You can call Thumbtack a unicorn, but the startup’s CEO sure won’t. Marco Zappacosta thinks the turn of phrase that refers to a privately held company valued at more than $1 billion is “gussied up a little too much, probably.”
“I think we’re going to avoid saying that word ourselves,” he says.
Thumbtack, a platform that connects local service professionals like plumbers and piano teachers to customers, raised $125 million in a recent round of funding led by Scottish money management firm Baillie Gifford. The startup is now valued at $1.25 billion.
That’s a significant milestone, acknowledges Zappacosta. What he doesn’t want is for anyone - including employees of Thumbtack - to get to thinking that “this is what we’ve been optimizing for.”
“I mean, we’re trying to build an Amazon or eBay for services,” he says.
To understand what becoming a highly valued privately held company means for Thumbtack, consider the company’s history with fundraising. The company was struggling to raise any money at all in 2012. Turning around Thumbtack’s luck took some soul searching.
Thumbtack at the time couldn’t show proof that it could monetize, according to Zappacosta. “But that was fixable.”
To fix it, the company made it easier for professionals to post their Thumbtack profiles on Craigslist, where they were already posting. This tweak helped the startup attract a network of professionals large enough to serve customers seeking a variety of professional services. The company now has 200,000 active paying professionals on its platform, which Zappacosta says is more than the number of professionals listed on Angie’s List and Yelp combined.
Thumbtack ultimately settled on a pay-per-introduction model in which professionals pay for leads to customers in their geographic areas seeking the kinds of services they offer.
Zappacosta says startups struggling to raise funding can ask themselves a series of questions to find out what it is that they’re doing wrong.
”Is it you, the person, the entrepreneur? Is it the space you’re in?” he says. “Is it because you haven’t accomplished enough? Is it because your growth rates aren’t strong enough?”
Entering the realm of “unicorn,” as overhyped as Zappacosta (and venture capitalist Mark Suster) might consider the term, serves as “a reflection of our past accomplishments that we have shown that this is a model that customers truly love,” says Zappacosta.
Zappacosta is as mindful of anyone of the tech bubble talk -- "It's becoming shocking binary," he said of the current funding environment when Inc. explored the debate in our September issue -- but he still thinks nine-figure later-stage funding rounds reflect “real traction.” A startup raking in that level of investment is doing so based on data and not dreams.
It's also, he acknowledged, taking a substantial step closer to an eventual IPO.