The Exchanges

Q then the final question is from Aliyah Busky at TaskRabbit, or formerly of TaskRabbit, who said that with marketplaces, your NPS is always going to be bad on one side of the equation. Either you make it great for the demand side with lower prices, And then you make supply side unhappy or vice versa. How do you think about that equilibrium of marketplaces and one side always being unhappy?

A I think that's bogus. I think that's definitely not true of Amazon. It's definitely not true of Airbnb, and it shouldn't be true of a service marketplace either. I think TaskRabbit's challenge is that it commodified the labor side of the platform, and therefore its main offer to the customer was speed and low prices. And in that sense, Yeah, it's, it's going to have a low MPS on the supply side. Our pros are earning 72 dollars an hour and are able to differentiate themselves on more than just price. Now, we obviously have complaints. It's not like we're perfect in any way, but I don't think, uh, structurally we are going to be in a position where we have to privilege one side or the other. I think that may be true in these more commodity services. So I think ride sharing could be one of these. Where, you know, if you ask me what I care about in a ride from my home to my office, like, it's as fast as possible and as cheap as possible, and unfortunately, that means the driver's going to continue to be squeezed, so much so that they're looking to replace the driver with software. In our marketplace, you're looking to hire a talented professional to do something you can't do yourself. Say, be your wedding photographer, tutor your child in the SATs, paint the experience, Mysterio of your home, and therefore, there's a lot of discretion that goes into it, and you're interested in fin…

AI assessment note: “I think that's bogus. I think that's definitely not true of Amazon.”

Q Okay, so your favorite book and why, what must I read?

A It's an impossible question. The book I'm reading right now, which I love, it's called The Wizard and the Prophet. It's by Charles Mann, who's a historian, and he wrote his book, uh, 1491 and 1493 about pre-colonial America, which were incredible, and this book is about the 20th century environmental movement and the two schools of Thought that emerged the sort of conservation environmentalism and the sort of techno optimistic sort of environmentalism. And it's interesting. He does a great job of not telling you sort of what's the right way forward, but just presenting the challenges we face when it comes to water, energy, and the like through the lens of these two approaches and these two men who sort of started these movements. It's a beautiful book.

AI assessment note: “The book I'm reading right now, which I love, it's called The Wizard and the Prophet.”

Q then the final question is from Aliyah Busky at TaskRabbit, or formerly of TaskRabbit, who said that with marketplaces, your NPS is always going to be bad on one side of the equation. Either you make it great for the demand side with lower prices, And then you make supply side unhappy or vice versa. How do you think about that equilibrium of marketplaces and one side always being unhappy?

A I think that's bogus. I think that's definitely not true of Amazon. It's definitely not true of Airbnb, and it shouldn't be true of a service marketplace either. I think TaskRabbit's challenge is that it commodified the labor side of the platform, and therefore its main offer to the customer was speed and low prices. And in that sense, Yeah, it's, it's going to have a low MPS on the supply side. Our pros are earning 72 dollars an hour and are able to differentiate themselves on more than just price. Now, we obviously have complaints. It's not like we're perfect in any way, but I don't think, uh, structurally we are going to be in a position where we have to privilege one side or the other. I think that may be true in these more commodity services. So I think ride sharing could be one of these. Where, you know, if you ask me what I care about in a ride from my home to my office, like, it's as fast as possible and as cheap as possible, and unfortunately, that means the driver's going to continue to be squeezed, so much so that they're looking to replace the driver with software. In our marketplace, you're looking to hire a talented professional to do something you can't do yourself. Say, be your wedding photographer, tutor your child in the SATs, paint the experience, Mysterio of your home, and therefore, there's a lot of discretion that goes into it, and you're interested in fin…

AI assessment note: “I think that's bogus. I think that's definitely not true of Amazon.”

Q Can I ask, in terms of the skill that you've practiced and honed, how do you really like to structure and run your board meetings? Is there kind of commonalities in how you view kind of effective board meetings?

