Billion Dollar Unicorns: Thumbtack Joins The Ranks



Analysts estimate the local commerce market for service providers to be anywhere between $400 billion-$800 billion. Despite its size, the industry is still heavily reliant on word-of-mouth and Yellow Pages like services. But the market is opening up and bigger vendors like Amazon and Google are joining in. Recently, Thumbtack, another smaller platform in the industry, joined the Billion Dollar Unicorn club with a model that is marginally different from the rest.

Thumbtack’s Offerings

San Francisco-based Thumbtack was founded in 2008 by Sander Daniels, Marco Zappacosta, Jonathan Swanson, and Jeremy Tunnell. Unlike other service provider information sites like Angie’s List that provide a listing along with a review of professionals in the neighborhood, Thumbtack connects local service providers with potential clients through a bidding process. Users submit a write-up on the nature of work they need done and the services they need from the vendors. Thumbtack’s platform then identifies potential vendors who are then allowed to submit quotes for the work. Users can then select a service provider based on the bids submitted.

Thumbtack is able to deliver custom, project­-specific quotes from qualified and available professionals to their customers to help them make informed decisions. The list of services it provides ranges from home improvement and repair to event services and tutoring for school or music and wellness lessons. Thumbtack believes that Americans spend nearly $700 billion each year on the portfolio of over 1,100 services that it offers. Its platform is able to facilitate nearly 5 million customer projects each year delivered by more than 200,000 active professionals.

Earlier this year, Thumbtack announced the acquisition of HeartThis for an undisclosed sum. HeartThis is known for an app which has over 2 million users and lets consumers shop across multiples stores from a single portal. Thumbtack has no plans of entering the products e-commerce race, but wants to leverage the HeartThis’s four-member team to deliver enhanced mobile offerings. HeartThis is only the first of many acqui-hires that Thumbtack is looking to perform in the coming months.

It is also working on building tools to improve and extend the experience for the professionals who use Thumbtack as a marketing platform. In its present form, Thumbtack acts as an introduction platform between buyers and sellers. Over the course of time, it plans to increase these interactions to more than just introductions by adding features such as CRM, invoicing, and product management software to create an end-to-end solution. It is also expanding the number of services it offers by adding the likes of child care and elderly care to its portfolio.

Thumbtack’s Financials

Thumbtack earns revenues by charging service providers a fee for each bid. Its platform has helped generate over $1 billion in annual revenues for the professionals. It does not disclose revenues, but analysts believe that Thumbtack is still unprofitable.

Thumbtack is venture funded so far with $273.2 million raised from investors including Baillie Gifford, Google Capital, Sequoia Capital, Draper Associates, Javelin Venture Partners, Tiger Global, and MHS Capital along with several angel investors. Its last round of funding was held in September this year when it raised $125 million from Baillie Gifford, Tiger Global, Google Capital, and Sequoia Capital at a valuation of $1.3 billion. Last year, it raised $100 million at a valuation of $750 million.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

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