Houzz Co-Founder Adi Tatarko Tells Us Why Bootstrapping Was the Best Thing for the Company

Tatarko initially launched her home design company with her husband as a side project. Now it is reportedly valued at more than $2 billion.

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By Nina Zipkin

Courtesy of Houzz
Houzz Co-Founder Adi Tatarko

Turning a house into a home can be stressful, especially when you are trying to match your surroundings with the beautiful designs in magazines, online and posted on various Pinterest boards. On top of that, a plethora of choices, logistics and deadlines can turn the whole experience of remodeling, a more than $300 billion industry in and of itself, into a giant headache. Enter Houzz.

Adi Tatarko and Alon Cohen, the married team behind the seven-year-old home design-platform have worked to grow a community where users can exchange photos, recommendations and advice -- from where to buy the best products to how to find the most trustworthy professionals -- to make the process a bit easier.

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The duo was inspired to launch the company after experiencing their own ups and downs during a remodel. Originally a side project, Houzz has now grown into a global business with highly popular iOS and Android apps, with 40 million monthly users and over one million active home design and renovation professionals, as well as localized platforms all over the world in Australia, Denmark, France, Germany, Italy, Japan, Russia, Spain, Sweden and the UK.

We caught up with CEO and co-founder Tatarko to talk about thoughtful hiring, scaling a side project into a viable business and building a culture you can be proud of.

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Q: Knowing what you know now, what would you have done differently when you were first starting out?
My husband and co-founder Alon Cohen and I identified hiring as very important to the company we wanted to build and invested a lot of time and energy recruiting the best people early on.

That said, when you invest so much in the hiring process, you get more attached to the people, and it becomes difficult to admit when someone is no longer a good fit. Investing in the hiring process will reduce mistakes but not eliminate them completely.

When someone is not a good fit, it's better to let go sooner rather than later. In earlier stages, I really struggled to let go and move on, but ultimately I learned that hanging on was more detrimental to everyone involved.

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Q: What do you think would have happened had you known this back then?
I think we would have progressed much faster in certain areas had we let the wrong person go and hired somebody better sooner. There's a tremendous relief that comes with finding the right person for each position.

Q: How do you think young entrepreneurs might benefit from this lesson?
Once you raise money, it's easy to want to hire as fast as possible, but it's important to be thoughtful about what you're trying to build, the culture you want to establish and who are the right people to help you for the long term. Hiring thoughtfully but parting fast when you've made a mistake saves a lot of time.

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Q: What are you glad you didn't know then that you know now?
I'm glad I didn't know Houzz was a big business early on. Working on Houzz during the early days as a side project we were so passionate about, helped us to focus on building a great product and user experience without worrying about other aspects of it. In retrospect, we didn't realize what we were doing was bootstrapping, but it enabled us to take our time and build the company from the ground up the right way.

Q: What is your best advice for aspiring entrepreneurs?
There are two things you need to prove to investors as a first time entrepreneur. One is proof that your idea is a good one and that it can work, and two that you are the right person to execute and scale it. My biggest advice would be, if possible, develop something meaningful before you go to investors.

Related: Biz Stone to Aspiring Entrepreneurs: If You're Not Emotionally Invested, Don't Do It

Spend the first six months to a year building a great product or service and proving to yourself that the idea is good and you can do it, rather than chasing investors and redoing PowerPoints. Bootstrapping our company turned out to be one of the best things that happened to us.

When Alon and I decided to bring on investors, we didn't just have an idea of what we were going to do, we had a proven concept with an engaged community and knew how execute. The two question marks that investors usually have -- is it a good idea and are you the right person to scale it -- were completely irrelevant at this point.

Interview was edited for length and clarity.

Nina Zipkin

Entrepreneur Staff

Staff Writer. Covers leadership, media, technology and culture.

Nina Zipkin is a staff writer at Entrepreneur.com. She frequently covers leadership, media, tech, startups, culture and workplace trends.

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