Today, Thumbtack announced that we raised $150M in funding at a $1.7B valuation. These are big, exciting numbers. But Silicon Valley is immune to exciting numbers. People assume endless hockey stick curves, with big rounds as a reward for reasonable risks.
Our story is not reasonable.
Sequoia is making one of its largest U.S. investments in us because Thumbtack did something unheard of in this part of the world: We took a business that was growing more than 80% year over year and we pressed pause.
The reason was simple, even if the consequences were dramatic. We had found a radically better way of delivering on Thumbtack’s promise — Find local professionals for pretty much anything — and we were committed to doing whatever it took to get there.
We started from scratch on our product, taking it from a digital bulletin board to an instant matching mobile experience unique in the local services marketplace. We changed the business model, switching engines mid-flight while still going all-out to support the hundreds of thousands of pros and millions of customers who have come to rely on us.
And it worked.
But the process to get there was the hardest transition in the 10-year history of this company.
The old version of Thumbtack was manual. A customer came in and filled out a form for what they needed, then five pros could send quotes. It was first come, first served, and pros would pay per quote.
Its power came from the fact that every quote was handcrafted by a pro just for you. But sometimes the process took minutes. Sometimes it took days. Sometimes the pros who responded fastest were the best fit for the job. Sometimes they weren’t. The business was growing fast, but we knew that its latency and inconsistency would forever limit its potential.
It needed to be instant — every time. It needed to be a great fit — every time. If we wanted to succeed, it couldn’t be anything less; otherwise, customers wouldn’t come back.
So we built a self-serve system used by our pros to capture billions of individual preferences across hundreds of categories so that we could generate quotes programmatically with the same fidelity that pros could manually.
There was no easy way to do it; we had to grind our way through job, pricing, availability and location preferences for hundreds of thousands of pros, in all 50 states, doing everything from carpet cleaning to wedding photography.
We moved pros away from paying per quote and onto a new model: paying when customers contacted them. We had to build a new back end and quickly follow with a new front end.
It was hard. Hard for us, but especially hard for pros, many of whom had built their businesses on our platform. We were constantly experimenting. Prices changed. Features changed.
And it was hard on the numbers. What worked for house cleaning fell apart when applied to wedding planners. What worked in urban centers with a lot of supply didn’t work in rural locations with smaller supply. Every change had a million variants and it took time to convince pros to try the new system.
It always took longer than expected. We ripped out much of our old codebase to rebuild the product from scratch. There were weeks when we grew revenue in the single digits from the prior year. Some team members left. There were wins that were exhilarating – but most days felt like a slog.
But gradually, it started to work.
Customers started seeing the value of the new Thumbtack: Get the app, search for what you want, adjust a few filters, and you’ll see a list of highly-rated pros who can do exactly what you need. They’re available when you need them, so no more calling around, no more guesswork, just an instant connection to professionals who can get the job done.
And when customers experienced that magic, they loved it. The more they come back, the more pros they hire, and the more they return.
As the experience started to coalesce, pros started finding their balance too. More and more pros turned on features that would allow them to target the exact customers they wanted. Those pros are now getting contacted by more customers, are hired more often, and most importantly are able to focus on what they do best.
What’s most exciting about this investment is how we’ll use it to make Thumbtack better for pros. We’ve spent the last two years indexing billions of preferences for how they want to work and what kind of projects they want to take on. We’ve been asking the questions their customers would ask so we could match them perfectly. Now growth has reaccelerated dramatically, and we have the runway to make Thumbtack the only platform they need to find the right customers.
The local service marketplace is vast. Hundreds of billions of dollars flow through it every year. Thumbtack wants to be there to support every business, to help every customer and to strengthen the backbone of the American economy and beyond.
The last two years have been a rollercoaster, and our investors have been there every step of the way. They’ve seen the pain. And they’ve seen the growth. And they see the future.
That’s why they’ve reinvested. That’s why they believe in us. And that’s why we’re more excited than ever about the future of Thumbtack.