Diversity in the Workforce is Essential, According to Houzz Co-Founder Adi Tatarko | Inc.

Thank you, Eric. Great to meet you, again.

I know we have to do it in person, next time.

I am. The same house that started Houzz.

It means great memories. When I used to correspond with friends from all over the world, in Japan, and UK, and Germany, and actually type the letters, and send it in the mail, and get the great stamps, and the envelopes, and being so excited getting it years ago, but this one has the Hebrew letters, and truly brings great memories of my childhood. My mom got it for me as a gift. And, I felt like this is such a great memory for me. It should be in my office.

Great question. Well, we just got married and in Israel and in the US actually. So, we had dual wedding. And, Alon thought that it's gonna be really cool when we came to the US for our honeymoon to live for a few years in the US. And, I thought, yeah, that's great. I actually had a very different idea of what would be great. I thought more of the city and New York, but here we go, we had an opportunity to move and work for a tech company in New York, and that was pre kids. And, you know, why not? We love the big city. We love New York. We thought it's a great opportunity for our careers. And, also, personally. So... So, we did it, and then one thing led to the other, and more than 20 years passed since that decision.

Unfortunately, New York only lasted one year, because that company then moved to Boston, and there was a whole development from there. And, we had to make a call, whether we go back to New York, move back to Israel, or like what Alon wanted, move to the Silicon valley. I'm saying, I keep saying what Alon wanted, because it was absolutely not what I had in mind when we moved for just for a few years from Israel to the state. But, I happened to agree with that request, thinking it's gonna be for a short term. And, it ended up being much more than that. Yes.

Well, I think in general, I am all into exploring new things. That was the drive behind, okay, let's try the US for a few years. Let's learn. Even the agreement to move from New York to the Silicon valley though, the suburb is not my cup of tea in general. I was kind of, okay, let's explore it. And, I always try to make the right decision, from now going forward, and not just try to justify past decisions. So, I think this is the starting point for everything, right? Because, if you are fixated on, well, I've made, a long time ago, a decision that this is where I'm gonna live, and this is what I'm gonna study, and this is what's gonna be my profession. Then, you will be less open to new things that come your way, whether it's a suggestion from a partner, or from a friend, or just something that comes your way, or an idea. So, I'm very, I think, open-minded, and I'm always, even if my initial reaction is absolutely not, willing to look at things and consider them. And, then, truly taught myself how to think about things from now going forward versus just justifying past decisions. So, that's a starting point. I will say, I'm married to entrepreneur in heart. So, it was very clear to me when he said, let's move to the Silicon valley, that he will do something. I actually had something very different in mind for our life in the Silicon valley. I wanted to have kids at this point, and I felt like my career in high-tech was too intense, 16 hours a day, that with kids would not work so much. I kind of moved aside from it, and went to study again, and worked in a small boutique investment firm for several years, crafting a very different career path for myself. But, again, I think when Houzz started, and that opportunity knocked on the door, it was very hard not to at least look at it and say, wait a minute. This is so much fun and I'm so excited about it. So, one thing led to the other, I think it's a combination and lots of luck of Alon being very entrepreneurial. Him actually crafting the way towards something that I happen to really, really love. And, when he popped the question, not a will you marry me, that was years before, but would you join and do it with me, full-time, and be the CEO? I really had to think about it. Now, Eric, it may sound from the beginning of this conversation like I'm just whatever he wants, he would actually laugh if he would hear this conversation, because there are not many things that are so easy to convince me that are so big, but it happens to be that the move to the Silicon valley, which I didn't want to originally, and then the move back to tech were both initiatives that he started with. So, I gave him the full credit or blame depends on how you want to see it.

