Even if you aren’t part of its network of professionals, there’s a good chance you’ve visited Houzz’s website. Since launching in 2009, the site has attracted a base of 40 million monthly users who can find inspiration, shop for furniture, or search through the profiles of roughly 1. 5 million experts offering everything from interior design to pest control services.
The Palo Alto startup raised $400 million in venture capital funding last year, more than enough to cover the $30 million purchase of IvyMark, a business management platform for the interior design community, which it acquired in February.
But for some interior designers, the merger was the latest in a sequence of events that have undermined their trust in Houzz.
“I would not have joined IvyMark if I had known there was a tie-in with Houzz, so when that news broke, it was purely a business decision to leave the platform,” says Jennifer Hyman, owner of Chicago-based Hyman Interiors.
The Petition
Last month, Hyman signed an anonymously created petition that rails against what it calls Houzz’s “deceitful practices” in creating a billion-dollar business “that was built on our backs using our creative work. ” It exceeded its initial goal of 1,600 signatures by March 21, and had garnered 2,176 as of publish date.
The petition several designers have filed against Houzz for “deceitful practices. ”
At the root of the petition is the belief that Houzz is eliminating the need for interior designers with its “visual match” algorithm, which scans designer portfolio photos and tags them with links to similar-looking products that consumers can then purchase. Petition signees assert that the platform actually competes with designers’ businesses, that the company leverages the images designers upload to advertise their own services to further Houzz retail initiatives. Some designers feel that their professional project photos function as little more than advertisements for Houzz’s retail operations – and incentives for users to take a DIY approach to designing, rather than hiring a professional.
“When Houzz first started, I saw the website as a platform where you could find inspiration for projects and clients could browse through rooms and find the style they like,” says New York-based designer Natalie Kraiem. “Houzz was used as a tool for researching and not for shopping. ”
In 2014, Kraiem was excited that a Houzz photographer shot a room she designed for a show house, featuring it on the website. “I saw this as a way of connecting our interior design business with potential clients and promoting our work,” Kraiem tells AD PRO. “I received a lot of positive feedback and exposure from this feature. However, then Houzz started selling furniture and home decor items, mixing images from designer projects and their items for sale. I disliked the idea of seeing the two platforms together, merging the inspirational pictures from our projects as a way to sell their products. ”
This concern is the root of the frustrations of many designers, who saw Houzz’s move to becoming an e-commerce platform (the site started selling through its Marketplace in 2014) as a sort of betrayal.
Though these concerns have existed for quite some time, the IvyMark acquisition reignited them. Designers who trusted IvyMark to help them store and manage sensitive information like customer data and invoices now worry that Houzz could turn around and leverage that data to drive their own sales at the expense of a designer’s existing business. “There is no incentive for Houzz and IvyMark to maintain separate databases of client information, and no laws preventing it either,” Hyman says. “It’s in Houzz’s best interest to access that data and utilize to their advantage so they can market and sell to a very motivated target audience. ”
The Response
Houzz, meanwhile, has been striving to earn the trust of this faction of the design community. In an open letter to IvyMark users shortly after the acquisition, Houzz co-founder Alon Cohen assured customers that Houzz will not “use the designer’s client information in IvyMark proposals/invoices/POs to market similar products to their clients. Let me be clear. We will not do that. Period. Not in emails, not in phone calls, and not in ads. ”
Houzz has also partnered with the American Society of Interior Designers “to increase public awareness of the impact and value of interior designers,” according to a statement on the ASID website, which encourages members to apply for the Houzz trade program, to which ASID members are automatically accepted.
The services Houzz offers to appeal to designers.
The Success Stories
The site has a healthy faction of designers who find its services to be valuable ways to market themselves – and find clients. ”It’s been incredible for my practice,” Chicago-based designer Michael Abrams tells AD PRO. “I had a profile up early on and was involved in the initial launch and I’ve also been very participatory in the questions section. Over the years, I’ve gotten about 11,700 followers. ” This has translated into several clients, including many from cities outside of Chicago, where Abrams advertises his services through Pro Plus, Houzz’s paid marketing program. Promotion through Pro Plus is divided by geographical area, and costs $200 per month per area.
“For somebody in New York to say, ‘I want to work with a Chicago designer is amazing,’” says Abrams, who believes his activity and large following give him a leg up outside his Pro Plus zone (Abrams has also secured clients from Seattle, Baltimore, and New York through the site and has fielded inquiries from locales as far-flung as Dubai). “People mark photos they like and then notice that many of them are mine, and they see that commonality and reach out saying, ‘I saw this pattern and I thought I’d give you a call,’” says Abrams.
