By Colleen Leahey, reporter
FORTUNE -- Adi Tatarko planned big things for her Silicon Valley ranch-style house. But making them a reality proved an expensive -- and miserable -- experience. Tatarko's friends described similar frustrations while renovating their homes, so she and her husband Alon Cohen began developing what would eventually become startup Houzz. Cohen understood the mutual need between buyers and sellers on eBay.com, where he was a senior director of engineering, and wondered why the $300 billion home improvement industry lacked a similar platform.
He took a note from Hollywood while dreaming up the design: "In a movie about the future, what would a product that solved this problem look like?" If Angie's List and Pinterest had an Architectural Digest-obsessed child, Houzz would be it. Professionals upload high-resolution shots of their designs, tag the images with detailed descriptions, and "Houzzers" can ask questions about the picture: What brand and color paint is that? What material is that countertop? Who manufactures that sink faucet? Ideabooks allow users to save images in an inspiration-board manner, and there's also editorial content, with a weekly newsletter and blog.
Word-of-Internet took off, and Houzz's initial users began sending the site to friends. With no marketing strategy -- or budget -- Tatarko knew they had hit a sweet spot when a parent of her son's friend called. "My sister in Oregon just told me she found this great site, you have to check it out!" It was Houzz. Tatarko left her job as an executive at a boutique investment firm to work on the startup full time.
A year after launch, the couple met venture capitalist Oren Zeev. Petrified that an investor would come and "ruin everything," Tatarko cautiously listened to his pitch. His laissez-faire attitude ("You don't want to monetize, don't monetize. Do whatever you want to do. It's your thing.") eased her mind; Houzz raised $2 million that fall.
As the company's user base expanded, he joined full-time in October 2010 and hired top-notch engineers from Google (GOOG), PayPal (EBAY), and Yahoo (YHOO). They focused on simplifying the user experience, improving the website, and developing an iPad app (the Apple product launched earlier that year). Cohen's interest in scalable platforms, where the core code remains unchanged no matter the device, roots itself in watching eBay's API, which he helped build in 2001, grow so rapidly; he built Houzz in a similar manner, allowing a more seamless transition from desktop to mobile device. Professionals began getting business from homeowners outside of their local communities: One Houzzer paid for a five-person landscape firm based in Newport Beach, Ca., to work on his home in Dubai.
Tatarko remained hesitant about new investors; did she really want to invite more strangers into her digital home? Zeev pushed, and "we just said fine, let's pick the five best firms out there. No presentations, I'm not doing the Sand Hill Road thing." Zeev sent out five emails; Mike Morritz and Alfred Lin from Sequoia answered first. Tatarko grilled them on their interest in and commitment to Houzz, as well as their ability to lean back and let her run the company based on their vision. As the former COO/CFO of Zappos, Lin knew a thing or two about building a healthy company culture. "It was a done deal. We had to cancel the other meetings," Tatarko says.
In January, Houzz closed a $35 million round, which included Yammer founder David Sacks and Kleiner Perkins Caufield Byers's Mary Meeker, bringing its total funding to $48.6 million. In the past year, unique users increased by 4 million to 14 million, the number of professionals is up 49,000 to 200,000 and the Houzz Apple app has been downloaded 8 million times. It also launched a Pro+ platform for professionals, whose subscriber base has grown 350% since January. The subscription service allows professionals to geotarget Houzzers to market to in specific areas; it's a pay-per-city model. (Houzz also generates revenue through advertising.)
Lin was attracted to Houzz's disruption of an old industry, with little information about best service and pricing. "The community brings transparency to home improvement." Meeker discovered the site more organically: "I've got a house. I like decorating. Someone sent me a link to the site, and I was a fan," she says. As she learned more about Houzz's founders, she was hooked. "Betting on a husband/wife team can be tricky." Referring to Tatarko and Cohen's complementary skills -- her financial acumen and his engineering background -- Meeker says, "This team seems very different, very special."
The founders are obsessive Houzz users not because it's their product, but because they are still remodeling their home. "Working together is way easier than remodeling together," Cohen laughs. Their team finished a survey of 100,000 Houzz users in March, and they're using the data to improve the recommendation engine with an algorithm that understands style, not just preference. "Everything we do, is to give back to our community."
Apple figured prominently in the Queen of the Net's 2013 presentation of industry trends.