I am. And, I will say this, it could have been different. It was totally his idea and proposal, because people ask, how did you decide? Well, he... I thought when we did it as a side project, and at some point it started accelerating a lot. I wasn't even sure that if it will become a company at more progressed stages of the side project, that I'm gonna do it full-time, myself. I was sure that he will. And, when he said, I think that you should resign your job, come and do it with me, full time. He resigned as well. And, you should be the CEO. That was that moment where he explained to me why he thinks that I should be the CEO, why he think that I should do it, full-time. So, I had a lot to digest in this, but yes, part of it was I'm gonna do it full time, 16 hours, maybe not enough, with the kids. I should really, really love what I do in order to say yes to it. Obviously, I did.

Well, it's interesting. I think that it was just the dynamic of how we set up things to work between us. We're very complimentary. We don't come from the same fields. We don't have the same knowledge and this is very helpful, right? When one is dealing with different types of activities and the other one is enjoying other type of activities, it's less conflicting. So, I think in his mind, the foreign ministry, the external, but also, internally, the type of things that I was much more accustomed to do were more suitable for what he had in his mind, being the CEO. Again, it could have been different. Anyway, we work together in a very complimentary way, but that was his idea. That this would be a better fit for me to do that. And, I thought, okay. It could have been different. When you don't have ego driving decisions and you truly think what would work better for the company. You can come up with the best solutions. It may not work very well with people that either come with ego, or don't know each other very well, or they're not that complimentary. And, then they have the same desire to have a certain title or to lead. But, for us, it was never about that. And, I think it helped a lot to make the right decisions.

Well, I'm not gonna lie. It's not an easy thing. I think that the little people that help us the most are our young kids. And, I say little, because they did it when they were very little. The early years were extremely hard to create that separation, because we worked nonstop, and we didn't have a lot of help, yet. It was just the early years before the company grew that much. And, it was our kids that around that... Dining table would say, if we don't understand what you're talking about, or we're not part of the conversation, then don't talk about it, and stop. And, when we told them put cell phones aside, because I truly believe in family conversations, and being engaged, they said, we do that, you do the same. So, they helped us to put these boundaries really early on and it helped a lot. When we are with our kids, we're with our kids. And, then we put time together to talk about business during working hours. And, then when we're just a couple. And, so we have time for going out and try, try not to talk about work too much. So, it's a lot. But, I think if you look at it from the great side of things, we have so much in common, 'cause many times people work in very different universes and I've heard lots of men and women say, well, that's nice to hear, but I don't want too much of it. I'm not into this world or not into that world. And, these are things that get us excited. So, it's blurry, but we also learn to put the separation in the early years. It was funny because I would text Alon on and say, the meeting with the investors was great. I'll show you the deck afterwards. Don't forget to buy diapers on your way home. And, so it was such a mix of everything. I think we learned how to create the right boundaries for us and for the family.

Yeah. So, the same home that we're talking from right now, so full cycle, we bought this house, we knew that we are batting here on something that, over time, maybe we'll have to... Money to renovate, step-by-step, very old house from 1955. And, we started saving after we bought the house to do different types of renovations, nobody ever renovated this house before we got it. So, it was very dated, but in a place where we wanted to leave. So, this process, once we saved the first amount to do the first piece of renovation got us very excited. We thought it's gonna be such a wonderful process and we'll build our dream home. It was the first house that we ever purchased to buy, to live in for ourselves and for our family. So, it was very exciting, yet very, very disappointing. It was such a contradicting between expectations and reality. We couldn't find great professionals. It was all a few referrals from the network that really understood what we want to accomplish. They send us to bookstores to show them books and try to explain what we want. The budget wasn't the right budget. We ended up working on it for a long time, probably with the wrong pros for us. Somebody can be great for you, but not exactly a good fit for what we're trying to do. And, we ended up with plans in front of us that we didn't like and we couldn't afford. It was very, very frustrating, but that actually yield the concept of Houzz, because we realized we don't know. The professionals find it hard to understand what we want. There needs to be some visual, in front of us so that we can talk about it. It needs to be much more effective, in terms of who is involved and how everything is being done. And, while many industries were already digital and moved to the 21st century, this was a very, very old school, offline, fragmented, and broken industry. So, a side project within our own community that brought together 20 parents from our kids' school, and interior designers and architects from our area, all were very excited to get a platform where they can visually see everything, and ask, and connect started it all. And, the rest was history. It started growing organically and we would go at night, and when we put the kids to bed, and looked at support at Houzz after we opened it outside of the community, with questions, and requests, and answer, and a year later we had hundreds of thousands of users that are spending a lot of time on the platform and many, many professionals collaborating with them. And, that triggered later on the creation of the company itself, the resignation from work, and doing it as a business full time, with many other Houzzers, and support from the community.

