Change Agents: Porch aims to reduce home-project pain
SAUSALITO, Calif. — In 2012, serial entrepreneur Matt Ehrlichman was fresh off the IPO of a software company he worked for and looking to take a year off to be with his wife and young kids.
Then disaster struck: He had a new start-up idea.
"I love building things that solve problems," Ehrlichman, 35, says with a sigh.
Ehrlichman's brainstorm became Porch.com, which launched a year ago today. Born out of Ehrlichman's own frustration in trying to source professionals to build his new home, the site aims to clean up the often murky world of home-improvement projects by providing contractors a place to showcase their handiwork and consumers a way to source ideas and vet local craftsmen.
"We like to think of it as a LinkedIn for helping you find trusted workers for your home project," says Ehrlichman during a break from visiting Bay Area investors. "Beyond that, we aim to be the home network, a place for people to tell the story of their homes. We think there's a need, given your house is your biggest investment."
Initially consisting of a few dozen friends in his Seattle basement, today the company employs 200 and is building out a new 30,000-square-foot space on the east side of town.
More significant, its nine-month partnership with Lowe's — all 1,700 home-improvement stores boast sales associates trained to answer customer questions with Porch — takes on a new dimension with today's announcement of a Lowe's-led Series A round of $27.6 million,bringing the company's total funding to $33 million.
That news dovetails with a retooling of the Porch website with "an even greater emphasis on transparency and detailed data on licensed builders," says Ehrlichman. "It's about being specific. It's not just 'What does a kitchen remodel look like and cost,' but it's what it looks like and costs in your neighborhood."
For Lowe's, Porch represented a way to forge a stronger bond with customers.
"There are other companies playing in this space (such as design-focused Houzz.com), but no one else showed the same focus on data and consumer insights that can be gleaned from that data," says Jay Rebello, vice president of new business development at North Carolina-based Lowe's.
Rebello says consumer spending on homes hasn't rebounded fully, but instead has led to a greater focus on making the most of remodeling dollars. Lowe's leading the latest venture round is consistent with its desire to "invest in early-stage companies that are in touch with where consumers are going," he says.
Increasingly, technology of all kinds is proving a differentiator for companies in the $158 billion home-improvement stores sector. Home Depot, which dominates with 43% of the market, recently started selling 3-D printers, while Lowe's, with 31% market share, debuted a MyLowe's home management tool at the 2012 Consumer Electronics Show.
"Due to the high level of competition between these two retail giants, Lowe's can't afford not to keep up," says IBISWorld analyst Jocelyn Phillips. "(Its partnership) with Porch.com reminds consumers that, instead of just functioning as oversized hardware retailers, Lowe's is increasingly a company to turn to for tech-enabled home-improvement solutions."
Phillips says the appeal of Porch is that it offers broad project suggestions while facilitating "those traditional retail purchases that still account for the vast majority of Lowe's yearly revenue," which in 2014 is expected to be $52 billion.
Ehrlichman is convinced there is a growing hunger for more transparency in home remodeling and sales.
As proof he notes the 1.5 million professionals who have signed up with Porch, as well as the 120 million highly detailed projects currently logged into the site, representing some $2.5 trillion in home-improvement work.
"It all came to me when my wife and I were trying to build our own home, and it took us months of interviewing contractors and architects before we could even remotely get started," he says. "In the end, you tend to go with word-of-mouth referrals. But I figured there had to be a better way."
That attitude is what led Seattle-reared Ehrlichman, whose grandfather was Nixon White House general counsel John Ehrlichman, to start his first company at 14, a sports camp for neighborhood kids.
That quickly mushroomed into developing software to help facilitate the enrollment process. By the time he was a freshman at Stanford, his company, Thriva, was a national outfit helping the likes of the San Francisco Giants with its baseball camp enrollment.
Thriva sold to Active Networks in 2011 and went public with Ehrlichman as its chief strategy officer (and then sold in 2013 for $1 billion).
"I rang the bell on the New York Stock Exchange, you know, checked that professional box, and then was sure I was going to take time off," he says. "I still owe my wife a vacation."
ABOUT MATT EHRLICHMAN, 35
WHAT: Founder and CEO, Porch.com, which connects homeowners with project ideas and local contractors
WHERE: Seattle
What's your advice to fledgling entrepreneurs? "First, pick a market where a real problem exists and where you're deeply passionate. Second, recruit the very best people you know — it's all about the team, and if you can't get amazing people, it's not going to work anyway. Lastly, just go for it. There will always be risk, but there is nothing else you can do where you'll learn more and have more fun."
What was the best part about building your own home, and the worst? "The actual work of designing the home was tremendously fun. We spent a long time and late nights going through every detail and really making sure we had it right. The worst part is the uncertainty. We just didn't feel informed to know what to budget, who to hire, or which products to purchase. That pain brought Porch to the world."
If Porch is another hit, will you finally take that year off or start another company? "We're at the first step of a marathon at one year in. So while I certainly intend to go all the way with this as my last start-up, there's no doubt I owe my family that year-long vacation."
Paste BN's Change Agents series highlights innovators and entrepreneurs looking to change business and culture with their vision. E-mail Marco della Cava at mdellacava@usatoday.com. Follow him on Twitter:@marcodellacava.