Adi Tatarko

Co-Founder, Houzz

For a long time we didn't want to bring VCs onboard at all. We’d heard a lot of things, and we were afraid bringing in the wrong people would ruin all the fun.

Alon Cohen

Co-Founder, Houzz

We even considered monetizing Houzz very early on, even though we knew it was the wrong time, just to avoid taking investment.

Adi Tatarko

And we didn't want to do that either. But it got to the point that we just couldn't scale it anymore by ourselves.

Alon Cohen

So our seed investor convinced us to have coffee with a few people, and he sent out some emails — we were actually at a costume party at the time, on a Sunday night — and 10 minutes later we got a reply from Mike Moritz. He said, "We'll be at your office at 10 a.m."

Alfred Lin

Sequoia

As soon as we walked into Houzz it was clear this was a special company. There’s a different energy level that you see in a company that has some magic spark, and we felt that. We were captivated by their story, and even then the product was very well done.

Alon Cohen

We showed Alfred and Mike the product and then went for tea, and they basically said they wanted to invest. It was much faster than we ever imagined.

Adi Tatarko

And, they proved to us during the process that we could run this the way we wanted. We were very upfront and said, "If you're going to force us to start creating lots of decks and reports just to please you, we don’t want to spend our time on that.” And they said, "Right, that sounds great."

Alfred Lin

At the time they were just getting the content and community going, and they certainly had no revenue. So there’s always the question: When is the right time to monetize?

Adi Tatarko

I didn't want to monetize at all for a long time. Our belief was that the right time is when your user has actually asked you for something — when you have a strong enough brand, when your reach is significant and the focus can shift for a bit from building the product.

Alon Cohen

Building monetization features takes effort as well, especially in the beginning when you don’t have many engineers. It takes you away from the product, and it’s very hard to do both those things well.

Adi Tatarko

But surprisingly Sequoia didn't push at all on that front. Alfred said, "Do it right. You're obviously building the right product for this industry because it's growing so fast organically. We’re not in any hurry. We're here for the long term."

Alfred Lin

We’re always on the side of the founders on this. You have to make sure the community's healthy first, and when you do monetize, you need to do it in a way that’s additive to the experience.

Alon Cohen

But eventually we started seeing demand from the market. IKEA contacted us wanting to do something together, and so we began brainstorming with Alfred and with Mike about different options.

Alfred Lin

There was a lot of back and forth on when we should monetize and how. Adi and Alon wanted to do right by the community and they were very, very careful about the type of advertising they accepted from the beginning.

Adi Tatarko

I remember Alfred coming to our house — this was before we had formal board meetings — and we were all sitting on the sofa brainstorming about what to build and how, things that worked from his and Sequoia experiences, and things that didn’t.

Alfred Lin

They could’ve turned on revenue much sooner, or faster, or from a host of other sources. But they decided very early that every single feature or piece of advertising needed to improve the Houzz experience. That’s who they are, and we support their philosophy.

Adi Tatarko

We felt, and Sequoia supported, that if we built the product the right way, monetization would follow. And it's exactly what happened.

Alon Cohen

The evolution of all our revenue channels has been organic, and we've modeled all of them that same way — based on how we can actually enhance the experience on the site, rather than detract from it.

Alfred Lin

To this day, every time they make a product change it’s out of real passion and love for doing something great for the community, and it shows in how vibrant the community is.