A few years ago, Thumbtack was just a handful of people working out of a rented house. We were excitedly chasing a dream without any pay, my co-founder was sleeping in a closet, and there was this constant existential fear of running out of money.
We were determined. We wanted to make hiring a plumber as easy as buying a book online and we weren’t going to take “no” for an answer. Well, at least not the final answer.
When we attempted to raise our Series A in Fall of 2011, we got rejected—not once, not twice, but 42 times! It was pretty brutal. With our bank account close to zero, we started discussing how we were going to let go of the entire team. But even in the face of defeat, we could see our dream off in the distance. There was just a mountain (and a desert, and maybe a lava pit) in the way.
Fast-forward to today: we’re announcing a $125 million investment on top of last year’s round of funding, which we’ve barely touched. Our feelings range from holy-shit-what?! to sincere gratitude. We not only survived, but have a pretty well-stocked war chest to keep building toward this audacious goal.
We decided it was time to pull back the curtain on the last six years: struggles, plans for the future, and a few concrete lessons we’ve learned along the way.
Three Hard-Earned Lessons
Our goal was (and still is!) to build a destination—the destination—where customers could get projects done easily and pros could successfully grow and manage their independent businesses.
Turns out, that’s a lot easier said than done.
Lesson #1: We needed focus. So we focused on everything.
When we launched, we wanted to be the most helpful to the most people. So to do that, we offered every type of local service in every region of the U.S.
Investors, MBAs, and expert entrepreneurs told us going for that kind of breadth was crazy—that constraints are the enablers of innovation. They weren’t wrong about that. What they were wrong about was what constituted a constraint.
Breadth, in and of itself, is chockful of limitations that require a different way of thinking. By focusing on how to execute a broad offering (over 1000+ categories in 1000+ geographies), we were forced to find fundamentally more-scalable solutions for attracting customers and pros.
That form of first-principle thinking helped us build an enduring community of customers and professionals. It also became an important company value we proudly uphold today.
Lesson #2: Building liquidity takes creativity.
How do you build an active community of pros without customers to attract them and vice-versa? I could make an analogy about eggs and stealing chickens, but the point is: you need to pick a side and offer them something useful from day one.
To start, we built a tool for professionals to easily post their Thumbtack profiles to Craigslist. Independent pros were already using Craigslist—we simply helped them better show off the quality of their their work and highlight their online reputation. Chris Dixon rightly calls this approach, “come for the tool, stay for the network.” But once you’ve built a useful tool, the challenge is how to get it in front of people.
Most professionals were already listed online—we just needed to find them. So we wrote a web crawler, then indexed and classified billions of pages to figure out what kinds of services pros were providing and where. That’s how we got our list (still the most comprehensive one that exists today) and what enabled us to reach these folks and get them onto the platform.
This scrappiness and creativity still runs deep at Thumbtack. We hire for it, train for it, and celebrate it daily.
Lesson #3: Value is a two-way street.
Here’s another million-dollar question: How the hell do you monetize a services marketplace?
The industry’s smartest people told us a commission model was the only way to go. So, we tried it. The problem? These are in-person transactions; you can’t force people to pay a certain way. And if we can’t reliably know what’s going on, we can’t accurately charge a commission.
Then we tried a subscription model. It was super easy to understand, which enabled us to sign up 10,000 paying pros—great! But in the long run, it meant the cost to the pro stayed the same each month no matter how much new business we brought them—not so great. We needed our revenue to grow in lockstep with the value we create.
Cue the pay-per-introduction model we have today. What matters to pros is flexibility and a profitable return. So we made sure that’s what they got. It was simple. Plus, it let us guarantee our customers high-quality quotes from pros who were serious about providing a great service.
The beautiful thing about a marketplace is that all incentives are aligned. We’re only successful when our pros are successful and that’s the way we like it.
An Impact You Can See and Feel
Those lessons paid off. We now have more than 200,000 active, paying professionals, millions of customers, and powerful recognition from investors. But big numbers don’t come close to what I see in person, every day.
I was at breakfast with 70 of our pros on Friday, listening to their stories. They truly see us as partners in their success, and we’re so unspeakably proud of helping them grow.
What if every electrician, caterer, and piano teacher could stop worrying about the constant hunt for new clients—if pros could just focus on what they love to do. And what if everyone had shorter to-do lists and could spend more time on the important things: their families, their passions, their happiness.
Those what-ifs are why we get up in the morning. That’s the world we’re excited to build.
Still Obsessed With Solving The Same Problem
We have a lot of work to do, but the end-goal is the same. We’re building a one-stop-shop for confidently and easily hiring any local professional. What’s in the works:
Hyper-intuitive matching: We’re much more like a dating service than a directory. We’re matching two very unique sets of requirements: aligning the specific needs of one individual with the skills and availability of another. There are so many stipulations: location, timing, materials, budget, preferences, and more. It’s a hell of a challenge.
We’re tackling it pretty well for millions of customers already, but we can do better. We need an even more granular matching algorithm that’s shockingly perceptive. So that’s exactly what we’re building.
An end-to-end experience: We want to be able to help with a project’s entire lifecycle. The more tools we can provide (payments, scheduling, invoicing, business management, etc.), the faster and easier our customers can get their projects done and the more our pros can focus on what they do best: providing an incredible service.
We’re Just Getting Started
Today, we generate $1 billion in revenue for independent small businesses every year and have more paying pros on our site than both Angie’s List and Yelp combined. All of this, and yet we’ve only scratched the surface.
Local services is a $700 billion market in the U.S. alone. It’s no wonder players like Google and Amazon have recently gone after the same space. There’s a lot of opportunity here. But in the end, it’s going to come down to whoever can best solve this very tricky problem. And with money in the bank, offices full of smart people, and enthusiastic pros and customers by our side, we feel damn good about our odds.
Oh, and P.S., if you like problem-solving and creative thinking as much as we do, we just so happen to be hiring. Join us.