Speaker 3
Yeah, that's so interesting. Because I'm just thinking about like the year 2007. I mean, today I couldn't imagine not having like a service like this to find like a plumber and stuff. And so I imagine like back in the day, you had to, I don't know, get a phone book or something. So when you were building this product, what was the initial market and consumer reaction to this technology?
Speaker 1
Yeah, you're sort of thinking about it the right way. Historically, this problem was solved either by going to the newspaper classifies or to a directory and then word of mouth, right? Asking a friend, a neighbor or whatever. At the time in 2007, 2008, what we saw was that every online solution was just a offline product ported online. So Craigslist, obviously being the classifies and then Yelp and others being the directory. But when we really sort of thought about that, neither one of those models made sense for hiring pros. Classified, if you think about it, they're ephemeral, right? They roll off. And that's great because it keeps the inventory super fresh. But a pro is a pro this week, next week, next month, next year. Like they need a home, they need a profile, they need reputation. On Yelp, the challenge is it stops and really did at the time with a phone number or an email. Yeah, it gives you reviews, it gives you pictures, but that's information. What you need is a connection. You need to hire somebody, you need to book somebody. And so what we saw as the opportunity was to really be that broker marketplace, sort of place where these two sides were meeting and really do the work of helping them come together. And that's been kind of the focus from
Speaker 2
the get go. Sort of thinking about when you guys got started and how technology has changed since then. I mean, back in 2007, like sure, maybe you had an iPod touch or maybe you're using, I mean, the apps back then used to be like, I
Speaker 1
mean, the iPhone launched 2007. The app store didn't exist until 2008 or nine, I believe. You know, I don't think it's a surprise that Uber, Airbnb and Thumbtack start within sort of six months of each other. And there are many more like the whole kind of sharing economy, gig economy, it's been called all sorts of different things. But the way I would characterize it is that all of these services helped bring online some previously offline asset or resource. Airbnb with homes or accommodations, Uber and ride sharing with people's cars. And Thumbtack with people's time and talent, these assets have always been there, but they haven't been brought online and be easily sort of discoverable, hireable, bookable. And I do think the iPhone was critical to that because it sort of brought the internet from our desktops into our world in a way that makes all this, it's not just possible because obviously you could do it on a desktop, but it like it changed how people used technology in the internet to get you done, particularly get you done in their local environment. That's what really changed, right?
Speaker 2
And I know there's also lots of talk about how the generational divide of how people approach things like using their phone versus using their computer also things like social media and sort of like how different generations want to interact with technology in general. And so I'm curious with that backdrop that you just mentioned, how do you feel Thumbtack has been able to meet people where they are and change and adapt as consumer trends did with technology as well as booking stuff online, moving on to these marketplaces. How have you guys been able to kind of adapt as the market did?
Speaker 1
So I think we were just way ahead of the market, to be honest. In 2008, people weren't yet thinking of doing this online, to be honest. I think that is only really happening now over the last few years, COVID, I think was really the final kind of push to make this truly mainstream. You know, I think that there's absolutely generational aspect here. You know, like the greatest generation is the least interested in Thumbtack, right? If you just think about like American generations and they're like the most handy, thrifty DIY like capable and then millennials are on the opposite extreme. They're the least sort of like DIY, handy, capable and the homes that they have are the most complicated they've ever been. They have the most systems and sort of assets inside of them. And these folks are also busy and therefore motivated to, you know, have somebody help them. So I think if you look at who we work best for, it's millennial homeowners. And it's sort of first time homeowners. And I think that is just winded our back because that's everybody in 10, 20 years. So yeah, it changes things. Also think about it, if you've been in your home for 30 years, you know, like maybe your parents, you might have your roster of people already, right? They probably even have a drawer in the house that has this stack of business cards in it that are like the people for the house. We are the modern version of that, where you as a new homeowner need to find your people, need to have a place to guide you and then ultimately hire them. And that's what, you
Speaker 2
know, we're building. And God forbid a young person made a phone call. We all know that all of us hate doing that, Murr, right?
Speaker 3
Yeah, no, seriously, I would rather not. But you said that you were early to the market. And I'm really interested in knowing how did you pitch investors this product since you were early to the market? What was their response?
Speaker 1
You know, I think the one benefit we've had is that the problem is obvious to everybody. I've never pitched someone and have them been like, what do you mean hiring these people as a breeze? I can do it whenever, however I want. You know, you hear the opposite like, oh, this is always soft. I have so many horror stories. I'm so frustrated by this. There's so much more I want to do, but I can't do this and that, right? So I think the pain point is like very, very present for the vast majority of homeowners, right? You know, young people might not get it. Certain people in certain circumstances might not be interested in it. But like a broad swap of homeowners like has felt this and knows exactly what I'm trying to solve. I think the tension has always been like, can you do it? Well, the business work is the sort of product and experience. The right one is the marketing plan. The right one. Not is there something
Speaker 2
real here to go chase? Now that you guys have been growing and been around for as long as you have, especially being a marketplace company as well, knowing that investor interest and marketplaces sort of ebbed and flowed over the last decade, especially. I'm curious, like what role did that play in your fundraising journey, if any, this changing feeling around marketplaces, good and bad? In some
Speaker 1
sense, I don't think there's been that much of a change in feeling. I think for investors and for people who study great companies, I think you see a lot of marketplace businesses among the set of great companies, especially great internet companies. And so I think great investors are always excited and interested in that. Maybe from a media narrative, certainly there was a time where the sharing economy was front and center. Crypto and other things certainly took over for a while. Now we're in an AI phase. So by all means, the narrative has changed. But when I talk to investors and people who fund businesses, and particularly the most thoughtful ones and the most long-term ones, they appreciate that marketplaces have unique dynamics. To make that more obvious, we have 94, 95% gap gross margins. That's extremely high. Booking.com is a little higher, like 96%. But when you look at who has some of the highest gross margins across a public sector, it's often the marketplace businesses because no surprise, they're mediating an interaction. We help broker an introduction. We help a customer find and hire. There's not a lot of marginal cost in that work. It's not very operational. It's purely a digital thing. So that's never gone out of style. Investors love high gross margin marketplace businesses as they should.