Building a Two-Sided Marketplace: LawnStarter CRO Ryan Farley (Part 2)

Sramana Mitra: Are we talking about a marketplace model? What is the business model?

Ryan Farley: It’s a transactional model. We process all the payments and we pay the service providers. It makes it a lot easier for them. The lawn service providers are going to make more money through our platform and it allows them to move their own customers to our platform because we take care of so much of the administrative overhead.

We also bring them jobs very close to their existing jobs with our distribution algorithm. They have nice clustered jobs with us. They end up making more money off our jobs than they do on their own in many cases.

Sramana Mitra: Why is that?

Ryan Farley: One of the biggest expenses for a lawn care provider is the drive time. They have to drive a truck with a trailer between 15 homes a day and they have to pay people to sit in the truck. If we can reduce the amount of distance that they’re driving by sending them jobs that are next door to jobs that they’re already doing, they cut down that expense.

Sramana Mitra: Is that the only place where you’re delivering higher leverage or is there any other way that you’re generating leverage for your community?

Ryan Farley: We’re bringing them incremental customers that they would not have been able to get. They wouldn’t have to cover the upfront marketing cost or figure out digital marketing. Occasionally, you’ll find a lawn care business that hires a local agency to do AdWords or SEO, but typically the agencies are not that good and they’re also expensive.

We’ve reached the administrative overhead. It’s one of the biggest hassles of lawn care professionals. Our platform takes care of all that. When our technology doesn’t do it, we have a customer service team that can field requests.

Sramana Mitra: Is your model such that once you have a client, the same service provider is going to take care of that particular client week after week?

Ryan Farley: In general, it’s the same service provider unless the customer isn’t satisfied.

Sramana Mitra: You’re basically recruiting annuity client for each of your providers.

Ryan Farley: Exactly.

Sramana Mitra: Are they paying you on that annuity service? All the transactions are being processed through you and you’re taking a commission an all of those?

Ryan Farley: That’s right.

Sramana Mitra: What year did you get going with this?

Ryan Farley: We first started working on it in August 2013. We did a bit of beta testing that fall. Our first real launch was in the spring of 2014.

Sramana Mitra: What percentage do you take from these transactions?

Ryan Farley: It varies by service, but between 15% and 20%.

Sramana Mitra: What was your strategy to get this off the ground? Did you get a bunch of lawn service providers on the portal first?

Ryan Farley: Yes. Very early on, I remember we put up a website and somehow had a couple of people sign up with us. I had to find a guy to mow a loan. I called a guy up. When we came to really launch, we were in Washington DC where you have four seasons.

We used the seasonality to our advantage. We used the winter time to recruit all these lawn care professionals. We met with the early ones. We made the agreements over winter. That way, we didn’t need to have customers on hand because there were no customers to be had. That gave us runway to go and acquire the customer side of things. We had the supply ready to go before we went and got the demand.

This segment is part 2 in the series : Building a Two-Sided Marketplace: LawnStarter CRO Ryan Farley
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