How to build a website like Thumbtack

Thumbtack has grown into a leading online marketplace valued at over $3.2 billion after raising $275 million in 2021. So far, the company has facilitated over 70 million projects on its platform.

Despite Thumbtack's growing size, thriving companies like Sharetribe-customers Probuddy and Picture Hum have carved out profitable niches by specializing in a smaller category within the services industry. This suggests that smaller, niche service marketplaces can also succeed in the industry alongside the larger companies.

If you're interested in building a website like Thumbtack, this guide will take you through the process step-by-step, from developing your idea to launching your first minimum viable product (MVP).

The online marketplace model is booming, disrupting traditional industries like the service industry. The opportunity is significant: the service sector is massive. In the US, services contribute over three-quarters to the nation’s GDP in 2021.

Although major players like Thumbtack capture a large share of the market valuation, they face increasing competition from agile startups that focus on smaller niche markets. These newcomers can move faster, provide specialized offerings, and deliver a more tailored experience to their target audiences.

Moreover, creating your own online marketplace is now easier than ever, and you don't need a large team or a huge budget to get started. Here's why:

• You don't need inventory or full-time service providers: Companies like Thumbtack simply connect service providers with customers without maintaining inventory or full-time workers. This asset-light model significantly reduces overhead and startup capital requirements.
• There’s a low barrier to entry: No-code platform builders have made creating an online marketplace like Thumbtack very accessible. For instance, Sharetribe allows you to launch a fully functional two-sided marketplace within a day without any technical skills or coding. 
• You can test and iterate quickly: The simple development process lets you launch your marketplace quickly, test your business model, gather feedback, and iterate your ideas before making huge investments.
• Marketplaces are extremely scalable: Because marketplaces don’t need inventory and their business model is closely tied to the value they provide (more on that later), the model is extremely scalable. (With Sharetribe, you can also easily extend the marketplace by adding unique features with custom coding as your platform gains traction).

Overall, building a website like Thumbtack has become easy and fast, and it has profitable potential in the foreseeable future. This guide explains proven methods for creating a platform similar to Thumbtack.

Thumbtack is a two-sided online marketplace that connects service providers with customers. The platform facilitates local service professionals' discovery, hiring, and payments. It operates as a “reverse marketplace”: customers post jobs, and professionals bid on them. This is different from a classic marketplace flow where sellers post listings of their offerings.

So, on Thumbtack, service providers like plumbers, photographers, and handymen create detailed profiles to showcase their skills, experience, credentials, and pricing. They can then bid on relevant job requests posted by customers and communicate back and forth on the details. However, professionals can only send quotes to customers if they have Thumbtack credits (more details below). 

For customers on the demand side, Thumbtack lets them post job listings with specific requirements like location, budget, job scope, and timing. They receive customized quotes from interested professionals, which they can filter and compare based on reviews, pricing, credentials, and profile fit. 

Once they select a provider, the workflow seamlessly happens through Thumbtack, from scheduling to payments to leaving a review.

How does Thumbtack generate revenue? Thumbtack monetizes exclusively through lead fees, which is very uncommon among marketplaces.

In our study of how the top 100 marketplaces monetize, commission (a percentage of each transaction) was by far the most common business model, followed by subscription. In fact, Thumbtack was the only marketplace on the list that used lead fees only.

Thumbtack charges service providers a lead fee when they successfully connect with a new customer through the platform (either start a discussion or make a booking directly). This fee is calculated as a percentage of the estimated job—up to 10%.

However, instead of a flat fee, Thumbtack service providers buy credits. These credits allow them to bid on and send quotes to customers who have posted projects matching their service offerings.

The cost of a lead (in Thumbtack credits) varies depending on several factors, such as project size, location, and competition. Typically, Thumbtack credits cost between $1.50 and $1.42 each. Service providers can buy credits in bulk, such as packs of 12, 24, or 60 credits, which cost around $17.99, about $34.99, and approximately $84.99, respectively. The more credits one buys, the greater the benefits. 

Thumbtack works similarly to other gig work platforms like TaskRabbit. However, while TaskRabbit focuses more on individual gig tasks, Thumbtack focuses on skilled, long-term professional services. TaskRabbit’s business model is a classic commission, which is charged as a service fee from both the customer and the service provider (Tasker).

