The service market—well, it’s a real mess. On the one hand, it’s just enormous. On the other hand, no matter what service you order, it will either be delayed, more expensive than promised, of inappropriate quality, or all of the above 🙁 This means that you can rise very quickly and significantly here if you create your own service that starts doing everything properly. For example, like this startup.
Project Essence
I noticed this startup last fall but overlooked it at the time. Recently, in our fast founder chat, we were discussing the topic that a “good idea is when you can start earning quickly and easily.”
One participant shared his example when he decided to try painting summer cottages. A week after placing ads, he received dozens of orders, then bought equipment and hired workers. In the first month, revenue reached about 1 million rubles, and then doubled every month until the season ended.
The example concluded with the phrase, “for those seeking an idea, painting services are a very open, promising, and profitable market.” And that’s when I remembered that startup 😉
Craftwork offers Americans an “easy way to paint their homes.” This includes a full range of services — painting facades and interior spaces, both after building a house and during its major or cosmetic renovation.
At the first step, the customer enters the startup’s application or website, answers a few questions about the planned work, and within 30 seconds receives an approximate estimate of the cost and time required for the job.
If the initial estimates suit the customer, they can upload photos of what needs to be painted along with their requirements, preferences, and comments.
Afterwards, the startup’s specialists take a closer look at the scope of future work, clarify prices and deadlines, and create a schedule for the visits of craftsmen based on the customer’s schedule — and all of this, as promised, within “a few minutes.”
Next, the customer can relax because the work will start at the appointed time, and regular notifications will be sent to them. First, about which craftsmen will do what, when, and then about what they have actually accomplished.
The declared cost of the work includes all expenses and is final. No additional payments will be required during the work — neither from the startup nor from the craftsmen fulfilling the order.
Craftwork was founded in January 2023 and started operating three months later in the city of Charlotte and its surroundings in North Carolina. In 2023, the startup demonstrated revenue growth of 50–100% per month.
In the summer of the same year, the startup managed to get into Y Combinator, raising the initial investment of $4 million from YC itself and other investors. And in November of the same year, it raised an additional $6 million in investments.
3 months from the startup’s birth to the start of operations, revenue growth of 2x per month, and 2 rounds of investments totaling $10 million within 8 months from the start of operations — looks very pleasing 😉
What’s interesting
The question arises: where does such revenue growth and investor interest come from? I decided to look for market figures and was amazed.
The size of the house painting and finishing market in the United States is $24.7 billion! Moreover, the market is very opaque and fragmented, with many small local companies operating with unclear quality in advance. To actually order something, you need to call, discuss, and then deal with delays and requests like “the job turned out to be complicated, we need an additional payment, sir” 🙁
As one of the founders of the startup says, “I can order anything from my phone except to press a button and call a craftsman who will come and do the necessary home work for me [within the declared time and money].”
The problem here is not so much that there are no websites and software for calling craftsmen but that, alongside the software, it is necessary to rethink the very principle of how such a service business operates.
Most home repair services are marketplaces that simply accept orders and pass them on to external contractors. As a result, they cannot guarantee the timing and quality of the work. Therefore, today’s Craftwork decided to hire its own craftsmen — and on very favorable terms for them. These craftsmen receive a weekly salary from the startup, regardless of whether the startup provides them with work or not. In addition, the startup provides them with proper health insurance and opportunities for professional development.
This way, Craftwork can demand quality work from employees in exchange for all these benefits that employees would be reluctant to give up.
As the market is genuinely large, Craftwork turned out not to be the only startup that decided to modernize it. Another American startup, Improovy, caught my eye, which raised $3.3 million in investments, $2.8 million of which it attracted in a single round in 2022.
In general, the entire market of home repair services is fragmented and opaque. Forbes estimates that in the United States, there are 2.5 million companies providing similar services, employing 6 million people — an average of 2.5 people per such company 😉
In total, the revenue of this market adds up to a staggering $500 billion per year! Again, as a result, startups appear on the overall home repair market that introduce new approaches and business models.
Among them, Honey Homes is worth noting, which I wrote about last summer. They created a subscription service for all-in-one handyman services — he comes twice a month and completes all accumulated minor repair work that the homeowner has been collecting in the service app all this time. The subscription cost is $200 per month or $2,000 per year. In total, the startup raised $12.1 million in investments, $9 million of which came from a single round last year.
A conceptually similar type of service is car repair and maintenance. Last year, a startup on this topic, Carma, made it to Y Combinator, about which I wrote in December. They created an app where you can find a nearby auto repair shop in 30 seconds, where you can bring your car today for repair or maintenance.
Where to Run
The service market is, of course, a real mess. On the one hand, it’s just enormous. On the other hand, no matter what service you order, it will either be delayed, more expensive than promised, of inappropriate quality, or all of the above 🙁
The size of the market attracts some founders who try to create specialized marketplaces like “Avito for repairs” in general or in some specific service areas. However, unfortunately, the straightforward model of taking this market head-on doesn’t solve problems with deadlines, prices, and the quality of work.
To move to the next level, you need either a) to have your own craftsmen with clearly defined business processes for planning work, executing it, and controlling the quality of the results, or b) to integrate into business processes third-party contractors or your own franchisees with software-human complexes that allow you to do the same confidently.
In all likelihood, it is necessary to move sequentially from one territory to another and from one category of services to another, to avoid falling apart and losing control over what is happening. Also, you need to be able to “milk” the market and gain a critical mass of customers who consider you the best choice in a particular category of services in a specific territory.
Accordingly, the direction of movement is the creation of services that can provide ordered services within promised deadlines, at promised prices, and with promised quality.
They should become the “next generation” after today’s service marketplaces — and therefore will be able to take away existing customers from them and attract new ones.
The task is, of course, super challenging — but the market is so huge, and the problem is so pressing that the prize fund will more than cover this headache.
About the Company
Craftwork
Website: craftwork.com
Latest Round: $6M, 17.11.2023
Total Investments: $10M, Rounds: 2