Yeah. So, at the base of everything and you know that we have that enormous community, right? So, from the get go, and that mission never changed, we realized that bringing this professional community, and we're talking about architect, designers, general contractors, we have like one hundred different type of professionals involved in home remodeling and design, and on the other side, homeowners, or designing enthusiastic, or renters that want to update their homes asking question and collaborating with them. So, this enormous community was the core of everything. How do you bring that knowledge and visuals from the pros to... The convenience and put it all in front of the homeowners that this magic will happen. And, everything we've built in terms of monetization, or the business, followed that connection. So, on top of this enormous global platform today with this very large community, we started building the tools based on demand from the community, whether it's tools for the professionals to grow their business, or to manage their business from start to finish, or tools from their homeowners that are now demanding it from the professionals. So, what did they both want in order to make this process better? Professional... Obviously, we wanted from the get-go to be seen and to make sure that many homeowners and the most relevant ones will see them so that they can grow their business by getting the relevant clients for them, after they understand their expertise, and their style, and appreciate their knowledge. They also want to be able to provide services that are techie. So, to schedule the meetings, to build the clients, to show them, as you mentioned, 3D modeling, they really progressed a lot over the years. And, a big part of it is because homeowners are demanding it now. Homeowners are saying before you come to my home, give me a proposal, how much it's gonna cost. I don't want to wait a few months until you put something on paper. Tell me, roughly, what's gonna be the budget. Show me what you have in mind. They do it in 3D. They're able to generate proposals within a few hours from our database and send it automatically. So, lots of expectations in terms of how the process should work, how billing should work came from homeowners, and professionals adopted. So, what Houzz did, Houzz just followed this demand. Okay, this is the industry. It's fragmented, right? Before we started, pros would get clients maybe through referrals of people they knew, which was very limited, especially for new pros, or there were yellow books, or directories, or lead gen, but that didn't give them the right homeowners. And, homeowners did the same thing like we did. And, that really opened up a whole new universe to grow your business, significantly. And, now we followed this request and demand and also to manage your business from start to finish. So, our SAS platform for professionals is offering them, from start to finish, ability to grow their business and to manage their business, the whole backend, and giving all these advantages to clients that are hiring them. That's our core revenue channel as a complimentary service, based on, again, following the demand from our homeowner and pros community. We, also, realize that people want to buy the products and materials they see in the images. So, we initiated a marketplace. And, pros and homeowners are shopping and completing their work on the projects by shopping from Houzz. So, again, everything the business followed, both, the platform for growth and then management, the whole SAS offering start to finish, and the e-commerce from demand. What do people do online and what they want to do online versus offline today when everything is aggregated under one roof? It's basically followed the demand from the community.

It's not affiliated. It's our own marketplace.

It's our own marketplace where we have thousands of vendors and sellers that are selling through the platform. And, we initiate it. It's not an affiliate. It's our own marketplace. We build the whole marketplace.

Yeah, I guess we were not the only homeowners feeling that frustration from the process. And, there were many professionals looking for something like this as well.

