Corner Office: The C.E.O. of Houzz on Attracting Investors

Corner Office: The C.E.O. of Houzz on Attracting Investors

This interview with Adi Tatarko, chief executive of Houzz, an architecture and interior design Web site, was conducted and condensed by Adam Bryant.

Q. Did you have the entrepreneurship bug early on?

A. Both my grandmother and my mother were entrepreneurs. They kept saying: “It’s all about you. If you want something, you can do it. Just be passionate about something and go all the way." So it was just something that I was part of early on. I saw both of them working very, very hard, but they thrived.

Q. Other influences from your family?

A. Even at school I was frustrated sometimes because it was just so traditional and people couldn’t think out of the box. I questioned things. Instead of my mother telling me, “No, you have to do it exactly the way they say it,” she actually encouraged me to think out of the box. It’s O.K. to question things. She was so supportive on that front.

Q. How did that manifest itself as you started building your company?

A. We wanted to find the right investors who supported our vision, and I didn’t want to go to V.C.'s on Sand Hill Road and start pitching people. I just didn’t want to do it. It’s not me. I love what I’m doing, and if somebody wants to join us as investors, they need to understand it without me making a standard pitch. So we would just have coffee with people in an informal environment and talk about what we are doing. We figured they’ll get it, and if they don’t, then they shouldn’t be our investors. This was the way we did it. It was very informal.

Q. But even if it’s over coffee, you’re still pitching.

A. That’s true, but it wasn’t in the forum that people are used to. It was important for me to say: “Look, I’m not going to try to package it in the way that you are used to. I’m not going to make up numbers for a PowerPoint and show you that the company is going to be worth X and make Y. I don’t have a crystal ball.” Even today, I keep saying to investors that I don’t have a crystal ball and I have no idea what’s going to happen in five years. I know who I am, I know what the company is, I know where we’re going. I have the power to control the day-to-day and what we are doing, but I don’t know what’s going to happen. It goes back to what my mother said when I was in school: “If you have another way to say it, just tell them you have an innovative way to demonstrate it.”

And the investors have been fine with it. I told investors when I met them in the restaurant: “If you think that you’re going to be feeling that this is not right, and we’re not doing it the way you are used to, then just don’t join. It’s going to be very, very different.” And they actually liked it. It is different.

Q. You have 110 employees now. How did you build the culture?

A. My husband, Alon, and I are running this company together, and we said early on that we wanted to be a pretty flat organization. It started from the idea that people can be way more creative when they don’t have middle management.

How many times do engineers feel frustrated because they are very talented and they have to report to a middle manager who isn’t necessarily talented? At some point, the engineer just says, “I don’t want to do it.” Or they feel that if they don’t get promoted to be that manager, then they’re not good enough. And it’s not true. You can be an amazing individual contributor, but not necessarily even like being a manager.

So many times those middle-management positions can just block people from growing individually. So we actually built the company in a way that we don’t have middle managers at all. This also requires hiring people who are very mature and experienced, and who can take everything from coming up with a concept all the way to executing it by themselves, and be very creative, innovative and entrepreneurial.

Q. But people need priorities, too.

A. We set the goals for the entire company. It’s very important that everybody in the company understand where we are going, why we are doing what we are doing, and what other people in the company are doing. We all sit in one big open space together. We have company meetings every few weeks just to make sure everybody’s on the same page. So we talk about these goals, and they own their goals.

It’s all about numbers and how do we get there and how do we achieve everything. They own this, and it works. It’s just amazing. You let people own something, and be entrepreneurs, and they thrive. You see people are moving between tables consulting with each other. And they are getting an immediate response from their work because things move really fast in a small company.

Q. How do you hire? If you were interviewing me, how would that conversation go?

A. I will first walk through your résumé and try to understand why you’ve made certain choices. I’m trying to understand what type of person you are, and the choices you made and the way you made them will tell me a lot about you. So it’s less about the type of jobs you did; it’s more about why. Why this company and not the other company? Why did you move from this one to the other one? So I’ll try to learn about you and who you are. I just in general want to understand what is it that will make you happy. So I will ask you, “What will make you thrive?” But I will also ask, “What will make you unhappy?”

Q. In terms of the culture?

A. Yes. And this is always very interesting, and you learn a lot about people. Sometimes they’re very surprised, because they don’t expect a negative question like, “What makes you unhappy at work?” But you hear great answers.

Q. What’s a great answer for you?

A. I like hearing that people don’t like to be micromanaged. They like to be responsible for something. People don’t like repetition. They don’t like boring things. When someone says, “I want to own something. I want you to trust me,” I love that.