Experience And Scale Matter In The Home Improvement HaaS Space

By Patrick Moorhead - November 30, 2015
I have been covering the home improvement HaaS (humans as a service) space for a while now, and if there’s one thing I am evangelizing is that the notion of experience and scale matters. I know that sounds basic, but that’s the reality, and one that is challenged by some. I am all for changing everything about anything, but when it comes to human nature and trust, these are difficult to build an algorithm around, host at Amazon.com AWS and call it a day. Scale is obvious as companies need a wide swath of quality data and need powerful cloud systems to process it in real-time and provide the most relevant results to the end user. This is true at Uber, Instacart and isn’t about just taking your big idea to the Apple iPhone and Amazon.com AWS. All of this thinking came to a head recently when I read about the unfortunate layoffs of 90 employees at Porch and reports that key executives “bolted”. The Porch situation, while horrible, is nothing compared to the overall amount of companies who have come and gone in the home improvement space.  Here are just a few: OK, so you get the idea. The home improvement HaaS business is tough with a lot of churn, investment and closures. If you read the details of the closures, it is really quite telling. The best example of the challenges of the space came from Jim Brown, founder of Haven, in a blog post on Medium. Brown’s candor and guts are respectable and he summarizes his learnings as, “I believe we underestimated the complexity of creating a consumer focused business and overestimated our ability to build such on a limited budget.” That’s makes a lot of sense and I can personally relate to consumer web ventures that ended in a lot of layoffs. I was in one at AltaVista. Through the analysis and interviews I have done on HomeAdvisor (owned byIAC/InterActiveCorp ) and companies that have exited, cash, patience, and experience appear to be ingredients for long-term success. So how does HomeAdvisor stack up? Let’s look at the stats, provided to me by HomeAdvisor:
  • $1B investment
  • $360M in annual revenue
  • 35M homeowners served
  • 100,000 approved home service providers
  • 5M unique users per month
  • 1M projects with cost data
This absolutely leaps and bounds above even their nearest competitor, Angie’s List. I reached out to Chris Terrill, CEO of HomeAdvisor (owned by IAC/InterActiveCorp ) and I think he had some wise words for the investment community about getting into the space. And a bit snarky, too, which I appreciate. Hi-res-Chris-Terrill-1200x1800 HomeAdvisor CEO Chris Terrill (Photo credit: Chris Terrill) “On the surface this sector seems so simple, and akin to a quick gold rush opportunity,” In reality it requires strong operational focus, a lot of cash over a long period of time, and the right mix of expertise.  Many VC’s are looking for the Unicorn in this space that can grow quickly, build a qualified network virally and do it all with a relatively small initial investment. “ I think even Google now realizes this now. In fact, Google just inked a deal with IAC/InterActiveCorp’s  HomeAdvisor enabling homeowners to book appointments with home service providers via Google search results. HomeAdvisor appears to be the only HaaS provider in the sector so far. I can’t say yet what this means Thumbtack.com, backed by Google Capital.  Who knows, maybe this leads to an even cozier relationship between Google and HomeAdvisor in the future.
Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.