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With Series A funding from Benchmark, Prefer takes the wraps off its new marketplace

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Between Thumbtack, Yelp, Angie’s List and Amazon, it wouldn’t appear that the world needs a new platform that matches customers with service professionals. That’s not the way Julio Vasconcellos sees it, clearly. Vasconcellos has spent the last year-plus working on a services platform called Prefer that relies exclusively on trusted referrals, replacing the wisdom of crowds with the wisdom of one’s friends when it comes to hiring a babysitter or accountant or housekeeper. In fact, if Prefer has its way, it will eventually become users’ go-to source for every service professional with whom people tend to have a close, ongoing relationship.

It’s an intimidatingly tall order, but Vasconcellos would seem to have the right experience. After graduating from Stanford with a business degree, the native Brazilian headed home to help grow Facebook’s reach in Brazil as a country manager. Eight months later, he was at work on his own startup, Peixe Urbano, Brazil’s first online daily deals company. In 2014, the company sold to China’s Baidu for undisclosed terms. Vasconcellos — who remains on its board — then joined early Peixe investor Benchmark as an entrepreneur-in-residence, where he was soon creating Prefer with venture partner Scott Belsky. (Belsky is Prefer’s executive chairman.)

We talked with Vasconcellos this morning about where the service is available, how it works and why he thinks it can pierce an already noisy landscape. Our chat has been edited for length.

TC: You’ve been working on this for how long?

JV: We’ve been working on it for more than a year now, and we’ve been running a beta program in New York since the end of last year. The service is still only available in New York and that will remain the case for the foreseeable future. We want the network to grow organically and to grow the right way, and I think once we feel like we’ve gotten to the right size, we’ll think about [next steps].

TC: Benchmark led your Series A, which you never announced. How much did you raise and when did that round close? And were there any other investors involved in the deal?

JV: It closed almost a year ago, and there were other friends and seed funds that Scott and I knew from over the years [that participated].

TC: Are you raising a Series B now? How many employees do you have?

JV: We’re not looking for any funding. We have 13 employees in New York and San Francisco. Our product lead was our first product manager at Peixe. Several people from our five-person engineering team are former mobile leads from Tumblr. Our founding designer was the first designer at Twitter. We have a lot of great people who’ve worked on marketplace and network products.

TC: How does Prefer work?

JV: From the perspective of the client, you join the platform, usually because you’re looking for someone where trust matters a lot. Once you join, you connect to friends of yours on the app — through your address book but also because we recommend friends you might know through your existing network. You in turn can recommend professionals you know.

TC: Is this mandatory? Do you ask people to recommend a certain number of professionals as they’re joining Prefer?

JV: We’ll basically prompt them to recommend professionals they know during the on-boarding process. You aren’t required to do this; it’s more a nudge. We’re trying to foster community and that whole get-some-give-some attitude.

TC: How did you seed the platform? How many people are currently using it?

JV: We just reached out to people we know in New York and asked them to please download the app and help us out. [Laughs.] Then they reached out to their friends and invited them, and so on and so forth. We haven’t disclosed any numbers [relating to users]. It’s still early days.

TC: It’s an interesting concept, yet I can imagine people being hesitant to share too broadly their trusted service professionals. I love my sons’ babysitter. Because I trust her, I’m not sure I’d want to advertise her services far and wide.

JV: I definitely get it. We have kids, too. But the number one category on Prefer right now is babysitters. Because people are connected to close friends and family members on the platform, they’re open to sharing that kind of information. They know, too, that their friends will also be sharing their babysitters.

TC: Which raises another point: How big is this online circle of trust? Who can see the professionals who are recommended?

JV: It’s a friending model. Both sides have to opt in. So for you to see my service providers and for you to see mine, we both have to opt in. The basic assumption here is that users will have access to a smaller number of options but much higher-quality options.

TC: And how are transactions between clients and service professionals handled?

JV: We provide you with the tools . . . so easy communications, booking, and then you just pay with your credit card. We take anywhere between 3 percent and 5 percent of the transaction revenue depending on a few things. Whenever we generate new business for a professional, for example, it’s five percent, but we’ll take less when it comes to ongoing transactions.

TC: And for the age-old question, how do you keep these professionals on the network once they’ve found comfortable new relationships with clients?

JV: A lot of open marketplaces charge between 20 and 30 percent of each transaction. If you’re a babysitter or dog walker, that’s a ton of money, so once you have a client, you might try to take them off the platform.

The reason we take a nominal fee is because we don’t want to gouge professionals on cost. We also want them to be able to use us as a dashboard for how they run their business and we have a separate app for them that allows them to do that. Not last, every time a professional is recommended on the platform, it’s like free word-of-mouth marketing, so it’s in their interests to work on the platform. The longer they use it, the more potential clients they can generate.

TC: Do you establish tiers of pricing or do you let the service providers name their price?

JV: We let people highlight who they are and why they charge what they do, including letting them set their own prices and create their own service menus. We don’t dictate pricing in any way. In fact, they’re more than welcome to negotiate one-on-one with customers if they choose to do business together.

TC: You’re entering into seriously crowded territory here. Why do it?

JV: There are a lot of valid ways for you to get leads and connected to commodity-like professionals. But if I look at my Facebook feed or group text messages, I’m still getting ongoing requests for good recommendations for more trusted service professionals. The notion of trusted referrals has probably existed for hundreds, if not thousands, of years. But [automating the process] is something that no one has really cracked yet.

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