Quick, name this Boston-area consumer Web company: It flew under the radar for years, bootstrapped its way to a thriving business built on technology developed in-house and a sharp emphasis on customer service across multiple websites, and then rose to new heights after rebranding itself.
If you said Wayfair, you’re right. Another correct answer: Homeyou.
At first glance, no one would confuse the two. Boston-based Wayfair (NYSE: W), the online seller of furniture and other home goods, has grown over the past 14 years into a billion-dollar publicly traded company with offices in the U.S. and Europe. In the process, Wayfair has become a pillar in the local tech scene, while boosting its name recognition elsewhere via national TV ad campaigns.
Homeyou—which helps connect contractors with homeowners planning remodeling projects—has a long way to go to achieve Wayfair’s level of success. But in hearing Homeyou’s origin story from Artem Filikov, the company’s vice president of marketing and corporate development, some interesting parallels between the two businesses emerge.
First, a bit of background on Homeyou. It’s one of several consumer websites owned and operated by Woburn, MA-based Triares, which was founded in 2009 by Fabio Espindula, a Brazil native whose resume includes leading user experience for Flywire, the payments company formerly known as peerTransfer. Espindula later brought on Eduardo Leitao and Bill Madeira—also native Brazilians—and Filikov (originally from Russia) as co-founders. (They’re pictured above, from left to right: Madeira, Leitao, Espindula, and Filikov.)
In the early days, the co-founders had other full-time jobs and worked on Triares on the side, Filikov says. They spent several years building websites and fine-tuning the business model. Along the way, they found an approach that Filikov says enabled the company to grow from six people at the beginning of 2014 to 94 employees at the start of this year. The company could hire another 100 or so people this year, mostly sales and call center personnel, he says. Filikov wouldn’t talk sales figures, but CEO Espindula told Patch last summer that he expected Triares to hit $10 million in revenue in 2015.
Although Triares is keeping the other brands around, the company is devoting most of its efforts to building Homeyou and pushing that brand in the press.
Here’s the gist of how Homeyou works: Its website and mobile app match homeowners nationwide with local contractors who fit the criteria of remodeling jobs, from roof repairs to redesigning the kitchen. The company connects the two sides in a few different ways.
The contractor can call the homeowner using a number that routes through Homeyou’s phone system, so the potential customer’s personal phone number isn’t shared with the contractor unless he or she wishes. In that scenario, Homeyou only charges the contractor a fee if the homeowner books an appointment.
“Not every single appointment is going to turn into a job for the contractor, but obviously it’s a higher value proposition” than a cold sales lead, Filikov says. “All they want is a shot. After that, it’s up to them to sell themselves.”
Homeyou does sell customer leads in bulk to contractor networks and large companies—the traditional business model for firms in this sector—but the “pay per booking” option is proving popular among some contractors, Filikov says. “Long term, we think that’s the new way” of connecting homeowners and contractors, he adds.
In addition, some contractors pay Homeyou to handle booking appointments with homeowners for them.
“At the end of the day, it’s homeowners who are looking to be connected with the contractor,” Filikov says. “How we deliver that information to the contractor, it’s more of a back-end kind of thing. What really differentiates us is the quality of our leads. Everything is from inbound marketing. The homeowner finds us.”
The question is where Homeyou goes from here, and whether it can stand out among competitors like Angie’s List, Thumbtack, and Porch.
But if Wayfair’s experience is any indication, Homeyou might be on the right track. Below I’ve outlined three ways in which the companies are broadly similar. Perhaps the comparison will prove instructive for other consumer software or marketplace startups contemplating their strategy.
1. Bootstrapping (at least at first). Every startup must weigh the pros and cons of raising outside capital to grow the business, and the calculus is slightly different for everyone.
Wayfair didn’t take any outside investment money until nine years in, when it was already generating more than $380 million in annual revenue and employed more than 750 people. It ended up gobbling $358 million in venture capital before a $319 million IPO in 2014 that valued the company at $2.4 billion.
Homeyou’s co-founders have purposefully avoided venture capital, Filikov says. That enables them to retain decision-making freedom and to “think long term,” he says. “We don’t have somebody breathing down our neck to have an exit and to make a lot of money.” (That was part of Wayfair executives’ thinking, too, in the early years.)
The challenge is bootstrapping a business puts pressure on the company to … Next Page »