Marketplace to hire professional service provider.

We built a marketplace to find the best provider for home services in your area (e.g., plumber, painter, exterminator, etc.).

Thumbtack focuses exclusively on the introduction between the customer and the experienced professional. Finding the right contractor is the key pain point when hiring a contractor for your home. It is not, for example, paying them.

We solve this problem with our unique bidding system. A customer fills out a project-specific form and receives a project-specific quote from experienced professionals. We require professionals to pay for each bid they submit and show the customer the first 5.

We both lived far from college and flying home was super expensive. Some of our friends from other countries used localized airline sites (because they were in their native language) and we noticed they had cheaper flights! So we built a web app that saved us thousands of dollars on flights over the course of a few years by doing two things.

1. Checking each airlines localized sites and throwing our IP address to that location. Airlines change their prices based on the location of the potential customer.

2. Using our intended destination as a “connecting” airport. For example, sometimes flights that connect through Chicago are cheaper than direct flights to Chicago. You simply don’t fly on the second or third leg.

It was a fun hack that eventually got shut down. We learned how to work together and that showering is very important when working in close quarters.

We met sophomore year of college (6 years ago) in a Masterpieces of Western Philosophy class, a mandatory class at Columbia University. We started arguing about the existence of free will in the latter part of the class and our discussion continued to lunch. We’ve been best friends ever since and, in fact, the argument continues to this day.

We are currently in a private beta in San Francisco.

We launched 5 months ago and here are our key metrics:
- 650 completed projects (50% MoM growth)
- 150 Contractors Signed Up, 3200 potential customers
- 1900 bids (close-rate ~34% lifetime but increasing as network grows)

1/2. I picked this idea to work on for two reasons.

First, My dad was a contractor for 43 years and I have experienced the problem of getting new clients first hand. Getting new jobs was hard. From the ages of 7–18, I was head of business development for his company☺, which meant hanging flyers on every single lamp post in town every Saturday for 11 years and responding to every single Craigslist request for a contractor. Each time he would have to give references and justify that he and his team could do the job. AND the majority of the customers didn’t know the right questions to ask to help us give a quote. Often times, they ended up just going with their friend’s plumber even though my dad was obviously better!

Second, finding a contractor is an absolute nightmare. For example, how do you trust a person contacting you on Craigslist, or the flyer on the street? Can you verify their references?

What questions do you ask them to receive an accurate quote?

When your toilet doesn’t work is it because it is: clogged? not flushing? flushing slowly? constantly flushing? fills slowly? overflowing? leaking pipes? unpleasant oder? wobbly handle? How is the building connected to water and sewage systems? Municipal? Well water? Septic? You get the point. It sucks.

3. People need what we are making. Every single person with a roof over their head needs what we are making. When a stranger enters your home, you need to make sure it is the right person. The introduction is everything and that is where we excel! (growth explained in other questions)

Currently, people looking to hire an experienced professional are powerless. We change that. By creating a system in which multiple experienced professionals bid for a job, we provide a transparent and efficient market for home services.

Before we existed (or for those who haven’t heard of us yet), people had to resort to archaic means of finding a professional. They could either search through Craigslist and hope for the best or call friends and use who they had used — with a limited sense of what the market has to offer.

We also provide an incredible customer acquisition channel for our contractors. It isn’t just that customers have trouble finding great contractors but contractors have trouble acquiring new customers. We help grow their business.

Thumbtack is quite the matchmaker.

We have a lot of competitors: Amazon, Google, Angie’s List, Handy, RedBeacon, HomeAdvisor.

We fear Amazon and RedBeacon.

We fear Amazon because it has almost unlimited resources. They do not need to profit from this arm of their business. We do.

We fear RedBeacon because they are focusing on the exact same market but with a different model. They take a commission from the contractor when they ‘win’ a job.

Most importantly, no one is mainstream. The winner has yet to be determined in this fragmented and inefficient market. Ultimately, assuming each player executes, the winner will be the model that scales in the most cost-effective way. We believe the winning model is one that charges for a bid (similar to an advertisement) and not one that takes a percentage of the sale. Contractors understand paying for a lead, they have trouble with the idea of a broker or an agent.

