How Thumbtack Built a Huge Local Services Marketplace

How Thumbtack Built a Huge Local Services Marketplace

How do you build an online marketplace from scratch?

Thumbtack, an online marketplace for local services, yesterday announced a $100M funding round led by Google Ventures.

Building a local services marketplace is a notoriously difficult problem that has beaten many entrepreneurs. So how did Thumbtack get where they are? What tactics are behind their apparent success?

The founder of Thumbtack, Marco Zappacosta, was interviewed by Andrew Warner of earlier in the year and covered some of the tactics that Thumbtack used to build its marketplace. You can read the transcript of their interview here.

Here’s a summary of the tactics and approaches Marco described:

1. Built Supply Side Using Scraping and Customised Mass Emails

  • Recognising the chicken-and-egg problem of all marketplaces, Thumbtack saw the supply side as easier to get in place and focused on that first.
  • They used web scraping to compile data on local service providers and developed software to process and organise it.
  • They used the extracted information to bulk send customised emails to service providers inviting them to create profiles on the site.
  • They were concerned about being blocked by email service providers so were careful about monitoring the relevance of their emails.*
  • Their technology wasn’t limited to a specific category or part of the country, so they covered a broad range of categories and the whole US from the start.**
  • With their first $6M of funding, they had listed hundreds of thousands of service pros.

Here‘s an example of an email Thumbtack reportedly sent in 2012. What do you think: was this spam?

** It’s interesting to see that Thumbtack succeeded despite going against the common wisdom of focusing on a single city and/or category.

2. Built Demand Side Using SEO (Based on Unique Content of Service Provider Profiles)

  • Service providers creating their own profiles resulted in lots of unique content.
  • As the service provider profiles were crawled by search engines, this resulted in lots of organic search traffic.
  • More and more customers now coming from word-of-mouth and direct.
  • Have started running search and display ads, including retargeting.

3. Tried Different Revenue Models (Commission -> Subscription -> Per-Quote)

  • Initially, tried commission-based model. But had collection issues (hard to tell if an introduction resulted in paid work, lots of providers didn’t pay).
  • Next, tried subscription model. Worked okay, but wasn’t well aligned with marginal value of each introduction.
  • Currently charging providers to respond to quotes. (They can pay per response or buy credits in bulk.)

4. Off-shored Labour-Intensive Tasks

  • 75 of 200 employees are in the Philippines.
  • Main tasks for these employees are: responding to support inquiries (from customers and providers) and helping to onboard service providers.

In summary, then, in terms of building up their marketplace, Thumbtack’s use of mass emails to contacts scraped from the web seems to have been key. Another important decision was to keep their supplier profiles accessible to search engines. This allowed them to grow their demand side through SEO.

At Thumbtack’s current scale and with a large amount of money to spend, it will be interesting to see whether other paid acquisition channels will now start to pay off for them.

What other tactics have you seen used to successfully establish marketplaces? Do leave a comment below.

If you’re interested in tactics for building marketplaces, you make like to read my posts on Getting to Critical Mass: How to Start a Marketplace Business and Skillshare: How to Build a Marketplace for Online Education.

Photo by kellee_g

What’s the Future of Local Advertising?

What will local advertising look like a few years from now?

BIA/Kelsey recently released the following slides about the local ad marketplace in the US.

A few interesting points they make:

  1. It’s Big – The local ad market brings in $133 billion annually
  2. It’s Fairly Traditional – 92% of local ad spending still goes to traditional media companies (TV, radio, yellow pages, etc.)
  3. It’s Top-Heavy – 81% of the spending is by the largest 22% of companies

What are the takeaways? There is a lot of hype around ‘local’ at the moment, what with FourSquare, Facebook Places and the Google/Groupon non-deal, but for the companies that get it right there are huge real opportunities in local advertising over the next few years.

Google Boost – Simpler Self-Service Ads for Local Businesses


Google today announced ‘Boost’ a new, simplified self-service ad offering. It’s in beta for the time-being and only available in a few cities in the US, but it could be an interesting step in helping small businesses get started with online advertising.