A Yeah, I mean, there's sort of like three chunks. One is just the administrative part that just needs to get banged out at the start, so approving minutes, option grants, all the sort of legal procedural stuff. Then there should be a business update and sort of a financial component, but really it's about reflecting back how you did against the goals that you set out for yourselves. And ideally it's not so much of the reporting of like, here's what the number is, but much more about here's what happened. Here's why we exceeded, or here's why we fell short. Here's what we learned. Here's where we were wrong. And just providing that insight, which I think is honestly most valuable in preparing rather than necessarily the discussion that it fosters. And then the real meat of the conversation is a discussion around one, maybe two key strategic decisions that the company is facing. So it could be something about entering new markets, fundraising, thinking about a hiring plan, thinking about sort of a long-term product strategy, things that are going to play out over quarters and years that are really important to get right and think through ahead of time. And again, a lot of the value is in preparing for it, in thinking through Through the various options and the pros and cons, and then it's about getting real sharp on the answers and hearing the feedback from these people who have t…

AI assessment note: “there's sort of like three chunks. One is just the administrative part”

Q Can I ask, how did that decision affect the fundraising and the investor appetite, given the potential loss in the repeatability and sustainability of revenue coming in?

A Ah, so honestly, it catalyzed it. We raised our A in January of 12. We began testing sort of new models not much later in the spring of 12. By the fall, we had a very strong hypothesis on what it was being. We tested that out. And then finally, in sort of January and February of 13, we flipped the marketplace. And so February and March were the first months that this new model was rolled out nationwide. And we raised our beef from Sequoia six weeks later because they saw the potential in what we had done. And also, I think they recognized that, you know, this was a team that was willing to go for it. They were not, we weren't going to get stuck with sort of decision paralysis or get caught in a local maxima just because we were sort of scared of how to unwind that. And so that meta sort of fact, I think helped a lot too. Um, but you know, we're a marketplace, so no one expected or wanted us to have a subscription based business, which is great in a lot of context, but not in a marketplace.

AI assessment note: “honestly, it catalyzed it. We raised our A in January of 12.”

Q Can I ask in terms of kind of that one-on-one interaction, would you advise all founders to maybe have that external sounding board as a one-on-one weekly meeting? Or do you think maybe it's a very tailored individual circumstance?

A I think it can come in a lot of different ways, but I would definitely encourage founders to have a weekly or every other week phone call. Ours is 30 minutes. We often use 10 to 20 minutes. Sometimes we use the whole thing. Rarely we skip it, but it does happen, and it's just someone I trust a lot, someone who knows the business and cares about the business and has seen a lot and can help me honestly just move faster. I've never done this before, and so there are definitely times where I don't know what the range of possibility is, and so having him sort of fill in that gap Gets me to make a decision much faster than I otherwise would be able to.

AI assessment note: “I would definitely encourage founders to have a weekly or every other week phone call.”

Q Okay, so your favorite book and why, what must I read?

A It's an impossible question. The book I'm reading right now, which I love, it's called The Wizard and the Prophet. It's by Charles Mann, who's a historian, and he wrote his book, uh, 1491 and 1493 about pre-colonial America, which were incredible, and this book is about the 20th century environmental movement and the two schools of Thought that emerged the sort of conservation environmentalism and the sort of techno optimistic sort of environmentalism. And it's interesting. He does a great job of not telling you sort of what's the right way forward, but just presenting the challenges we face when it comes to water, energy, and the like through the lens of these two approaches and these two men who sort of started these movements. It's a beautiful book.

AI assessment note: “The book I'm reading right now, which I love, it's called The Wizard and the Prophet.”

Q Not at all, but I want to kick off today. So tell me, how did you make your way into startups, and what's the founding story for Thumbtack in a very succinct three to four minutes?

A Sure. So we kind of did what you're not supposed to do, which is decide to start a business and then go hunt for an idea. However, I think that actually gets a very bad rap here in the And it's a very tried and true method. You know, Amazon did that. Microsoft did that. And what I had coming into this was a relationship with a couple of guys who we'd worked together in college and kind of started this nonprofit together. We had a lot of fun doing that, but decided to sort of change industries, start a technology company and really go hunt for a big problem. Uh, we literally said to ourselves, you know, what's the biggest problem that we can solve with technology and one that we believe is inevitably going to be solved. And so we just started talking and talking about the world and sort of things that we thought were broken. And the observation that led to all of this was why is it so hard to hire a plumber? You know, when you think about it, the universe typically makes it very easy for you to spend money to get what you want. And yet here was this massive category. It's not plumbers. It's not just home services. It's all local services where you had to work hard to spend your money. And it wasn't because there weren't great professionals who are ready to do the work. It was literally a market failure, a problem of discovery that these two sides couldn't easily find each other …

AI assessment note: “The observation that led to all of this was why is it so hard”

Q Can I ask, in terms of the skill that you've practiced and honed, how do you really like to structure and run your board meetings? Is there kind of commonalities in how you view kind of effective board meetings?

