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Summary:

Redbeacon is just a year and a half old, until recently was bootstrapped, and has deployed its local services marketplace in only one region. But something about what it’s doing makes people think the company’s on to something big. CEO Ethan Anderson explains the appeal.

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Redbeacon is just a year and a half old, until recently was bootstrapped, and has deployed its local-services marketplace in only one region, but something about what it’s doing clearly makes people think the company’s on to something big. It’s won four separate startup competitions, including TechCrunch 50 and Silicon Alley Insider’s top prizes. People seem to really like the idea of using a website to find and negotiate with local service providers to clean their house or detail their car.

Redbeacon’s most recent valuation was its first outside funding: $7.4 million from Mayfield Fund and Venrock. So we invited co-founder and CEO Ethan Anderson over to our office to hear about what the company is doing to meet these lofty expectations. He told us that one of the most interesting services requested on Redbeacon came last week, for an artist to paint a user’s bulldog riding a horse, with Native Americans riding next to him chasing buffalo. That job got 12 quotes. On the more serious end of the spectrum, the most valuable gig acquired on the site to date was for a $15,000 driveway installation. (Redbeacon’s business model is to take 10 percent of jobs won through its service.)

Redbeacon is planning to use the funding to expand, said Anderson, by building up new regional markets and also through online distribution, via a publisher widget and formal partnerships with distributors like phone directories. He wants to build Redbeacon as a brand, while borrowing from the traditional classifieds business.

Next week, someone I found through Redbeacon is coming by to clean my house, after a reasonably easy process evaluating multiple bids, schedules and clarification questions on the site. The company doesn’t guarantee its providers’ work, instead using social feedback, Yelp reviews and ranking to recommend relevant providers and let the user make a decision. In some cases, unfortunately, that means there’s very little information to go on. I’d love to see more about how providers perform relative to the competition and how their pricing stacks up relative to local averages. Still, it was incredibly convenient to use a web interface, and I will most likely do it again.

Here’s our video interview with Ethan Anderson:

By Liz Gannes

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  1. I couldn’t even find a glazier in the categories – when their support contacted me, they didn’t not what that was. So clueless – no responses.

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  2. 10% ?!?!?! Thanks, but I’ll stick to ServiceMagic for now.

    Seriously, there are so many companies that have tried this. SimplyDone partnered with AT&T (then SBC) to get the Yellow Pages involved, Respond & Imandi each raised $10+ million in 1999 from notable VCs, Angie’s List is well respected. Most of the above are gone or ghost sites, though some have been reasonably successful. What’s amazing is the myopia of the investment & startup community.

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  3. As a co-founder of ImproveNet ($82m raised, public in 2000, acquired by ServiceMagic), my perspective is that RedBeacon may work well with easy to define services such as car detailing and house cleaning where the buyer knows exactly what they want and when they want it. With ImproveNet, we went after the larger kitchen and bathroom remodeling projects (because that’s where the money is!) and found that homeowners often didn’t know what they wanted, so project leads sometimes weren’t real enough for the contractors to pay for.

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  4. RedBeacon seems like a LendingTree for contractors. Kind of Web 1.0 with some pasted-on testimonials. Not all that innovative.

    Many players (AT&T – Buzz.com, Reach Local, Localeze, Google, Facebook, LikeList) are converging on the social-local space to leverage word-of-mouth referrals. Who will come up with a successful way to effectively tap the value of these trusted recommendations?

    These two elements might be the keys:
    1. a unique monetization model. There’s so much value in the transaction itself – why not convert that to cash?
    2. a unique way to benefit causes. The Web is famous for its ability to marshal the concern and financial support of people for good causes. With a creative model, the social capital of these transactions can benefit charities with a recurring source of donations.

    Disclaimer: I am the founder of a word-of-mouth referral community called YouGottaCall.com. Our tag line is “Good referrals. Doing good.” We aim to provide recurring donations for trusted charities by harnessing the value of successful word-of-mouth referrals.

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