With so many moving parts in the home improvement process, nothing ever goes as exactly planned. Many of the hurdles of the home renovation process like over-budget, delays, workmanship issues can be solved with better communication and properly managing expectations and timelines between homeowners and contractors. Block Renovation is a managed marketplace platform that leverages technology to guide homeowners and contractors through the renovation process to ensure that projects are completed on time and on budget. The company uses a proprietary design system and suite of homeowner tools to get projects rolling and connects the homeowner to a contractor from a pre-vetted network of construction specialists. Initially focused on bathroom renovations in the New York market, Block has expanded to cover kitchen renovations and also into the Los Angeles market. The pandemic created a renewed interest in home improvement as we spend more time at home and as a result, the startup, founded in 2017, has experienced triple-digit growth.
AlleyWatch caught up with Cofounder Koda Wang to learn more about how the company is alleviating the stress commonly found with home improvement projects, the growing interest in home renovation during the pandemic, the company’s strategic plans, latest round of funding, and much, much more.
Who were your investors and how much did you raise?
We raised $40M.
Our Series B Investors included NEA, Giant Ventures, Lerer Hippeau, Morningside, and Obvious Ventures. To date, we’ve raised $54M from investors including Rainfall Ventures, Firstminute Capital, BoxGroup, and SV Angel.
We’ve also had some great angels along for the ride – Eric Wu (CEO/Cofounder, Opendoor), Oisin Hanrahan (CEO, Angi), and Spencer Rascoff (former CEO/Cofounder, Zillow), designer Kelly Wearstler, and designer Ann Sacks.
Tell us about the product or service that Block Renovation offers.
Block simplifies and modernizes the renovation experience.
Renovations can be stressful for both homeowners and contractors. Most people hire a contractor and just hope for the best. We offer an alternative approach. We “productize” the experience so you know what you’re going to get, how much it costs, how long it’s going to take, and what it looks like.
For homeowners, Block offers homeowners clients a more predictable renovation with a vetted general contractor and access to a design system and suite of software tools. For contractors and designers, Block offers a suite of tools and a steady stream of projects that have been scoped, measured, and vetted for feasibility.
This enables a more modern renovation experience – predictable, data-driven, and digitally-enabled.
What inspired the start of Block Renovation?
Luke (my cofounder) and I were friends bouncing around a few ideas, and we started thinking through various ideas in the home. We were frankly startled by how often people were resigned to the status quo of hiring “two guys and a van” and praying that it wouldn’t be a disaster. Which is odd — because the home is often the biggest investment most people make in their lives, and yet they have less predictability from investing tens of thousands of dollars in it than they have when buying toilet paper off of Amazon.
We also started getting to know contractors — how they worked, and what their experience was like on the other side of the table. It’s not easy as a contractor — as a small business owner, you have to do everything yourself — sales, marketing, bidding, billing, payments, procurement, and more — on top of being a plumber or carpenter.
A lot of the existing solutions out there focused on just matching homeowners with contractors. That’s a first step, but it doesn’t solve the underlying problem of making the renovation itself better and easier. Our approach is a combination of business model and technology innovation — business model by productizing/templatizing renovation designs (much like customizing a car with limited choices), and technology by building tools for homeowners and contractors to get the renovation done with better predictability and less fuss.
What market does Block Renovation target and how big is it?
We’re targeting the $450 billion home renovation market. We’re starting with the millions of bathrooms and kitchens in the US.
What’s your business model?
We’re a managed marketplace, which means there are homeowners on one side, and contractors on the others. Block provides software and tools to homeowners and contractors for free. Because of Block’s scale and predictability, it is able to get better rates for both labor and materials for homeowners and bring down costs for contractors as well.
How has COVID-19 impacted your business?
A few things happened in tandem:
People were spending less time in the office, and more time at home, and started to invest more in their homes. By using bathrooms and kitchens way more often than usual, they were more motivated to improve them.
Also, savings rates increased, as people were spending less on things like travel and restaurants. Much of that got re-invested in the home.
Finally, as residential real estate activity has skyrocketed (so far through 2021), we’ve seen a lot of new homeowners want to renovate their homes.
What was the funding process like?
Construction/home renovation was historically overlooked by investors and under-served by technology. But lately, we’ve been seeing unprecedented momentum. People realize we are just scratching the surface of a $450 billion home improvement industry (and $1.3 trillion construction industry). We had a warm reception from both new investors and our existing investor base doubling down.
What are the biggest challenges that you faced while raising capital?
Staying grounded. You’re out there raising capital and meeting a slew of investors — that comes with sharing the narrative of the business and its buoyant future. But you also have to be clear-eyed about the challenges of today and keep the daily, weekly, monthly momentum of building the business. Navigating both is a balance. It’s easier when you have a team that you’ve been working with for a while whom you can trust to stay focused on what needs to be done.
What factors about your business led your investors to write the check?
- High trust, high integrity relationship
- Conviction in the thesis and the market
- The business performance and credible growth opportunities
- The caliber of the team
What are the milestones you plan to achieve in the next six months?
We’re launching in major markets across the US, and we’re going to be investing in our contractor and homeowner experiences.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
If you don’t need fresh capital, then great. You may be building a sustainable business that doesn’t need it, or you’ve been disciplined about managing your burn. Kudos to you. If you want future capital as an option in the back pocket, it wouldn’t hurt to build a handful of relationships with investors whom you may want to partner with someday. Otherwise, you’re in the enviable position of being able to primarily focus on business-building.
If you don’t need fresh capital, then great. You may be building a sustainable business that doesn’t need it, or you’ve been disciplined about managing your burn. Kudos to you. If you want future capital as an option in the back pocket, it wouldn’t hurt to build a handful of relationships with investors whom you may want to partner with someday. Otherwise, you’re in the enviable position of being able to primarily focus on business-building.
If you need fresh capital, then start building relationships with potential investors. Create some trust and familiarity before you officially kick off a fundraise. That said, a fundraise doesn’t make the business — you and your team do — so stay focused on your product and business performance. You want to demonstrate consistent momentum as you go into a fundraise process.
Where do you see the company going now over the near term?
A fundraise is a moment for focus and acceleration—not a moment for distraction. We’ll continue to run a smart and disciplined business. We are continuing to invest in national expansion and software for contractors and homeowners.
On the team front, we recently crossed 100 employees. We continue to stay focused on building a high-performance culture with a high-quality, high retention employee experience. This means weaving our company values into everyday interactions and career development. It means quality coaching/development conversations at all levels. It means good org design and roles/responsibilities definition. As we continue to hire, we’ll keep the bar high — the next 100 employees should be as strong as the first 100.
We’ll also stay close with our contractor community. Our business depends on high-performing, highly-motivated contractors — and we want to make sure they are getting the tools and support they need to be successful.
What’s your favorite outdoor dining restaurant in NYC
My cofounder’s wife has a delightful restaurant, King (on King St).