Petition signees, though, feel that the return on investment for an interior designer advertising their services through Pro Plus is minimal. Designers say that most of the leads coming in through the service present unrealistic budgets or simply want to get a quote before embarking on a project themselves.
“Their going rate for increased exposure on Houzz is about $3,500 a year, and for a small designer that’s a big financial loss,” says Laurie Laizure ($3,500 per hear would net out to just under $300 per month, so somewhere between one and two Pro Plus zones). Laizure runs Interior Design Community, one of a number of social media groups where designers (who often work alone) can foster a collective consciousness, and one of the primary promoters of the Houzz petition.
Adapting for Changing Times
Ultimately, the standoff has touched on one of the deepest challenges in the design industry today: More and more homeowners are looking online for ways to improve their spaces, but there are now many avenues for inspiration, instruction, and sourcing beyond the traditional model of hiring a designer. While free online services – like Houzz, decor app Hutch, or even Pinterest – that attract millions of users may seem like a threat to professional designers, there’s also the possibility that many of these users wouldn’t have hired a designer in the first place.
“Our #1 goal is to make sure we’re not interfering with the ability for people to hire designers when they’re excited about their work,” Liza Hausman, Houzz’s VP of industry marketing, tells AD PRO. “Would we love everyone to hire an interior designer and an architect? 100%. But if they’re not in that phase or don’t have the budget available to them, they should have other options. ”
Abrams readily admits that he fields many questions and inquiries that don’t all turn into paying clients, but for him, that interaction is well worth it. “You do get a ton of people who are kicking the tires and have no idea what the cost of your work is,” he says. “I can appreciate that not everyone has seen as much success with Houzz as I have, but I think it’s ridiculous not to give out a paint name – I mean, paint colors are not a secret! Is it that much sweat off my back to tell someone ‘This paint color is Benjamin Moore Shaker Beige’ and make their day? ”
Plus, Abrams notes, you never know when one of those inquiries might turn into serious business. “I’ve had people see my images and they want to have a dresser or bed that they’ve seen in the photo made,” Abrams says. “One year I had over $65,000 in online sales of custom furniture. ”
It may come as little surprise that designers with alternate revenue streams (like custom producs in addition to design services) are faring better on Houzz. At a time when Pinterest and augmented reality design visualization tools like Houzz’s View in My Room 3D make going DIY seem like an easy, cheap alternative, designers are more hard-pressed than ever to prove their worth.
“The design industry is going through a lot of changes overall and designers are challenged to be profitable,” Hausman says. “They’re challenged to explain to homeowners why they mark up products and the value of their services. We understand this is a challenge and a concern for designers and something they want more help with. ”
Hausman stresses certain steps that Houzz has taken to prevent site visitors from using designers’ ideas free of charge, such as ensuring that visual match tags aren’t visible to anyone in a designer’s local area (a recent update based on designer feedback) or anyone who clicks into a designer’s profile page (a barrier that has always existed). Going forward, it has promised to continue to take steps to support the design community.
Any and all improvements in this realm will likely be welcomed by the anti-Houzz set, who thinks the company isn’t doing enough to stress the importance of a designer. Melissa Frederiksen, founder of Atmosphere 360 Studio, says that most embark on DIY projects unaware of just how many small decisions and headaches an interior designer helps their clients avoid. “I don’t think a lot of people realize that there are a lot of decisions they’re going to have to make, down to what color they want the electrical outlets and how far apart they want the tile. ”
To demonstrate the value of designers in a DIY world, petition supporters like designer Casee Burgason are finding old-school avenues more fruitful than Houzz. In Burgason’s case, that means ditching online spaces in favor of “being more visibly active” and ”getting face-to-face contact with people” in her local central Iowan community. “Design is such a personal experience and I see a lot of designers who are just 100% focused on their online presence,” she says. “You have to go out there and get in front of them. That will make people realize those small things about the impact of design. ”
Hausman still thinks that by listening to feedback from Houzz users and working more closely with the professionals who advertise on the site (who, she notes, have access to analytics data about ad performance), it’s possible to elevate the value and status of interior designers within the context of what she calls “a technology and a tools company. ”
For now, the two sides appear to be at a bit of a standstill. Designers like Laizure are unwilling to give up on their demands (“It’s going to take time,” says Laizure. “It’s not going to be an overnight thing. But we’re not going to go away or give up on this”) while Houzz maintains its commitment to earning the industry’s trust. “We have some other changes that are coming out soon to try and reinforce to homeowners the value of hiring an interior designer,” Hausman says. “It’s a big part of our business model. ” In the interim, Hausman is keen on letting numbers speak for Houzz: “We drive $250 million in revenue to designers in 2016,” she says. “So we definitely think we are supporting designers. ”
