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Thumbtack now generates $1 billion in revenue for independent small businesses a year
The local services marketplace is filled with players, including companies like TaskRabbit, Angie's List and Yelp. Even companies like eBay, Amazon and GoDaddy are getting into the space. Frankly, though, its a space that has not seen much innovation or change. Most services operate the same way, with the same search and browsing features.
Thumbtack, though, is attempting to do just that, by upending how people and professionals connect. And it raising huge amounts of money to put that plan into action.
The company has that it has raised a $125 million round of funding, it was announced in a blog post from Marco Zappacosta, founder and CEO of Thumbtack. The round was led by Scottish money management firm Baillie Gifford with previous investors including Tiger Global, Google Capital and Sequoia Capital also participating.
The round, which comes a little over a year after Thumbtack raised a $100 million round in August of 2014, nearly doubles the amount of money Thumbtack has raised. That last round valued it at $750 million, and now this latest funding pushed it over the top, giving it unicorn status with a $1.3 billion valuation.
Founded in 2009, Thumbtack differentiates itself by allowing professionals to come to the customers, instead of the other way around. Rather than having the customer search and browse through listings, they instead tell Thumbtack what they need.
So, for example, if someone wants to have their house painted, they would tell Thumbtack all of the details, such as how many rooms are in the house, if they have crown modeling an how the high ceilings are. The company then takes that information to the professionals, who decide if the job is right for them. Once the company has enough potential workers, they will send that info directly to the customer.
The company caps the number of applicants at five, and the amount of time before they get back to the customer at 24 hours. But the goal is for them to send between three and five applicants within just a few hours.
In his post, Zappacosta went further than simply revealing the new funding, he also wrote about the six year journey of Thumbtack, and the lessons he learned.
That included needed to focus on certain categories, rather than offering every type of local service.
"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," he wrote.
"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."
He also learned that, "Building liquidity takes creativity."
"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," he said.
"This scrappiness and creativity still runs deep at Thumbtack. We hire for it, train for it, and celebrate it daily."
And, finally, that he had to give value to get value. Zappacosta has spoken to Vator previously about Thumbtack's evolving business model. It tried a transaction model, and a subscription fee, before hitting on its intro-based model.
"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," he said in the post.
"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."
Thumbtack has been hugely successful. It now has over five million projects requested every year in over 1,000 categories, including house paintings, wedding caterings and even people wanting to learn Spanish. The company operates in all 50 states, and now has over 200,000 unique paying professionals.
The company now generates $1 billion in revenue for independent small businesses every year and has have more paying pros on its site than both Angie’s List and Yelp combined.
Yet, Zappacosta says that the company is "just getting started."
"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," he wrote. "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."
(Note: Thumbtack was the winner of our very first Vator startup competition and event, all the way back in October 2009. We will be holding another Vator Splash event on October 15. Speakers will include Adam Goldenberg Founder & CEO of JustFab; Brian Lee. Co-Founder & CEO of The Honest Company; Michael Dubin, Founder & CEO of Dollar Shave Club; and TJ Sassani, Founder & CEO of zozi. Get your tickets here!)
(Image source: thumbtack.com)
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Thumbtack helps you accomplish the personal projects that are central to your life.
Whether you need to paint your home, learn a new language, or plan your daughter's birthday party, Thumbtack is the easiest and most dependable way to hire the right professional for your projects.
Get started by answering a few questions about your specific needs. Within hours, Thumbtack will introduce you to several available and qualified professionals. Compare custom quotes, reviews, and profiles and hire when you’re ready.
By connecting customers like you to the right pros, we enable independent professionals to grow their businesses and do what they love. We’re proud that many of our pros have doubled or even tripled the size of their businesses through Thumbtack.
Thumbtack is available nationwide for more than 700 project categories.