Commission is the most popular marketplace business model for a reason: it’s very scalable and aligns well with the value of the marketplace providers. Therefore, we generally recommend that most marketplaces start with a commission-based business model.

Thumbtack was founded in 2008 by Marco Zappacosta, Jeremy Tunnell, Jonathan Swanson, and Sander Daniels. The founders' vision was to make hiring local service professionals as easy as buying products online. They saw an opportunity to bring transparency and efficiency to the fragmented local services market.

As of 2011, Thumbtack had 50,000 users. Today, the platform facilitates over 7.1 million customer projects annually, requested by more than 5.2 million customers in nearly 1,100 unique categories for every zip code within the United States. 

That’s not all. Thumbtack has raised almost 700  million from investors to fine-tune its matchmaking algorithms. 

During an interview with one of their early investors, co-founder Marc Zappacosta explained that security and safety are key things that differentiate them from job directories like Craigslist and Yelp.

In his words, “When you need someone to take care of your baby, this one privacy area you care about most… That’s why everyone on Thumbtack has been vetted physically by humans.”

In a nutshell, Thumbtack succeeded by creating a seamless and secure experience for customers to easily discover, vet, and hire suitable service professionals in their local area. 

Here are the key reasons why Thumbtack succeeded. Some of them you can apply for your marketplace—some of them you likely shouldn’t:

• Identify and address a key problem and solve it better than anyone else: When Thumbtack launched in 2009, the problem with existing job platforms like Craigslist, Angie’s List, and Yelp was security issues. Thumbtack solved this problem by vetting professionals using various checks, including address verification and social security number validation, criminal status, etc. 
• Determine the right focus: When Thumbtack launched, Zappacosta said they wanted to provide the service version of goods-focused Amazon and eBay. So they opened a marketplace for every type of local service imaginable. This strategy worked well in 2009. Nowadays, almost every single marketplace founder and expert we talk to recommends doing the exact opposite: narrowing your scope. You can’t disrupt Thumbtack by going after its entire market share (without very deep pockets, at least). What you can do is focus on just one of Thumbtack’s service categories and build a better, more tailored offering for this niche (more on that in a bit!).
• Scale smartly: Thumbtack immediately opened its marketplace across the US. Again, today’s competitive landscape isn’t suited for this strategy anymore. Instead, you should do the opposite: start with a single geography and build a successful business there—then expand your reach one new market at a time. 
• Iterate and innovate continuously: One of Thumbtack’s strengths is its commitment to continuous improvement, and its attitude is worth copying for your marketplace, too. They consistently iterate on their platform, introducing new features and refining existing ones based on user feedback and market trends.

Despite Thumbtack’s success, several other companies are thriving and competing alongside them. Here are the five main Thumbtack competitors:

TaskRabbit is a strong competitor to Thumbtack as it also offers a platform for users to find local services. However, TaskRabbit focuses more on household tasks and errands, while Thumbtack covers a wider range of services. Thumbtack also allows service providers to bid on jobs, whereas TaskRabbit sets fixed task prices. The monetization model is different, too: TaskRabbit runs on commission, while Thumbtack charges a lead fee from the professionals.

Angi is another notable competitor to Thumbtack, particularly in the home services sector. Unlike Thumbtack, Angi requires users to pay a membership fee to access its reviews and recommendations. On the other hand, Thumbtack offers a free platform for users to connect with service providers without membership requirements.

HomeAdvisor is a strong rival to Thumbtack, especially in the home improvement and renovation industry. While Thumbtack covers a broader range of services, HomeAdvisor focuses primarily on connecting homeowners with contractors. HomeAdvisor also provides a screening process for its service providers, ensuring higher trust and quality assurance than Thumbtack. 

Today, HomeAdvisor and Angi operate under the umbrella of ANGI Homeservices Inc. since the merger of the two platforms in 2017.

Fiverr is a popular freelance marketplace. While Thumbtack focuses on a wider range of local services beyond just freelancing, Fiverr allows users to hire freelancers worldwide but for limited services. Thumbtack offers a more personalized approach, allowing users to request quotes and negotiate prices, whereas Fiverr users can display a fixed price for their specific services.