You're absolutely right. That was the core thing in front of us, where our core channel is, is the subscription SAS tunnel for the professionals, and around the world, the shutdown, the sheltering place started, and professionals immediately seek for help. They didn't know how long it's gonna continue, whether they'll ever have access to clients' homes and they wanted concessions, and freeze of accounts, and support financially. So, we knew we need to quickly make decisions for the company and reorganize thing, in terms of our plans, so that we'll be able to support all our clients around the world. So, that was really tough. And, it all happened really quickly where we also moved the entire company from working in offices to work from home. So, everything happening parallel. What we did was we decided to work with multiple scenarios, like many other companies, and prioritize support for our professionals, our clients as stock priorities. So, we trimmed in every single area that we could without touching people, of course, which is always the hardest thing to do. And, when we were done doing all that, we looked at that and thought, well, it's almost there, but not enough. So, unfortunately we have to make a tough decision to also... Let go a relatively smaller percentage of the population comparing to many other companies, but still every person matters. So, it was really hard, but we had to do it, because we didn't know for how long we'll need to maintain the support for all these professionals. So, that was the early days of the pandemic. We did have rough several months there. And, the shutdown for us was pretty impactful all over the world. In Europe, it started and pretty quickly spilled over to the US and other areas. Luckily, when things started to get better, the opposite trend happened. So, now, one, people all over the world looked at their homes very differently. They now needed much more out of their house, leverage every single centimeter or square footage, depends on where they live. And, they needed a lot of professional help. So, we saw a significant uptake in reach out to pros. So, that was one thing to get help and to get the renovations done all over the world. The other thing that happened, we were planning to roll out more of the SAS capabilities to our entire professional community, to manage digitally lots of the processes, and that accelerated significantly due to the fact that there wasn't such access to homes. Yes, there was a desire to hire. So, those demands created a much faster adoption of the tools. Homeowners demanded to do things online, demanded to see visuals online, and 3D modeling, and get proposals quickly, and professionals adopted the tools. So, the trends really flipped and we saw over 50%... A lift in terms of homeowners connecting professionals, comparing to pre-pandemic. And, we saw a meaningful adoption of tools and the software. So, we went down to go up stronger, but it was rough at the beginning.

Yeah. Well, 2020 definitely improved a lot, the second half of the year when we started getting out of it. Yeah, 2021, the trends continue. We do see high of all times in terms of homeowners contacting pros, pros adopting software, software leading how this job is being done faster and more efficiently. The adoption is on both sides, homeowners and pros. And, it all goes together with the trends that we are seeing. I think this is gonna stay post pandemic as well, because people now see their homes in a very different light than they saw it before. We see 10x looks and searches for art studios at Houzz. Four times home gyms, and outdoor expansions, and leveraging the home in a very... Of course, home offices in a very different way than we saw it before. I think lots of companies declaring that they'll move to hybrid models, more work from home. People tend to see their home, now, in a much broader capacity than when they looked at it before. And, we are seeing and getting the surveys from homeowners and pros. This is gonna be the trend in the coming years. And, it's here to stay.

Yeah, for sure. Look, Eric, there were trends before pandemic that we realized, and therefore created the software, and more support to do things more efficiently. But, I will say this, let's talk about the US for example, the aging homes in the US, the baby boomers that are renovating, shortage of homes in the market, all these led even before to heavier renovation and expectation for heavy lifting in the coming years, obviously pandemic on top of it. And, more people seeing their homes needs to function in different ways is here to stay. We're getting it from pros that are expanding their businesses and want to do things more efficiently. We're getting it from homeowners that are looking to do more. This trend will stay and will expend a lot in the coming years.

