SPEAKER_00: Today's episode of This Week in Startups is brought to you by GoToMeeting. Sign up for GoToMeeting and use the promo code START to receive your free trial. And by LiquidWeb, a leader in managed web hosting since 1997.

SPEAKER_02: Hey everybody, it's Jason Calacanis. It's This Week in Startups. We're here at CBS Interactive and CNET. They've been so wonderful letting me use their space today.

SPEAKER_04: We've got a tremendous young entrepreneur on the program.

SPEAKER_08: Hey everybody, it's Jason Calacanis here at CNET Studios. An incredible program we have today. Marco Zappacosta is with us. He is the founder and CEO of Thumbtack. Hey, I'm an angel investor in it. Watching this guy build this company has been awesome. And you're going to hear about a young 26-year-old founder who's just crushing it today on This Week in Startups.

SPEAKER_10: That's what it's all about, man.

SPEAKER_12: They said, money is the root of all evil. What? Money how it feeds my people. Yeah. We ain't going to live like equals until we get the money, spend the money, and defeat you. Yeah. Money is the root of all evil. What? Money how it feeds my people.

SPEAKER_16: Equals until we get the money, spend the money, and defeat you.

SPEAKER_18: Hey everybody. Hey everybody. It's Jason Calacanis here at CNET Studios. Steven, should I be calling these CNET Studios or CBS Interactive? What's the party line here?

SPEAKER_21: We call it CNET TV Studios at CBS.

SPEAKER_23: Oh my God.

SPEAKER_21: That's a mouthful. How many brands go on? CNET TV Studios.

SPEAKER_18: But on the outside of the building, it says CBS Interactive now. Yeah, yeah. I guess the CBS won that battle, huh?

SPEAKER_21: Yeah. Well, CBS is like the big umbrella company. Yeah.

SPEAKER_18: I've heard of the CBS thing you speak of. I've heard of it. Yes, yeah.

SPEAKER_04: Hey, thanks to my friend Jim Lanzone for letting me use the CNET Studios. I couldn't have done all these amazing shows in San Francisco without them. And today's show will be no different. Today on the program, I have a young entrepreneur, Marco Zappacosta. And he is the founder of Thumbtack, which is a great, great startup, which I actually was able to angel invest in. And I think I've only had two or three of the companies have angel invested in the program. But we met how? Through Open Angel Forum. Open Angel Forum.

SPEAKER_08: That was maybe two years ago, 18 months ago? I think it was March of 2010. March of 2010. Okay, yeah. So going on two years. Yeah. And you found out about the Open Angel Forum how? I don't even remember. It must have been through one of your blog posts or tweets. Got it.

SPEAKER_31: And so at the time, you were a 24-year-old guy. You got an idea for a business. Yep. And the idea for that business was?

SPEAKER_34: We want to make it easier to hire service professionals. That's something people do all day, every day. And it's still rather difficult. And service professional being? So a house cleaner, babysitter, a handyman, plumber.

SPEAKER_36: Right. All these people you need. And typically, people find them on Craigslist? So it's really word of mouth and friends. And then after that, it's all sorts of stuff.

SPEAKER_34: Google, Craigslist, Yelp. There isn't sort of a go-to place like Amazon or eBay for products for services online. Traditionally, it was Yellow Pages, but that's dying.

SPEAKER_08: That's dying. And you saw some flaw in the process. I mean, referrals from a friend. There's no flaw in that process. Your friend refers it.

SPEAKER_31: It's probably pretty good, right?

SPEAKER_34: It is good, but your friends don't know everybody. So you use them because you trust them, not because they know the best plumber or every plumber. It's just an easy way to get to a trusted provider. Right. But at the end of the day, it's an inefficient way to search. And so what we see is that the internet is so good at bringing people together, intermediating transactions, providing transparency, that it really hasn't been applied to this giant space. And so that's what we're up to.

SPEAKER_08: And if you get a referral from a friend for a trainer or for an accountant, that doesn't mean they've done any homework on, is this person a serial killer, child molester, felon? That's a big part of what you do.

SPEAKER_34: Totally. We want to be everybody's trusted neighbor. We want to be a place where they can turn and find who they're looking for and have confidence in the people that they go on to hire.

SPEAKER_08: How do you go about doing that? Mechanically, how is it better than finding your accountant or your babysitter on Craigslist? Yeah. Oh, wait a second. Did I just say find a babysitter on Craigslist? Do people actually do that? No, I think that's probably not typical. Not typical. But I mean, the amount of diligence your friend did on the babysitter is they seem like a nice person. Yeah. So if your friend actually introduces you to a babysitter, you've actually got no diligence

SPEAKER_46: in truth. Yep. You have the appearance of diligence.

SPEAKER_34: Yeah. I mean, basically you're saying, well, if they trust it with their kids, I'm going to trust them with my kids.

SPEAKER_49: Yeah.

SPEAKER_34: And even honestly, on Thumbtack, babysitter isn't one of our biggest categories because the trust

SPEAKER_51: issue is so big. You know, it's very big for parents to trust someone.

SPEAKER_52: And so how do you go about vetting?

SPEAKER_31: I'm actually looking here at the San Francisco children's section.

SPEAKER_53: Yeah.

SPEAKER_34: How do you vet these people? So there's two things. One, we want to make sure that the people are accurately representing themselves so that they are who they say they are, you know, that their name is right, their address is right, his phone number is right. They're not sex offenders. We'll go in and read all the profiles to make sure that they're appropriate, that they pass our community standards. And then the big thing is getting, you know, ratings from the community. So people have used them in the past, testimonials from past clients, pulling in reviews from

SPEAKER_54: Yelp or Google Places, really giving the consumer everything we can find about that individual to help them.

SPEAKER_59: Hey, everybody. It's Jason Calacanis, and I am thrilled to announce that Liquid Web is a sponsor and a

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SPEAKER_65: Is she here, Jason? You are associated with the Sony Corporation, and they send you to California to represent them.

SPEAKER_66: That's what he used to say to me when I worked for Sony as an IT guy.

SPEAKER_65: And that means a lot. That's a very big corporation out of Japan.

SPEAKER_62: This is what she would say to me, right? He was so amazed that I worked for a Japanese company. He was an 80, 90-year-old Irish guy. He couldn't imagine that a Japanese company was operating in the United States.

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SPEAKER_08: Yeah. And so here I'm looking at some child care just to look at the site. Nona's Family Care. And now this person is a bronze member, which means I guess they're sort of just getting started out in the system. Exactly.

SPEAKER_31: And Thumbtack Reviewed, Email Verified, and DOJ. These are checked or not checked yet? Checked. All checked.

SPEAKER_34: And it means that she's not in the Department of Justice's sex offender registry.

SPEAKER_73: Oh, you know what it is? I'm looking at this. I've got to talk to Jim Lenzone. I mean, I'm at CNET Studios.

SPEAKER_75: This place makes so much bank. I'm on an HB computer. Stephen, is this thing from 1978?

SPEAKER_76: I think it's 90s.

SPEAKER_75: Is it 90s? Because, look, it's coming up gray here on my screen. Really? From the 90s. It's so bad. And then it's nice and green here on the feed. Anyway.

SPEAKER_08: So DOJ, Smart Surge Verified, what is DOJ? Department of Justice?

SPEAKER_36: Yep. It's basically their database of sex offenders. So we make sure that these people are not in it. Email Verified means you... Yep. Connected an email. Okay.

SPEAKER_08: That means little, but it means something. Yep. And Thumbtack Reviewed means somebody reviewed them.

SPEAKER_81: Yeah. So this is basically our minimum verification. Ah.

SPEAKER_34: And then they can go from there. They can review... They can verify phone number, address, social security number. Oh. They can run a background check on themselves. And so those obviously are much more intensive and not everyone does it. Right. But we do try to push people in that direction.

SPEAKER_31: And how much do they have to pay? So who pays for that? Does the provider pay for that?

SPEAKER_36: The provider pays for that. We basically do it at cost. They're enhancing their profile in our network. So that's not where we make our money. And do you find that...

SPEAKER_85: I mean, do people actually care that they've been... About these like sex offender register? I mean, they should obviously. But are people just don't care or do they care?

SPEAKER_81: I think they care about the totality of what we do.

SPEAKER_34: And the brand, you know, standing sort of behind these people in some way. At the end of the day, are people reading each and every check? Probably not. But if they see that we go sort of as far as we can with everybody, that's meaningful. And they look to that.

SPEAKER_75: So in a way, the Thumbtack brand is what you're trying to do is say,

SPEAKER_88: we're focused on this issue. Therefore, you can buy into our system. Now, it's up to the provider how deep they go into that.

SPEAKER_08: But if you look at Craigslist, their starting point is anonymity. Exactly.

SPEAKER_56: And protecting people's privacy and anonymity. I mean, our brand is built around ease and convenience. And part of that is having faith in who you're being connected to. Because if you don't trust them, then it's not easy or convenient.

SPEAKER_08: Yeah. And so two years you've been working on the problem. How is it going now? I mean, how many people are using the service? And what's their – what do they like about it better than, say, just using Craigslist? Yeah. Or I guess Angie's List would be a big competitor.

SPEAKER_85: Absolutely. My wife is a little bit into that Angie's List.