Upwork is another major competitor to Thumbtack in the freelance services market. However, Upwork primarily focuses on connecting businesses with freelancers for digital projects, while Thumbtack caters more to local service needs. Thumbtack also offers a wider range of services beyond just freelancing, making it a more versatile platform compared to Upwork.

In a nutshell, the process of building a service marketplace like Thumbtack follows ten steps:

1. Identify a strong marketplace idea.
2. Choose the right marketplace business model.
3. Start with a focused scope.
4. Pre-validate your marketplace idea.
5. Build a marketplace platform, starting with an MVP (Minimum Viable Platform).
6. Onboard your first sellers.
7. Launch your marketplace.
8. Reach problem-solution fit.
9. Reach product-market fit.
10. Scale into new markets.

This is the process we’ve seen work time and time again as we’ve worked with hundreds of marketplace founders.

Next, we’ll discuss the ten steps and how they can help you build a successful marketplace like Thumbtack. However, If you want more information and useful resources, check out our complete guide on building an online marketplace.

A good marketplace idea must meet some basic criteria, including:

• It must solve a real problem for both sides of your marketplace. 
• It must target a large enough market that matches your business goals. 
• It should have many customers and service providers. 
• It should have the potential for frequent usage.

With over 1,000 professional service categories, Thumbtack itself provides a great starting point for niche inspiration. You could look at verticals currently listed on Thumbtack's platform that seem underserved or have room for improvement based on customer reviews and demand. 

For example, try searching for “Thumbtack frustrations.” You’ll find discussions on the Thumbtack Community and Reddit, for example, that can give you an idea of existing users' pain points.

Alternatively, you could draw from your experiences, background, or interests. Think about professional service industries you are directly familiar with, one in which you understand the pain points well, or one for which you could create a much more tailored and premium experience.

Other promising areas to explore could be:

• Services with complex booking requirements (think B2B services, for example)
• Services requiring high skills, verification, vetting, and credentialing
• Categories disrupted by new technologies and business models.

Overall, the key is to find an underserved niche where you can realistically build up a critical mass of high-quality supply and where your intimate market knowledge gives you a competitive edge over generalist platforms like Thumbtack.

Generally, marketplaces use one or more of these six different types of business models:

• Commission
• Subscription
• Listing fees
• Lead fees
• Freemium models
• Featured listings.

The commission-based model and lead fee are service marketplaces' most common revenue models.

Thumbtack's primary model is the lead fee. Providers pay a flat fee or percentage of the job value when they receive a new customer lead through the platform, regardless of whether they actually book the job.

While Thumbtack does not charge commission fees, most service providers, like Upwork, charge a percentage commission in addition to the lead fees. The commission is taken once a service booking is confirmed and paid for. 

When choosing your model, consider factors like: 

• The average job sizes in your niche 
• Whether complex vetting or messaging is required pre-transaction 
• How price-sensitive your supply is: Lower-priced services may require a commission model, while higher-value jobs could support lead fees.

Thumbtack successfully uses a lead fee model because service professionals are willing to pay upfront for access to its high customer demand and quality leads. For new entrants, we advise our customers at Sharetribe to start with a strategy that doesn’t increase the barrier for the first users to join, such as commission.

Start with a focused scope and gradually expand rather than attempting to tackle a broad market from the outset.

As we discussed, Thumbtack notoriously did the opposite. From the start, they aimed to blitz the entire U.S. market by offering every type of local service in every region.

Co-founder Marco Zappacosta explained in the company's blog that they started with a big vision: 

"When we launched, we wanted to be the most helpful to the most people. So to do that, we offered every type of local service in every region of the U.S."

However, this audacious approach was viable in 2009 when there was very little competition across most verticals in the online services space. Additionally, venture investors at the time were more willing to fund based on total addressable market size rather than demanding early traction.

The landscape has shifted dramatically. Hundreds of niche service marketplaces are now forcing new entrants to be much more focused initially. Modern investors also heavily prioritize real user traction over just big opportunity projections.

As such, it's critically important for Thumbtack-like startups today to concentrate their limited resources. The broad nationwide strategy of Thumbtack is very difficult and capital-intensive for new marketplace startups today. 

How do you achieve this? Start by focusing on just a single category and deeply saturating just one metropolitan area or tight regional cluster of cities.

Winning a small niche in a small geography first can help you develop a defensible brand, refine your playbook, and prove your model before attempting broader expansion.

