The market is efficient. Good contractors have good clients and work on good jobs. They have B2B business relationships.
It is a two sided market for lemons. The contractors are mostly contacted by lemon customers. Mostly lemon contractors are likely to respond.
What makes homeowners lemon customers besides price sensitivity and non-repeating projects is inexperience.
Construction scheduling is in NP. Professionals subjectively incorporate that into their expectations with experience and the experience is often at the institutional level. Weather delays, materials shortages, slow owner decision making, things hidden behind drywall, bad soil underground, etc etc. The second ’etc’ because any of these things on someone else’s job affects your job.
Nobody who has been around the rodeo actually believes it will be done in time for Christmas. Maybe Memorial Day if you are lucky. But Labor Day just to be safer.
This is basically a better version of what I came here to say. I worked in a family construction business, and my perspective / experiencr is that good, established contractors do no advertising and have years of backlog (at least for custom homes or major renovations). I like how you define two markets, that's how I have seen it. There are people that are looking for quality and have the experience to know what to look for and what to pay in terms of money and patience, and there are those that watched a show about how to negotiate with your contractor and get three quotes, etc. Ironically, you usually pay less with a good contractor because you're paying for work and not marketing.
I've seen different variations on the "connect you with a contractor" business model, and to me they don't work because good contractors are not a commodity. There is definitely a class of contractor that will go for this, but they are always the worst ones because if they were better they would be loaded up with work without having to pay in to a service that takes a cut from them.
For very routine jobs, this kind of service is provable fine. Like ordering McDonald's from uber eats. And this appears to be what they are initially targeting.
Home Depot and Lowe’s already offer service in the market segment. They advertise fixed prices but their affiliates don’t take on projects with unusual conditions. And sometimes never provide a quote because they are busy.
There is always an unmet demand for below market rate services. Always a demand for work with infeasible economics.
The construction market is highly efficient. Competitive bidding is normative.
This is the right take. Home projects are not like, say, Uber where the primary quality criterion is essentially getting a person to point B in a reasonable time frame, so easily measurable.
Brokering this kind of work is much tougher, with far more variables for quality/success and more room for subjectivity along with some lag time between the work and ability to fully measure quality. I suspect the founders here will find that the very reasons it's a problem for customers are the reasons it will be a problem for them. There is no shortage of bad contractors willing to charge for their work, and the good ones don't need to share their cut to get work.
So, they've absolutely identified a significant homeowner challenge, but their solution seems a bit naive. As another example, auditing photos for quality is unreliable and doesn't scale with project complexity. Yet, if you start to go further in auditing (e.g. on-site auditors) or otherwise guaranteeing and allocating work, then you've essentially re-invented subcontracting (perhaps even more akin to employment). I think they are also vastly underestimating their exposure in guaranteeing this type of work, especially for a small firm. Just arbitrating disputes alone can be a massive resource drain, and that doesn't include the actual remedy (and who pays for that remedy?).
And, of course, the Home Depots and Lowe's of the world already do something similar, with variable results. Hard to see where the real value-added differentiator is here, outside of the lack of brick and mortar.
I do hope they have an epiphany on their journey that leads them to a solution.
Interesting... HomeBreeze has quickly become an important B2B relationship for the home pros we work with. Although a lot of what you're describing is for construction, which we don't serve, your comment makes me think that we could be giving homeowners access to great contractors who they wouldn't be able to otherwise access.
Can confirm the 2-sided lemon market exists in the UK. Sites like ratedpeople.com will efficiently connect you with absolute chancers who will make an excellent mess of any task.
The only way to get any kind of basic quality assurance is either to do it yourself, or to find a referral to a reputable pro via word of mouth, often having to wait months for their next available slot.
Comments
The market is efficient. Good contractors have good clients and work on good jobs. They have B2B business relationships.
It is a two sided market for lemons. The contractors are mostly contacted by lemon customers. Mostly lemon contractors are likely to respond.
What makes homeowners lemon customers besides price sensitivity and non-repeating projects is inexperience.
Construction scheduling is in NP. Professionals subjectively incorporate that into their expectations with experience and the experience is often at the institutional level. Weather delays, materials shortages, slow owner decision making, things hidden behind drywall, bad soil underground, etc etc. The second ’etc’ because any of these things on someone else’s job affects your job.
Nobody who has been around the rodeo actually believes it will be done in time for Christmas. Maybe Memorial Day if you are lucky. But Labor Day just to be safer.
This is basically a better version of what I came here to say. I worked in a family construction business, and my perspective / experiencr is that good, established contractors do no advertising and have years of backlog (at least for custom homes or major renovations). I like how you define two markets, that's how I have seen it. There are people that are looking for quality and have the experience to know what to look for and what to pay in terms of money and patience, and there are those that watched a show about how to negotiate with your contractor and get three quotes, etc. Ironically, you usually pay less with a good contractor because you're paying for work and not marketing.
I've seen different variations on the "connect you with a contractor" business model, and to me they don't work because good contractors are not a commodity. There is definitely a class of contractor that will go for this, but they are always the worst ones because if they were better they would be loaded up with work without having to pay in to a service that takes a cut from them.
For very routine jobs, this kind of service is provable fine. Like ordering McDonald's from uber eats. And this appears to be what they are initially targeting.
Home Depot and Lowe’s already offer service in the market segment. They advertise fixed prices but their affiliates don’t take on projects with unusual conditions. And sometimes never provide a quote because they are busy.
There is always an unmet demand for below market rate services. Always a demand for work with infeasible economics.
The construction market is highly efficient. Competitive bidding is normative.
This is the right take. Home projects are not like, say, Uber where the primary quality criterion is essentially getting a person to point B in a reasonable time frame, so easily measurable.
Brokering this kind of work is much tougher, with far more variables for quality/success and more room for subjectivity along with some lag time between the work and ability to fully measure quality. I suspect the founders here will find that the very reasons it's a problem for customers are the reasons it will be a problem for them. There is no shortage of bad contractors willing to charge for their work, and the good ones don't need to share their cut to get work.
So, they've absolutely identified a significant homeowner challenge, but their solution seems a bit naive. As another example, auditing photos for quality is unreliable and doesn't scale with project complexity. Yet, if you start to go further in auditing (e.g. on-site auditors) or otherwise guaranteeing and allocating work, then you've essentially re-invented subcontracting (perhaps even more akin to employment). I think they are also vastly underestimating their exposure in guaranteeing this type of work, especially for a small firm. Just arbitrating disputes alone can be a massive resource drain, and that doesn't include the actual remedy (and who pays for that remedy?).
And, of course, the Home Depots and Lowe's of the world already do something similar, with variable results. Hard to see where the real value-added differentiator is here, outside of the lack of brick and mortar.
I do hope they have an epiphany on their journey that leads them to a solution.
Interesting... HomeBreeze has quickly become an important B2B relationship for the home pros we work with. Although a lot of what you're describing is for construction, which we don't serve, your comment makes me think that we could be giving homeowners access to great contractors who they wouldn't be able to otherwise access.
Installing water heaters is, as you know, construction.
Giving homeowners access to average contractors is a step up. Hard times are the measure of relationships.
In your case it will be when you have to choose one side of the market’s interests over the other.
Ultimately, vetting of customers is necessary. That’s equilibrium. The supply of sweet lemons is limited.
Can confirm the 2-sided lemon market exists in the UK. Sites like ratedpeople.com will efficiently connect you with absolute chancers who will make an excellent mess of any task.
The only way to get any kind of basic quality assurance is either to do it yourself, or to find a referral to a reputable pro via word of mouth, often having to wait months for their next available slot.