A Yeah, I mean, there's sort of like three chunks. One is just the administrative part that just needs to get banged out at the start, so approving minutes, option grants, all the sort of legal procedural stuff. Then there should be a business update and sort of a financial component, but really it's about reflecting back how you did against the goals that you set out for yourselves. And ideally it's not so much of the reporting of like, here's what the number is, but much more about here's what happened. Here's why we exceeded, or here's why we fell short. Here's what we learned. Here's where we were wrong. And just providing that insight, which I think is honestly most valuable in preparing rather than necessarily the discussion that it fosters. And then the real meat of the conversation is a discussion around one, maybe two key strategic decisions that the company is facing. So it could be something about entering new markets, fundraising, thinking about a hiring plan, thinking about sort of a long-term product strategy, things that are going to play out over quarters and years that are really important to get right and think through ahead of time. And again, a lot of the value is in preparing for it, in thinking through Through the various options and the pros and cons, and then it's about getting real sharp on the answers and hearing the feedback from these people who have t…

AI assessment note: “there's sort of like three chunks. One is just the administrative part”

Q Can I ask in terms of kind of that one-on-one interaction, would you advise all founders to maybe have that external sounding board as a one-on-one weekly meeting? Or do you think maybe it's a very tailored individual circumstance?

A I think it can come in a lot of different ways, but I would definitely encourage founders to have a weekly or every other week phone call. Ours is 30 minutes. We often use 10 to 20 minutes. Sometimes we use the whole thing. Rarely we skip it, but it does happen, and it's just someone I trust a lot, someone who knows the business and cares about the business and has seen a lot and can help me honestly just move faster. I've never done this before, and so there are definitely times where I don't know what the range of possibility is, and so having him sort of fill in that gap Gets me to make a decision much faster than I otherwise would be able to.

AI assessment note: “I would definitely encourage founders to have a weekly or every other week phone call.”

Q What's the single best piece of advice given to you in the incredible thumbtack journey?

A Someone relayed to me at some point the Bill Gates quote that people overestimate what they can do in a year and underestimate what they can do in a decade. And that was always stuck with me. And actually I was reflecting on that recently, you know, with Dropbox going public, which was an awesome outcome, but you know, they've been at it for 11 years. And that was also YC's first company to IPO again after 11 or maybe even 12 years. And these are the two of the most premier brands in the Valley who've had incredible success and are full of talented people. And it took them a decade plus to achieve this, this outcome. And it's a reminder that building things at sort of colossal scale takes time. And that perspective is too often missing.

AI assessment note: “Someone relayed to me at some point the Bill Gates quote”

Q Can I ask, how did that decision affect the fundraising and the investor appetite, given the potential loss in the repeatability and sustainability of revenue coming in?

A Ah, so honestly, it catalyzed it. We raised our A in January of 12. We began testing sort of new models not much later in the spring of 12. By the fall, we had a very strong hypothesis on what it was being. We tested that out. And then finally, in sort of January and February of 13, we flipped the marketplace. And so February and March were the first months that this new model was rolled out nationwide. And we raised our beef from Sequoia six weeks later because they saw the potential in what we had done. And also, I think they recognized that, you know, this was a team that was willing to go for it. They were not, we weren't going to get stuck with sort of decision paralysis or get caught in a local maxima just because we were sort of scared of how to unwind that. And so that meta sort of fact, I think helped a lot too. Um, but you know, we're a marketplace, so no one expected or wanted us to have a subscription based business, which is great in a lot of context, but not in a marketplace.

AI assessment note: “Ah, so honestly, it catalyzed it.”

