Thumbtack’s Heady Goal: To Build ‘The Largest’ Service Marketplace
The new breed of lead providers for services appears to have slowed down. While Angie’s List is all over the air waves, building its consumer base for an expected IPO, and ServiceMagic is performing well for IAC, and expanding, not much has been heard from such new companies as Redbeacon, Cox’s Kudzu, Likelist, HelpHive, Sears’ ServiceLive and Thumbtack.
For at least some of them, however, things continue to develop behind the scenes. Redbeacon, for instance, tells us it is now serving the top 50 U.S. markets and has built out its team.
Similarly, Thumbtack says it has made good progress toward its goal of building out “the largest directory of independent service professionals.” The angel funded company has 11 staffers in San Francisco, and a 120-person support team in the Philippines.
Thumbtack now has a database of 150,000 merchants around the U.S. It is also gaining consumer traffic, and now provides around 30,000 leads a week. It has had 550,000 unique visitors in the past 30 days, driven largely from SEO and social efforts.
Last week, we dropped by Thumbtack’s San Francisco headquarters to visit Marco Zappacosta, the company’s 26-year-old leader. Zappacosta says the company may have underestimated how much effort it takes to jump-start a marketplace. But its flexible model of letting businesses either pay up front for leads or on a commission basis appears to have hit a sweet spot.
The problem with most lead gen companies is they don’t offer leads on an opt-in basis. They require a merchant commitment every month. They force them to pay for things they don’t want. “There are times when a merchant is busy, or on vacation,” notes Zappacosta.
Whether merchants choose to pay up front or a higher amount of commission after jobs are completed, however, “varies by category,” says Zappacosta.
In both cases, however, Zappacosta says: “We’re underpricing relative to what we’re charging. More established, higher-end businesses, like roofers, want to pay up front for leads. They have an internalized sales cycle and don’t want to monkey around after an introduction is made.”
Categories on the lower end, such as tutors or handymen, however, don’t have any cash flow. “They also don’t trust us,” he jokes. Zappacosta also acknowledges that it has proved difficult to track how much jobs end up costing.
Interested to learn how Thumbtack are putting together their business plan and financial modelling when they have such a flexible payment model.
Is it that the 26 year old founder isn’t very good at money management? Or is it that they have very very deep pockets?
A sane person would think that a 131 strong team would be burning up the cash. Add to that a revenue model where local businesses can effectively choose how (and if) they will pay for the service. The combination of the two would seem to lead to a very rapidly shrinking runway in a notoriously difficult market (namely SMB advertising).
As a new user with Thumbtack we can say that they are a valuable resource for leads that turn into clients. You can pay as you go (our first job cost us $1.99) and you simply ignore leads that you don’t want.
We are an established business but if we can get a new client for a couple bucks…that’s a great deal.
I think you will see them rise in stature in the coming years.