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Risking Everything to Rebuild - Marco Zappacosta + Cyan Bannister

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2020 Startup Grind Global Conference
February 12, 2020, Redwood City, CA, USA
2020 Startup Grind Global Conference
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Risking Everything to Rebuild - Marco Zappacosta + Cyan Bannister
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About speakers

Marco Zappacosta
CEO at Thumbtack
Cyan Banister
Partner at Founders Fund

Marco is the co-founder and CEO of Thumbtack, an online services marketplace enabling hundreds of thousands of local skilled professionals to build successful businesses by connecting them to millions of customers. Marco has been focused on building Thumbtack’s pro-community across the platform by inviting entrepreneurs of all backgrounds and skillsets to join and share their experiences.

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Cyan Banister is a partner at Founders Fund, where she invests across sectors and stages with a particular interest in augmented reality, fertility, heavily regulated industries and businesses that help people with basic skills find meaningful work.Prior to joining Founders Fund, Cyan was an active angel investor with a portfolio including Uber, Thumbtack, SpaceX, Postmates, EShares, Affirm and Niantic, creator of Pokémon GO. A self-taught engineer and entrepreneur, Cyan has held a number of technical leadership positions throughout her career. As an early employee at IronPort, which was acquired by Cisco, Cyan oversaw support infrastructure and performance for a global customer base. She has a passion for the arts and is a voracious film, documentary and media consumer.

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About the talk

A Fireside chat with Marco Zappacosta, CEO of Thumbtack talking about his experience in Risking Everything to Rebuild. Interviewed by Cyan Bannister, a Partner at Founders Fund.


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Good morning. I'm so excited to be here. It's normally I am not in this chair and I don't get to interview anybody. So I'm really excited about this. So Marco how many people here are familiar with thumbtack? A good amount of people awesome. There's some people who aren't we should get them educated? Yeah. So I think that you know, what you kept a pretty relatively low profile over the years for better for worse. Okay, we've been at it a long time and I've been out of for 10 years and income taxes in the business of

helping you do more by making it easy to find Pros to get anything done and it's been a hard dream and one that we've worked on sort of over and over and over but increasingly we feel confident that we are the best way to do that. So you'll be hearing a lot more out of us over the coming months and years. So I met Marco at a dinner. So there were these pitch competition like little Salon dinners that I went to I don't know this is well over like 10 years ago. Who's 2010 OK Google 10 years ago, and I remember I'm very known for for texting very very short

descriptions of businesses when I'm really excited about them to my husband. And so I messaged When I was like open table for contractors and he's like yeah, that's exciting OpenTable made it easy to find what restaurants have availability and that same wasn't true for hiring plumbers contractors all the pros that you need is his huge array of professionals that are out there millions of them with all this talent and I can have free time and yet it wasn't easily discoverable and easily sort of search through by a customer and that's why we

tried to solve the company was just a few people it was in like your house and I'm one of the things that really struck me that I loved was about, you know, how you feed your employees. And so Marco would cook for them and it was just spectacular and it became part of your culture. I even came later now you're much bigger company and you have an amazing kitchen. Explain a little bit about why that is so important to you as humble and a practical Roots which is that we lived in an apartment. That was Far From Any restaurants and so just a pain in the ass to go get lunch.

And so we would start to go to Costco every couple weeks to get a bunch of food and I was maybe either the most Adept in the kitchen or the least Adept anywhere else and so I then went off and make food and that scaled until we were probably like eight or nine people at which points are to be too much and we brought in a friend of mine to be our have to come in once we can fill the fridge and that became part of the culture cuz every meal we would sit together and talk and just convenient and come from an Italian household where that's that's for relationships get built.

San Francisco wants to get rid of kitchens. Yeah. I think it's short-sighted and think thankfully, I think that one's not going to pass but yeah, yeah. It's important for us in a lot of other people when you started out you were small and Scrappy, you know, I remember when you were like scraping Craigslist, you know to find contractors in in and small businesses. And then you had what I think is pretty amazing explosive growth for a long. Of time. What was that. Like so this is really a 2012 through 2017 2018 and what head unlock that is that we'd

really discovered product-market fit and it took us three odd years to really get that right to find the model where we could efficiently bring a customer in a pro together and then just fuel it by bringing more Pros in more customers in and that took us about 2017. We're from the outside-in you looked at the company or like wow, the scale is a lot bigger the revenues a lot bigger, but internally what we were seeing was the limits of that model of that request for quote engine and realizing that we're faced with his big decision of whether to accept a diminished possibility or How

to reinvent ourselves to keep chasing that dream because you know here we were 2017-2018 still nobody had cracked it. Nobody had become that go to solution of fine and hire a pro for whatever you needed and we realized that our model was not going to be that it's over the course of the last couple years. We completely reinvented the product experience moving from a asynchronous request-for-quote experience to have the search and booking driven experience that's dramatically better for our customers and prose and that's why it's a start I said, you're going to hear a lot more about us

because now we have the answer. We have the ability to fulfill your every request in your every need and as that gets richer and richer we're going to get louder and louder called startup grind for reasons. So what process during that like, how did your company shift culturally employees handled us. Did you have to have to let people go higher different people? Like how did that work as a great question? So the why behind the decision was very Clear glass that the current model was going to take us to where we want to go do what do we do about it was a lot harder

