Thumbtack, a multi-sided platform launched in 2009, connects customers to service professionals and has raised over $273M, valuing it at $1.3B.  Despite its size, Thumbtack has relatively limited brand recognition, perhaps as a result of its decision to quickly roll out across the entire United States – CEO Marco Zappacosta claims there’s a paying professional in every U.S. county – rather than first building a significant user base in a single city or region. Regardless, Thumbtack reportedly has revenues exceeding $100M and a uniquely low burn rate, fueling investor confidence in the company’s potential, especially given its growth has been almost entirely organic to date. 
What’s perhaps most interesting about Thumbtack is the sheer breadth of services offered on the platform. There are many examples of platforms connecting consumers to providers of a single type of service (e.g., Airbnb for lodging or Uber for ride services), but Thumbtack’s value hinges on providing customers with access to professionals for virtually any need, a proposition that adds significant complexity to the effort of scaling. With that said, Thumbtack experiences significant cross-side network effects since the more consumers that use the platform, the more valuable the platform becomes for professionals and vice versa.
How does Thumbtack create and capture value?
Customers answer several questions that capture the specifics of the job they need done. Within hours, available professionals send quotes to customers that include an estimate for the job and details about the business. Customers can follow-up directly with the professionals before selecting the one that is best for them. Customers are also provided with user reviews for each professional. Reviews are an important aspect of Thumbtack’s offering: 85% of professionals that get hired have at least one review, and professionals with over 5 reviews are over 5x more likely to be hired. 
Professionals, when they signup for Thumbtack, indicate what type of work they are interested in providing, how far they are willing to travel, and other relevant details. The platform matches the professionals with customers, and the professionals can choose to send the customer a quote. Thumbtack charges professionals for each quote the professional sends, the primary way Thumbtack earns revenue and captures value. Professionals are only refunded if the customer doesn’t view the quote within 48 hours. If a customer views the quote and chooses not to respond for any reason, the professional is still out the fee. 
Customers value the ability to source local service providers in a quick and convenient manner, to see user reviews before selecting, and to receive multiple quotes to choose from. Professionals benefit from the access to more customers.
Figure 1: Comparing Quotes from Different Professionals 
What are some of the challenges Thumbtack faces?
Despite its success raising capital, there are several persistent issues that have plagued Thumbtack since it first launched in 2009.
- Disintermediation. Thumbtack, like many marketplace platforms, is vulnerable to disintermediation from its two sides – professionals and customers. To reduce the impact of this, Thumbtack has structured its revenue strategy to monetize professionals exclusively on their first encounters with clients rather than monetizing subsequent interactions. In contrast, TaskRabbit, a similar service to Thumbtack, charges a 30% fee on first transactions between professionals and customers as well as a 15% fee subsequently.  By taking what’s essentially a “pay for leads” approach, Thumbtack has attempted to limit the impact of disintermediation. However, this strategy does beg the question of whether revenue from lead generation alone is truly substantial and sustainable enough to drive meaningful growth for the company well into the future.
- Customer acquisition. Thumbtack has spent little on growing its customer base with most growth having occurred organically through word of mouth. As a result, the brand suffers from relatively low recognition. As noted earlier, due to the strong network effects inherent in this business, it is critical that customer volume is high in order to make the platform attractive to professionals and initiate the growth flywheel. There are dozens of comments online from disgruntled professionals complaining that they have spent hundreds of dollars on quotes but have received few, if any, jobs. More customers are necessary to keep critical professionals satisfied with the platform. If professionals are unable to convert quotes to jobs, the entire system collapses. Thumbtack has recently launched television campaigns to grow its customer base, but it’s not clear yet what effects these efforts have had. 
- Delay receiving quotes. Although the website advertises that customers receive quotes from professionals “within hours” of posting their job, the reality is that some customers are waiting up to two days or more. Seeking to address this delay, Thumbtack launched its Instant Match feature in late 2017. Instant Match immediately provides customers with a list of professionals who are available and interested in the job (based off information those professionals have provided). Professionals then get charged when customers respond to their auto-generated quote. 
Figure 2: Instant Match Feature 
Thumbtack has quietly grown its multi-sided platform into one of the most valuable marketplace startups in the world. With that said, the company is almost a decade old and has yet to become profitable while continuing to encounter challenges that threaten to derail the business. It will be fascinating to see if Thumbtack, armed with enough cash to sustain itself for years to come, can effectively address the critical challenges that have baffled other marketplace platforms around them.
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 Emily Price, “How Thumbtack Plans to Become the Amazon for Home Services,” Fast Company, September 26, 2017, https://www.fastcompany.com/40472921/how-thumbtack-plans-to-become-the-amazon-for-home-services, accessed March 2018.