To pre-validate your idea, you must answer a few questions before investing significant time and resources into building out the service marketplace. These include:

• Do sellers and buyers actually have the problem you think they have?
• Can your solution efficiently tackle the problem?
• Can you monetize solving the problem?

Getting real-world answers and data-driven evidence ensures that there is sufficient demand and supply for your specific niche marketplace. 

One effective approach for pre-validating your idea is to join the Thumbtack communities or subreddits, find a sub-group dedicated to your specific niche, and become active there. 

Ask experienced top service providers in the community how often clients post jobs related to your idea or how competitive it is. You could also ask questions about the specific problem you aim to solve and listen to their feedback.

If the feedback doesn’t align with your assumption, change your approach and validate again!

Alternatively, you can set up a simple landing page allowing interested users to pre-register and sign up for your marketplace before launch. This collects direct evidence of existing demand.

The goal is to avoid spending days building out an entire marketplace only to discover a lack of interest or mismatched expectations. Proper pre-validation helps eliminate riskier assumptions upfront.

The lean startup approach advises starting with a Minimum Viable Platform (MVP), which consists of just the core features needed to facilitate your marketplace's transactions. 

With an MVP, you can quickly enter the market with a lower upfront investment and gather user feedback to improve the product iteratively.

Thumbtack itself started off a bit scrappy. Zappacosta, one of the co-founders, once said that, in the early days, everything was done manually. Customers had to fill out forms, and professionals would respond with quotes.

As you can see from the screenshot, Thumbtack’s initial platform lacked visual polish and was light on advanced functionality. However,  it had the basics needed for its local services marketplace—customers can post jobs and receive quotes from interested providers. 

Similarly, your MVP should focus on core value propositions and transaction ease. Users must be able to browse the service catalog, send quotes, make bookings, and make payments. While you should avoid overloading with bells and whistles at the start, you shouldn’t compromise on a good user experience. 

Building an MVP from scratch with coding can quickly become development mud for new founders. If you don’t know how to code yourself, you have three other options to create an MVP like Thumbtack:

• Find a technical co-founder to build it for free.
• Find skilled freelancers on platforms like Upwork or Fiverr.
• Build your MVP yourself using no-code platforms.

The third is much easier and faster. You can leverage a no-code marketplace builder solution in a few days without writing a single line of code. 

Sharetribe, for instance, lets you launch a fully functional two-sided marketplace (with a traditional workflow similar to Fiverr’s), complete with listings, booking flows, payments, and order management, in days instead of months. This significantly reduces upfront engineering costs and gets an MVP live faster so you can start discovering product insights and attracting early users.

As the marketplace grows, Sharetribe also provides unlimited flexibility to extend with custom coding for more advanced functionality, vertical-specific features, branding, and more.

All two-sided marketplaces face a chicken-and-egg challenge when first getting started: Customers won't join a platform with few service providers, and service providers won't join a platform with few customers. So, which side to focus on first?

The standard approach, which Thumbtack followed, is to focus first on seeding the supply side with a critical base of service professionals before marketing to prospective customers.

In Thumbtack's case, they were able to scrape data to identify and proactively reach out en masse to service providers across every profession throughout the United States. However, taking such a nationwide blitz approach is unrealistic for a new lean startup.

Instead, focus on a particular geographic region or niche vertical at a time. You can manually find and reach out to qualified service providers through professional associations and job boards or leverage your existing connections in the aforementioned communities.

So, how do you convince professionals to sign up? Here are some ideas:

• Offer incentives like initial discounted fees or premium marketing placements.
• Show how your marketplace improves the experience of service providers.
• Offer exclusivity by showing that only top service providers are invited to join initially.
• Communicate your demand potential in a convincing manner.

With that said, be prepared to do a lot of direct sales and hand-holding, at least initially.

This is the stage where you start to attract prospective customers looking to hire professionals. However, this initial launch doesn't have to be massive. You can start by soft-launching in your geographic region or set of people.

A key advantage when launching is if you were able to recruit service providers who are also active on other major platforms like Thumbtack. Since they have existing customer bases, you can incentivize them to promote your new marketplace as an alternative to their current customer followings. 