SPEAKER_04: She hasn't talked about it recently. But she did like two years ago. She was really into Angie's List because she paid for it, I guess. Yeah.

SPEAKER_36: So how does it compare and contrast Angie's List?

SPEAKER_34: Sure. So we started in December of 2009. So just over two years have been live. And it's going well. We have almost a quarter million active service professionals nationwide. Wow. Half a million monthly uniques to the site. And generating sort of meaningful transactions for our service professionals. And ultimately monetizing those for ourselves. So things are very exciting. In terms of how we compare ourselves, you know, what we're trying to do is become more of a transactional marketplace. Not just a directory like Angie's List where you can find information about these service professionals. But actually the platform through which you can engage and hire them. Right. Really, that's a big pain point that people have that nobody has really addressed online. And when you say the platform, you mean I can book them through the system? Oh, yeah. So, you know, basically imagine you're hiring a plumber to repair something in your bathroom. It's easy to find 10 phone numbers. The hard part. But that's easy. You can do that with Google. You can do that anywhere. The hard part is finding 10 people who are engaged and interested and ready to do the job. And that's what we get you to much, much faster.

SPEAKER_08: And you do that through the sort of like creating a request on the system? Yeah. So it's a request for quote process. Now was that the original vision was to do the request for quote? Or is that something you added?

SPEAKER_34: That's been there since basically the beginning. We've always wanted to be transactional. And sort of that has evolved in the actual mechanics of how we get in the middle of the transaction. And we'll continue to going forward. But we've always wanted to be, you know, we see ourselves much more like eBay or Amazon than Yelp or Angesist.

SPEAKER_08: Right. Because those are informational communities. Okay. I use this plumber. Here's what I think of them. But then you call them up and it's all an analog, if you will, offline experience. Which I don't think people really want anymore. People hate being on the phone with people.

SPEAKER_51: Exactly. Exactly. You want it to be asynchronous. You want it to be on your time, on your sort of schedule. And on the phone, it's never that way.

SPEAKER_36: And also talking to people on the phone is just a drag, you know?

SPEAKER_34: Like it's all this pleasantry and – And you might need to get there. But you shouldn't start there. You know, if you're ready to hire that guy and he wants to talk logistics about coming to your house on Tuesday, so be it.

SPEAKER_75: Yeah, but everybody's so Asperger's these days. Nobody wants to actually look anybody in the eyes or talk to anybody. Nobody's got the social gene anymore. It's like Uber is great because it's like I don't have to call the dispatch. I mean, think about Uber. Full disclosure, I'm an investor on that too. It's actually an open angel forum company. We're going to have an open angel forum here in San Francisco again. Actually, it was really interesting. Two years ago when we did open angel forum, it was really needed, right? I mean, you didn't know any angels. No. And now in the last two years because of angel list and just how hot the market is, you don't even need open angel forum in certain cities.

SPEAKER_88: Like in New York and San Francisco specifically, any of the people we brought on to present would fill their rounds before – in the three weeks between when we thought we would have them.

SPEAKER_20: It's crazy. But back then, two years ago, you had a hard – did you have a hard time or was it medium time?

SPEAKER_34: I think it was – I think it was very typical. It was nothing, nothing, nothing, and then open angel forum kind of sparked us. Yeah. And from that, it happened very quickly.

SPEAKER_18: You had – who did you get from open angel forum at that time?

SPEAKER_125: You, Joshua Schachter, and Scott and Sam Bannister.

SPEAKER_53: Wow. I mean, those guys are big hitters. So you got – once you get the Bannisters and Josh Schachter, who's well-respected, everybody else is like, oh, it's validated.

SPEAKER_81: Yep, exactly. And then that was at the start of angel list as well, and Naval invested. And so that sort of just happened very quickly.

SPEAKER_57: Oh, wow. So you got Naval, right? Because Naval, I think, was at that open angel forum.

SPEAKER_127: I think he did come. I don't think he was there. Oh, he didn't make it. Right. But anyway, but yeah, that was right when angel list started. So you had an easy time with the angel round.

SPEAKER_74: So I started with open angel forum and ended with angel list.

SPEAKER_08: Incredible.

SPEAKER_74: And you closed – how much did you guys raise in the angel round?

SPEAKER_08: 1.2. Wow. So it's a big angel round even for that time. And then you recently closed an A round. Yep, four and a half. Wow. And that was a year after doing the angel round or so? Yeah, a year and a half. So take me through that process of going from being 25 years – whatever, 24 years old, having never raised a dime, raising 1.2 million, and then building for a year. What did you have to prove over that year and a half in order to get to the A round? Because, you know, we hear about this – what is it? The A –

SPEAKER_85: Series A crunch. The Series A crunch, you know, the sort of, I think, manufacturer, like, oh, it's impossible to raise a Series A. I mean, if it's a great company with a great team, I think you can. But so what did you – did you set out to try to accomplish a certain number of tasks to get to that A round?

SPEAKER_81: Yeah, I mean, the biggest thing that we set out for ourselves was sort of solving the chicken and the egg problem.

SPEAKER_34: That was the biggest point of sort of feedback we got during the angel process, being like, hey, guys, I believe that this is viable, but only if there's a bunch of activity, and you have to get both sides there. So that was –

SPEAKER_87: Both sides being – The buyers and the sellers. Which are the service professionals and the people who need the service. Exactly. And so we really spent the last – you know, once we raised that money, that was our overriding focus.

SPEAKER_34: And I think we solved that very successfully. We created a way to scalably attract service professionals to the platform and also to attract consumers.

SPEAKER_36: And so that was what we set out to do, and we did it. What did you do? Scrape Craigslist and then just send a bunch of spam emails like Airbnb did?

SPEAKER_134: We – Is that right Airbnb did that? I think they did, yeah.

SPEAKER_127: They were accused of that. They were accused of that, yeah.

SPEAKER_02: Which I don't really have too much of a problem. I'm trying to think if I have an ethical problem with that.

SPEAKER_75: If you listed your service or you listed your place for sublet on Craigslist and then an Airbnb rep were to contact you, is there something wrong with that? I don't know if there is.

SPEAKER_34: I mean, these guys are looking for more business. That's why they put themselves online.

SPEAKER_136: I think maybe the only person who has a problem with that is Craig.

SPEAKER_34: Yeah, and it's no different than the Groupon sales reps calling all the businesses in the – In the Yellow Pages. It's no different. Or Living Social calling the Groupon. Exactly.

SPEAKER_137: I don't think it's – I guess it was maybe that they scraped.

SPEAKER_34: I think it was – the only issue there was that they maybe weren't sort of transparent that it was coming from Airbnb, that it was written from just a user recommending it as another service.

SPEAKER_141: Oh, so there was a little bit of like, oh, you should check out Airbnb.

SPEAKER_34: But at the end of the day, it's a very reasonable strategy. You know, like growing marketplace companies is very hard. Yeah. And building up liquidity is really challenging. And you have to go get it from somewhere because it's not on your side. Right. And that's what they did. And we employed basically – you know, we looked for these guys all over the internet and then reach out to them. You know, if we had a job, we'd start with that. If we didn't, it was just sort of a plain marketing email. So, you know, very similar in the sense that we proactively went after the supply side.

SPEAKER_75: Ah, so you could say to the – if you have a job for I need a maid, you could then go to all the maids and say,

SPEAKER_31: hey, there's a job here. You should go apply for it. Exactly. And obviously nothing converts better than a live lead. That's all these guys want.

SPEAKER_75: So did you – as part of a startup, like do you say, okay, everybody in the company is going to get free cleaning services or –

SPEAKER_08: excuse me, some free service and just give everybody $100 in the company to go seed it?

SPEAKER_34: That's not how we seeded it, but it fed into the sort of flywheel that we built. You know, so we attracted supply, which via SEO then attracted demand, which then helped us pull in more supply and on and on and on.

SPEAKER_54: And we use it. We give everybody $150 a month to use it, but that's not what got the ball rolling.

SPEAKER_148: It's a lot of hard work, though, that first, like, chicken and egg thing. Did you narrow it down to only San Francisco in the beginning?

SPEAKER_34: No, we went nationwide from the get-go.

SPEAKER_36: Oh. And our thinking was, you know, our marketing strategy kind of works wherever and for whatever categories,

SPEAKER_08: so let's try to make this thing work at scale. But did you have people like in Austin, Texas being like, I'm looking for somebody to do this. There's nobody in child care. The thing is, people came to us via Google.

SPEAKER_154: And so if they showed up, we had what they were looking for in part. Now, maybe it wasn't high enough quality or cheap enough. Because of SEO traffic?

SPEAKER_81: Yeah, because you wouldn't click through if we didn't have something.

SPEAKER_74: Right. I got it. And so- So if somebody had babysitter in Austin, you were ranked. And we ranked and they clicked, by definition, we had what they were looking for.

SPEAKER_08: And I guess that's a big part of it is that you did SEO really well. And now, what about all these service providers sucking at creating profiles and creating images and writing descriptions? How do you get past that?

SPEAKER_149: So-

SPEAKER_08: Because I'm assuming with few exceptions, they suck at making their own profile.

SPEAKER_149: They're not natural marketers. And so-

SPEAKER_74: I mean, the same thing was Airbnb had the same problem.

