Pro.com — Transforming the Home Renovation and Remodeling Sector
by Bill Bryant, Partner
Peter Lynch, the famous investor behind the Fidelity Magellan fund (the largest mutual fund in the world for many years), coined an investment adage to “invest in what you know.” In other words, invest in a straightforward proposition where it’s clear in your mind why a company will succeed because you deeply understand the problem they are solving. With our investment in Pro.com, I am applying Mr. Lynch’s sagacious words.
My family lives in a beautiful, expansive 1902 vintage home; it’s one of Seattle’s original homes, and is on the historic register. Our home has been well-maintained over the years (we are only the fifth owner) with original woodwork, radiant heaters, “wavy glass” windows (including a Tiffany stained glass window), cabinets out of an antique dealer showroom, seven fireplaces, and many unique architectural details. But, when you have a home that is 115 years old, there are many outdated features that no longer work for how we live today. We have completed five significant renovation projects since we purchased the home. We completely remodeled the kitchen and three bathrooms. We consolidated two bedrooms and a family room into a master suite. We took our third floor and created a media and exercise space. We also built a mother-in-law unit in a full height basement.
In our experience, each project consisted of an opaque market of contractors who were difficult to qualify and slow to respond. Estimates and schedules were not transparent. The most frustrating aspect of the experience was that the remaining 10–15% of the project would be left hanging for weeks or months past the promised completion date. With 90% of the economics to the contractor behind them, they would start working on another project before completing the one that was nearly finished. Any individual homeowner is unlikely to represent another chunk of work in the short term, so there is little incentive to deliver customer delight and build a brand. As a result of how the market is structured, there are hundreds of thousands of contractors who are servicing the $400 billion home improvement industry, but no one contractor has more than a couple of percent share in any given geography. The local general contractor lacks the technology, data, automation, and scale to establish operations in multiple geographies.
Pro is fundamentally transforming the home renovation and remodeling sector by delivering an end-to-end consumer experience that begins with first touch around preliminary estimation, then manages the entire process between a homeowner and contractors through a beautiful, comprehensive app and set of tools to:
- Ensure the homeowner understands every last detail of a bid (and can easily make and confirm changes to overall scope or a specific work item).
- Know exactly where the project is in terms of schedule and cost, and what tasks are being worked on in real-time.
- Put the consumer in full control over the process, knowing that Pro has curated its own carpenters and electricians, in addition to the best general contractors and sub contractors, while negotiating better prices on labor and materials.
Most importantly, homeowners can rely on Pro to get the work done in a cost-effective and high quality manner. The difference is that Pro is building a national brand. Pro doesn’t look at one homeowner as a one-off project. They view each homeowner as someone whose opinion, referral, and review matters deeply. Pro has completed nearly 2,000 projects and averages over 20% of customers each month who were past customers, or referrals from past customers. Think about that for a moment. This is a business fraught with misaligned expectations! Pro’s customer centric focus on delighting the customer means exceeding their expectations.
While the market opportunity for a tech enabled “virtual” general contractor is immense, our thesis around Pro started with the management team. CEO Matt Williams sold his first startup to Amazon in the late 1990s, and then went on to hold senior general manager roles in helping Amazon build numerous billion-dollar businesses. COO and Vice President of Engineering Raji Subramanian also joined Amazon through an acquisition in the same era and worked in the early days of core businesses such as Marketplace and AWS, along with a stint running development for Yahoo! Finance.
We recognize every DFJ portfolio company that exceeds $1 billion in market value with an award we call the Golden Frisbee. To date we have awarded 26 Golden Frisbees with another 10+ portfolio holdings waiting in the wings. I have deep conviction that Pro will soon be awarded its own engraved Golden Frisbee, and am thrilled to welcome Pro to the DFJ family.
Bill Bryant is a partner at DFJ