Alternatively, you can also use these methods to attract customers:

• Google local service ads targeting your city.
• List your marketplace on directories or discovery sites.
• Use any existing customer base or email lists.
• Offer referral programs that reward existing users for referring new customers.

The goal of this launch phase isn't to drive massive volume right away but rather to facilitate your marketplace's initial transactions. This allows you to observe real user behavior while continuing to build out supply and demand in parallel.

Achieving problem-solution fit means that you've validated that your core marketplace solution successfully solves the key problems and pain points for both sides of your platform.

However, problem-solution fit does not necessarily equate to instant profitability. At this stage, the focus is ensuring your marketplace consistently facilitates transactions and generates revenue.

But what if you have enough users but no successful transactions yet? You may need to find out what the problem is and iterate. Ask your users questions like:

• Did they understand your platform's unique value proposition? Are the benefits clear for both sides?
• Are customers finding the services they need? Do providers see enough potential clients?
• Can customers easily find the services they seek? Is the matching algorithm delivering relevant results for both parties?

Answers to these questions will guide you on where to improve and iterate.

Moreover, if your ultimate goal is Thumbtack-level success, it can be tempting to start pouring fuel on the fire to rampantly scale and grow as quickly as possible. However, you must resist that urge.

At Sharetribe, we have seen that an iterative mindset is the most capital-efficient path for new marketplace businesses. So, ensure you gather insights from actual initial users, evolve based on learnings, and nail down a validated solution before over-investing in growth.

Achieving product-market fit means you have a validated and repeatable business model that can scale successfully. 

For a marketplace like Thumbtack, the key indicators of product-market fit include:

• Supply and demand achieving liquidity 
• Unit economics (customer acquisition costs vs. customer lifetime value)
• Optimized matchmaking and seamless transaction flows
• Proven retention and repeat usage metrics

Of all the four, liquidity is the most important metric. It shows that clients can find the service they need and that service providers convert their listings into bookings. You can boost your liquidity using these methods:

• Direct sales.
• Marketplace SEO
• Viral marketing.
• Hyperlocal offline marketing.
• Network effects.

If your end goal is to build a major, nationwide service marketplace like Thumbtack, reaching product-market fit with a proven playbook is essential. This blueprint will be a major asset as you pursue larger expansion stages.

At this stage, you'll likely need to raise external marketplace funding for your expansion. Thumbtack itself raised $30 million in 2014 from investors like Sequoia and Tiger Global and then $100 million from Google the same year to support its growth.

Although its gross revenue exceeded $2B in 2021, and its latest $275M round in the same year came at a $3.2B valuation, Thumbtack is not yet public, so we don’t know if they’re profitable.

However, today's VC environment is very different from when Thumbtack started. Investors now heavily scrutinize profitability potential and unit economics rather than just eyeballing the total opportunity size.

The point is that, when discussing with investors, you must prove that you can reliably replicate your product-market fit as you expand into new regions and categories.

With a proven playbook and product-market fit in your initial beachhead markets, you can then set your sights on ambitious growth and expansion. The goal is to replicate your success in new cities, regions, verticals, and adjacencies.

However, when scaling into a new market, ensure you note the following:

• Reach product/market fit in your first market.
• Then, scale one market at a time.
• Create a playbook of what works.
• Repeat the process until your business goals are met.

At this stage, your simple MVP may no longer be sufficient. You'll likely need to invest in product development to improve functionality, user experience, and other differentiating features.

If a platform like Sharetribe powers your marketplace, adding custom-coded elements to the no-code builder can be an effective approach.

Launching an online marketplace like Thumbtack is no longer exclusive to those with technical expertise, thanks to no-code platforms like Sharetribe. As long as you follow the right steps, you can bring your marketplace vision to reality with remarkable ease, even without any prior coding experience.  

Here’s the summary of what it takes:

• Start by niching down–find an underserved local service vertical or region to focus on.
• Validate real demand and supply before building.
• Launch an MVP marketplace quickly using a no-code platform like Sharetribe.  
• Prioritize onboarding quality supply before marketing to demand.
• Iterate rapidly based on user feedback to reach problem-solution fit
• Establish a repeatable playbook to achieve product-market fit efficiently
• Raise funding to fuel expansive growth into new markets and verticals

But the most important step is to start today! Don't over-plan—build, launch, learn, and improve continuously.