SPEAKER_34: Absolutely. And so we actually built up a big team in the Philippines. We now have 130 people out there. And part of- Yeah, and part of what they do is curate these profiles. So help clean up the content. You know, we don't change anything. But, you know, we'll fix spelling mistakes. We'll add capitalizations. We'll add spacing to make it look better. And, you know, then obviously the system encourages them to add pictures. We have a, you know, points and gaming system try to get them to invest as much as possible into their profile.

SPEAKER_106: Yeah.

SPEAKER_08: And so how was this going out for the angel round? You went out and you said, hey, look, we got some liquidity here. And then boom, term sheets show up.

SPEAKER_34: I wish it was that easy. No, I mean, we had to knock on a lot of doors and sort of similarly like the angel round, once we had that first interest and that first term sheet, then things move much, much faster. But, you know, I think I'd done a decent job of building relationships over the previous year. And so there were a lot of people for us to call on sort of day one and then sort of just iterated off the feedback.

SPEAKER_36: You mean VCs who maybe heard about the angel round or maybe had previously pitched in the angel round?

SPEAKER_154: They reached out to me. I was always game to talk to them. Got it. You know, if they were. Well, I sent some associate calls. Yeah.

SPEAKER_01: It's like, I'm doing a spreadsheet of like Red Beacon, Thumbtack and everything because we saw Angie's List went public. Exactly.

SPEAKER_36: They're trying to understand the space. And what do you do? You get on the phone with one of those associates? Yeah, exactly. It's worth spending the 45 minutes on the phone. Really? Not to me. Well, I'm such a snob. You don't have to.

SPEAKER_136: I'm like, these associates call me. I'm like, oh my God. You don't have to.

SPEAKER_34: I guess so at this point now, but it's like Keith Ravoy saying that, you know, you shouldn't talk to a VC until you start raising. That's great. And if you can pull it off, I can imagine that being a better strategy. Right. But if your co-founder's Jack and you've got Square, you're slightly in a different position.

SPEAKER_175: It's a little bit of a snobby position to take. You know, it's true. When I was starting off my career, if I got contacted by anybody, I was like, yeah, you

SPEAKER_97: want to hear about what I'm doing? You got it.

SPEAKER_34: I mean, Mark Sester has this kind of post that you're always raising. You're always raising. That's the truth, isn't it? And the flip side of that is his other post that he invests in lines and not dots. Right. And so that's, you know, for a nobody, for somebody who's never done anything, has no name, you got to play that game.

SPEAKER_179: Right. And you want to just show incremental growth, demonstrative growth over time.

SPEAKER_34: And people should be clear. You know, you're always, I mean, when you're talking to them, you're pitching them because they're evaluating you as a potential investment, even if you're not raising right then and there. That's all they're thinking about. Yeah, they're trying to see. That's all they care about.

SPEAKER_08: That's disguised. And what do you think these VCs are looking for today when they're talking to a young entrepreneur?

SPEAKER_38: What was your gaming of the system? When they're talking to you, what did you think they were trying to determine? Because you're thinking about that, right? Oh, definitely.

SPEAKER_51: I mean, one is, is the market big enough? Which for us wasn't really an issue. It's gigantic.

SPEAKER_81: If anything, it's too big and has sort of eaten too many smart people and too much capital. Ah, right. It's like saying the search space. Yeah. You know, like, oh, you're going to do a search engine? Good luck.

SPEAKER_34: Yeah, exactly. Then I think it's the caliber of the, sort of the team and sort of how we come across.

SPEAKER_31: And then it's- Optics of the team. Yep. And how do you present that? You just have a list of bios?

SPEAKER_187: No, I think that's just very personal. It's not pedigree.

SPEAKER_189: I think it's just how you come off, you know, how you sound, what you smell like, what you look like. Really? They do judge a book by their cover. Definitely. Absolutely.

SPEAKER_34: I mean, you know, I've heard you guys say it as angel investors that you make your decision very quickly. Yeah. And that's often a function of how the person comes off. And I think the game is not that much different for these VCs.

SPEAKER_75: I think it's correct. I think if the person sounds like they're really enthusiastic about solving a big problem in a big market, and you get that sense that this person will never stop. You know, I got that sense when I met you. I was like, you know what?

SPEAKER_08: This person has no experience in a huge market, but Thumbtack's an awfully good name.

SPEAKER_194: It is a very good name.

SPEAKER_08: It's a really good name and a really good idea.

SPEAKER_75: And yeah, that is a, you know, you start to put together like a couple of these little pieces, like good domain name, well-spoken person with a big vision, but has like an attention to detail.

SPEAKER_08: I mean, the attention to detail is always something to me that I'm looking for is like, how much do you know about this market, right? How much research have you done? How much do you know about competitors, right?

SPEAKER_85: Like the first thing I do with you, I bring up Red Beacon, I'm bringing up Angie's List. And if you don't have a good answer for that, you need to practice that, right? Have those answers queued up. Absolutely. And so how did it go? You got some term sheets. How did you get from, we're raising an A round, which is translated, we're running out of money, to, I'm assuming it's not like a self-sustaining business yet, right? Not yet. So since it's not a self-sustaining business, you're saying we're raising an A round, which means we only have six months of capital left or something to that effect. How do you go from that discussion to term sheets come in?

SPEAKER_34: I mean, I think you, you know, with the partners that you've developed some relationship with, you say, you know, look, we're ready to take it to the next level. Like, let me come pitch you for real. And it's about presenting a plan to apply that money at scale. You know, what does 5 million bucks, 6 million bucks, 4 million bucks, whatever you're raising get you? And why is it going to work? And, you know, why is where you're getting valuable? And I think that was, that's basically what you got to sell, that you're going to use this

SPEAKER_36: money productively in a scalable way.

SPEAKER_08: What did you tell them? I'm going to hire a street team of salespeople in all these cities? No. No, for us. Technology?

SPEAKER_74: What is it that marketing?

SPEAKER_34: So for us, you know, it's interesting. We solved the chicken and the egg problem and the thing is growing sort of on its own at this point. So it's much more about investing in the product and building that transactional marketplace of our dreams, you know, enabling you as a consumer to not just find out information and request quotes, but actually go through and book and hire. So, you know, more like a kayak experience or an Airbnb, which for certain categories makes a whole lot of sense. So we did pitch sort of a very, it was a product focused pitch.

SPEAKER_02: We have 20% of the product built.

SPEAKER_131: This is the other 80%. It's going to take 18 months to build. It's going to take hiring this level of people, this many more developers.

SPEAKER_51: And it's also something we learned that people are, and I'm sure you know this well, skittish about sort of SEO as a channel.

SPEAKER_210: Oh God, are they?

SPEAKER_88: I mean, people told me when I was doing Mahalo, like, you know, when I was raising money for a four or five years ago, like, I will not invest in an SEO driven business because I believe Google at some point will own the second click.

SPEAKER_08: And that's what's, I mean, even beyond the Panda update, Google wants this business.

SPEAKER_36: They want to kill you. I mean, they know that it's one of the biggest pool of ad dollars that they're not touching right now. That's why they tried to buy Groupon, right? Right.

SPEAKER_04: And so they, you basically are going out there saying, give me money and Google is going to want these clicks.

SPEAKER_87: I mean, that was, I mean, there's value first question that comes up. Definitely. It's a huge risk.

SPEAKER_34: You know, that, you know, a large fraction of our consumer traffic is coming from that. And we know it's so valuable that they're certainly thinking about internally, how do we capture this value ourselves? And they're sort of cheating now, it seems.

SPEAKER_75: I mean, everybody's talking about this with Google. Like, if you type in credit card rates now, they have this Google advisor, which I can't

SPEAKER_36: find, but. Yeah, basically compared rates. Yeah.

SPEAKER_75: Did you see that Google advisor? It was like, whoa, wait a second. I mean, do you think Google has a full blown version of Thumbtack, Red Beacon five years

SPEAKER_08: from now? They don't currently, right? They just have the ad marketplace.

SPEAKER_51: So I think, you know, I think they, you know, actually Larry Page on not this quarterly

SPEAKER_34: call, but the one before talked about search being more than 10 blue links and it being a time sort of a sort of getting to the transaction or being an answer engine. They don't want to use Bing's phrase because it's too good and it's already taken. But really, that's the point that, you know, search engines have to get you to the answer faster. And if that answer is, if you ask it two plus two, nobody cares that they return four, right? No. No, that's fine. Yeah. But when you say, you know, best restaurant in LA and they return their own Zagat ratings as opposed to a list of directories that have their own ratings, then, you know, it's a little, you know, is that fair?

SPEAKER_106: So basically you in your mind have already determined Google's doing this and you still

SPEAKER_08: think you can build a business. Yeah, absolutely.

SPEAKER_87: I mean, I think at the end of the day. So you don't need their SEO traffic. I think that's why the product focus is so important because it's ultimately a hedge against

SPEAKER_34: that, you know, because if we can become a destination, if consumers come to know us as the brand that solves their...

SPEAKER_02: How do you become a destination as opposed to an SEO driven business? I mean, what is it to... In terms of operating a business, how do you...

SPEAKER_34: So the way we see it is that SEO gets people to the door and then the product has to delight them to get them back and it has to get them to tell their friends about how great it was.

