(Remodeling Magazine) REM – Hey Matt, I’m going to jump in
here real quick, I’ve got a question for you. You’ve talked about how the Lowe’s
partnership has been really big for you guys. Porch is able to look at
everybody that’s going in, and you’ve built Porch from the ground up to hook
people up with professionals and then Lowes came in later. My question to you
is this, what about Google and Amazon? Those guys are starting to look at doing
something, maybe not exactly the same as Porch and connecting but they’re still
kind of looking at this as an area they could potentially expand. What does
Porch do, or what is Porch’s advantage in this area connecting people with
professionals that puts you above and beyond someone like Google or Amazon
who’s jumping in here later in the game?
ME – I think that’s an awesome question yeah. Would I want Google and Amazon to be competing? I don’t think any entrepreneur would say yes. But it’s inevitable. I mean this is one of the biggest industries that there is period. We knew from the very beginning that other companies would compete. At the end of the day we designed the company and really designed our whole strategy to stay ahead for a very long time. And what I mean is that I mean we didn’t start building consumer features, you know like features that anyone could copy. We went after things that other people can’t replicate. We bring in all this data with our exclusive partnership that only Porch has access to. Building this massive network of partners that only Porch has access to. So therefore we know, for homeowners who your neighbors have used and which professionals work on homes like yours and who is verified licensed today in any of the 50 states and their grade that they say they have. And that kind of partnership. All these things we’ve kind of done that tell us information about the professionals that lets us create this totally different experience. And its through this large partner network that we get access to all of these consumers that we’re able to connect to professionals and again that’s unique for Porch. Different from our strategy, you know at the end of the day, focus is key. We have well more than 400 people at this point and all we do is we’re focused on helping homeowners with their homes and professionals growing their business. That’s a massively larger investment than the big companies are making. And the level of focus we have is just different in terms of what we’re trying to do in that space. The last thing I would add is just the objective of what we’re trying to do. Amazon and Google actually are a lot more like other companies that are out there that are purely in the business of finding a professional or find any local service. What we’re really doing is we’re helping the homeowner to love their home and we’re helping them to manage their home. If you think about different experiences there’s find a professional, there’s a book a professional, they can get ideas and in the middle of that you know Porch is the only one that’s really for homeowners to help try and take care of their home, to manage their home. You’ll see a bunch more of what that means specifically this fall, but we’re taking a very different approach than other companies out there.
REM – Ok great, thanks!
ME – Yeah you bet.
DR – Those two competitors he mentioned, Amazon and Google that are investing. Amazon, its pro.com, maybe it’s Amazon home services as well. Google has Thumbtack and might as well throw Home Depot in there with Red Beacon, those are all kind of similar, do they take a percentage of the job? That’s quite a bit different than your business model, isn’t it?
ME – Yeah, there’s all kinds of business models out in the market. Some take percentages from the job, when transactions are processed, others charge on a per lead basis, some charge the consumer a fee to get access to information. There’s all kinds of business models that are out there. Porch has a couple of core products that we focus on. You know one offering a subscription package to professionals to be able to get highlighted and be able to show the things that drive them more business in particular zip codes that they want to focus on and to grow in. And the second as we roll this product out, but in Seattle we have our booking site where transactions are processed through the system and whenever those transactions are processed there’s a transaction fee they’re charged and then there’s a transaction fee there. But the product is free to the consumer, it will always be free to the consumer. We don’t charge professionals on a per lead per basis or any of those models. We’ve set it up such that our customer the professionals are excited and happy with what we’re doing.
DR – Did you say you’re going to be booking the transaction?
ME – Yeah we have that live in Seattle today, but we’ve found some homeowners, what they’ve told us, is that for lots of types of things in their home, they need a remodel or a roof repair or there’s this big project, they want to talk to multiple professionals and the number one thing that’s most important is trust. They want to go and see who their neighbors have used, who’s licensed etc… And that, and connect with multiple professionals, reach out to them and call them you know, directly. There’s other things with very small projects, like you know my toilet is plugged. They don’t want to spend time talking to multiple professionals they want to be able to see what it costs and push a button and have a great professional that Porch stands behind come over to my home. You know right now that second product is only available in Seattle, but that is something that we’ll make available to homeowners as we go.
