A year after Thumbtack raised $100 million to expand its marketplace for home services and other professional freelance jobs, the startup is making its first acquisition to beef up its engineering and product teams. It has acqui-hired talent from HeartThis, an app with 2 million users that lets consumers shop across multiples stores from a single portal.
You might think that this is a sign of e-commerce consolidation, but HeartThis and Thumbtack sit at opposite ends of the marketplace spectrum, respectively covering products and services, and at least in this case never the twain shall meet.
Thumbtack is not acquiring HeartThis’s product or technology. It will instead take on four people, including co-founder and CEO Andrew Gadson, to work on different projects, likely first starting with mobile services. (The two remaining HeartThis employees, co-founders Jennifer Gee and Lance Tokuda, have moved on to pursue other things, Gadson told TechCrunch.) Thumbtack itself employs around 125 people in San Francisco — have a look at its offices here — plus another 230 phone support people in Utah.
The terms of the deal have not been disclosed but at least part of it is in shares, with HeartThis investors becoming investors in Thumbtack.
“They’re happy because they believe in us,” Thumbtack co-founder and CEO Marco Zappacosta said of the HeartThis investors. “They are now betting on Thumbtack.”
HeartThis, founded in 2013, had raised $2 million with investors including Freestyle Capital, 500 Startups, Founder Collective, Google Ventures, Social Starts, Tekton Ventures, Tom Moss, and Karl Jacob. Thumbtack, founded in 2010, counts Google Capital, Javelin Venture Partners, Sequoia Capital, Tiger Global, Draper Associates, MHS Capital, and a long list of angels among its investors. It has raised nearly $150 million to date.)
Zappacosta says that Thumbtack looked at a dozen different teams for potential talent acquisitions before it settled on HeartThis. There will be more acquisitions to come, he says.
Could that lead Thumbtack to more fundraising? Quite possibly. “We have almost all of the $100 million we raised in the last round still in the bank,” Zappacosta says. “But we are being smart and opportunistic. We are in a thankful position where raising money is not a challenge for us and you can never say never. The capital markets are more welcoming of our story and those like ours like never before.”
The reference he’s making is to the boom we’ve seen of online marketplaces where people are coming together to sell and buy services and goods from each other, with the cream of the that crop — companies like Airbnb, Uber, Postmates and Wish — attracting hundreds of millions of dollars in venture funding to scale up. Thumbtack stands among them as one of the anointed leaders in its particular brand of marketplace, linking up home and other professional freelancers with individuals requiring their services.
Thumbtack’s bigger aim is to grow its engineering and product teams as it continues to work on building out its platform.
Specifically, while Thumbtack now covers some 1,000 categories of services for hire — from electricians through to language teachers, DJs and personal trainers — it now wants to build more tools to improve and extend the experience for the contractors who market themselves through Thumbtack.
“Today, we’re focused on introductions between buyers and sellers, consumers and contractors,” he says. “Over time, we plan to expand to facilitate more interactions, with services like CRM, invoicing, product management software and more to create an end-to-end solution.”
The idea is that this can help Thumbtack be more competitive against rivals (of which there are many smaller ones, and some larger ones like Angie’s List and Yelp, and some very big ones like Amazon and Google), and also potentially help the company expand its revenues per user.
The company matches consumer requests for jobs with a shortlist of potential contractors, and it makes revenues by charging contractors on a per-intro basis to those would-be clients, with that fee varying by category. The company has more than 200,000 professional contractors signed up (up from 75,000 a year ago), and it says that it has sent $1 billion of business though its platform since 2010, with the current rate of projects matched with professionals at over 5 million/year.
Zappacosta says that the company plans to add more categories over time, including child and elderly care and automotive services.
But those categories are not likely to include physical products any time soon, he adds. In other words, none of the technology developed by HeartThis is making its way to Thumbtack.
That’s not to say that tech and product will be dying. HeartThis picked up 2 million users over its life, and Gadson says that for now it will continue to operate as normal as the founders figure out the longer-term fate of the product.
“We built one of the highest rated shopping apps, but we didn’t see a clear path to become a dominant player in online and mobile shopping,” Gadson explains. “We’re still in discussions about what happens next, and we’ll keep users abreast of what that will be.”