SPEAKER_04: Net promoter score? Exactly. Stuff like that. So what's happened, my perception in the industry is what's happened is because you had this free traffic stream of Google search, you didn't have to build a nine or a 10 product on the

SPEAKER_88: net promoter score. You could build a seven or eight as long as people weren't saying bad things about you. And even if they were saying bad things, it seemed like SEO worked in your favor because

SPEAKER_150: you moved up like that controversial guy, the eyes guy in the New York Times story. But now without the free Google traffic, you do have to build a superior product. Absolutely.

SPEAKER_34: You can't build e-how. And the thing is, I think we didn't have that many resources as a company and so we invested in the sort of the growth side or the traffic side and now we have the money and the time to really invest in the product side and that's what's so exciting. Well, I thought you did the product side too though. We did it.

SPEAKER_88: The way you verified the listings with, you know, like, hey, you could have said it's an open system, anybody lists anything and you might have had more short-term growth. Yeah. You throttled it by saying we're going to do all these checks.

SPEAKER_87: So we, you know, we care a lot about the product and we certainly didn't half-ass it.

SPEAKER_34: At the end of the day, you know, we had to make trade-offs about sort of investing in one side or investing in the other and now, fortunately, we don't have to make those trade-offs as much. And the SEO thing, you know, really rewards sort of older domains and it's sort of just on autopilot at this point.

SPEAKER_56: It just works.

SPEAKER_75: So what about, um, what about raising the benchmark to be listed in the system? Like if it's growing so well, are you having this debate of maybe we should have less people in the system and make people go through more, um, verification process?

SPEAKER_08: Are you raising the bar or are you keeping it the same? So we've talked about it.

SPEAKER_34: I mean, the, our biggest question is, can we accurately figure out who's good and who's bad and then B, what do consumers want? Cause there are some consumers that come in and want quality at the expense of cost. They're willing to pay for it, but some get there and they just want something that's cheap and quick. So, and it's hard and it's like, who do we, who do we cater to? And I think that the, the answer is somewhere in the middle, you know, we're not the cheapest and we're not the best. Um, we're sort of just average.

SPEAKER_56: You know, if you want, if you're a typical consumer with typical needs, we're going to serve you, serve you real.

SPEAKER_61: Hey everybody. I want to tell you about one of my all time favorite products, go to meeting. I use go to meeting religiously because it's stable. It's feature rich. And I want to show you a couple of the features today that will blow your mind guaranteed. Here is my desktop computer. Boom. You're seeing it side by side. Now look, I've got Microsoft word loaded here. I've got a browser window open here. Uh, and I can very simply, I've got Carolyn on the line here, our producer, and she's in HD. Look how gorgeous, the perfect HD video. And now the, you know, the fact that we can do a nice video conference, you'd expect that from go to meeting, right? This is a great company, but I'm going to show you a couple of features that most people don't even know they can do.

SPEAKER_62: I can give entire control of my desktop to any individual who is on the conference. So if I say, hey, Carolyn, in production, you want to take over and show us what we're talking about? So now I can just give her my desktop, which I have, and she can just go do a, she can just do a Google search here and boom, before you know it, we're going to see a Google search. And she's going there and typing in this week in startups. And on my screen, we're seeing that. Great. You'd expect that. But now we could also be working in Microsoft Word and editing a document together. All amazing. But what's more amazing is Tyler, who's, you know, he's on the road a lot. He's a very important guy. He's logged in on? My iPhone. You're logged in on your iPhone. Yeah. Show the camera. We've got the camera right here. This is unbelievable.

SPEAKER_238: I'm watching her do a search for this week in startups.

SPEAKER_61: And you were then, what I just noticed you did, you were zooming in for a second.

SPEAKER_238: Yeah, I can zoom in. I just watched her click the link and now she's on the This Week in website.

SPEAKER_62: Right, and you're zooming in. Yeah. Now, what if you want to ask a question to her? Look at this interface.

SPEAKER_238: Actually, this is really cool. So I just pop open the menu bar, hit chat. Right. I can pick who I want to chat with, either everyone or just her or just you. Right.

SPEAKER_62: Now.

SPEAKER_238: And I can tell her, like, hey, do a search for.

SPEAKER_62: Yeah, you just type in, like, do a search for this or whatever. Now, that's amazing. But additionally.

SPEAKER_238: You know what I should do? I'm going to chat at you so you can see what happens there.

SPEAKER_62: This is my iPad. Now, I'm going to ask you to switch from the iPhone to the iPad, if you don't mind, which we can, either you can zoom in on, or actually we can, oh, you know what? Why don't you just, oh, there we go. Whoa, I'm spinning the iPad. Whoa, whoa. This is my iPad. The same meeting flawlessly on iPad. And if, I could ask us to use the camera maybe because we're capturing my iPad. But let's tilt the camera over here and zoom in. And let's zoom in on the bottom right here. Now, if somebody were to chat and I was on my iPad, somebody say something in the chat room, what you'll notice is it pops up in the bottom right-hand corner. Right there. Boom, that little green box is like a little alert, like, hey, something's going on. And this is the beauty and simplicity of GoToMeeting. We set this meeting up in just a matter of seconds. Setting up a meeting is so easy. Then you get that nine-digit code that you just email to everybody with, or you just give them the URL, or both. If they go to GoToMeeting, and in seconds they're in the meeting, whether it's on their

SPEAKER_61: iPad, their iPhone, their laptop, their Android, I think you could do it with ColecoVision. I think they ported it to ColecoVision, and they also to TRS-80, you can log in with, and also with Super NES. All of those things work with GoToMeeting. Maybe not the last couple, but the first one's definitely. PSP. No, I don't know if they have PSP, actually. I mean, it is mind-blowing, because sometimes I'm on GoToMeeting, I don't want to have my laptop, like I'm just hanging out by the pool or something, I'm in the hot tub. I don't want to pop out in a GoToMeeting and just be on my iPhone, but you can put your

SPEAKER_62: headphones in, you could be on the subway, you could be in an airport lounge, take out your iPad, take out your iPhone, and do a GoToMeeting. And that's just the beauty of it, and anybody can edit it. It is flawless enterprise software, they only charge you by the month. It's not like they're asking you to do some big upfront payment, and it's stable, and you look like a professional sending a GoToMeeting link, because the meeting starts on time. Don't screw around with those free options. The free options, you get what you pay for, and you don't get much. And I'm telling you, you're not going to get on an iPad, and you're not going to get an iPhone, and it's not going to work, and then you're going to look like a, you're going to look unprofessional. How many times have we done an angel meeting, or a launch meeting, or a TechCrunch 50 meeting, or any of these meetings, and somebody's like, oh, hit me on Skype, hit me on this, hit me on that, Google Talk. All these free services, they never work. They never work. I mean, it's one thing if you're trying to chat with your mom, you know, or, you know, whatever, chatting with your boyfriend or your girlfriend, that's, you know, whatever. Okay, yeah, you Skype. When you want a serious business meeting, and you want to have your desktop up and running, and HD, beautiful, look at this gorgeous video of Carolyn over here in the corner. I'm zooming into it. I mean, that's HD. You can't get that in any other service. She's married, by the way. I don't want anybody to start emailing Carolyn and asking her anything, okay? She's happily married. Thank you, GoToMeeting, for making my life amazing, and for producing such a high-quality product, that I am so proud to count as a supporter of This Week in Startups.

SPEAKER_250: And Tyler's very happy, too, because he doesn't like to be in the office. He's always in Thailand, or Vietnam, or Japan, or Korea.

SPEAKER_253: Couldn't do it without you. Yeah. Yeah, GoToMeeting. We love you. It's a good market.

SPEAKER_78: So, I have friends that were talking to me, and they were like, we're going to get Korean movers, because the Korean moving guys, or the Chinese moving guys are the cheapest,

SPEAKER_08: going from LA to San Francisco. They're not bonded. They may not even be citizens of the United States. They could be felons, but they're $40 an hour for two guys. So, what you're saying is, if you did a felon check, or a driver's license check, you might

SPEAKER_88: take out the cheapest options.

SPEAKER_85: And people might want those. Yep. Plenty of people.

SPEAKER_137: People do want them.

SPEAKER_256: Absolutely, especially these days.

SPEAKER_137: Yeah, so if you had a choice, I want somebody who has no license, no insurance, and $40 to, you know, an hour to pick up a piano or something.

SPEAKER_08: Yeah. Your system would not let that person on, or would they let that person on?

SPEAKER_34: They wouldn't if they didn't pass our community standards. And basically, what we've said is, we impose a floor. And if you don't meet that floor, you can't take part. What is the floor? The floor is that it's not a scam. It's not anything that's inappropriate. It's not anything that's illegal. That you are the actual provider of that service. You're not just like a multi-level marketing.

SPEAKER_87: So, a driver's license is basically? So, if you're a licensed trade and you put in your license, we'll go in and verify that.

SPEAKER_81: We don't require that you put it in. But if you do, we'll verify it.

SPEAKER_36: What about a driver's license, though? It's like, you know that. How do you know it's the person's actual name and it's them? So, we do that via the social security number check.

SPEAKER_260: Ah. Which is basically the same game. Somebody could fake that a little bit. Nothing is ungameable at the end of the day.

