Late last year, ReachLocal founders Michael Kline and Zorik Gordon parted ways with the company and spun off a still-nascent local commerce project, ClubLocal, that both helped develop. Today, the long-time executives have relaunched the project as Serviz, an application that builds on many of the service’s core functionality. ReachLocal still holds a stake in the startup.
The startup has developed an local commerce application that allows users to book appointments with service providers in over 300 home service categories, including plumbing, carpet cleaning and appliance repair. Consumers can see the prices they will pay for home services in advance and also book an appointment anytime, from anywhere. Gordon, the company’s CEO, compared the service to Uber.
“If you think about that type of experience, we’re bringing it to more skilled services like plumbing and appliance repair,” said Gordon. “It’s just a fundamentally better, faster, cheaper, lower-cost and safer way to do this, and we think it’s going to revolutionize the market.”
The company partners with local “one truck” technicians, handling the marketing and booking process and subsequently provides smaller margins provide savings to consumers. In addition, consumers can review the technicians they work with, which guarantees quality control. Gordon said the fledgling company has provided home services to thousands of consumers since its soft-launch in July.
“The existing home service companies, the guys who have been around for 100 years or so, have unbelievably high markups. Consumers are really getting fleeced,” he said. “By creating a new middleman connecting consumers directly to the technicians, we’re able to fundamentally transform the economics of the space,” he added.
Gordon explained the average home services company makes consumers pay a 100 to 400 percent markup on parts and materials. Although someone may be paying $100 plus per hour, there’s a good chance the tech is only getting between $15 – $25 an hour. Gordon said Serviz brings the hourly rate for techs down to $40 – $60 an hour. He said at the end of the day, lower prices is what made companies like Amazon successful when online retail first exploded.
“We’ve really answered one of the biggest questions consumers have, which is how much is this going to cost,” he said. “Sure it was great to buy a book over the computer, but the real reason people did it was because it was cheaper,” he said.
The company faces stiff competition from a range of extremely well-capitalized competitors. Thumbtack has raised well-over $100 million to build a similar project. Homejoy and Handy, two startups initially focused on home cleaning, have raised $30 million plus funding rounds and are well positioned to move into other home services. Pro.com, a startup founded by former Amazon execs, has nabbed $17 million in as many months. And Amazon itself is rumored to be piloting its own booking service.
Gordon pointed out that home services is a trillion dollar industry, and he expects to grow quickly. In fact, he wants to see Serviz to dominate the home services sector in every single city in the world.
“The whole on-demand revolution is a really big story. You’re talking about a trillion dollars worth of services that are being done poorly,” he said. “Essentially everything that used to be in the Yellow Pages is all going to be moved to these new online brands. It’s still in the very early days, but I think we’re disrupting the business model.”
Mason Lerner is a contributor to Street Fight.
Hear more about disruption in the home services sector from Handy and others at Street Fight Summit in NYC on November 4th!