to host a party. “He said, ‘Now you have an excuse to finish the home!’ So we did the exterior of the house and the garden and it was finished just one day - a single day - before the party. The builders left, we cleared up the mess, switched the lights on and it was ready. Sometimes you just need a deadline.”

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