Redbeacon, the six-person San Francisco-based service referral company, announced today that it has raised a heady $7.4 million in Series A financing from Mayfield Fund and Venrock. CEO and Cofounder Ethan Anderson tells us that the company needed such a huge round to quickly ramp up the staff, including engineers, designers and marketing people; aggressively expand markets beyond San Francisco (although no markets have been finalized); and build a wide range of business partnerships.
Anderson notes that demographics and population size will play a large role in determining its next markets, but that business “distribution partnerships” will also play a role. For instance, Redbeacon is currently testing with BT in the U.K.
Partnerships, however, will consist of all shapes and sizes, including communities, search engines and media sites. The commission basis for job leads will “monetize better than advertising,” predicts Anderson. It will also feel like a natural, value-added feature of their sites. Partners “will drive tons and tons of traffic,” he says. “They’ll be moving to value added transactions to users.” The site currently works with BigTent, the women’s group site. It also works with several companies that remain unannounced.
Partnerships are being extended to individual SMBs, which can be partners by plugging a Redbeacon widget into their site. They can emphasize specific service categories and service providers among the leads that are carried and receive a piece of Redbeacon’s 10 percent commission for jobs. A plumber, for instance, could provide a link to dry wall repair. “It is very contextual,” says Anderson.
Anderson adds that the site’s big challenge right now is not so much online competitors such as ServiceMagic, QuinStreet and others, but “changing consumer behavior,” as people are still used to picking up the phone. The social aspects of the site should help along these lines, especially the solicitation of consumer reviews, which complement reviews imported from Yelp, Google and Yahoo. Anderson notes that 50 percent of consumers who use the service for a job are providing reviews.
As for learnings from the site’s launch in San Francisco, Anderson says it is now up to 4,000 small businesses and service pros, and “is always getting more. It is almost enough to make the service work” with price quotes on every job, he says. “People are getting price quotes from very good providers.”