Thumbtack doing things that don't scale

In the crowded landscape of online marketplaces, Thumbtack has emerged as a dominant player connecting consumers with local service professionals. But in its early days, the company faced the classic chicken-and-egg problem that plagues all marketplaces: they needed service providers to attract customers, but they also needed customers to attract service providers. Their solution to this dilemma wasn’t sophisticated algorithms or viral marketing campaigns—it was good old-fashioned email outreach, executed with persistence and precision.

The Marketplace Challenge

Founded in 2008 by Marco Zappacosta, Jonathan Swanson, and Sander Daniels, Thumbtack set out to create a platform where consumers could find and hire local service professionals for everything from home repairs to wedding photography. The vision was ambitious: to build a comprehensive marketplace that would make hiring local services as easy as shopping online.

But building a marketplace from scratch is notoriously difficult. Without service providers, there would be no value for consumers. And without consumers, service providers would have no incentive to join the platform. This chicken-and-egg problem has derailed many marketplace startups, but Thumbtack found a way to break through by focusing intensely on building the supply side first.

The Email Marketing Strategy

Rather than trying to solve both sides of the marketplace simultaneously, Thumbtack’s founders made a strategic decision to focus on recruiting service professionals first. Their approach was remarkably straightforward but required significant manual effort—a perfect example of doing things that don’t scale.

“We used email marketing to get our first 1,000 users,” explained co-founder Sander Daniels. “We found email addresses of local service professionals and messaged them letting them know we existed.”

This wasn’t sophisticated growth hacking or viral marketing. It was direct, one-to-one outreach that couldn’t possibly scale in the long term. The team spent countless hours scouring the internet for email addresses of plumbers, electricians, photographers, caterers, and other service providers. They compiled these contacts into lists and began sending personalized outreach emails.

But simply announcing their existence wasn’t enough. Thumbtack needed to offer a compelling value proposition to convince busy service professionals to sign up for yet another platform. Their pitch was simple but powerful: “If they registered with Thumbtack, we would start sending them job leads.”

This value proposition directly addressed the number one pain point for service professionals: finding new customers. As Daniels put it, “The number-one thing any local service professional wants is new customers.” By promising to deliver exactly what these professionals needed most, Thumbtack created a compelling reason for them to register.

The Manual Labor Behind the Scenes

The simplicity of this approach belies the significant effort it required. Finding email addresses for local service professionals wasn’t as easy as downloading a database. The team had to manually search for business websites, social media profiles, directory listings, and other sources to compile their contact lists.

Once they had the email addresses, they needed to craft messages that would cut through the noise of busy inboxes. These weren’t mass-blasted, generic emails. They were carefully written to address the specific needs and concerns of different types of service professionals. A message to a wedding photographer would emphasize different benefits than one sent to a plumber or a personal trainer.

The team also had to manage responses, answer questions, and guide interested professionals through the registration process. This high-touch approach required significant time and attention from the founding team, but it was essential for building the initial supply side of their marketplace.

Building Trust Through Delivery

Simply getting service professionals to register wasn’t enough. Thumbtack needed to deliver on their promise of providing job leads. This meant they needed to start generating demand from consumers, even with a limited number of service providers on the platform.

The team used various strategies to attract initial customers, including search engine optimization, local advertising, and leveraging their personal networks. They focused on creating a seamless experience for consumers, making it easy to request quotes from service professionals for specific jobs.

When a consumer submitted a request, Thumbtack would match it with registered service professionals in the appropriate category and location. These professionals would receive notifications about potential jobs, allowing them to submit quotes and potentially win new business.

This fulfillment of their core promise—delivering job leads to service professionals—was crucial for building trust and retention. Service providers who received legitimate job opportunities through the platform were more likely to remain active and even recommend Thumbtack to colleagues, creating organic growth through word of mouth.

The Virtuous Cycle

As Thumbtack onboarded more service professionals through their email marketing efforts, they were able to offer consumers a wider selection of providers across more categories and locations. This improved the consumer experience, leading to more job requests being submitted on the platform.

