CNBC Disruptor 50

Houzz's 3D tool makes users 11 times more likely to buy products on the platform, CEO says

Key Points
  • "Mad Money" host Jim Cramer hears from Houzz CEO Adi Tatarko about her technology-focused home design company's latest 3D venture.
  • Tatarko, whose company is valued at $4 billion, breaks down how her catch-all online marketplace makes money.
Houzz's 3D app significantly increases odds consumers buy on the platform

Technology-home-design hybrid Houzz is using augmented reality to help consumers visualize furniture and decor in their home — and it's paying off in droves.

In an interview with CNBC, Houzz CEO Adi Tatarko, who founded the online platform with her husband Alon Cohen in 2009, said that users of Houzz's new 3D tool are 11 times more likely to make purchases on the website.

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"We're very proud as a technology company that we can always be in front of the best technologies and apply them very deeply into our own industry," Tatarko told "Mad Money" host Jim Cramer.

The tool, a part of Houzz's app called View in My Room 3D, lets users put virtual items in their rooms at any angle using their devices' cameras. It allows users to put multiple products into their rooms to see how they'd look together.

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"View in My Room 3D is basically an ability to use your mobile device to empower you and envision everything," Tatarko said.

"Since we introduced that tool last year, we had over 2 million people that used it in order to make decisions for their home remodeling and design, and these people were 11x more likely to purchase the product and materials that they saw using this technology," she continued.

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Tatarko's position as chief of a disruptive e-commerce player is unique. According to CNN Money, fewer than one in 10 "unicorns," or start-ups with a valuation of $1 billion or higher, are founded by women.

Now valued at $4 billion, Houzz is growing rapidly, with 40 million users visiting the platform each month. The company has also won investments from Iconiq Capital, Wellington Management, Sequoia Capital, and GGV Capital.

Houzz's millions of users come to the website for its comprehensive approach to interior and exterior design. Its database of over 16 million photos offers rich tools for both individual and professional designers to "execute their dream homes," Tatarko said.

The CEO added that Houzz's main sources of revenue are twofold, with one coming from the 1.6 million professional contractors and designers that can choose to subscribe to advertise on the platform and reach local homeowners, and the other coming from the homeowners themselves.

"Both professionals and homeowners said that they love the fact that they get all the data attached to the photos that we have, ... but they wanted also to sync the tags and be able to purchase these products that they see, the materials that they see, right away from Houzz," Tatarko told Cramer. "That helped us to make a decision to build a robust marketplace on Houzz."

Now, with 20,000 different sellers offering 10 million different products, Houzz has established itself as a catch-all, tech-driven design assistant, disrupting the DIY and remodeling industries.

"You can get it all – be inspired, find the great professionals that would help you execute a project – and then that second channel would help you get all the products and materials," Tatarko said. "That's what created both revenue channels: the demand from our own community."

Watch Adi Tatarko's full interview here:

Houzz's 3D app makes users 11 times more likely to buy products on the platform, CEO says

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