Q In terms of kind of that sudden capital injection, I'm intrigued. How do you think about kind of maintaining a strong operational efficiency and capital efficiency with such a large capital reserve suddenly given?

A I think this goes down to hiring a great CFO and one who can help impose the discipline around doing what you say you're going to do. And from a budgeting standpoint, yeah, you have a lot of money in the bank, but you still need to be deliberate. You still need to justify these investments and understand how they're going to play out and have a rationale for it and hit your numbers. And so we're in this position where we've raised two hundred fifty million dollars And a huge chunk of that is still in the bank because of that discipline and the business has done very well, but we don't exceed our budget. We don't spend frivolously. We make big investments and things that we think will pay dividends over a long time and having sort of a good FP&A function and just sort of a strong sort of CFO is vital to that. Otherwise, the truth is there are a lot of good ideas and the challenge is saying no to a lot of these good ideas. In support of the great ideas where you should really be doubling down and investing in. That, I think, is where a lot of companies sort of go a little sideways. They sort of fund all the mediocre to good ideas and forget to really just go all in on the great ones.

AI assessment note: “hiring a great CFO and one who can help impose the discipline”

Q though, that's been excited by the problem you're solving. You've educated and also got on board many incredible investors, and I want to start today on the theme of Boards. We've spoken before, and you've said that founders should think of board members as employees. So starting from this, why do you think this, and how does that alter maybe how you interact and really engage with those board members?

A So I think probably the appropriate term would be to say partners. I think too often founders are intimidated by the board and sort of see it as a sort of group on high that needs to be answered to when really these are smart Capable, hardworking people that you should partner together to navigate through this sort of very challenging environment, and I think fundamentally the board is an accountability mechanism, and it's a way for you to audit your own progress and hold yourself accountable to whether you did what you said you were going to do, and then it's a brain trust of very strategic, hopefully, and very sort of long-term and thoughtful people that you can bat ideas around with, that you can test things out, that you can sort of Get smarter about how to make some of these big decisions. It is a skill, though, and you have to really practice and work on it.

AI assessment note: “So I think probably the appropriate term would be to say partners.”

Q In terms of kind of that sudden capital injection, I'm intrigued. How do you think about kind of maintaining a strong operational efficiency and capital efficiency with such a large capital reserve suddenly given?

A I think this goes down to hiring a great CFO and one who can help impose the discipline around doing what you say you're going to do. And from a budgeting standpoint, yeah, you have a lot of money in the bank, but you still need to be deliberate. You still need to justify these investments and understand how they're going to play out and have a rationale for it and hit your numbers. And so we're in this position where we've raised two hundred fifty million dollars And a huge chunk of that is still in the bank because of that discipline and the business has done very well, but we don't exceed our budget. We don't spend frivolously. We make big investments and things that we think will pay dividends over a long time and having sort of a good FP&A function and just sort of a strong sort of CFO is vital to that. Otherwise, the truth is there are a lot of good ideas and the challenge is saying no to a lot of these good ideas. In support of the great ideas where you should really be doubling down and investing in. That, I think, is where a lot of companies sort of go a little sideways. They sort of fund all the mediocre to good ideas and forget to really just go all in on the great ones.

AI assessment note: “I think this goes down to hiring a great CFO and one who can help impose the discipline”

Q Not at all, but I want to kick off today. So tell me, how did you make your way into startups, and what's the founding story for Thumbtack in a very succinct three to four minutes?

A Sure. So we kind of did what you're not supposed to do, which is decide to start a business and then go hunt for an idea. However, I think that actually gets a very bad rap here in the And it's a very tried and true method. You know, Amazon did that. Microsoft did that. And what I had coming into this was a relationship with a couple of guys who we'd worked together in college and kind of started this nonprofit together. We had a lot of fun doing that, but decided to sort of change industries, start a technology company and really go hunt for a big problem. Uh, we literally said to ourselves, you know, what's the biggest problem that we can solve with technology and one that we believe is inevitably going to be solved. And so we just started talking and talking about the world and sort of things that we thought were broken. And the observation that led to all of this was why is it so hard to hire a plumber? You know, when you think about it, the universe typically makes it very easy for you to spend money to get what you want. And yet here was this massive category. It's not plumbers. It's not just home services. It's all local services where you had to work hard to spend your money. And it wasn't because there weren't great professionals who are ready to do the work. It was literally a market failure, a problem of discovery that these two sides couldn't easily find each other …

AI assessment note: “The observation that led to all of this was why is it so hard to hire a plumber?”