More job requests meant more opportunities for service professionals, increasing the value of being registered with Thumbtack. This created a virtuous cycle: more professionals led to more consumers, which led to more job opportunities, which attracted more professionals.

This virtuous cycle is the holy grail for marketplaces, but it can only be achieved after reaching a critical mass on at least one side of the market. Thumbtack’s email marketing strategy was the unscalable but necessary work that got them to that critical mass of service professionals.

Scaling Beyond Email

While email marketing was effective for acquiring their first 1,000 service professionals, Thumbtack eventually needed to develop more scalable acquisition methods as they expanded to new markets and categories.

They began to leverage their existing base of service professionals for referrals, offering incentives for bringing new providers onto the platform. They also developed more sophisticated digital marketing strategies, including targeted online advertising and content marketing focused on the needs and challenges of service professionals.

As the platform grew, they were able to use data and automation to make their acquisition efforts more efficient. They could identify which types of service professionals were in highest demand from consumers and focus their recruitment efforts accordingly. They could also analyze which messaging and channels were most effective for different segments of service providers.

But even as they developed these more scalable approaches, the lessons from their early email marketing efforts remained valuable. They maintained their focus on addressing the core needs of service professionals and delivering tangible value through job opportunities.

The Results

Thumbtack’s strategy of focusing on service professionals first and using direct email outreach to build their initial supply side proved remarkably effective. From those first 1,000 users acquired through email marketing, they grew to become one of the largest marketplaces for local services in the United States.

By 2021, Thumbtack had over 250,000 active service professionals on their platform across hundreds of categories. They had raised over $400 million in venture capital funding and achieved a valuation of $3.2 billion. What began as a manual email outreach campaign had evolved into a sophisticated marketplace connecting millions of consumers with service professionals every year.

Lessons for Marketplace Startups

Thumbtack’s approach to building their marketplace offers several valuable lessons for other startups:

1. Solve the chicken-and-egg problem by focusing on one side first: Rather than trying to build both sides of their marketplace simultaneously, Thumbtack focused on recruiting service professionals first. This allowed them to reach a critical mass on the supply side before turning their attention to consumer acquisition.
2. Do things that don’t scale: The manual process of finding email addresses and sending personalized outreach messages couldn’t possibly scale to hundreds of thousands of service professionals. But it was exactly what Thumbtack needed to get their first 1,000 users and start building momentum.
3. Address the core needs of your users: Thumbtack’s value proposition to service professionals was simple but powerful: they would provide job leads. By focusing on the number one need of their target users, they created a compelling reason for them to join the platform.
4. Deliver on your promises: Thumbtack didn’t just promise job leads—they worked hard to generate consumer demand and deliver actual opportunities to service professionals. This fulfillment of their core promise was essential for building trust and retention.
5. Build toward a virtuous cycle: Every marketplace startup aims to create a virtuous cycle where growth on one side drives growth on the other. Thumbtack’s email marketing strategy was the necessary first step toward achieving this self-reinforcing growth.

The Power of Starting Simple

In an era of sophisticated growth hacking and viral marketing strategies, Thumbtack’s approach to building their marketplace might seem quaint. There were no clever referral programs, no social media stunts, no growth loops designed to drive exponential user acquisition.

Instead, there was just a team of founders willing to do the unglamorous work of finding email addresses and sending personalized messages to potential users. It was a simple approach that required significant manual effort, but it was exactly what Thumbtack needed to overcome the initial chicken-and-egg problem and start building momentum.

As co-founder Sander Daniels reflected, “We found email addresses of local service professionals and messaged them letting them know we existed. If they registered with Thumbtack, we would start sending them job leads.”

This straightforward strategy—finding potential users, telling them about your product, and delivering on your promises—is a reminder that sometimes the most effective growth tactics aren’t the most sophisticated. Sometimes, they’re just the result of founders willing to do things that don’t scale to get their marketplace off the ground.

Thumbtack’s journey from manual email outreach to billion-dollar marketplace is a testament to the power of starting simple, focusing on user needs, and being willing to put in the unglamorous work required to build something valuable.