FORTUNE -- If you don't have 23 minutes to watch the video of Mary Meeker's state-of-the-Internet report at AllThingsD 2013 -- or if you just want a chance to study more closely slides that she showed for an average of 14 seconds each -- here are the 10 that pertained to Apple (AAPL).
They covered everything from the MOREPhilip Elmer-DeWitt - May 30, 2013 7:20 AM ET
There is still lots of room to grow in mobile, says one of the world's top Internet analysts in her annual report.
FORTUNE -- Mary Meeker's annual Internet Trends report is a little like Cokie Roberts's Monday morning appearances on NPR -- a litany of points of unsurprising conventional wisdom.
That doesn't make it valueless: Like Roberts's weekly reports, Meeker's annual presentations put a lot of disparate information in context and offer MOREDan Mitchell, contributor - May 30, 2013 6:48 AM ET
This AdMob vet wants to bridge the divide between desktop and mobile advertising. If she succeeds, even Google could find itself at a disadvantage.
FORTUNE -- Kamakshi Sivaramakrishnan never planned to go into advertising, much less run a startup. But when the 37-year-old Stanford graduate, with a Ph.D. in Information Theory, met AdMob founder Omar Hamoui, she turned her back on Wall Street and joined AdMob as a research scientist in MOREJP Mangalindan, Writer - May 21, 2013 7:58 AM ET
Three of the Bay Area's marquee investment firms want to capture the most interesting ideas before they're hatched.
FORTUNE -- It was classic Sergey Brin. Dressed in sports shorts, an exercise shirt and blue Crocs, the Google co-founder showed up riding an elliptical bicycle, and as he does these days, wearing Glass, Google's futuristic wearable computer that fits on a head mounted display. Oh, and he was a few minutes late.
The MOREMiguel Helft, senior writer - Apr 10, 2013 5:00 PM ET
How Sean Parker bumbled his new startup's launch; HP CEO Meg Whitman opens up.
Airtime makes an awkward first impression [FORTUNE]
The company aims to offer frictionless video networking that allows you to chat with your existing friends or with strangers based on location or interests you share on Facebook. Like predecessor Chatroulette.com, it's easy to switch to a new chat partner, but unlike that service, which became known for its shock MOREJP Mangalindan, Writer - Jun 6, 2012 1:04 PM ET
Aaron Sorkin talks about future Steve Jobs movie, impact of technology on his writing [ENGADGET]
The highlights included a frank quote that whoever ends up playing Jobs in his movie -- not to be confused with the one already in production with Ashton Kutcher -- will have to be "good, and intelligent." He also confessed to being fully engaged in the "three screens" movement, but wasn't too prideful to admit that he MOREJP Mangalindan, Writer - May 31, 2012 12:08 PM ET
Fortune's curated selection of tech stories from the last 24 hours. Sign up to get the round-up delivered to you each and every day.
* Zynga (ZNGA) raised around $1 billion in its initial public offering (IPO), giving the social gaming champ a $7 billion valuation. Check out colleague Dan Primack's list of the biggest winners to come out of this, including CEO Mark Pincus, Kleiner Perkins Caufield Byers, and Institutional Venture Partners. MOREJP Mangalindan, Writer - Dec 16, 2011 3:00 AM ET
More jobs are opening for Android developers according to a report today.
CC Flickr user MJ/TR (´･ω･)
Dow Jones' VentureWire reports this evening that most of the companies seeded with cash from Kleiner Perkins famous iFund are taking their iApps and porting them over to Google's (GOOG) Android platform.
A telling stat:
13 of the 16 companies backed by the $200 million iFund now have both iOS and Android apps or will within a few MORESeth Weintraub - Apr 7, 2011 12:37 AM ET
Kleiner Perkins' Green guru believes on a household level, green power needs to recharge advanced batteries rather than plug right into the fuse-box.
FORTUNE -- Having helped both create the Java programming language and co-found Sun Microsystems, Bill Joy is best known as a technologist and entrepreneur. He hopes to add environmentalist to that list.
As a partner at leading venture capital firm Kleiner Perkins, Joy is devoting much of his time to MOREScott Woolley - Apr 6, 2011 6:03 PM ET
|Chrysler relents, agrees to recall 2.7 million Jeeps|
|Immigration bill could cut deficits by $175 billion - CBO|
|Google files First Amendment court case against NSA surveillance secrecy|
|It's official: Jack Lew's new signature|
|China's fastest-growing cities for millionaires|