Jonathan Swanson
Co-Founder Thumbtack, former West Wing staffer, lover of life
Discussion
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Jonathan Swanson
@swaaanson · President, Thumbtack
Hey everyone, excited to hang out on Product Hunt today. I'm a former White House staffer turned entrepreneur. I've spent the last 7 years building Thumbtack -- we started in a house (where I slept in a closet...) here in SF and now we're a team of 100+ in SF and on pace to help our small businesses earn $1B+ this year. Happy to chat about Thumbtack, marketplaces, fundraising, building remote teams (we have 1000+ in the Philippines), or whatever else you all are curious about.
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Ben Tossell
@bentossell · Community Lead, Product Hunt
@swaaanson Hey Jonathan!
I've just joined the PH team and the transition to remote working is interesting. Do you have any top tips to working most effectively while keeping happiness levels high?
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Jonathan Swanson
@swaaanson · President, Thumbtack
@bentossell First, create a routine of when you work and when you don't. One of the biggest challenges of working from home is separating work from play. Create a schedule and stick to it. Second, build friendships! Get to know your team members, meet up in person. Work is way better when you have awesome friendships. It's something we really want to facilitate on the team. We organize lots of events for you but encouraging you to organize meet ups on your own as well!
Lomesh Dutta
@lomeshdutta · www.near.in
@swaaanson I am building a local service marketplace in India www.near.in . I think the biggest challenge is cost effectively acquiring customers as these categories are need based and in my opinion low repeat. What is the biggest marketing channel that has worked for you? What kind of repeat rates do you typically see in Thumbtack
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Jonathan Swanson
@swaaanson · President, Thumbtack
@lomeshdutta Hi Lomesh, cool business you're building. :) You're right: acquiring customers and pros in a cost effective way is one of the biggest challenges building a marketplace. Most local services are pretty low frequency (if you need a locksmith, bartender, or wedding officiant every day you have a problem...) which is why at Thumbtack we are building a very broad marketplace. We have 1500+ categories which means while any one category is pretty low frequency in aggregate customers can use Thumbtack for all their service needs.
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Jonathan Swanson
@swaaanson · President, Thumbtack
@swaaanson Once we decided to build a very broad marketplace (instead of a single vertical, like HomeJoy) we knew the biggest challenge was first how do you acquire pros across 1500+ categories and 100+ cities. And then how do you acquire customers. This is the classic chicken-and-egg problem. To solve it we created a heuristic we called "network independent value" -- in other words, what sort of value could we offer to pros to join thumbtack BEFORE we actually had marketplace liquidity (lots of customers). Chris Dixon has called this "come for the tool, stay for the network": http://cdixon.org/2015/01/31/com...
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Jonathan Swanson
@swaaanson · President, Thumbtack
@swaaanson We tested a bunch of different tools for pros in the early day but two things really stuck: (1) We allowed pros to create a profile where they could add reviews, photos, licenses, etc. Pros found this useful in itself. (2) We built a tool to allow pros to easily post their services on Craigslist. At the time, most pros used Craigslist to build their business (no longer true) and would have to go to Craigslist a couple times a week to re-post their service. We created a way for pros to do this more easily. Pros LOVED this. And while it didn't create value on the thumbtack platform right away, it did allow us to acquire and build relationships with tons of pros. And then we started focusing on getting customer demand. So, the pros came for the tool, and stayed for the network.
Lomesh Dutta
@lomeshdutta · www.near.in
@swaaanson Makes a lot of sense. Good luck to you for Thumbtack! Would love to stay in touch and pick your brain as we continue to build our play.
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Jonathan Swanson
@swaaanson · President, Thumbtack
@swaaanson In terms of channels we used to acquire professions: we tried EVERYTHING. Traditionally in this space the way you acquire small businesses is by leveraging a massive sales force. Yellow Pages, Yelp, etc have thousands of sales people. This approach works but is obviously super expensive, not scalable, etc. From the beginning of Thumbtack, we thought the traditional sales approach was broken and didn't make sense because we needed to acquire pros across so many categories and geographies. So, we've acquired 1M+ professionals using more modern, programmatic methods -- crawling the web, machine learning, Facebook, etc. Getting acquisition costs to be 95%+ lower than traditional sales methods was key problem we had to solve and we spent 3+ years really cracking it.
Lomesh Dutta
@lomeshdutta · www.near.in
@swaaanson Keep the CAC low and just keep going. Love the way you've build it
Sathya Peri
@gosathya · on a leave of absence
While working on Thumbtack, describe a moment when you were on fence and about to quit. What did you do to overcome that obstacle?
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Jonathan Swanson
@swaaanson · President, Thumbtack
@gosathya The hardest moment at Thumbtack was in the fall of 2011. We went out to raise institutional money for the first time and while raising angel money had happened pretty easily raising VC was REALLY hard. Over the course of FOUR months we pitched 45 VCs. And we got 44 nos. About half way through this process, after a couple dozen nos, we realized that we might not be able to find the money. We were low on cash and so we had to literally start planning to let go of our team while simultaneously continuing on to fundraise. This was obviously brutally discouraging and emotionally challenging. There were definitely times where it would have felt good just to walk away. But the thing that kept us going was we always had conviction that SOMEONE was going to build the Amazon of services. It just felt inevitable. And I just couldn't stand the thought that someone else would do it and not us. :) So we trudged on. And fortunately, the 45th VC -- Javelin Ventures -- decided to take a bet on us. Whew!
daniellevine
@daniellevine · Docket.report
Hey @swaaanson! Thank's for doing this AMA. I'm wondering, what's the best thing you've come across in the last 30 days and why? Could be anything, a product, an article, a tea, a quote. Anything! Thanks for answering.
