MyOnlineToolbox.com, created by ServusXchange LLC, is both a business SaaS for home remodeling contractors and a Web 3.0 collaborative platform that connects contractors to each other and to homeowners, and gives home improvement product vendors (e.g., the Lowe’s and Home Depots of the world) a targeted way to reach both homeowners and remodeling contractors at the time a decision about remodeling is being made.
Brian Javeline, CEO of MyOnlineToolbox, spotted this opportunity shortly after he sold his interest in his previous venture, an online private equity software, in 2005. With two partners, Philip Tonks and Michael Carson, both of whom had extensive home improvement industry experience, he founded the company, which is based in Pompano Beach, Florida.
Javeline is a serial entrepreneur with over twenty years in software development whose past enterprise application development includes apparel industry software used by manufacturers Hanes and bebe and, most recently, InvestmentCafé, an online private equity service that counts among its users such investment firms as The Carlyle Group and UBS. Tonks is a partner at Paul’s Maintenance, Inc. (PMI), a large remodeling company in Florida, and Carson is a consultant and past owner of a home inspection firm.
According to the Bureau of Economic Analysis, the U.S. residential repair and remodeling market is a $152 billion industry for the labor alone. The home improvement market is $535 billion in product demand, according to Lowes 2009 Annual Report. There are over two million remodeling contractors in the United States by some industry estimates, but that number may well exceed three million owing to the fact that small contractors don’t always fill out surveys. Of the total remodeling contractors in the United States, 80% are small and 20% are larger firms, which brings the total TAM for MyOnlineToolbox to approximately $60 million a year by modest estimates.
Aiming for a slice of each of those lucrative markets, MyOnlineToolbox circles the entire home improvement ecosystem, starting with contractors who by using its SaaS platform engage homeowners, and then bringing in home improvement product vendors to complete the circle. Javeline positions MyOnlineToolbox first and foremost as a versatile and mobile “toolbox of business essentials” that a contractor can access from anywhere by logging online to store and organize contacts, schedule projects, create estimates and invoices and do many other tasks that traditionally have been done all over the place, often by taking notes in a hurry on a piece of drywall without any way to organize or analyze them later.
The collaborative platform for MyOnlineToolbox went live in 2009 with just over 80 users after extensive testing by PMI contractors, and it now boasts of over 1,000 contractors, all of whom joined as a result of comarketing partners and word of mouth, and mainly because the platform is self-propagating by design, similar to how LinkedIn encourages people to connect and interact with each other.
Further, not unlike LinkedIn, the more peers a contractor brings into his or her private network, the more efficient his or her work flow could become. The network of peers could bring in new jobs, help contractors complete jobs faster, and improve communications between contractors and homeowners, meaning less work to redo and quicker payment.
MyOnlineToolBox developed its SaaS application in collaboration with PMI, asking continually for feedback from PMI and its contractors, who from the start were their early adopters and to date have run thousands of contracting jobs through the MyOnlineToolbox platform. PMI represents a good example of a prospective contractor customer for MyOnlineToolBox, as a mid-sized contractor firm that sells between $3 million and $7 million a year in home repair and remodeling services.
The competitive landscape is rather fragmented. SuperBuild, Service CEO, CompuTool, Computer Ease, and Contractors Anywhere are among the more than 40 other companies that provide software to residential and commercial contractors, but each commands less than 1% of the market share.
For MyOnlineToolbox, SaaS revenues will come from recurring subscription fees charged to larger contractor firms, which are now set at $89 per month and could grow as more software functionality is added, while small one- to two-contractor firms are free users.
MyOnlineToolbox projects that it will gain 20,000 paying contractors and hundreds of thousands of free users before it begins engaging home improvement vendors as advertisers. Other potential sources of revenue are financial transactions between contractors and homeowners and and marketing dollars from home improvement suppliers and service providers.
Javeline presented to Sramana on February 18, 2010, at the 1M/1M strategy roundtable as the first presenter for the day. Sramana liked the company’s overall strategy and focus but recommended that it boost its TAM by charging small contractors a fee of at least $29.99.
ServusXchange LLC, the creator of MyOnlineToolbox, has received a combined $2.35 million in funding from the three cofounders and angel investors in California, Minnesota, New Jersey, Florida, Canada, and the United Kingdom. The company is looking to raise an additional $350,000 to $650,000 from angel investors, preferably seasoned entrepreneurs with domain experience in construction services, target advertising, and M&A.
Once profitably is reached within three to five years, individual investors could be bought out or stay on to enjoy the dividends. A possible exit could be achieved by selling to a large home improvement product suppliers such as Home Depot, Lowe’s, Ace, or Menards or trade magazine publishers.
This early stage company has free users that it is in the process of trying to turn into paying customers. While it remains to be seen whether they will succeed, and what kinds of conversion rates they would achieve in its freemium strategy, the tightly segmented market and the strong domain knowledge of its founders convinced us to put the company on the 1M/1M Incubation Radar.
This segment is a part in the series : 1Mby1M Incubation Radar 2010