DR – Ok, so part of your gameplan is to schedule the work, and will you make the financial transaction as well?
ME – Yup. The dollars for those smaller jobs process through the system and go through to the professional’s bank account. That’s something that what we believe from professionals, what they’re telling us is what they really do want is the combination of leads, opportunities to go and do bigger projects that they want and some of those smaller things they can tuck in and fill in their schedule. And we’re offering them both of those two things. You know jobs that are ready and available for them to just pick up and those leads, bigger opportunities, that they can go and price up.
DR – You know, I think your success and anyone’s success in that space is ultimately going to be on one, the quality of your product, the homeowners experience with that professional is gonna be the ultimate center of who’s going to be successful. Not that maybe more than one won’t be successful, but ultimately the one that can do the most quality. I think when homeowners look at their home, they’re not putting in something that’s cheap and something that they don’t think is quality. They’re looking at quality and value both.
ME – I think that’s right, that’s spot on. We are more than anything else, Porch is trying to focus on, from the professionals that we work with is about quality. That’s the stuff we talk about internally, that’s the metrics that we look at. They really don’t stand behind those professionals. You know the vetting that Porch does and the data we have on professionals is so much deeper and richer than anybody else’s in the market and the reason we make that investment. It really does come down to the experience the homeowner has with the professional. What we want is the great professionals to want to partner with Porch because we push that and allow them to win and have a really great experience. So that’s a core part of who we are and what we’re focused on.
REM – Matt, I’ve got a follow up question to that. One of the things that happened at the leadership conference was that some of the contractors were concerned and interested in your use of the word professional. And you kind of talked about how you’re not really recommending anybody, you’re putting all of the information out there so the users of your site can make an informed decision. But it sounds like with this quicker thing that there are going to be maybe some Porch sponsored guys that you’re working with. Is that correct? Or how are you getting these guys you’re vetting?
ME – Yeah, that’s exactly right. We are, for certain types of projects, like smaller projects, the professionals we’re working with we’ll, once we are comfortable in the quality of those professionals, we will make those quick jobs available to them. For professionals that are premium professionals of Porch, we can give early access to those, but only if they are of quality. Because we are standing behind that. That work for the consumer. So we need to make sure those are great professionals. Again, we always give consumers the choice, if they want to book this, they can. If they want multiple professionals to come to them they can. If they want to call multiple professionals, that’s great as well. We want them to get their projects done whichever way is convenient to them. That’s generally our approach and how we think about it.
REM – Ok. Let me ask you this too, so say, you’re working on this right now it’s only in one area, I understand that. Say I’ve got an emergency with my toilet and I need to get something replaced on there and I go on Porch, is there going to be a clear designation that these are the Porch recommended guys that I can call? Is there going to be a section, how are you going to demarcate between that? The impression that I got at the remodeling leadership conference was that it wasn’t a recommendation service just yet. You were just putting all the information out there, and now if you’re recommending folks that’s a little bit different.
DR – I would say that if you’re owning the transaction, that’s entirely different as well. You’re assuming ownership then of the project? Aren’t you taking responsibility if you own the transaction?
ME – That’s two different questions there. The first question, sorry I lost it, can you give it to me one more time?
REM – Yeah, you’ve mentioned before that Porch wasn’t’ a recommendation service, it’s just putting all the information out there. So if I have a quick problem that I need fixed, whatever you guys define as one of those simple problems, am I only going to be able to select those Porch recommended guys? Am I going to have a selection? Is there going to be something to show that this is a list of our recommended guys, this is not our recommended guys, these are the professionals in the area? How’s that going to work?