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Jonathan Swanson
@swaaanson · President, Thumbtack
@daniellevine This blog: http://waitbutwhy.com. I'd discovered it more than 30 days ago but never really dug in. But more recently I read a few of the blogs and I am now OBSESSED and read all of them. Highly recommend.
Vikram
@j4uvikram · Associate, Nirvana
@swaaanson Great job by you all, Thumbtack today is the role models for many service marketplaces. Just curious to understand how does one ensure repeat usage in high value categories (not on demand categories) & what metrics in you mind talk of a healthy marketplace?
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Jonathan Swanson
@swaaanson · President, Thumbtack
@j4uvikram The best way to ensure high repeat rate is to build a product that customers LOVE. For us, that means we need to quickly and reliably deliver 3+ quotes on every request on Thumbtack. When we do that, customers love it. But delivering reliably across 1500+ categories and 100+ cities is SUPER hard. Biggest challenge of our business. We have multiple teams working on making our product deliver reliably at all times.
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Jonathan Swanson
@swaaanson · President, Thumbtack
@swaaanson In terms of marketplace metrics we look at: (1) customer request growth (2) new pro acquisition (3) customer repeat rate (4) pro cohort engagement rate (5) % of requests that get 3+ quotes (our definition of a high quality experience (6) customer support speed + CSAT. And about 100+ other KPIs. ;)
Vikram
@j4uvikram · Associate, Nirvana
@swaaanson Thanks a lot Jonathan, was very helpful. Will surely love to seek your insights in marketplaces further.
Erik Torenberg
@eriktorenberg · Former Product Hunt
Hi @swaaanson! Thanks for taking the time to chat with us.
What's something you've changed your mind on in the past 6 months?
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Jonathan Swanson
@swaaanson · President, Thumbtack
@eriktorenberg Fun question: This has evolved over more than 6 months but I've changed my mind pretty dramatically on how much I believe in free will. The more I've read and thought about the brain and free will the more I think people are hyper-influenced by their genetic inheritance and early upbringing. This has pretty dramatic implications for how you think about politics, justice, etc. Sam Harris has an awesome book on the topic: http://www.amazon.com/Free-Will-...
Ryan Hoover
@rrhoover · Founder, Product Hunt
Hi, Jonathan! What's been the hardest challenge over the past 7 years, growing to 100 people?
Side note: I left a previous startup where I joined as #10 and we grew to a similar size. Curious if you experienced some of the same challenges we did. 😊
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Jonathan Swanson
@swaaanson · President, Thumbtack
@rrhoover Tons of challenges! Every stage is a new challenge which is lots of the fun of startups I think. The biggest challenge for the first 5 years was just not running out of money! We only raised ~$6M the first few years so that meant taking no salary, working in a house, etc. In the last couple years we've raised $150M+ and that transition -- from tiny, intimate, scrappy startup --> really fast growing company with tons of people -- has been hard (and fun).
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Jonathan Swanson
@swaaanson · President, Thumbtack
@swaaanson One of the hardest challenges has been helping early team members "grow up" with the company. Some team members are able to scale their efforts to grow from managing 3 people --> 30 people. And others aren't. And some like that transition, and some don't. Having really honest conversations with people about when it's working and when it's not is definitely the hardest part -- sometimes the person who was perfect to lead a team or effort at 50 people is not the same person at 200 people.
Jeff Needles
@jsneedles · BI @ Meerkat & Maker of Things
@swaaanson Hey there! What's your morning routine? Has it changed at all as you've transitioned professionally?
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Jonathan Swanson
@swaaanson · President, Thumbtack
@jsneedles 1. Grab my phone. 2. Check twitter. 3. Check email. 4. (Ideally) work out.
Erik Torenberg
@eriktorenberg · Former Product Hunt
What do you and your team understand about marketplaces that other people don't but could learn from?
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Jonathan Swanson
@swaaanson · President, Thumbtack
@eriktorenberg Lots of people who build marketplaces have a "build it and they will come" mentality. We knew from the beginning that building a marketplace would involve primarily solving user acquisition challenges -- finding and acquiring customers and professionals in 100+ cities in a scalable and affordable way. We didn't know HOW to do that when we started though! :) But we focused religiously on solving that problem for a long time. We also knew that the only way to do it scalable/affordably was to do it differently -- we needed a creative solution, a growth hack, etc. We needed a solution that no one else knew about and was using. If other people were using it then it wouldn't be as effective any more or it would be expensive. That was our key insight. We then spent the next few years hunting for our creative solution. We tried a dozen things, but the solution turned out to be roughly: crawl the web at scale (billions of pages), use machine learning to identify the websites/blogs of professionals who were a good fit from thumbtack, create a corpus of these 15M+ professionals, and use this corpus to acquire professionals programmatically online. That sentence took about 10 seconds to write but actually discovering + building that system took 3+ years. :)