Q Absolutely, and what a challenge it is, and what a challenge. But I do want to kind of address, before we move on, the demand side. We addressed Supply side acquisition there. I'm super intrigued when opening up new markets in new states, how do you really look to front load demand with maybe no existing presence? And what does that demand side look like?

A So we actually went nationwide very, very early in our history because we found a supply side acquisition strategy that could really fill up the network everywhere. And so at this point, we actually have a paying professional in all but one county in the United States. And so geographically have managed to be very, very broad. And the benefit of that is it has let us then leverage marketing channels that are not geographically specific. So we can buy remnant on TV or online independent of where it's going to show because we have supply everywhere. So this is actually a challenge sort of jumpstarting a new market that we haven't really had in a long time. So it's, it's something that we don't have like a playbook for. When the day comes that we ultimately go international, we'll have to really think through that. But for the time being, SumTAC is already nationwide. We're live in every city in the United States. We have pros just about everywhere, and now we're working to get ever more demand. So it's a different problem for us than most.

AI assessment note: “it's something that we don't have like a playbook for.”

Q Absolutely. And wonderful to hear about kind of the strategic advantage of having those conversations. I'm intrigued on the strategy perspective that we discussed. In terms of business model, there have been some big shifts. You shut down millions in recurring revenue for a new model. Talk to me. What was that conversation like between you and your co-founder, Jonathan?

A Man, that was scary. So, you know, the background here is we really struggled to raise our Series A. And the primary feedback was that we hadn't shown an ability to monetize this marketplace, which was valid. And so sort of at the last minute, we put in place a subscription model, which we knew was imperfect, but had the benefit of being easy to implement and quickly showed that we could make revenue. Then we were in this position where we'd scaled that thing up, honestly, just because the marketplace was growing and doing well, but we knew it was imperfect. You Static monetization method and marketplaces are highly dynamic. And so we just had less control over one of the key variables, the price of one of these connections than we wanted. And so this was one of those moments where you have to go back to what you're optimizing for and what you're playing the game for. And for us, we wanted to build a big independent franchise, a household brand. And to do that meant sort of sacrificing this sort of short-term path To do the right thing for the long-term health of the business, and we went for it. You know, in retrospect, it was obviously the right call, but at the time, it was super scary.

AI assessment note: “Man, that was scary. So, you know, the background here is”

Q Absolutely. And wonderful to hear about kind of the strategic advantage of having those conversations. I'm intrigued on the strategy perspective that we discussed. In terms of business model, there have been some big shifts. You shut down millions in recurring revenue for a new model. Talk to me. What was that conversation like between you and your co-founder, Jonathan?

A Man, that was scary. So, you know, the background here is we really struggled to raise our Series A. And the primary feedback was that we hadn't shown an ability to monetize this marketplace, which was valid. And so sort of at the last minute, we put in place a subscription model, which we knew was imperfect, but had the benefit of being easy to implement and quickly showed that we could make revenue. Then we were in this position where we'd scaled that thing up, honestly, just because the marketplace was growing and doing well, but we knew it was imperfect. You Static monetization method and marketplaces are highly dynamic. And so we just had less control over one of the key variables, the price of one of these connections than we wanted. And so this was one of those moments where you have to go back to what you're optimizing for and what you're playing the game for. And for us, we wanted to build a big independent franchise, a household brand. And to do that meant sort of sacrificing this sort of short-term path To do the right thing for the long-term health of the business, and we went for it. You know, in retrospect, it was obviously the right call, but at the time, it was super scary.

AI assessment note: “Man, that was scary. So, you know, the background here is”

Q Absolutely, and what a challenge it is, and what a challenge. But I do want to kind of address, before we move on, the demand side. We addressed Supply side acquisition there. I'm super intrigued when opening up new markets in new states, how do you really look to front load demand with maybe no existing presence? And what does that demand side look like?