Google have, for some time now, been encouraging small, local businesses to set up Google Places profiles with various information such as address, opening hours and phone number. Boost makes use of this information to help create relevant ads for the business. The business owner still needs to write the ad copy and specify categories to advertise under, but the tool apparently sometimes provides suggestions and then figures out the mapping to actual keywords and Google maps. The ads are charged on a pay-per-click basis with the business owner setting a maximum budget.

From the screenshots in Google’s blog post, it certainly looks like setting up ads through Boost will be less intimidating for the average user than going the standard Google Adwords interface. I suspect a service like this is still asking too much for most small businesses to attempt, but it’s certainly lowering the bar they need to cross and I’m sure that’ll be enough to encourage some small business owners to give PPC advertising a try when they wouldn’t have done so before.

If Boost helps significantly more local businesses advertise online then it should, in turn, help publishers of local and hyperlocal content generate more ad revenue. Perhaps it’s time for me to have another look at Localmouth

Further Reading

Creative Commons License photo credit: Bdale Garbee

Realities of Small Business Websites

One Man Band Street Performer Ann Arbor Art Fair July 24, 20103

I spend a lot of time with people who know a lot about the web. They’re either building online businesses or they’re 30-something friends who live in London and who use the internet frequently in their day-to-day lives. That’s why I found it interesting recently to work with someone who’s outside of that circle, to help him put a website together, and explain to him a few of the things I’ve started to take for granted.

The guy in question is a joiner, working with wood to install doors, stairs and cupboards, repair furniture, etc. He is looking to develop his business increasingly into antique furniture restoration and uses the web, but wouldn’t claim to know about any technical details. He wanted a simple, affordable website as he knew it could help his business, but at the same time he was a little worried as he’d heard stories from other people about their bad experiences with having websites built.

Working with this small business owner was a good reality-check for me and along the way I realised three things about small business websites that I’m sure many designers of small sites will have discovered before me:

  • Getting good photos is a pain – photos from stock photography sites can feel very cheesy and may not be representative of the business. Meanwhile, amateur shots taken by the owner or a friend are likely to be relatively poor-quality. How do people normally approach this?
  • How to market their website isn’t obvious for a small business owner – a small business can get themselves listed in various local directories and perhaps ask some friends for links. Beyond that, most other techniques need a fair amount of knowledge and are likely to represent a larger investment of time and/or money than a very small business will to want to make.
  • WordPress is a good small business CMS platform but it’s hard to find a good CMS theme – in my opinion, WordPress is a wonderful platform for a small business website. It’s stable, relatively simple to set up and use, and has a fantastic range of plugins. However, the selection of CMS themes that is available is relatively poor. There are a few people providing paid-for premium themes designed for CMS use, but I can’t help thinking there’s room for more. Perhaps the majority of people still don’t realise how effective WordPress can be for this sort of thing?

Creative Commons License photo credit: stevendepolo

Group-Buying Deals for London

Analysis of a Korean meal

Very soon, together with my co-founders, I’m going to be launching a new venture.

Like VouChaCha, it’s going to offer local deals. And like MenuLover, it’s food-related. This time, though, there’s a new twist: group buying.

The group buying bit works like this: When you sign up for our service, we use the bargaining power of our large group of members to negotiate special deals for you.

Business owners, in return for lots of lovely new customers (like you), agree to offer discounts off their usual prices. They grow their business. You enjoy a good time out at a fun new place and save enough money to do it again very soon.

We’re focusing on food and drink-related offers so, for example, we might offer you 50% off a cookery class or half-price meals at speciality restaurants.

An important rule is that, if you sign up for a particular deal, you only actually get the deal if a certain threshold number of people sign up. e.g. you might get the half-price cookery class only if another 29 people also sign up. If not enough people sign up for a deal, you don’t get anything (or pay anything).

I’m really excited about this and can’t wait to see the site live and people getting deals.

The more people who join us, the better the deals we’ll be able to bring you, so if you like discovering great new places in London (and enjoying special discounts when you get there), then do head over to DealBunch now and be a part of it. Invite your food-loving friends, too!

You and your friends will get £5 of free credit if you sign up with the invite code M2777017 (a thank you for kindly reading my blog, and limited to 35 people, so get in quick.)

