Workiz was founded in 2015 by a group of locksmiths determined to bring their local trade peers out of the pen and paper dark ages and into the future of digitized operations.
Today Workiz announced a $40 million Series C investment designed to help them continue to scale up in what is an increasingly competitive space. This round follows a $13 million Series B back in February.
The funding round featured investors with tech investing resumes that include companies like Alibaba, Asana, Spotify, and Toast. Lead Edge Capital led the round, joined by Gsquared and La Maison. Also joining were existing investors New Era, Magenta Venture Partners, and Maor Investments.
In an interview this week with Localogy Insider, we asked CEO Adi Azaria what were its most urgent needs that a fresh $40 million would address. People were at the top of the list. In order to attract the best people, a company needs to demonstrate it will be in the winning column. And without a talented team, it’s very hard to scale.
“The competition for employees is getting super challenging for companies. Without growing fast, you lose on headcount you lose on the quality employees, and so on,” Azaria told us. He added that “Growing faster is something that we have to do in order to take market share.”
The funding round announcement said the company will use the funding “to scale its operations while recruiting more talent and growing its customer base.”
The Path to Digitization
We talked to Azaria about progress in the drive to digitize local service businesses. This spans everything from how they acquire customers, process estimates, collect money and manage the customer experience. He said Covid was a catalyst, but the real catalyst has been evolving consumer expectations.
“Even without COVID, you could see the digitization basically takes place,” Azaria said. “And it’s not coming from the small businesses, by the way. It’s coming from the consumer. The consumer says, ‘What do you mean, you don’t have the ability to book online? What do you mean, you don’t take credit cards?’ Right? And then again, all these years basically changed the mindset of businesses. If they’re not going digital, they’re just gonna be out of business. And we clearly see that every day.”
Workiz offers a comprehensive all-in-one tool for home services pros. The stack breaks down into five buckets. Scheduling, payments (including a Quickbooks integration), communications (includes texting, click to call, and call tracking), people (includes team messaging and GPS tracking), and customer support. The company prices the product based on users.
Target Market Tradeoffs
Workiz sits at the lower end of the market, based on pricing, ARPU, and the average size of the businesses it serves. A one or two-person operation pays $65 per month and a company with 15 pros pays $299 a month. The company’s hook is a 14-day free trial with no credit card required.
It offers a nice contrast to ServiceTitan, which addresses larger service organizations, with large fleet operations. We asked Azaria about the tradeoffs involved in choosing to go after smaller service businesses vs the mid-market players.
ServiceTitan has focused on the “medium” sized local service provider, generating roughly $33,333 annually from each customer. Workiz by contrast generates about $2,500 per year per customer on average. Azaria said there are challenges at both ends of the market, but he likes his TAM.
“It’s all about market size and market share. As you go upmarket, you will see fewer and fewer companies and vice versa. Of course, it’s a two-edged sword,” Azaria said. “When you go very down market, you find customers churning like crazy. When you go very upmarket, you would see enterprise challenges like facing Salesforce and other huge businesses that really know what they’re doing. There is less churn, which also means less capability to replace the solutions. The question is where does most of the market lie? And what is the right price point? We see our market is at least a million to million and a half businesses in the US only.”
New Automation Tools
Coinciding with the new funding round, WorkIz has launched a new set of products designed to use more automation easier to help local services pros operate more efficiently.
The new suite is designed to help Workiz users close more leads, avoid job cancellations, and more. Workiz users can now send customizable automatic reminders to their clients for invoicing and payments. There is also a “review request” feature. This helps Workiz users acquire positive client reviews, which helps with lead generation and improves the overall business reputation.
Azaria said the increasing focus on automation can be helpful in addressing one of the local trade pro’s biggest challenges — finding and retaining enough skilled talent. And it’s helpful in a couple of ways.
First, using modern technology to process payments or track progress on a job, or solicit reviews signals that this is a tech-forward business. And this helps attract talented young tradespeople.
“If you’re working with pen and paper and if you get young people to work for you, they will stop working for you immediately,” Azaria said. “They will see that you are an old way business.”
And the second advantage is that technology can help a business avoid nagging inefficiencies and get more done with fewer people. For example with routing optimization. Or with automatically confirming appointments to minimize showing up only to find the homeowner isn’t there.
“So automation allows you to do maximum output,” Azaria said. “I think twice the jobs a day is the extreme that we see. But almost anybody that digitizes their business immediately gets a higher output — from 20% to 30% higher.”