Yeah. It's a great question. I think you need to stay, on one side, very connected to your mission. What is that DNA? What is it that you're trying to do? And, how do you stick to it? On one side, and I will tell you that we use the same slide as our... That we created for our mission 10 years ago, or 11 years ago, every single company meeting today, the same slide that say, we are creating that platform that will provide the best experience and the best tools from home professionals, and home remodeling professionals, and homeowners to have the best experience when they are remodeling homes. And, this mission to provide the best tools, the best technology for that specific mission remained the same all the years. On the other side, you have to keep moving forward. You have to adapt. You have to see what's next. You can't stay exactly the same. So, while the core mission remained the same, I think we were very open over the years to talk to the community, to get feedback, to see what's next, and to add or change things based on this feedback, while sticking to the core mission. So, that definitely helped. Obviously, you asked, from two to 1200, you need to change a lot. Mainly, you need to learn how to delegate and how to let other people do the work. You don't have to do it all by yourself. And, I think we learned over the years to do it better and better on that front. We always strive to bring people that are better than us, and experts in certain areas, and the right people at the right time in the right spots. And, I think it worked very well for us over the years. We brought people into the Houzz family, but we brought the right people that are a great fit for our culture, for our mission, that are very passionate about it. And, they help us lead as the foundation of Houzz. From the get go was like that, very diversified, with different people, different experiences. When you build, it's like a house, when you build a strong foundation from the beginning, you can build it from one material. I truly believe in that. You have to bring lots of different materials and put it... At the right time and the right places in the foundation. And, then you're not gonna have cracks in the walls that you need to fix a few years after. So, I believe that we worked extremely hard in the early years exactly on that. And, we enjoy the fruits of that today. In our foundation, there are lots of people that started with us in the early days, they are still in the company, and they're helping us lead this, and build a very strong future for the company. So, it evolved, but it evolved on top of this foundation.

I think that the one word that you're probably going to hear the most, if you go and interview the 1200 folks that work at Houzz, the first four that probably gonna pop up, they'll say family. They feel like this, because we truly take care of each other. We know each other. It's... People are very supportive of each other needs. They know each other families. So, while it's a company, mission driven, hardworking, hands-on, we say we build the future and we work hard to get things done. That's the mindset. People also feel very close to each other. And, the culture really embraced that. There are no... While there are managers and leaders, there's almost no hierarchy. People can come and schedule one-on-one with anyone, including myself or Alon. And, lots of interactions between people across groups. Anyone can come with innovation. We are all working very hard, all hands on people, working in and very focused on doing what they do, but also collaborating and supporting each other in a very different way. We truly care about each other in this company, and you can feel it. You could feel it obviously much more when you would walk into any one of our offices around the world and see us celebrating birthdays every week and laughing, and playing the piano together, and meeting for lunch every Friday around the world, and all together. But, I think we are working very hard to transfer a lot of it virtually as well, with mixers between teams and lots of care to each other. So, yeah, probably working hard, hands-on, family members, all driven, with one mission to change this industry. I think this is probably what most people will describe when you've talked to them.

I think that the biggest mistakes I always come back to. And, biggest successes too to people, right? This is where we decided in the early years to dedicate more than 50% of our time to interviewing people when we grew across the board. And, I think that was the right call. But, when you invest so much in the people, which again, that builds everything, it builds the culture, it builds the company, it builds the product, it builds the brand, everything. It's also harder to let go when you're making mistakes and you will make mistakes. We all make mistakes. And, I think for me personally, and probably some of my colleagues and partners in the company too, that's obviously the hardest thing to let go when you make a mistake when... And, I think I learned over the years, it's not going... Doing any good, neither to you, to the person, to the company, to keep someone in the rods... In the wrong spot. So, that's probably if I'll go back in time, now, I would tell myself, yes, it's okay to take the time to hire right. We did tremendously well on that front. And I'm very, very proud of Houzzers that we brought on board over the years. I think we did less great in terms of, in the first several years, understanding that sticking to it. It's not necessarily good to anyone, but people are always the hardest. I think if you make a mistake with the business, if you want to pivot, if you want to change, at the end of the day it's all doable, right? It's a matter of time, and money, and how to do it, but it's all doable. But, with people, when you don't want to hurt people, especially when you're so close to everybody, it's the hardest, but it's not the smartest way to keep moving on like this. So, I think I would probably go back in time and change, hire slowly and take the time to do it right. But, when something is wrong, don't drag it.