Without further ado, follow this link for some delicious London group-buying deals.

Nearly forgot… if you have any feedback on the site or any suggestions for us, then do let me know in the comments below. Thanks!

Creative Commons License photo credit: Mendhak [???]

Launch48 – Launching a Start-up in a Weekend

Making Stuff Happen in 48 Hours

The last couple of days I was involved in another “build a website in 48 hours” event. This time, it was Launch48, organised by a couple of friends of mine, Ian Broom and Adil Mohammed. Thanks to lots of great work from Ian and Adil, some generous sponsors who provided important things like office space and free pizza and drinks on the last night, and the boundless energy of around 70 enthusiastic participants, it was a great weekend.

We started on Friday night with a vote for our 4 favourite ideas out of a series of rapid-fire elevator pitches by anyone who fancied suggesting an idea. Excitingly, my idea was one of the four that was chosen. 15 or so people duly signed up to work on the idea over the weekend, and a whirlwind 48 hours was underway.

Local Vouchers

Our idea was to let people find vouchers for local retailers using their mobile phones. So you might, for example, be out in cental London and decide you want to get lunch somewhere. You pull out your phone and our service tells you that the cafe round the corner is offering a free dessert with their lunchtime menu. Great. You ignore the Starbucks next to you and head off to claim your bargain.

It didn’t take long for our team to get stuck into the problem at hand, figure out everyones’ talents and get to work. Luckily we found that we had a really nice spread of skills and abilities. Two intense days of design, coding, business planning, market research, PR, sleep deprivation and burrito-consumption later, VouChaCha was born, destined to bring local vouchers to your mobile phone.

A million thanks to the VouChaCha team for your immense efforts over the weekend. You were amazing! It was an incredible couple of days and a pleasure to work with you all.

What’s Next?

Well done to the other three Launch48 teams, CharityPie, DecisionsDecisions and ILikeUCoz, too. It was inspiring to see so many people come together (some having traveled very long distances to be there) and producing such neat things. What I liked best was the simplicity of all these ideas. I think they all have the potential to go somewhere.

A follow-up meeting is planned for 6 weeks’ time, so it will be exciting to see where we can all take these ideas between now and then.

Can You Help an Exciting New Startup?

If you think you might be able to help VouChaCha out in some way, we’d love to hear from anyone with experience/contacts regarding:

  • partnering with retail chains, especially restaurants, cafes, pubs and bars
  • vouchers, especially mobile vouchers

We’d also love to hear from any companies interested in sponsoring us by providing a few hundred pounds to cover our costs for the next 45 days. This is a fantastic sponsorship opportunity for somebody and you’ll be really helping us out.

If you think you can help with this or anything else, please get in touch. Thanks!

Local Search Habits: Findings from a Yahoo Study

Greg Sterling over on Search Engine Land shared some interesting findings the other day from a Yahoo study into consumers’ behaviour when choosing local services and providers.

The numbers regarding consumers’ choice of research tools (generic search engine vs. vertical search engine vs. internet yellow pages) are particularly interesting as there’s quite a lot of variation between verticals.

The article also has some good data about the types of terms people tend to search for.

Useful reading if you’re marketing local services. to Launch UK Version of its Hyperlocal News Site

Union Flag
Creative Commons License photo credit: Mr. Siegal

According to today, hyperlocal news site has confirmed that it will be launching a UK version. They report that the UK site is currently in beta. currently powers ‘buzz maps‘ for the Washington Post that show which places are currently being mentioned most by local bloggers. No doubt they’ll be looking to set up some similar partnerships when they launch here in Britain.

Trinity Mirror Starts Geotagging Local News

Southern UK - A Year of Edits
Creative Commons License photo credit: Peter Ito

The Guardian’s Oliver Luft reported on Wednesday that the Trinity Mirror-owned Liverpool Echo has launched a map-based news service where they are geotagging news stories and allowing for postcode-based searches.

According to the article, Trinity Mirror have plans to roll this out more widely.

Trinity Mirror also have other experiments with presenting news at more focused local levels, so it will be interesting to see how they get on.

(Thanks to James Thornett for mentioning the Guardian article.)