and Islam her to be sure about and my biggest regret actually looking back on how we ran that process cuz I'd wish I'd been more honest about the unknowns. I think Founders and CEOs often feel that they need to be the cheerleader and chief this herd of optimist and Chief and there's an important part of the job. That is that but the same time I think even more important it's about being the realist and there are times where reality is uncertain and human beings. I think are most on edge. When it comes to uncertain environments and so it's much better

to name it and say hey sign in with a known problem and to get to where we want. We have to fix it. I don't know how we're going to fix it. I don't know how long it's going to take but I know that it's going to be the most important thing that we can do to accomplish our dreams and if you're excited about that, let's go all-in, but I'm not going to sit here and pretend that it's all going to be easier. Okay. In fact, the thing I'm certain of is that it will be hard and I think having taken a more explicit Act. The people who were not

right for that transition would have left and I would have been easier and the people were truly determined and excited about that challenge of which it was most of the folks. They would have been integrated to setting expectations is a big lesson that I took from that and you know, despite things being scary. If you hire great people they are smart and they will know and you can sort of the pack a message on on top to her to make him feel good about it. You got to just speak the truth and tell him where things are at. I mean it's super hyper competitive out there

for talent, especially when you're operating at scale and you you reach this Plateau I can imagine that's got to be a scary time in the business. Absolutely. That's how many employees do you have now, there's a little over eight hundred of us. Okay. Yeah, and I think it's true that is hyper competitive. But but what people want I think the special the very best people one is a mission that they believe in and something that Thumbtack is always had is A mission that we truly believe in live it's about empowerment but helping these Pros live their dreams ultimately and helping busy

homeowners get more done and there's feels good. Secondly, they want to be in a place where they can make a difference and if it's just about making money, you should go work at Google and Facebook. They're there all day long and like, how are you going to go do it? It's a great retirement home. You can Coast, you know, enjoy yourself but you want to build something. If you want to be part of an adventure where you're creating the future you have to take risk. There's no way to do that in a risk-free setting and so having people who are excited about that is

it's Excel selecting you're open about that the people who want it, and her to participate in it and if you want that retirement account then Hugo Boss by imagine a lot of people in his audience how many people here Founders are starting companies. That's a lot of people awesome really really excited for your Journeys what piece of advice could you give all of them? You know just cuz it is a grind and there's jalapeno there's times where there's highs and there's Lowe's like what what, you know, the highs are the

addictive and they're so fun and everything is great. But then when you get hit with your first problem like real business problem, like what advice do you give them? I think there's two things. I think the first thing is you have to be passionate about the problem. You're solving not the solution that you're building. So if it's simply that you love the ink intricacies of this sort of widget tool service application your building at some point, you're going to get bored or even worse at some point. It's going to turn out to not be the right answer and you have to build something else and I've

seen a lot of people sort of lose stamina when that sort of tension comes but if you're passionate about the problem, you're solving and the impact that you're going to have that carries you through a lot of ups and downs cuz it's this Northstar that's always true. So I think first and foremost like truly believing in the mission in the impact that you're having the second thing I'd say is do it with people who are equally passionate cuz the beautiful thing about being a team is your all sort of riding different waves. And so sometimes you're on a low but your partners on a high and that

balances you out and you're by yourself or not with people who are really in it with you as a true partner. It's going to be really hard when those lows are low and and you have nobody to turn to so, you know, it's a team sport for a reason teams teams are stronger. And the last thing and I think maybe a little sort of nerdy but actually think a cop a tolerance for cognitive dissonance is a really important power of a Founder what I mean by that is holding two opposing views in your mind at one time. So I'm one hand I've always believed

that there's an opportunity for us to be this category killer to be this brand that people trust as the one and only way to hire Pros but everyday really all I think about is the flaws the challenges the risks and turn of having both of those in mind at the same time as really useful cuz that confidence is really sustaining but then the fear and the sort of like being totally paranoid is what makes you should get better every day and makes it increasingly likely that you get there until I think having that tolerance for holding those two opposing views is a really important

feature for any founder. Awesome quickly, you know you did keep a low profile for so long. So and I get conflicting I even give conflicting advice on this is like, you know exit in the early stages. You should be focusing on the business and not doing PR and all that sort of stuff, but you did keep your head down for so long. I don't want us the right time. I don't know part of me looks back and wishes, we had started building really are certain brand earlier. And I think the things that I didn't appreciate is brand building. He's dividends over time. They really

compounds that's not a one-time thing. You really have to invest in it like any other marketing channel and build equity in it. And so it's certainly a mistake that I that we didn't start earlier the flip side though. And this goes to the famous quote that in the long run. The stock market is a scale in the short run. It's more of a shouting match. And so it's really like about Pest and economic value that really matters in Long-term and if your heads down building that that ultimately will will carry out and sew in a weave have have had competitors over the years

