{"id":16323,"date":"2016-11-17T19:11:50","date_gmt":"2016-11-18T00:11:50","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/furnish-your-future-apartment-or-home-through-the-power-of-artificial-intelligence\/"},"modified":"2016-11-17T19:11:50","modified_gmt":"2016-11-18T00:11:50","slug":"furnish-your-future-apartment-or-home-through-the-power-of-artificial-intelligence","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/furnish-your-future-apartment-or-home-through-the-power-of-artificial-intelligence\/","title":{"rendered":"Furnish your future apartment or home through the power of Artificial Intelligence"},"content":{"rendered":"

Soon, you will own a nice apartment or home.\u00a0 And you\u2019ll want to furnish it, decorate it, and make it your own.\u00a0 What digital transformations might help you personalize your future abode?<\/p>\n

If you recall from Angie\u2019s List, the company decided to add a free tier to entice more user memberships, hoping this would entice service providers on the platform to continue paying for advertising [1].\u00a0 As a company that relies heavily on advertising revenues for nearly 80% of its revenues however, Angie\u2019s List could use alternative ways of creating and capturing value.<\/p>\n

One of its smaller and more recent competitors, Houzz<\/a>, is seeking to diversify its revenue streams and be more relevant to millennials. Houzz, an online home improvement marketplace, is free for users and creates value for service providers (think architects, designers) by providing them a place to upload photos of their work to casual users who may be thinking about redecorating, redesigning or furnishing their apartments or homes.\u00a0 As a platform, Houzz captures value by charging for premium listings.<\/p>\n

\"houzzfig1\"<\/a><\/p>\n

Fig 1: Houzz\u2019s website, a Pinterest-like display of service providers\u2019 photos of home interiors and exteriors.\u00a0 But what if you want some of the furniture or other items in the photo?<\/strong><\/p>\n

Unlike Angie\u2019s List, though, Houzz also earns additional revenue streams by featuring advertisements from major merchants (like IKEA and Black&Decker) and through e-commerce commissions on products users see in the photos (Fig 2<\/strong>).\u00a0 In terms of operations, service providers and Houzz staff must explicitly and laboriously tag each product in the photo, and if the product is already in Houzz\u2019s database (thanks to its partnerships with certain merchants), users can buy the item through a link to the product\u2019s website.<\/p>\n

\"fig2\"<\/a><\/p>\n

Fig 2: After Houzz\u2019s deep learning algorithm recognizes the products in the photo, Houzz\u2019s Visual Match tool can also show you how products will appear in your own home [3]. Neat!<\/strong><\/p>\n

For Houzz to achieve its customer promise of providing customers the ability to buy any item in its photos, it needs to overcome two limitations.\u00a0 The first is that many service providers do not know what products are in the photos they are taking \u2013 they are selling the interior design, or the porch, not necessarily the furniture or appliances.\u00a0 Having the service manually fill in the products in their photos when they are uploading is a nuisance.\u00a0 The second is that although Houzz\u2019s marketplace contains 11 million photos, only 6 million products can be purchased through its database (that\u2019s fewer than one product per photo) [2].\u00a0 Just looking at the photo below, 6 products appear in just one picture, so there seems to be a bottleneck in terms of tagging products in these photos.<\/p>\n

To automate the task of marking items in a photo for sale, Houzz has begun to use software to scan service provides\u2019 photos for products that look like those already in Houzz\u2019s database.\u00a0 The software is based on an advanced method of data analysis known as deep learning<\/strong>. \u00a0<\/strong>With deep learning, the goal is to get software to recognize things like facial features the same way that our human brain does – by first detecting simple patterns and then using them as building blocks to detect more complex patterns<\/em> [4].\u00a0 Houzz\u2019s engineers train their deep learning algorithm on pictures of products already in the database (e.g. tables, sofas, chairs) so that when the algorithm encounters a new photo, it can accurately identify what the product in the photo is and whether it exists in the database.<\/p>\n

While automatically recognizing products in photos is an important new feature, an additional step that Houzz should be thinking about is how to get more items into its database, so that its deep learning algorithm can find virtually any product in any photo of a room, patio, or yard.\u00a0 By coincidence, just the other day I had a discussion with a fellow HBS CODE club member about a web crawling tool he is currently developing.\u00a0 Given a list of keywords (say, of various furniture) to be queried, and a way to look up the prices and websites for those keywords, this tool can autonomously query (or web scrape, as they call it) websites and automatically export into another file the prices and link information for thousands of products at a time.\u00a0 Such a tool, while still in testing phase, can conceivably be used to greatly expand Houzz\u2019s database.\u00a0 With Ericsson predicting worldwide smartphone subscriptions projected to double to 6 billion by 2020, smartphone camera resolution increasing by a megapixel a year, and trillions of photos uploaded to the cloud annually, Houzz\u2019s investments in deep learning should be a useful tool for future homeowners like you and me [5].\u00a0 (782 words)<\/p>\n

 <\/p>\n

Sources:<\/u><\/strong><\/p>\n

[1] Dolan, Robert J., and Ayelet Israeli. “Angie’s List: Ratings Pioneer Turns 20.” 性视界 Business School Case 517-016, September 2016.<\/p>\n

[2] Lardinois, Frederic Houzz now uses deep learning to help you find and buy products in its photo<\/em> https:\/\/techcrunch.com\/2016\/09\/14\/houzz-now-uses-deep-learning-to-help-you-find-and-buy-products-in-its-photos\/<\/a> TechCrunch.com, Sept 14, 2016.<\/p>\n

[3] http:\/\/www.houzz.com\/ideabooks\/61877912\/list\/inside-houzz-introducing-view-in-my-room<\/a> \u00a0\u00a0Houzz.com, February 17, 2016.<\/p>\n

[4] https:\/\/www.youtube.com\/watch?v=CEv_0r5huTY<\/a> \u00a0Deep Learning, Simplified. Published Dec 11, 2015 by DeepLearning.TV<\/p>\n

[5] http:\/\/www.ericsson.com\/ericsson-mobility-report<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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