I have become recently fascinated with what some have referred to as “People as a Service”. Because “PaaS” was already taken as a tech acronym as “platform as a service”, I’ll call it “HaaS”, or “Humans as a Service”, for short. HaaS refers to the growing business of digitally mechanizing and monetizing people’s fractional time. The one’s you’ve heard about on a national level are Uber for rides, or if you live in Austin like me, Burpy for groceries or Favor for, well, any favor like picking up things at a restaurant or at nearly any store. One major HaaS segment, a huge one, is home repair and improvement. Right now the press has keyed in on the big guys like Amazon.com who is entering the space or the small upstarts like Thumbtack, backed by Google Capital, but I believe companies with an established track record like IAC’s HomeAdvisor are the most interesting ones to watch. I had the chance to interview Chris Terrill, HomeAdvisor’s CEO, and I’d like to tell you a little bit about HomeAdvisor and why I think they are unique. A little background first.
HomeAdvisor is an operating business of IAC, a $6B conglomerate run by the iconic Barry Diller. I didn’t even know it until I talked to Chris, but IAC also owns big digital brands I’m sure you’ve heard of like Match.com, Tinder, and OKCupid. These three IAC services are in its most simplistic form, using digital technologies using proprietary algorithms to connect like-minded people with other like-minded people who want the same things. While HomeAdvisor isn’t about connecting two people on a date, it’s about connecting a homeowner with a need with a service provider with the right skills and experience.
HomeAdvisor isn’t a startup, has been in business over 15 years, and based on any data I can get ahold of, is the largest in its space. You may remember them as ServiceMagic, but they had a brand change in 2012 to HomeAdvisor.
By the numbers, HomeAdvisor is impressive, and provided me with the following stats: $300M+ annual revenue, 30M homeowners (lifetime), 90K approved home service providers, 2.3M reviews, 5M+ unique users per month and 1M+ projects with real cost data.
When you consider that the entire U.S. homeowner population is 115M, this means that approximately 25% of all homeowners have signed up to use HomeAdvisor (not counting duplicates).
Yes, that surprised me, too. So how has HomeAdvisor managed to get such a lead? Many reasons.
Experience matters in home improvement and HomeAdvisor has the most of it, according to my data. Not to diminish the skill required to pick up and take me to the airport (Uber), shop and deliver my groceries (Burpy), or pickup Chick-Fila for my son (Favor), but home improvement is different. It’s one thing to meet me at the door with goods ranging from $10 to $300. It’s another thing coming inside your home to do a week-long $10,000 bathroom remodeling. You would want someone screened criminally, financially, skills, experience, and that’s what HomeAdvisor does.
HomeAdvisor is also about “have it your way” service. They let you “shop” three different ways. Instant Connect gets homeowners immediately connected to talk to a professional. This may be good for air conditioning service where you may have some valuable discussion before you even know what’s wrong. ProFinder is where homeowners tell HomeAdvisor details about the project and they will link you with four qualified pros. This would be good for some kind of major project like a remodel. Then there’s Instant Booking which enables instant booking with a pro. This would be best for something simple that you need done fast, like a leaky faucet.
Then there are HomeAdvisor’s tools…. Because HomeAdvisor has enabled tens of millions of projects since 1999, you can imagine all the historical data they have on service provider reviews and project costs. That helps answer two very important questions: “approximately what should my project cost in my part of the country” and “which service providers have the best reviews” on those projects. HomeAdvisor’s TrueCost Guide has over 1M projects in their cost database with local and national information on 300 different kinds of projects and the data is updated real-time. The local angle is important as a weatherproofing job in Maine is a lot different than one in Arizona. National data is important, but not nearly important as local data. Finally, HomeAdvisor has 2.3M reviews that have been verified as “real”.
I have used HomeAdvisor many times as well as competing services like Angie’s List and Google-backed Thumbtack and I do personally see a difference in the experience. I’ll just touch on screening for now. I like HomeAdvisor’s approach to screening every one of their service provider owners and principals. No process is ever perfect, but HomeAdvisor’s screening process appears to be the most diligent of anyone. According to their website, they screen before (not after) they get in the HomeAdvisor network for state-level licensing, sex offenses, civil judgments, criminal offenses, state business filings, and identity verification. This is very expensive and very time consuming. HomeAdvisor has an entire department to do this. That is different from other services and personally important to me and my family.
I am looking forward to how home services HaaS plays out. I don’t see any new-comer Uber style attack being successful as there is already a federated home service provider system with HomeAdvisor. Disparate and warring cab companies don’t exist in home improvement. I don’t see a Google-based Thumbtack stealing the show either, either, given that it’s such a people-business who aren’t as wowed by technology. Nor does Google’s datacenter prowess or AI come into play. Maybe in the future as home automation takes off, but not now. My opinion on Amazon.com Home Services is similar to Google. Amazon.com has datacenter, technology and logistic prowess which are important, but not what can amount to revolutionizing the space like Uber did. Every home job is custom and unique and involves more people than it does technology and Amazon.com doesn’t deal well with a variable product. Amazon.com is really only fully up and running in four cities so far.
Hopefully you see why I’m excited in HaaS and IAC’s HomeAdvisor. HaaS is where the action is hot and home automation is an estimated $8B opportunity and is a real hot one. I’ll be digging a little deeper into some of HomeAdvisor and their competitor’s strategies and offerings in the coming months.