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Home improvement platform Houzz lays off 180, reportedly gears up for public listing

Houzz has built a $4 billion business on the back of a platform and marketplace that lets you plan and execute home improvement projects. But as the startup gears up for its next phase of growth, it is also going through some growing pains. TechCrunch has learned and confirmed the company this month laid off around 110 people in the U.K. and Germany, along with an additional 70 in its U.S. home market in Q4 of last year.

“We restructured our international marketplace workforce, primarily in our U.K. and Berlin offices, so that we can double down on the areas that will have the greatest impact for Houzz,” a spokesperson told TechCrunch. “It’s always difficult to go through a restructure at growth stages given the impact on people’s lives. We value and appreciate all of our employees and will do everything we can to retain them. We are introducing as many new opportunities as possible in other parts of the business so that those affected can apply and transition to other positions. For those who will leave Houzz, we are offering a separation package and providing any help we can as they look for a new opportunity. Houzz’s business is strong and we continue to hire and scale teams across our international and U.S. offices.”

Houzz has 1,800 employees, meaning that these two tranches of layoffs account for approximately 10 percent of the company. The spokesperson added that Houzz has been hiring in Q4 in other areas — some 300 people in all — although she did not specify in which department or region.

Houzz is also not providing much information about which departments have been impacted by the layoffs or what happens next, but details posted on social media point to at least one entire international department getting eliminated.

“Purchased items from you in the UK. For the second time one of my orders was canceled. I emailed your offices + tried to call only to find the phone had been disconnected. I tweeted yesterday & rcv’d a message that all staff had been made redundant,” one customer noted on Twitter.

A source hints to us there could be more layoffs coming, as the company looks to get into the black ahead of a potential IPO.

“The company aims to slash costs in order to be profitable before going public,” the source said.

Starting out as an online community for people redecorating their homes and looking for inspiration and a place to share their ideas — it was co-founded by real-life partners Adi Tatarko (CEO) and Alon Cohen (president) as they were remodeling their own house — Houzz has over the years raised more than $600 million from an illustrious group of investors that include DST Global, GGV, Kleiner Perkins, NEA, Sequoia and more. The aim: to build out a much larger and ambitious marketplace to target an industry — home improvement — that’s estimated to be worth well in excess of $1 trillion in North America and Europe alone.

Today, you can buy furniture, decorative items, bathroom and kitchen units and more across some 65 different product areas. Professionals and would-be customers also use the platform to connect with each other; millions of consumers and more than 1 million professionals currently use Houzz.

Over the last several years, the company has also expanded internationally, made acquisitions and launched new technology to fill out that vision. That’s included buying IvyMark to develop a bigger offering for interior designers, and building out an AR-based service, among other moves.

All that rapid growth and development, however, seems to have come with some challenges as Houzz attempted to make the transition from startup to more mature, large business.

Reviews on Glassdoor posted by ex-employees in recent weeks (see here and here) point to issues at the company with how management communicates with staff, the lack of a coherent and consistent strategy and other operational challenges that can come with building a business with a number of different facets over a relatively crunched period of time.

“The company has fought on many fronts over the last few years — editorial, community, marketplace, visualization software, paid local marketing,” our source notes. “All promising projects but requiring years of incubation and continued investment.”

Houzz has never commented on IPO plans, but last May it hired Richard Wong from LinkedIn as its CFO. Some took this as a signal of its longer-term intentions to go public.

Companies as diverse as Amazon, Pinterest and Wayfair all compete in one form or another with Houzz, and with its most recent valuation at the $4 billion mark, the question is how Houzz proceeds with its next stage of growth.

A sea of money raised by VCs and PE firms has led to a number of companies in turn raising large, late-stage funding rounds — extending the private life for many a startup.

But on the other hand, a recent run of strong IPOs has also laid the groundwork for more companies to opt for public market exits.

Both of these, as well as a potential acquisition, could all be options for Houzz. In any case, they are all options that could be pushing the company to reassess its cost base and strategy.

We’ll update this story as we learn more. For those impacted by the news, we hope you land on your feet.

Read more: https://techcrunch.com/2019/01/29/houzz-layoffs/

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Pro.com raises $10M funding round to expand its home improvement service to more cities

Pro.com started out as a marketplace that wanted to connect homeowners with home improvement and renovation professionals. Today, however, the company is a tech-centric general contractor with licenses in Washington state and California and its also probably one of the best-funded general contractors. The company today announced that it has raised a $10 million growth financing round led by DFJ, with participation from existing investors Maveron, Madrona Venture Group and Two-Sigma Ventures. DFJs Bill Bryant will join the Pro.com board.

According to Pro.com CEO Matt Williams (who launched the earlier incarnation of the service in 2014 and who was also previously at the helm of Digg.com after that company went through its darkest days), the team realized that while it could make the marketplace work, it couldnt guarantee that the homeowners would have a good experience.

So instead of helping homeowners connect with pros, it now has its own teams in place in all the cities it operates in. These include carpenters, electricians and project managers, for example. If needed, the company also works with a group of pre-screened sub-contractors (who are often specialists in their fields) to help with its projects.

The idea here is that homeowners will get a far smoother experience than is typically the case when it comes to working with general contractors. Pro.com can generally generate quotes much faster than its competitors, for example, thanks to the companys use of technology and its analysis of local prices (and the plan is to introduce same-day/next-day quotes soon). The company also uses its mobile apps to manage its staff, capture updates from its work sites and generate invoices. Williams tells me that the company plans to expand this use of technology to keep track of a given project over time.

With their end-to-end virtual contractor service, Pro.com is fundamentally changing the consumer experience when engaged on a home improvement project, from first touch on estimation to the last day of inspection and sign off, DFJs Bill Bryant told me. No more stress, just a beautiful kitchen delivered on time, on budget!

Williams didnt want to talk about where exactly Pro.com will launch next, but he noted that the companys focus right now is on the West Coast and that he plans to use the additional funding to launch in at least 10 new cities within the next year or so.

We have been a company that has been heads-down focused for the last two years after the last round of funding, Williams told me. That brought us to this product/market fit. We have been growing over the last year with this model and realized this is working and working well. Now, we can penetrate a new market quickly. For some states that means getting the right kinds of licenses, of course, which can take a while, but for the most part, activating a new city for Pro.com is mostly about hiring the right people and finding the right sub-contractors (which is relatively easy for the company, thanks to its experience with running local marketplaces for pros).

In its Seattle market, Pro.com currently generates quotes for about three to four percent of all projects and wins a high number of these, according to Williams. The plan, of course, is to increase these numbers over time. Given how fragmented the market for general contractors is, Pro.com has a good chance of establishing itself as a leader in this space, especially given that many of its competitors are solely focused on offering a marketplace.

Read more: https://techcrunch.com/2017/08/08/pro-com-raises-10m-funding-round-to-expand-its-home-improvement-service-to-more-cities/

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