SPEAKER_56: So, we want to give consumers a transparency and the sort of trust in our content. And so, we try and verify everything that comes in.

SPEAKER_87: And we set the minimum floor. But within that, if you're looking for the cheap quote, we want to get you that. If you're looking for the fancy quote, we want to get you that.

SPEAKER_228: Right. And that's why you have all those check marks on the left-hand side, right?

SPEAKER_08: Like, here, if you are really discerning and you really want to, what about doing an interview with the person actually over Skype or something like that? Because I've heard people doing that.

SPEAKER_36: We've talked about that.

SPEAKER_34: And we have a quarter million of these guys, so we can't interview them. But if we created a product by which they could introduce themselves, which you care about. You know, imagine you're hiring a guitar teacher for your kid. You know, you want to know what the guy sounds like and what he looks like. And just hear him talk about teaching kids.

SPEAKER_54: Right. But we haven't rolled that out yet.

SPEAKER_08: How competitive has TaskRabbit become? Because I heard about the concept for TaskRabbit, like, I don't know, a year ago or something.

SPEAKER_228: I was like, I don't want to be involved with these people who are working for under minimum wage. And it just felt a little bit ghetto to me, like, too sketchy. But it does seem to be getting traction. Definitely.

SPEAKER_08: And are you concerned about, are they a competitor or not?

SPEAKER_34: So the way we see them today, and I think that's the question mark, how are they going to change, is that today they help you outsource things that you'd otherwise do yourself. So errands, right? Picking up dog food. Right. Dropping your laundry off. Things like that. But Thumbtack helps you hire people with skills. Skills that you don't have that you're trying to sort of use a professional for. So it's more professional grade. Absolutely. Right. They did just acquire a company that was squarely a competitor, SkillsSlate.

SPEAKER_31: SkillsSlate. Yep. They're based out of New York.

SPEAKER_08: So they're going to put professionals in at some point. At some point. Does that mean you're going to drop down and put in TaskRabbit or TaskBase people? I mean, it's definitely in our orbit of services.

SPEAKER_34: I think the tough thing that they have is it has to be very temporal. And so they have to invest a lot to make sure that they can get you what you want now.

SPEAKER_87: Ah, right. I need somebody today, the next hour, the next 30 minutes. But if you're looking to get your deck refinished, it's not about doing it the next half hour. Right. Yeah. You want it done right for the next 15 years. Exactly. And it's not going to splinter and give your kid a splinter. Exactly. And, you know, I think we've had to do very different things.

SPEAKER_34: They, all their labor can basically do all the tasks. Ah, right. Because it's all like. It's informal and not skill-based. Ours, it's very segmented. A carpenter is not an electrician, is not a handyman, or is not a plumber. Plumber, right. So, you know, we have to build up liquidity in each category.

SPEAKER_08: So, yeah, yours has got a huge defensible thing.

SPEAKER_179: Yeah. But they could, I guess, go upstream and just not with those people. They're smart. They're thinking about it. Absolutely.

SPEAKER_78: Now, what about this sort of issue around the minimum wage and stuff?

SPEAKER_75: You know, they seem to somewhat verify the people, but it seems like people are working

SPEAKER_36: for under minimum wage on the system. Well, it's job-based or task-based. Right.

SPEAKER_34: So it's not necessarily, you never know, you know, and if something turns out to be way longer than expected, it can absolutely be below minimum wage.

SPEAKER_81: And I don't know how that plays out in terms of liability, but. Oh, that's huge liability.

SPEAKER_46: I mean, if you break the, I mean, if you break the, any California employment law,

SPEAKER_85: California, you are guilty. California is so pro-employee. And I've had two instances, I can't talk about all the details, but instances where I had like an independent contractor who then claimed to be a full-time employee. And it was like, here's the independent contractor list. And we signed a contract where you initialed each of the 20 items on that IRS list that you're an independent contractor. And you know what the judge said? The judge said, you can afford it, just pay it. And I was like, wait a second. I specifically designed an independent contract, because I had these at Weblogs Inc. So what I said was, when the lawyers met with me and said, here's that, you know what I'm talking about, the independent contractor list. And it's like, do they use their own equipment? Do they get their own schedule? Do they direct their own work? All of those things. Do they have other clients? I put those into the agreement. And not only did I put them into the agreement as bullet points, I put a little initial

SPEAKER_08: next to each one. So they initial each one. I think I'm smart.

SPEAKER_88: Kept me out of trouble for a thousand freelancers over the years. And one of them decides, oh, I'm going to try California law. And I don't use freelancers anymore. But that's dangerous. You will become, you are absolute, TaskRabbit is absolutely liable. 100% liable if a task in their system winds up in below minimum wage.

SPEAKER_08: Because it doesn't matter if they are legally liable. What matters is the appearance of impropriety.

SPEAKER_285: I mean, you don't have anything close to that because people are paid so well, I guess. It doesn't seem to be anybody in there under $10 an hour. I mean, everything is expensive.

SPEAKER_34: No, I mean, I think our smallest jobs are handyman jobs. Right. You know, which, you know, you get someone to come change a light fixture or something like that.

SPEAKER_88: How do you deal with the sort of, as an entrepreneur, you decide to do the whole United States. I'm assuming the laws in every state are different about this kind of work.

SPEAKER_02: Yep. In every city are different about this work. And how do you, the marketplace is, of course, just a marketplace.

SPEAKER_08: And we say that. But the fact is, a local judge could say, well, the marketplace is the provider and whatever. And how do you deal with, did you just sort of like deal with it in the review mirror for each market?

SPEAKER_34: We looked into it a little bit and basically eBay had similar concerns. And so basically a precedent got set that they are like a classifieds ad where they're not responsible for what's happening. Though they've done a lot to ensure the trust and safety of what's going on because it builds their brand and it's a valuable thing.

SPEAKER_51: But at the end of the day, they're not vouching or that's why, you know, you buy something that was fake off of eBay. You can't sue them for it. People have tried. People have tried.

SPEAKER_127: But the TaskRabbit people are wearing TaskRabbit shirts, right? Is that what I heard?

SPEAKER_295: Yeah, though I don't.

SPEAKER_127: And they do an interview with them on Skype. That's where I heard about the Skype thing. Yes, they do absolutely do an interview with them.

SPEAKER_08: So they're sort of like we are making, we're making some. Yeah, it's tricky because they want to promote the brand through these people. And they want to.

SPEAKER_87: So they're actually. It's like Uber, right? Yeah. They want to promote the Uber brand through these cars, even though they're not necessarily employees of Uber or employees of TaskRabbit. And it's a fine line between the two.

SPEAKER_08: If you put somebody in a TaskRabbit or an Uber shirt, you're giving the appearance, you're

SPEAKER_31: getting the value of them being an employee without them being an employee. It's dicey. I could imagine something happening here. Wow. It is dicey. So Red Beacon recently bought by Home Depot. Yep. That takes out a competitor, I guess. Definitely. I mean. You breathe a sigh of relief about that. Yeah. I mean, they were smart, hardworking guys. And now there's one. They won the TechCrunch 50 conference last one. And that was one of the first things I asked you about was how are they different.

SPEAKER_223: Yeah. You had a good answer for that, I think.

SPEAKER_87: Yeah. I think the one thing that we did differently and I think successfully ultimately was building up traction, distribution.

SPEAKER_34: Right. I think as ex-Google guys, it's something that doesn't come as naturally. And I think when you're at Google as a product manager, you know, you say, can I have more traffic, please? And it just sort of comes. Sir, please may I have some more? Yeah.

SPEAKER_75: It was like AOL or Yahoo was the same way. Like anybody who's creating any project inside AOL was like, please, can I have some home page

SPEAKER_310: traffic, please? Yeah.

SPEAKER_311: And so I think at the end of the day, it's something that they didn't focus on. Right. But they did build an elegant system.

SPEAKER_87: They built a great part of it. Elegant system. Absolutely. It works great. But it didn't have as much, it didn't naturally grow like Thumb Tech does.

SPEAKER_315: Did they ever get to the point where they had like profile pages for all their people, like a directory?

SPEAKER_317: They ultimately did.

SPEAKER_315: They originally launched without that. Correct.

SPEAKER_87: They were like, you're just going to put in what you want and we're going to hide from you the directory. Yep.

SPEAKER_34: And what they realized is that people wouldn't come to them sort of organically. That build it and you will come is not viable in our space. Right. And so they lost out on all the SEO traffic. Exactly.

SPEAKER_319: And then people want to browse. Yeah.

SPEAKER_87: And people want to have confidence that you're actually going to send it to real people, high quality people.

SPEAKER_51: So I think that's something that they realized and changed. But SEO is a slow, hard game. How many people in your company are older than you versus younger than you?

SPEAKER_154: Seven older, one younger.

SPEAKER_111: Or six older, one younger.

SPEAKER_04: Is there an issue being a 26-year-old CEO and having a 35 or 40-year-old person working for you, do you find?

SPEAKER_111: We don't. And all of us are sort of. In the same range? Yeah.

SPEAKER_127: You know, mid to late 20s. But do you think it's an issue? I mean, listen, Zuckerberg's got 5,000 people working for him and he was a kid when he started

SPEAKER_87: in 21, 22. So I think at the end of the day, if things are working and we feel like we have momentum, then it doesn't really matter. Right. And if we have faith in where we're going, then it doesn't matter. If things are going badly. Then I think absolutely.

