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A Closer Look at Home Services in Light of Thumbtack’s Big Raise

As a follow up to our post yesterday on Thumbtack’s $150 million round led by Sequoia Captial, I decided to dig around more on the two companies that I believe Thumbtack sits in between in the market — HomeAdvisor at the higher end and Taskrabbit at the lower end. I listened to the latest HomeAdvisor (ANGI-Homeservices) investor call. Here are a few things I learned.

1. Last year HomeAdvisor acquired Handy.com with the intent of moving down market — think small jobs and for renters, not homeowners. Handy.com occupies roughly the same market space as Taskrabbit.

2. There’s a drive at ANGI-Homeservices to extract more value from its service requests, or SRs as they’re called. They generate about 24 million SRs a year. They believe because of their scale they can figure in real-time the value of that request and price it accordingly to the service provider merchant. Essentially, it’s working towards building a real-time pricing model which better aligns the predicted value of the job to the price paid for acquiring the job. The company’s Q2 earnings call in August should reveal more about how this is progressing.

3. Most interesting was HomeAdvisor’s focus on its real-time or opt-in platform, which, is essentially a one-to-one platform connecting the consumer with the service provider in real-time. The focus here is not surprising. The modern consumer is impatient and wants to check their task list quickly. In the older model, consumers would dump their service request details into the “machine” and wait to learn which service providers might be interested. Presumably, this model eliminates that waiting period and accelerates the outcome.

4. During the call and also in its State of Home Spending Report, HomeAdvisor shared that the average homeowner does about six home-related jobs. According to the report, they should do 12 jobs a year and ANGI-Homeservices touches just 2 a year. This suggests considerable runway in both supply and demand.

We can point to some $1.3 billion invested in just six companies operating in and around the local service provider business. Some come to the space from the reviews and CRM arena — think Service Titan, Podium, Signpost, and Broadly. Others come from the marketplace model — ANGI-Homeservices, Thumbtack, and TaskRabbit.

My view is there’s a high probability for consolidation involving some of these companies. I also expect these companies to increase their focus on helping the service providers retool their business operations to drive better immediacy in dealing with customers and great internal efficiencies to compete in today’s era of modern commerce. Fun times ahead indeed.

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