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 “be profitable from day one,” Filikov says. Homeyou’s founders didn’t pay themselves a salary until about two years ago, he adds.
The silver lining? “Lack of resources creates a need for creativity and elegant solutions,” Filikov says.
2. Building a unified brand. The way Wayfair and Homeyou built up their Web traffic and then refocused on a single brand is strikingly similar.
Wayfair was originally called CSN Stores and ran a network of more than 200 retail websites with generic names like Cookware.com, Strollers.com, BedroomFurniture.com, Luggage.com, and EveryFaucet.com. Eventually, the company decided to consolidate all those websites under one giant e-commerce roof, and rebranded as Wayfair.
Homeyou has similarly launched more than 800 microsites targeting specific services, like bestroofquotes.com and reliabletreeremoval.com, whose names are geared toward popular search terms. “They’re not very sexy sites,” Filikov admits, but the search engine optimization wizardry has helped the company find more high-quality leads for contractors.
After a couple of years quietly building the business, Filikov and company are marketing the Homeyou brand more aggressively. But its executives haven’t decided if that effort will involve shutting down the hundreds of generic microsites or redirecting them to Homeyou’s website, which could deal a blow to the company’s overall Web traffic, Filikov says. “It’s scary from an SEO standpoint.”
Wayfair’s executives can relate. The company had to weather big drops in traffic as it gradually redirected its 200-plus shopping sites to Wayfair.com between late 2011 and mid-2012. That’s because search-engine algorithms punish traffic redirects, making companies earn back their ranking if they rebrand. But Wayfair saw it as a necessary barrier to overcome if the company was to have a chance at evolving from a huge network of home-goods shopping sites to a one-stop home shop.
Taking a huge chunk of venture capital meant Wayfair had a cash stockpile to sustain the business while it made that transition. Unless Homeyou raises outside money, it might not want to take the same risk with its fleet of websites.
3. Developing technology in-house. This has been an emphasis for both companies. Wayfair, for example, built its own software to manage enterprise resource planning, analyze reams of customer data, and oversee product searching and order management.
At Homeyou, “we built pretty much everything we use in-house,” Filikov says. That includes developing its own customer relationship management software and Web-based call center system.
Homeyou is considering adding more product features that enable it to interact with homeowners, Filikov says. Those might include delivering photos of suggested remodeling designs based on user preferences and sending messages to recommend home maintenance, like “have you checked your air filter lately?”
The goal would be to make Homeyou a destination for more than just hiring a contractor, Filikov says. “We want to create more of a long-term relationship with the homeowner.”
Interestingly, Filikov mentions that Homeyou could also add the capability for customers to purchase furniture and home accessories from it—which might make it a Wayfair competitor someday. Selling home goods is “something in the back of our minds,” he says. “But our bread and butter is still the services.”
Filikov says he admires Wayfair’s emphasis on product and customer service “as an engine to drive growth.”
“The long-term thinking is what I see in Wayfair that personally I think is a really good model,” Filikov says. “We think we have a model that works very well.”