SPEAKER_36: Yeah. And then people are like, oh, there's a kid running this joint. Exactly. Right. And I think that's just how it goes. You know, the more blame and more credit. Right? Yeah. And if you're old, yeah, right.

SPEAKER_328: You get every story about Thumbtack is going to be 25-year-old Marco, 26-year-old. I mean, they mention your age in news stories.

SPEAKER_08: Yeah. It happens. Definitely. Yeah. So they are sort of obsessed. I had that for the first half of my career. Now they don't mention it. Now they're like, oh, you're 40.

SPEAKER_18: You should be creating great stuff. Yeah. It's interesting how that works. Yep. You get a little bit of disproportional credit, like you're saying. Yep. Toughest part of your business today is what? What's the toughest part right now?

SPEAKER_51: Toughest part of my job right now is hiring, finding great people, which I think is not unique to us.

SPEAKER_75: But yet, being here in San Francisco, you guys are San Francisco-based? Yeah. I walked here. We're local.

SPEAKER_08: You walked here, yeah. So being based in San Francisco, you have the most talented people in the world. They just happen to be very expensive. Yep.

SPEAKER_34: And I think we're happy to pay what the market demands now. Right. The issue is getting them excited about what we're doing, because these are people who can do sort of anything, anywhere. So they have-

SPEAKER_08: Start their own company off of AngelList or apply to Y Combinator being two options that didn't used to exist. Yep. And I think that's a squeeze, because on one end, you have Facebook and Google and Twitter,

SPEAKER_34: Zynga, and on the other end, you've got the availability of AngelMoney for starting your own company. Yeah. And so people in the middle really have to work hard to attract that talent.

SPEAKER_04: I think what we've got to do is put a moratorium on anybody, AngelL investing, for the next five years so we can digest all these companies.

SPEAKER_88: And there are a lot of tweeners. Now you've basically set yourself apart, right? I mean, it must be a great relief to get that A round under your belt, because that sets you up for two or three years of focused growth- Absolutely. ...without having to raise again.

SPEAKER_137: Yeah. Is that what you- were you looking for two years of runway, three years of runway? We look at it as two years.

SPEAKER_34: Yeah. You know, we're also a business that's already generating meaningful revenue and should continue to do so. So it's, you know, we see it as this money should take us to forever, but we should also

SPEAKER_87: be smart enough to find great growth opportunities to go out and raise real growth equity. So, you know, we're- that's what we're working towards. The B round. Yeah.

SPEAKER_88: See, here's the thing about the B round. The A round, you're selling promise, right? Mm-hmm. We have this product. We have- it has great promise. And, you know, if you've got a reasonable team and you built a decent prototype, a decent product, right? Prototype, I guess, maybe more angel round, you're fine. You get the A round. They're betting on the team and the market. You get to the C round, you've got some wildly established revenue, right? Yeah. You're C round, you got 10 million in revenue, and we're trying to get it to 50. And that's what this 10, 20 million dollars can do. But the B round, oh, man, that's the painful one. Because you have neither, you know, the no results of the A round or the meager results, just product results, nor do you have the C round results. And that's the B is this trench of despair.

SPEAKER_34: I mean, I think they're all kind of moving up. So, in a sense, you know, 10 years ago, people showed up at these VCs with a PowerPoint and got 5 million bucks. Right. And now, it takes a lot more progress to get there because of the angel money and because of how fast you can move and how quickly you can build traction.

SPEAKER_87: So, I think, you know- Everything's slotted over one. Definitely. And there's so many more companies, so these guys can be pickier. You know, I think the Series A crunch is just that there are more angel-backed companies and the same number of VCs, so I don't know, you know, it's just the more supply.

SPEAKER_08: I think, you know, looking at it and looking at my angel portfolio, which has done, thankfully,

SPEAKER_88: great, but I'm super happy to have you guys in there. A lot of the other things I passed on, I'm seeing now, are truly sideways, running out of money, have five people who have computers and maybe they have a couple of rented desks somewhere, but they're not going to get their A round.

SPEAKER_87: Those people then cycle back around and then you can employ them. We hope so.

SPEAKER_34: I mean, the problem is, you know, if you're five guys who believe and have a lot of vested equity, it's pretty cheap to keep going. And, you know, and you're young, right? You know, it's not like you have a family and you're worried about paying for your kids.

SPEAKER_351: Right, so you're just like, oh, we get some more ramen money, we'll hold on.

SPEAKER_34: Is it worth spending three more months? Probably. And that, I think, happens a lot and it keeps a lot of great people and talented people working.

SPEAKER_08: You would have figured it out to, at least to continue going. Absolutely. Even if it meant laying off half the staff and just being like a sideways, like zombie-like company. Yeah, we wouldn't have felt like we'd done. You wouldn't have given up.

SPEAKER_75: You would have persevered. Which is then why you got the A round, because people get that sense that you're going to persevere and you're going to keep going.

SPEAKER_08: Like, so now do you think that maybe the future is for companies like yours, you go look at those A round companies that are sideways and then go acquire them, AccuHire and get them behind this mission? Like, there's got to be 50 little angel companies that are pursuing local. Yep. They're everywhere. They're everywhere.

SPEAKER_34: I mean, that's definitely a strategy that we're going to employ looking for recruits, right? These are people who understand the space, who are invested in the space. And, you know, maybe, you know, it's the pride part that's tough.

SPEAKER_51: You know, they've got to swallow their pride a little bit and be like, you're right. I didn't do it, but. You're doing it. Yeah. I want to come join. Right.

SPEAKER_127: And they got to shut down their brand and you got to keep your brand going.

SPEAKER_88: But it's starting to happen. I saw Airbnb bought a company and you just said TassRabbit bought a company. There's going to be a lot of these like micro transactions. And I think these transactions are going to be for zero dollars. Yep. Just going to be like, here's some equity.

SPEAKER_111: And if that's a win on the entrepreneur's, you know, box score, which is great. A fake win.

SPEAKER_363: Yeah, but.

SPEAKER_111: A faux win.

SPEAKER_51: Five years from now, are people really going to dig into the details of the transaction? Maybe, maybe not.

SPEAKER_367: Yeah, I am.

SPEAKER_368: I always say, when people tell me they sold their company, I'm like, really? How much did you make? You make any money off that? Or what happened exactly?

SPEAKER_369: But I mean, that happens. I mean, even.

SPEAKER_228: There's a lot of saving face in this industry. Yeah. A lot of people will slide into the home run. Yeah. It's a home run, but nobody made any money.

SPEAKER_313: But with big preferred and big overhangs.

SPEAKER_372: Yeah.

SPEAKER_313: Sometimes the common doesn't get much at all.

SPEAKER_75: Yeah. So your parents are entrepreneurs. That's right. Yep. Famous entrepreneurs. They built Logitech. Yeah. Which not everybody, maybe it's not as important of a company now, but in the 80s, 90s, that was a super important company. Yeah. So what's it like having your parents having built such a great company that's so well known?

SPEAKER_127: Are they great advisors?

SPEAKER_51: They're great supporters. And that's ultimately the privilege that I have, right? Yeah. That not only is sort of in any way they are there to support me.

SPEAKER_34: And they came to this country in 1976 and embarked on this crazy journey and lived the American dream. So they're immigrants.

SPEAKER_08: Oh, yeah. So you are the son of immigrant parents. Yep.

SPEAKER_75: And there is a big bias towards folks like you. Everybody seems to think that if your parents were immigrants, that you're going to be hard working.

SPEAKER_187: I think the thing is they... Is it true?

SPEAKER_34: I think they are more than most fortunate for the opportunity that they had. And it's something that they want to instill in their kids. Right.

SPEAKER_260: So you think that's the dynamic?

SPEAKER_154: Yeah, absolutely. That they know that they would have been just fine had they stayed in Italy, right? They totally find existence.

SPEAKER_34: It wouldn't have been a problem, but they would never have had the opportunity to build what they did. And so I think they were often very encouraging of us finding that or working towards that

SPEAKER_36: because it's special and not everyone has that. In a way, Logitech was a very design-driven company. Very design-driven.

SPEAKER_75: It was like an Apple-like company in terms of they built such beautiful product.

SPEAKER_08: I mean, the first thing I did for... You know, I grew up in the 80s as a teenager. I guess I'm 10 years older than you or 15 years older than you.

SPEAKER_88: So like Logitech, to me, the first thing you did when you bought a computer, if you were a serious guy, was throw away the keyboard and get yourself a Logitech keyboard. Man, I had the curved one, you know, and the Logitech curved mouse.

SPEAKER_34: And they had to because it was effectively a commodity plastic product.

SPEAKER_51: You know, they had to sell the design. They had to sell the brand. Again, you know, it's not like their keyboards were...

SPEAKER_388: They didn't make a better F when you hit it.

SPEAKER_08: No, no. It was still the same F in your email or your website.

SPEAKER_04: So I guess they're super helpful for you. But you don't pull that card, I guess, because I didn't know about it until way after I invested. You don't mention it or do you mention it?

SPEAKER_390: If it comes up, it comes up.