who had sort of spiked up in their profile in the recognition, but underneath they hadn't really built anything valuable and Toad petered out. So through the pr the marketing the brand building can amplify something that's there and working in and sort of other sustenance but it can't be a substitute for that. You need both start a little bit earlier, but the same time if I had to choose between the two I'm glad that really all of our time and energy and effort went to building this platform and building this engine because I know the power in that and I know that

it's going to come down for a long time and people will come to know your customers know who you are. You're not part of like the hype cycle. So I think you're like one of the most successful companies that the Press doesn't talk about. With me about that. I've been working hard to fix awesome. Let's shift gears a little bit because there's a lot of people out here starting companies, you know, what is the future of technology for small business owners? So one thing that I think needs to be said more is technology isn't just a substitute

for labor. It isn't just going to come at the expense of jobs. There will be that automation is Real by the same time technology can Empower labor can Empower small business and you see this trend that's happening and I think people are realizing that small business is a giant industry. You look at Shopify. I think it's the best example of this right now. They are serving. Yeah these hey helping them get set up with stores and create e-commerce presences. That's incredible. Billion dollar company now, The world

of sort of human Talent is basically Limitless in my mind and technology is really just scratching the surface of helping that Talent be a plumber a caterer for someone who is you know, building something and selling it on Etsy or through their store on Shopify and we are just at the start of Technology continuing to empower these people and my goal and this is obviously with with respect to Thumbtack. But if you're a talented professional that should be all it takes to build a successful business being an online marketer shouldn't matter to being a great plumber being great

at customer relationship management and keeping track of your operations shouldn't get in the way of delivering a great service. We as technology Builders and Technology providers can do a lot of that for you. We can make it into to the easy and as part of that the people with the talent can spend more of their time serving their customers living their own dreams and I think Make the world of Richard and better place. There's a lot of opportunity there. I don't think all the problems are even nearly saw there still businesses that are run-off spreadsheets and text messages and and

things like that. Yeah, it is heartbreaking and then also motivating to see how much opportunity there still is how much analog interaction there is how much sort of back office tools is a notebook and a pen or a spreadsheet with a list of names and emails. All of these things will have tools and services built around them and ultimately that's about empowerment. It's helping these entrepreneurs these creators on the service professionals do more and they have that talent that have that Hustle but they don't always have the orthogonal skills around marketing or operations

that play today hold them back. So I think it is it's beautiful because it builds a great business, but it also empowers more business owners to deliver their own dreams, and if you look at the United States right now, Formation and Entrepreneurship is that multi-decade Lowe's it's a real risk for our economy in our country that entrepreneurs aren't sort of starting things. And I don't mean that Justin the text sent I mean that in a broad sense of starting a coffee shop starting a plumbing business all the things that sort of are the engine of this economy. I we need more of them and I

think a lot of people look at these problems and it's enticing to go sort of like making web apps and consumer apps. Do you know direct-to-consumer? But like when you're actually making like a sass product or a product for the small business owner lot of people say was just really on Sexy and not fun and all these things but like really fun, especially when you change someone's life and they're suddenly making meaningful income. Don't get into the small business sector for the sex sex appeal. You won't find it there. What you will find is so many great people who are working

hard to live their dreams and when you participated in that and provide the spark or the new customer or the tool that lets them get further than they thought possible. They love you for it and they love the partnership that comes from that and it is sort of an intoxicating feeling to be able to talk to these pros and realize that we know we played a small part in them realizing their dreams. Definitely. This is a recurring theme one of the reasons why I love Thumbtack in the very beginning is I invest in companies that do this and like uber Postmates etcetera. And I think

one of the things I think is an opportunity here, the number one thing that I hear small business owners, what they need is access to Capital, you know, we can raise Venture Capital, you know, we can also get debt, you know, but some of their options are only credit card The things that you know have very very high interest rates. Like what do you think about what the opportunities that are there, but they find me new customers find me more customers, which is really Revenue them grow. And the second

is capital to serve that Revenue in to grow into that opportunity Finance is not something that is a separate thing where you go to the bank and ask them for a loan increasingly. It's being built into these platforms as a feature as a product. I'm looking with Shopify is done and they talked about this morning in one day giving a $200 loan and a million dollar loan to different businesses and it's sort of natively built-in. We have aspirations of helping are Pros Access Capital through the platform and I think more and more as these work

clothes get digitized as these marketplaces replace analog interactions. Then have the the purview in the perspective to be able to offer capital in a very seamless and economically efficient way because we know if I was saying as a great power on the platform she delivers great service. She's growing she's coming to us saying hey, I need to buy another truck and buy more tools. Great. We can give her that loan and that we know that it'll pay back. So I think increasingly finance will just be one more product or feature of these platforms that are really about fueling growth and it

won't be something that feels like, oh, I got to go to the bank for the financial institution to do that. It's just going to steep in everywhere. Thank you very much. I think our time is about up. I don't know if you want to give one motivational thing to the audience like to get them excited. But yet so last thing I'll say is I think entrepreneurs are about expanding the scope of the possible and I see that on our platform with are Pros, but I also see it when I meet all of you is entrepreneurs and Think that's what fuels our economy in and makes our future Prosperity possible self.

Thank you for doing what you're doing and keep up the Grande. Thank you, everyone.

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