A So we actually went nationwide very, very early in our history because we found a supply side acquisition strategy that could really fill up the network everywhere. And so at this point, we actually have a paying professional in all but one county in the United States. And so geographically have managed to be very, very broad. And the benefit of that is it has let us then leverage marketing channels that are not geographically specific. So we can buy remnant on TV or online independent of where it's going to show because we have supply everywhere. So this is actually a challenge sort of jumpstarting a new market that we haven't really had in a long time. So it's, it's something that we don't have like a playbook for. When the day comes that we ultimately go international, we'll have to really think through that. But for the time being, SumTAC is already nationwide. We're live in every city in the United States. We have pros just about everywhere, and now we're working to get ever more demand. So it's a different problem for us than most.

AI assessment note: “So we can buy remnant on TV or online independent of where it's going to show”

Q though, that's been excited by the problem you're solving. You've educated and also got on board many incredible investors, and I want to start today on the theme of Boards. We've spoken before, and you've said that founders should think of board members as employees. So starting from this, why do you think this, and how does that alter maybe how you interact and really engage with those board members?

A So I think probably the appropriate term would be to say partners. I think too often founders are intimidated by the board and sort of see it as a sort of group on high that needs to be answered to when really these are smart Capable, hardworking people that you should partner together to navigate through this sort of very challenging environment, and I think fundamentally the board is an accountability mechanism, and it's a way for you to audit your own progress and hold yourself accountable to whether you did what you said you were going to do, and then it's a brain trust of very strategic, hopefully, and very sort of long-term and thoughtful people that you can bat ideas around with, that you can test things out, that you can sort of Get smarter about how to make some of these big decisions. It is a skill, though, and you have to really practice and work on it.

AI assessment note: “I think probably the appropriate term would be to say partners.”

Q from ThredUp on the show, and he said that your board is right 50% of the time, the skill is knowing the other 50% of the time. I'm intrigued. How do you assess when the board is, is maybe right and not right, and is there a time maybe that you can recount where you maybe disagreed with the board and their strategic force, and how did you communicate that?

A I mean, I guess I don't think of the board as a monolithic entity that, you know, has one judgment. You know, there's five of us on there, and we come from different backgrounds and have different perspectives, and we often agree, but not always, And I don't think it's any different than me and my executive team that we disagree on all sorts of stuff, and that's important, and that's healthy. I think starting from the premise of right and wrong is a false framework, because the truth is you don't know, and you will not know whether you're right or wrong for years, and so it's much more about the process around the decision-making, how well you can uncover sort of blind spots or things that hadn't been thought about getting by and committing, and I think an important part of the board is that Willingness to commit to these big decisions. Thumbtack over the last year and change has really evolved the product and the platform quite a bit, and that's something that the board had to be super bought in on, and the executive team, obviously the whole company, but it's not about right and wrong. It's about, hey, we agree that this is the path forward for these reasons, and we're going to work like hell to make it work.

AI assessment note: “starting from the premise of right and wrong is a false framework”

Q from ThredUp on the show, and he said that your board is right 50% of the time, the skill is knowing the other 50% of the time. I'm intrigued. How do you assess when the board is, is maybe right and not right, and is there a time maybe that you can recount where you maybe disagreed with the board and their strategic force, and how did you communicate that?

A I mean, I guess I don't think of the board as a monolithic entity that, you know, has one judgment. You know, there's five of us on there, and we come from different backgrounds and have different perspectives, and we often agree, but not always, And I don't think it's any different than me and my executive team that we disagree on all sorts of stuff, and that's important, and that's healthy. I think starting from the premise of right and wrong is a false framework, because the truth is you don't know, and you will not know whether you're right or wrong for years, and so it's much more about the process around the decision-making, how well you can uncover sort of blind spots or things that hadn't been thought about getting by and committing, and I think an important part of the board is that Willingness to commit to these big decisions. Thumbtack over the last year and change has really evolved the product and the platform quite a bit, and that's something that the board had to be super bought in on, and the executive team, obviously the whole company, but it's not about right and wrong. It's about, hey, we agree that this is the path forward for these reasons, and we're going to work like hell to make it work.

AI assessment note: “starting from the premise of right and wrong is a false framework”