SPEAKER_34: I mean, I think at the end of the day, this is a very meritocratic industry. It's like, do your consumers love you? Are people paying you dollars? Right. It doesn't really matter that you're there. That's all that matters. It doesn't matter what your parents... If that's happening, then it's worthwhile. If it's not, then it's not.

SPEAKER_75: Yeah, exactly. And what else have you learned now as an entrepreneur? I mean, it's a different time than when they were entrepreneurs.

SPEAKER_85: I mean, today, things move so quickly. I think that's the biggest thing.

SPEAKER_377: And it takes so much less money to start something.

SPEAKER_87: It's a different world. Totally different.

SPEAKER_75: I don't even know if their lessons apply.

SPEAKER_87: I mean, their lessons that apply are the ones that are interpersonal, company building, culture building.

SPEAKER_260: Not, like, operationally, like, you know, they don't know about internet marketing. Right. That didn't exist.

David Friedberg: For them, marketing was going to CES. Yeah.

SPEAKER_260: Or whatever. I don't know what. And they started selling out of catalogs. Yeah.

SPEAKER_08: Getting out of CompUSA. PCMag was marketing back in the day.

SPEAKER_87: Exactly. So it's... No AdSense. Nope. Nope. So it's less sort of strategic and more sort of the softer stuff. That's always true. Right? Yeah.

SPEAKER_08: How do you deal with people who are upset? Yeah. Yeah. Not working hard enough, having a nervous breakdown.

SPEAKER_75: Exactly right. How do you do that? How do you work? So how about this whole Gen Y thing? I've written a couple things about Gen Y.

SPEAKER_08: You're a Gen Y guy, but you want to win. You want to build a big company. Oh, yeah. Yeah. We're here to build something big. But a lot of the kids in your generation, kids, now adults, a lot of the adults who grew up in Gen Y, they don't have this desire to be rich, to do well, to make a lot of money, to build a big company, to have a legacy, to have power. Like, power, money, greed, success. Like, it doesn't seem like these are drivers like they were in the 80s.

SPEAKER_154: And I think maybe it's a function of them being content. You know, they can work enough to get where they want to get, and they're happy getting

SPEAKER_34: off early and hanging out with their buddies and drinking beer and playing pool. And if that's the case... Not good enough for you. No, I wouldn't hire them. But I can't...

SPEAKER_87: If that's what they want, and they can get by doing that, it's not... It's a distinct problem, though. I mean, it's a distinct trend. It could be. I don't have the perspective to see it change.

SPEAKER_34: But I do... You know, I have lots of smart and ambitious friends, and I see them sort of going for it. So I think it hasn't gone away. Right. But I think we're also rich enough as a society where people are, you know, like, hey, I got where I want to get.

SPEAKER_08: Right. And my parents have enough money. I have enough money. Or I can work three days a week. Why would I work five? Yeah. And so for you hiring people, how do you filter them out? How do you know if the person is like, I care about my lifestyle more than I care about this

SPEAKER_88: company? Because if somebody comes to you and says, I care more about my lifestyle than this company,

SPEAKER_85: you can't possibly hire them. You don't have enough ammunition to have that level of apathy at your company.

SPEAKER_31: Totally. And it's a cancer, isn't it?

SPEAKER_34: And it's a balance, right? If someone says, you know, I want to go home to have dinner with my wife, it's pretty reasonable. Right. But at what time? Yeah. At what time? Right.

SPEAKER_366: You want to have a 530 dinner? So it's all about coming back. It's all about, I think, the self-selection that I think, you know, we have a culture

SPEAKER_34: that has that passion and has that pride in our work. And we will self-select for people and we will attract those people who also have it.

SPEAKER_51: And, you know, we can't have people that don't. Right. So you don't have to worry about it.

SPEAKER_405: I think it's it's they would get they would get driven out of the organization pretty quickly. They get chewed up. And it happens in my company.

SPEAKER_08: It becomes uncomfortable if they're an underperformer in a group of performers.

SPEAKER_88: It's like trying to run with a group of people running at seven minute miles when you run a nine. It just gets very uncomfortable very quick. Yeah. But you don't have that.

SPEAKER_75: But you do have friends from like high school who, you know, who are just like, I want to go like save the migrant workers in China or I want to go build a well and I want to write a book and I want to do a YouTube channel. Like you have those people when you go to reunions and stuff.

SPEAKER_34: I think I definitely know of those type of people. I mean, we've also grown up where you've been told that that's a reasonable thing to want to do. Right. And that work should be sort of something that is always emotionally rewarding or, you

SPEAKER_51: know, all those types of things that. How much of your job is emotionally rewarding on a percentage basis?

SPEAKER_31: There's a lot of it. It's just a grind and you've got to do it. What percentage grind to emotionally rewarding and makes you feel like you're a gold star does it feel like right now is being CEO of a venture-backed company? I think most all of it is a grind.

SPEAKER_85: It's a freaking grind. Yeah. They sold you, your generation, a false bill of goods.

SPEAKER_31: Yeah. In a way. Yeah. Do you feel that way or no? I think a lot of people get to the working world and are like, whoa. Holy cow. This for 40 years? Right. Or this for 60 hours a week?

SPEAKER_85: Yeah. Or 40 hours a week? Yeah. I mean, I hire people for 40 hours a week, 50 hours a week. They're like, I have to do work. I mean, they're like, can I just check my Facebook page and order stuff on Amazon and move my Netflix queue around?

SPEAKER_08: You know, like, I mean, it happens rarely now, but I had somebody at work watching a Netflix movie. They were watching the movie The Prophet, which has subtitles, at work. What would you do if one of your employees was watching them? I want to see if we're on the same wavelength, Marco.

SPEAKER_366: Well, I would be surprised, and it would depend on what they were. If they had to do a data entry task, and they were, instead of, you know, listening to music, they were listening. The movie has subtitles. Yeah. So, at that point, there's no way around it. They shouldn't be doing that. They can't do that. Can you imagine?

SPEAKER_368: And I confronted the person, and they were like, yeah, no, I'm just listening to the background.

SPEAKER_75: I'm like, it's got subtitles. You're full of ball donkey. It's crazy. It's crazy.

SPEAKER_88: And so, looking at Google as a competitor, I want to get back to that, because I'm just

SPEAKER_434: curious.

SPEAKER_88: You guys buy traffic from Google? No. No.

SPEAKER_36: That doesn't work for your business? Buying?

SPEAKER_34: It will, but we don't have any need for it. You know, we're not trying to maximize revenue and sort of arbitrage, which is fine if you have a product that pulls people back and sort of has a lot of net promoter.

SPEAKER_154: I mean, AdWords is a business model competition, and we haven't focused on that side of our business a ton.

SPEAKER_04: AdSense is a business model competition. AdWords. AdWords is right. Yeah. So, when you're buying traffic, the person who wins is the one with the best business

SPEAKER_179: model. Yep. Interesting. Absolutely. So, you have to return the most per click. Exactly. In order to pay the most per click.

SPEAKER_02: Therefore, if you were a site that wanted to focus more on the experience and-

SPEAKER_34: No, that is something that will pay dividends, right? Because that'll get people to pull back. That should get more dollars out of them. That should create a more valuable sort of experience. But we haven't- that's not something we've focused on yet. Yeah. And at a certain point, we will absolutely focus on AdWords because- Right.

SPEAKER_150: But how can you beat them because now Google's using their own traffic to build their own competing products? Yeah.

SPEAKER_08: I mean, look at this here. This is the Google Advisor I brought up before we were just talking about. And as you can see now, they're like, oh, yeah. I mean, this used to be the organic search results of like, here's, what was that, Bank Rate and stuff like that? And they were like, Bank Rate spent so much money with Google that Google decided, well, why don't we just create Bank Rate? And look at this. You can contact the mortgage broker and everything. They've ripped off, disintermediated. How many businesses here? CDs, checking, savings, credit cards, mortgages.

SPEAKER_127: I mean, they have just annihilated the entire, that whole industry. And they bought the company to do what Kayak does, right?

SPEAKER_36: Yeah. The ITA. Oh, ITA? ITA, yeah. ITA, I mean, they have a, they have a hotels now. They do hotels?

SPEAKER_187: I didn't even know that. I think it might even be slash hotels. You're kidding.

SPEAKER_266: No. No.

SPEAKER_187: But do a hotel search.

SPEAKER_452: They also do airfares too, I think. I've heard.

SPEAKER_454: Here it is. Google Hotel Finder.

SPEAKER_97: Oh, my goodness. When did they put this out here? Oh, it's a Hotel Finder experiment in light gray. Yeah. Look at that, folks.

SPEAKER_456: Oh, my goodness.

SPEAKER_97: It is, that is unbelievable.

SPEAKER_51: And, you know, in some sense, you can't blame them because they're working hard to please the user.

SPEAKER_34: But they are going to, they're naturally at odds with their core mission now, which is to be the best search engine. Because now, you know, a marketer from Hotel Finder is going to say, hey, guys, give me some better placement.

SPEAKER_36: I need more traffic. And they're going to say, okay.

SPEAKER_88: But when you type in Hotel San Francisco, you don't see anything about this Google thing. Yet. Yet. But when you type in, like, there's no Google Hotel Finder here. But if you type in Chinese food in San Francisco, that's a different story. Then you're going to get San Francisco.