It is all about the introduction! There has been a recent trend in marketplaces to handle the entire transaction life cycle. From introducing the two parties, to handling the communication during the interaction, to facilitating payment. For some marketplaces (e.g., Uber & Airbnb), this makes sense. Enabling payments to occur seamlessly solves a pain point in the interaction and adds significant value.

However, in our case, this is not the main pain point and not where we can add the most value. When people hire a painter, the pain point they experience is not paying them $3,000 after they have completed the job.

People have been paying painters without too much trouble for years. BUT, finding that painter is an utter nightmare and that is where we come in. By focusing exclusively on introducing the contractor and the customer, all of our energy is spent solving the largest problem, while others are focused on the entire life-cycle.

We make money by charging contractors to bid for potential customers. It replaces a portion of their advertising budget. Rather than hanging a flyer on a lamppost, posting on Craigslist, or taking an ad out on Yelp, they know they have AT MINIMUM a 1/5 chance of acquiring the customer. When the job is between $250 and $3000, spending between $5–25 to get the job is money well spent.

Our ultimate goal is to replace our contractor’s entire advertising budget. We want to be how they acquire new customers. Currently, our contractors spend ~$2000/month on advertisements (~10% of gross revenue). They spend money on door hangers, refrigerator magnets, post cards, yellowpages, and more recently FB and Google ads (of which most contractors have only a minimal grasp).

Approximately 1/1000 people in the United States is a plumber (note, Thumbtack is far more than plumbers). If we assume that a major metropolitan area (e.g., San Francisco) has a stronger concentration of plumbers (1/300), then we can estimate there are 2800 plumbers in San Francisco.

Currently, our contractors are providing ~10 quotes/month with an average of $10/quote (5% of their advertising budget). If we assume this rate is maintained, $100/month ($1200/year) for 30% of plumbers in San Francisco, that results in just over $1MM per year. This is exclusively from plumbers solely in San Francisco. Nevertheless, we believe this rate will increase as our close-rate increases, the network expands, and we are able to drive more business their way.

This number increases significantly when we include:
- Other experienced professionals (painters, exterminators, electricians)
- Additional cities (San Francisco only has ~850k people)
- A larger slice in contractors advertising budget (we can do better than 5%)

We don’t know how large the market is but it is safe to say that the size ultimate size of the market is massive. It will not be an impediment to the success of Thumbtack.

Thumbtack is a two-sided network, which means we face the chicken and egg problem. The challenge is to grow both sides of the marketplace at the right pace so that both sides are satisfied.

Supply Side: We solved the initial supply-side problem by building a strong single-player utility for contractors.

We knew that contractors’ primary source of new clients was Craigslist but it was incredibly difficult for them to manage. We built a tool that streamlined posting/re-posting and responding to potential inquiries. Each post included a “powered by Thumbtack” at the bottom.

As a result, contractors were able to receive value from Thumbtack from day one, even without the “demand” side of the marketplace. They “came for the utility” and have ultimately “stayed for the network.”

We found these contractors by scraping thousands of databases across the web to find the exact location of these professionals. We then created extremely targeted advertisements to get them to sign up.

123/150 (82%) of our contractors have used this tool prior to responding to a customer inquiry. Of the 123 that have used the tool 86 (70%) have submitted a quote within 3 weeks.

Demand Side: We have 3 main channels through which we acquire potential customers.
1. Craigslist posts (35%): they were extremely well formatted and redirected back to Thumbtack, which attracted many potential customers when they searched on Craigslist.
2. Direct Search (47%): We have manually created over 1000 unique forms for potential jobs (e.g. painter, plumber, air-condition repair). As a result, we appear extremely high in search results for most home-related services.
3. WOM (18%): Thumbtack is awesome and people tell their friends :)

The way people play pick-up basketball is the way they approach life.

That’s a tough one. There are many obvious reasons: the network, funding, advice etc. But for me, it is a bit more simple than that. A few of my friends have participated and each one has said it was an inflection point in their life. I want that experience.

I trust them.