• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar
  • Skip to footer

Babcock Advisors

Growth strategies and exit planning

  • Home
  • Expense Manager Services
  • SELLING A BUSINESS
  • BUYING A BUSINESS
  • Contact Us

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

January 30, 2019 by Aaron Babcock

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 @HouzzUK 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/

Filed Under: acquisitions Tagged With: home improvement, Houzz, layoffs, marketplace

QoinPro.com: Free Bitcoins every 24 hours

VALUE ENHANCEMENT

For many of our clients, this will mean holding off going to market. But it’s not the end of our service. Every single client is given our value enhancement planning tool (which is customized for their business), the Roadmap to Enhancing Value. By identifying key areas in which your business can improve its value, we can drive your company forward and prepare it for the day you’re ready to go to market. Both the Roadmap for Enhancing Value and our Evaluation documents include two free updates, guaranteeing our advice remains relevant as your company goes to market.

Commercial Contractor 2015 - 2016 Comparisons

Opportunity: In 2015, their Hidden Profits were $220,190 or 4.73% of $4,653,681 annual revenue. Solution: Engagement with this client using the Profit Recovery Platform (PRP) was an awareness and accountability experience bringing clarity of the real financial story to the business owner. Outcome: From 2014 – 2016 there was an overall net gain of 41.80% or $2,413,672 based on Revenue, Gross and Net Margins and Hidden Profits of which were $129,345. There are an additional $204,040 in Hidden Profits uncovered in 2016 to work on in 2017.
Expense Reduction Commercial Contractor
P&L Optimization
Commercial Contractor
Commercial Contractor is a repeat client earning an Excellent rating of 24.03% comparing the outcome of their performance from 2015-2016 based on increased Revenue by $1,120,654, increased Gross Margin by $256,690, increased Net Margin by $142,231 and decreased Hidden Profits by $16,150. Working with this client since 2013 there has been an overall net gain of 41.80% or $2,929,978. Over 4-years increased Revenue by $2,330,076, increased Gross Margin by $357,074, increased Net Margin by $113,483 and decreased Hidden Profits by $129,345. There are an additional $204,040 in Hidden Profit opportunities uncovered in 2016 to work on in 2017.

Convenience Store 2014 - 2015 Comparisons

Opportunity: In 2015 their Hidden Profits were $51,103 or 5.47% of $934,963 annual revenue. Solution: Engagement with this client using the Profit Recovery Platform (PRP) was an awareness and accountability experience bringing clarity of the real financial story to the business owner. Outcome: Unknown as company was sold due to new competition and retirement.
Expense Reduction Expense Reduction
 
Convenience Store P&L Optimization
Convenience Store was a new client earning a Poor rating of -7.83% comparing the outcome of their performance from 2014-2015 based on decreased Revenue by $37,535, decreased Gross Margin by $19,748, decreased Net Margin by $14,052 and increased Hidden Profits by $4,462. This business was sold in 2016 due to new aggressive competition and nearing retirement.

General Contractor 2015 - 2016 Comparisons

Opportunity: In 2015 their Hidden Profits were $132,742 or 25.18% of $527,172 annual revenue. Solution: Engagement with this client using the Profit Recovery Platform (PRP) was an awareness and accountability experience bringing clarity of the real financial story to the business owner. Outcome: From 2014 – 2016 there was an overall net gain of 32.12% or $371,489 based on Revenue, Gross and Net Margins and Hidden Profits of which were $70,269. There are an additional $237,718 in Hidden Profits uncovered in 2016 to work on in 2017.
Expense Reduction General Contractor
General Contractor P&L Optimization
General Contractor is a repeat client earning an Excellent rating of 72.69% comparing the outcome of their performance from 2015-2016 based on increased Revenue by $562,278, increased Gross Margin by $131,541, increased Net Margin by $89,196 and increased Hidden Profits by $104,976. Working with this client since 2014 there has been an overall net gain of 32.12% or $371,489. Over 3-years increased Revenue by $399,610, increased Gross Margin by $399,610, increased Net Margin by $7,237 and increased Hidden Profits by $42,701. There are $237,718 in Hidden Profit opportunities uncovered in 2016 to work on in 2017.

GOING TO MARKET

Whether it is the day you receive your company’s valuation or five years down the line, we’ll do everything that’s needed to take your company to market. This starts with creating the kind of comprehensive documentation needed to attract optimal buyers and investors. Once it’s complete we’ll draw up a specific marketing plan for your business, as well as introducing you to tens of thousands of global buyers who have a combined $2 trillion to spend on acquiring businesses such as yours.

HEADQUARTERS

3003 43rd Street NW

Rochester MN 55901

Arizona Office

16036 N 11th Ave

Phoenix Arizona 85023

  • SELLING A BUSINESS
  • BUYING A BUSINESS
  • Contact Us

Copyright © 2019 · Epik Theme on Genesis Framework · WordPress · Log in