ME – So the primary engine that we run right now, the homeowners come in they do their research, they choose their professionals, we provide them access to the data, and they contact those professionals. So that happens across the country, across all the Lowe’s in the country, etc… Yes, for smaller jobs, for specific jobs, on their phone, hit a button that says “Hey, I need a plumber to come and unclog my toilet” or whatever that might be, those smaller defined services. In that case it goes out to the thoroughly vetted professionals and it pings them and says “Hey, here’s this opportunity to come and do this particular job in this particular home,” then it pings the homeowner and says ok great, the professional is on its way at the time you requested. Whether that’s now or Saturday morning. If the consumer decides they want someone else they can go ahead and choose a different professional. It’s really just a matter of simplifying this process for those smaller projects where the consumer doesn’t want to do research. For the mid-size and big projects, obviously the consumer would always go do their research.
REM – Ok, yeah.
DR – So when you say you’ve got a vetted contractor, what does that mean to you guys?
ME – Yeah we take it to the nexus, it’s all ready for professionals to take all that information for them. But we take it to the next level, things like background checks, to make sure they’re verified, that they’re licensed. You know, make sure we’ve done reputation monitoring across the internet. What kind of negative reviews are out there. It’s part of a number of other things we take in our process to be able to make sure those professionals are great. Clearly we want to see the reviews that they have on them and that project. You know we want to make sure those professionals are great and are high quality.
DR – Homeowners never ask me this, but we don’t walk into a condo in the city of Chicago without having the three following items: general liability, workers comp insurance, and EPA certification for any building that’s pre-1978. If we don’t have those things, we allow that entity to be at risk, at least that’s what I’ve been told. The EPA thing is something that can be verified at a later date. That we used those lead safe practices during the remodeling. If the workers comp isn’t in place then the homeowner, condo owner is in liability, same thing with general liability. If those things are not fulfilled correctly, then you’re leaving that entity or homeowner at risk. Those things cost us a tremendous amount of money as a general contractor, as a professional business. But I would say over 50% of our competitors, and I think this is part of the slack you were getting at the remodeling conference, don’t have any of those things. And so therefore they’re not really legitimate companies. And it’s real hard for us to look at something as a professional, what we would consider a professional, the standards we’re held to being professionals. Which really come out of our pocket book and really come out of our time for training and investment in our employees and classifications. So when you’re doing something online, I don’t really see any of those safeguards.
ME – An interesting learning for us over time is the vetting and requirements that are needed, particularly what consumers care about, and how different that is by trade. Like we provide services, it’s not just contracting services, its maintenance, repair, design, all these different types of services that homeowners use us to be able to connect with different business around the home. They get a cleaner or a lawn service, there are no license requirements for these companies. There’s very different expectations of the certifications that they would get when you’re dealing with a roofer or a handyman or an electrician. These types of folks, you know we understand that at like, state level what the license requirements are. And what kind of insurance they’d have to have in order to be able to get a license. And all these different rules that apply. It’s been a massive amount of work for us to be able to understand and have all these feeds of data coming in across every single state. But again, that’s a part of the value that we offer to the consumer. We can expose that information and let them make good choices. If they want to work with an unlicensed professional, that’s the consumers choice. If they want to, they can find all the licensed professionals, it’ll pull down just those and they can connect with them directly. When they take a job through us in Seattle, we make sure they have to be licensed for us to be able to recommend and push that professional, push that job to that professional. It varies by type of trade, type of professional, because consumers care about different things depending on what they’re trying to get done.
DR – The remodeling side of things, I know a lot of remodelers are kind of hot about review sites. Are remodeling professionals, those types of individuals, are they the majority of your market versus like cleaning services and landscapers and that kind of thing?
ME – Well, we’ve really expanded, so no, I’d say remodeling is not a majority. We’ve expanded across the home. I’d put it into 3 different buckets. You have improvement professionals. So remodelers, we’d put roofing in there, etc… There’s maintenance so, cleaning, window cleaning, carpet cleaning, lawn service, etc… And then there’s repair. Plumbing, handymen. Some of those trades obviously span across categories certainly. But there’s over 140 different types of professional. We really want homeowners to rely on Porch for anything they need done in their home. So no, remodeling isn’t the primary. Clearly people use Porch for remodeling a great deal and remodelers are able to create a beautiful profile in our system and it’s a huge category for us. But homeowners use us for all different kinds of things as well.