SPEAKER_462: Look at that first result. You're going to get local businesses. I mean, that's why they tried to.

SPEAKER_314: Look at Yelp ads. They tried to buy Yelp. And they didn't. For that reason. Yeah.

SPEAKER_34: Crazy. Batsaga. I mean, there's, the way we see it is that they're starting at the biggest end of local. Hotels, storefront businesses. And we're at the extreme, sort of, most fragmented end of local.

SPEAKER_75: In the worst case scenario, if you can't build an extremely large, sustainable business like Angie's List has, I guess that would be the ultimate goal.

SPEAKER_119: Yep. But the fallback is you get bought by Google, Microsoft, or somebody, and you have your shareholders get a return.

SPEAKER_51: Yeah. And we're creating something of value. And lots of people will be interested in it. So that's how we think about it. We just work hard towards that end.

SPEAKER_119: Red Beacon got bought by Home Depot.

SPEAKER_88: And a lot of local companies are getting bought. We just talked about Yelp. I'm assuming people have tried to buy in the business so far. I mean, I'm an angel investor, so I don't have any inside information. You haven't told me anything. But you must have had people buzz around.

SPEAKER_472: People have sniffed around. Sniffed around.

SPEAKER_34: Yeah. And I think they, for right or wrong, understood that we were pretty heads down at this point. And I think we will continue to be.

SPEAKER_36: And, you know, we'll obviously evaluate what comes our way. But you have a fiduciary responsibility to the investors to look at everything.

SPEAKER_57: We'll take a look. Certainly. Yeah. Which is a way of saying, like, we're not selling. We're building value.

SPEAKER_08: I hope you guys don't sell early. I mean, it's just such a big problem you're solving. And it's such an elegant solution already. I really hope that you guys can.

SPEAKER_476: And now we have the time and money and people.

SPEAKER_56: Well, the start of the team to really do it right.

SPEAKER_04: Yeah, I mean, I guess the question is always going to be quality versus the size of the marketplace. And that, to me, is where I'm torn with your business. If you ask me for advice on it, I don't know what advice I would give you.

SPEAKER_08: Because, in a way, to be more successful, the quality has to go down a little bit in terms of things. But, in a way, as a customer, as a higher-end customer, I want to see quality, quality,

SPEAKER_36: quality. And you might not be our perfect customer. I may not be.

SPEAKER_34: You know, it's sort of like, why do people go to Craigslist? Because they know they're going to find what they're looking for. And we want to deliver that same experience. You know, why do you flip open the yellow pages? Because they have what you're looking for. You know, you, as a more high-end consumer, might not start there.

SPEAKER_51: Right.

SPEAKER_36: And maybe... Well, what's the service for me to get a gardener? You know? Like, you guys will have it, but... It depends, you know, how fancy your gardening needs are. Yeah, I guess so.

SPEAKER_105: And we have very high-end people. Absolutely.

SPEAKER_08: But I think we don't have... I guess the hourly price here, when you start looking, when you start doing the filtering, I'm looking at the advanced search here, which, you know, I guess if I put it, there

SPEAKER_57: are people here for $150 per hour to do feng shui and gardening coaches and stuff like that. So... Yep.

SPEAKER_31: I guess your gardening coach... Yeah, that's a... That's a Northern California service. This is... Yeah, this is for the people who...

SPEAKER_85: Yeah, and you know what's interesting? We picked the... I just...

SPEAKER_57: I answered my own question, which is when I put the gardeners above $100 an hour, which gardeners in LA are probably $10 an hour. You probably have $10 an hour gardeners in there, $15 an hour gardeners. And this person, look at all their credentials, right? Facebook verified, thumbtack reviewed. I mean, he's got everything. Yep. And he's a coach for $150 an hour.

SPEAKER_53: And this is something that somebody in Marin or Chiburon would pay this money. Absolutely. But few people below there. Totally.

SPEAKER_34: And that's what we want to do. You know, we are peer-to-peer in that sense. Because we want to help the high-end people find the high-end providers and the sort of cost-conscious people find the cost-conscious providers.

SPEAKER_88: Hey, Marco, you're as impressive as when I met you. Continued success. Everybody check out Thumbtack.

SPEAKER_04: Not just because I'm an investor, but because I really do believe in the vision. And I really believe in you as an entrepreneur. I think you're going to do fantastic. You got your head on straight. And you really... You have a tremendous work ethic and you see it in the product. And really, all the people I've seen who've succeeded, it had nothing to do necessarily with talent. It had to do with a work ethic and inspiring the people around them.

SPEAKER_36: That's really... Well, thanks for backing us. And thanks for having me getting it started. I mean, listen, I write the smallest check of the whole group. But, you know, hopefully I can...

SPEAKER_88: Hopefully, if I tweet, have I been a good angel investor? You have been. I hope I've introduced you to... Definitely.

SPEAKER_486: I introduced you to a couple of good people. When I introduced you to some...

SPEAKER_472: I introduced you to some famous people. You introduced me to Marc Andreessen and to Ruloff. Wow. And Sequoia.

SPEAKER_20: And then when I send that email, do they get back to you immediately? Definitely. I met with both of them. You're kidding.

SPEAKER_51: I met with Ruloff and Andreessen. I met with Ronnie at that time. Oh, yeah. Okay. Yeah. Ronnie Conway.

SPEAKER_20: But that's good to know.

SPEAKER_489: Because, you know, I send these intros and I don't know if people take me seriously.

SPEAKER_51: And that's like what has helped, you know, build sort of my relationship with these VCs is people like you, you know, saying, hey, you should talk to this guy.

SPEAKER_97: Yeah. And I put a check in.

SPEAKER_08: So, if I invested 50 or 25, maybe you should consider putting in two or three. And Ruloff, you know, is going to say yes to the people that you introduced him to. Yeah. He's not going to say no to a meeting if I ask. And that's true. I just wonder if, like, they get back to you and, you know, if I have. Ruloff was awesome. Was it good? Yeah. He's a smart cat, man. I can have him back on the program. But he really. He's on your board, right? He is on the board of Mahalo.

SPEAKER_119: And what's interesting is, you know, Mahalo, we built a very large business around the SEO stuff, got absolutely slaughtered. And then last year, I was like, you know what? I told them, if you want to get off the board while I try to rebuild this mess, you know,

SPEAKER_88: with the train wreck of SEO and we lost two thirds of our traffic and you want to go focus on Tumblr or Square or all these things that Evernote, all these amazing things. And, you know, I understand if you want to put a junior guy on the board or you guys want to get off the board and just observe, I'll send you the materials and I'll rebuild

SPEAKER_119: this business into the mobile business, educational video thing I have. And he said, no, I want to see it through with you.

SPEAKER_09: I want to get over the finish line with you.

SPEAKER_136: And, you know, that means I'm taking one of his eight or nine board slots.

SPEAKER_150: He could have easily put a more successful business or currently more successful business in that slot. He didn't.

SPEAKER_119: Which is, I guess, you want to know you're in people who are there for the long term.

SPEAKER_04: Hey, thank you to our sponsors on the program and really can't say enough about my friends at CNET, CBS Interactive, and they've just been tremendous hosts. And Stephen Beecham, you are a flawless engineer producer. Thank you so much. Thank you very much. What kind of plug?

SPEAKER_88: Can I give a, I feel like every time I'm here, I mean, I do have this, I do position the CNET there really nicely.

SPEAKER_499: I'm going to start pushing the microphone away from me so you can see the CNET logo.

SPEAKER_228: But what's happening at CNET? What's something hot and awesome?

SPEAKER_21: Okay, well, every day you can come to cnet.com slash live and we do a live broadcast starting at 9 a.m. Pacific time. 9 a.m. Pacific. And we basically do technology podcasts, news, cell phone news, tech news. So come every morning. Good way to.

SPEAKER_504: And we do about a three-hour block a day.

SPEAKER_503: Three-hour block. Yeah.

SPEAKER_75: CNET.com slash live. Thank you to my friend Jim Lanzone.

SPEAKER_127: Another Thumbtack investor.

SPEAKER_506: Jim Lanzone's an investor?

SPEAKER_127: Oh, yeah. Oh, he's a good friend of mine. I didn't realize we were both. How did you meet him? Friend of a friend? Yeah.

SPEAKER_54: It's like when you get the first couple of people, then they want their friends in and they want their friends in.

SPEAKER_85: Yeah, that's what I want to do. Once I get in, I'm like, you know what? If I'm in on this, if I can get five more of my friends who have more clout than me or more cash than me or more influence than me, that's good for me.

SPEAKER_509: Yeah, absolutely.

SPEAKER_85: And so it is a sort of Silicon Valley is a self-fulfilling prophecy in a way. It's like if you get one person to believe in you and then it starts spiraling, you get more resources and you can keep spinning that story and getting better. I mean, that's sort of what's happened with you guys. Yeah.

SPEAKER_08: More resources, more ability to spin the story. Building gravity. Building gravity. I love that.

SPEAKER_85: You come up with that?

SPEAKER_510: I guess.

SPEAKER_85: Is that yours?

SPEAKER_511: I guess. Yo, building gravity. You heard it here first, folks. We'll see you next time on This Week in Startups.