How the Former CEO of Digg Plans to Win in Local
It’s rumored that Amazon wants to expand into local services, but a handful of former executives might beat the ecommerce giant to it. Earlier this year, Matt Williams, the former CEO of Digg and an Amazon vet, hooked up with a few other former Amazonians to found Pro.com, a local services marketplace that raised $3.5 million from investors that include their former boss Jeff Bezos.
The team spent months aggregating, and analyzing the amount which thousands of local service providers charged for projects like painting a porch or installing closet. Then, they used that data to forecast the cost of each job in each market for each provider — providing pricing transparency in an industry where consumers until now have often only found the price of a job after meeting with the provider.
Street Fight caught up with Williams recently to talk about what local can learn from the early days of ecommerce, the pricing problem in local services, and why industry partnerships may be a better indicator of success than you think.
There’s been an uptick in entrants in the local commerce space recently, with new and existing firms alike looking to cash in on Uber and Airbnb’s success. Given your experience with traditional ecommerce, where does this market stand today?
I truly think that we’re just scratching the surface. We’re in kind of at minute-one of day-one for this industry of on-demand local services and I truly liken it to the ’96 to ’99 era of ecommerce when you had a vertical play for every single category imaginable from pets to drug store items.
Ultimately, there was substantial consolidation. Those who built the right infrastructure or the right supply chain or the right kind of ecommerce experience ended up either acquiring competitors or winning outright. That’s the exact same thing that’s going to happen with local. It’s probably going to be over a decade frankly, but you’re going to see all this innovation over the next several years in on-demand local services, category by category, vertical by vertical, and it could be kind of years before you see any kind of a category leader emerge.
Let’s talk a bit about the local service category in particular. How do you think about Pro.com’s market?
From a market perspective alone, services in and around the home — stuff like home renovation, remodeling, maintenance — is a $275 to $315 billion dollar category. I think over two thirds of that is not the do-it-yourself, paint-your-own porch activity. So the in-and-around-the-home category is just absolutely enormous and it includes everything from fixing something to actually full-on home remodel.
There’s been some backlash to Uber’s valuation recently, with some questioning whether it can move beyond just a taxi service. Do you see Uber, and others in the space, as a transportation company, tied to its vertical, or a broader technology platform that could dramatically expand its addressable market?
I very much view Uber as a technology platform, which is solving of the complexity of the supply chain of getting a car and getting where you need to go. And I very much view what we’re doing as technology platform, solving the problem for the customer from understanding price through to getting a pro whose highly qualified, all the way through the transaction itself in terms of getting the pro to my house on time. There are just very few companies that are doing that in solving that entire supply chain.
From a competitive standpoint, what differentiates Pro.com’s product from marketplaces like Thumbtack?
We’ve looked at a number of different models and what we learned was that pretty much every service that’s out there is trying to solve the front-end of this equation: help me find a pro. But there are very few companies that are focused on being able to help more difficult propositions such as price that will help drive that decisions.
For services, the purchase process is generally backwards: you have to go call a pro and find a pro and then get a price. What we’ve learned is that customers actually want to understand price but they can’t do it easily today because they have to go find a pro and everybody out there that’s got to survey pros are mostly focused on having a lead generation approach.
Outside of product innovations, what else will help separate the winners from the losers in this busy sector?
In general, I think differentiation will come through what’s unique about a companies product for consumers as well as the network that get sets up in terms of the depth of and breadth of kinds of network.
But I also think that there’s a significant benefit in partnering in this domain with companies that offer complementary services. We just recently announced a partnership with Build.com where to get your entire home project priced and then done. It’s a combination of physical products in the case of that you need a lighting fixture or whatever in addition to the services that are being performed and I think that part of where you’ll see success in terms of the customer experience is making it very easy to kind of get the entire project done from end to end with one set of providers that are integrated.
Steven Jacobs is Street Fight’s deputy editor