Home remodeling goes social as tech startup transforms industry

Home remodeling, one of the biggest industries in the country, is being transformed by the Internet with a push from a fast-growing startup in Silicon Valley.

Until recently, a homeowner thinking about remodeling would have checked out books from the library, read some design magazines, asked friends for advice and tried to find help on the Web.

But in January, 14 million people turned instead to Houzz, a small Palo Alto, Calif., company that has grabbed the $300 billion remodeling industry by the tail and is changing the way homeowners connect with design professionals and figure out how they want to improve their homes. And it's taking off just as the housing market is rebounding and giving homeowners more equity to play with.

It's the latest example of the way the Internet has disrupted an entire industry, having already transformed everything from publishing to entertainment. But this is with a twist: Rather than hurting established players in the remodeling business, sites like Houzz are likely to benefit them by bringing them more business more efficiently.

"Houzz has had a huge impact in the residential design community," said Mark Demerly, an Indianapolis architect and recently chairman of the American Institute of Architects' custom residential network. "We ask our clients to seek out things on it they like and that inspire them."

Created four years ago by Alon Cohen and Adi Tatarko, who were remodeling their Palo Alto home, the home-improvement site quickly caught on across the U.S. and in Canada.

"Clipping things out of design magazines seemed so antiquated," Cohen recently recalled. "Today everything is online. We thought, 'There's got to be a better way to do this.' "

Houzz's iPad and iPhone apps have been downloaded 6 million times. It has 14 million visitors a month - up from 1.3 million downloads and 4 million visitors a year ago - who pore over 1.2 million images of remodeling projects with links to 188,000 architects, designers and other professionals. In a little more than two years, it has drawn $48.6 million in three rounds of venture funding.

The revenue comes from advertising by national brands and a professional subscription package launched a few months ago.

Now competition is emerging. Last month, the Seattle-based home-valuation site Zillow introduced Zillow Digs, a similar service. Zillow spokeswoman Cynthia Nowak said it's "a huge market," citing a study that found that nearly 25 percent of recent homeowners completed a kitchen or bathroom remodeling project last year.

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Home remodeling goes social as tech startup transforms industry