Zorik Gordon has a goal for his company: Become the Uber of home repairs. The former chief executive of online business marketer ReachLocal Inc. is now heading up Serviz Inc., a Sherman Oaks startup that ranked No. 1 among Valley firms for venture capital investment last year. Serviz’s website allows consumers to post a job, find a contractor at a set price, and pay for it online. According to Gordon, performing the transaction online is what separates his company from its numerous competitors, including Angie’s List, Thumbtack Inc., Craigslist and Google Inc. “The vision is to be the retailer of home services, from A to Z, at low prices – an Amazon approach,” Gordon said. “This is the era of retail for services online. There are going to be online brands for any on-demand service that today you buy conventionally.” Serviz started as ClubLocal, a division of ReachLocal, the publicly traded Internet marketing firm for small businesses in Woodland Hills. Gordon was co-founder and chief executive of ReachLocal until he resigned in September 2013. At the time, the press release said he resigned to “pursue other entrepreneurial opportunities,” which he now maintains referred to his ambitions to run ClubLocal. In February 2014, ClubLocal was spun off from ReachLocal. According to filings with the Securities and Exchange Commission, ReachLocal retained a 19.9 percent stake and gave it a value of $4.5 million. The company declined further comment beyond the filings. At the same time, Groupon Inc., the Chicago discount deal site operator, led a $7.5 million round of investment in the newly renamed Serviz that included another $3.2 million paid out over 12 months. Then in December, Serviz closed a Series B financing worth $12.5 million led by PointGuard Ventures in Menlo Park. Other investors include Stibel Investments in Malibu, Gordon and ReachLocal co-founder Michael Kline. Serviz was ranked as the top recipient of venture capital in the Valley for 2014, according to a report from accounting firm PWC and the National Venture Capital Association. Groupon did not respond to a request for comment. Home improvement At ReachLocal, Gordon sold packages of Web marketing services – typically a website, search engine optimization, advertising with Google AdWords and social media outreach – to small business owners. He said home repair shops were a big part of the client base. About three years ago, while chief executive at ReachLocal, Gordon saw that the next phase of ecommerce evolution would move beyond marketing and lead generation to actually making transactions on a website. Consumers would want to connect with service providers, understand the job and the price, and pay online. Groupon was a pioneer in the space, offering services such as family photo portraits and massages at a discount. And then came Uber. “We saw that coming, and in the tech world you either hop on the train or get left behind,” he said. With Serviz’s system, the company first recruits local plumbers, handymen, electricians and other technicians either through the website or old-fashioned cold calling. The vendors must pass an interview and agree to Serviz’s standard prices. For example, installation of an under-sink disposal costs $199, including the appliance, while carpet cleaning runs $33 a room. Each vendor receives an iPad and notifies Serviz about its hours of availability. When consumers need a service, they visit the site, type in their contact information, a description of the job and a two-hour time window to meet the contractor. Serviz matches the job to an available vendor, who must confirm the assignment. When the two-hour time window arrives, customers get a text or email when the service provider is en route. The contractor arrives, confirms the price, and assuming the customer agrees, performs the work. Once the job is complete, the customers pay with either a check or credit card through the Serviz provider’s iPad. Serviz takes a 20 percent cut of the total price. Zohrab Grigoryan, owner of ZH Plumbing in North Hollywood, signed up with Serviz four months ago and is now the top-selling vendor in the region, having completed more than 400 jobs. Each week the site gives him seven to 10 water heater installations, which cost $875 and up, depending on the unit size. “You can take the work or decline it, but I’ll tell you this, if you leave all day open, you’ll get work all day,” he said. Cheryl Lomelli, a Van Nuys homeowner, found Serviz through Google and gave it a try because she needed a plumber in a hurry. “I needed an appointment without a six-hour time window, and they offered a solution,” she said. “The work was good and reliable, and I would use them for other services.” Jeremy Broekman, principal at online brand consulting firm Broekman Communications in Encino, said Serviz is well-positioned as online marketing moves away from lead generation, which has suffered a backlash from business owners. “The ReachLocals of the world need to diversify their services as home improvement vendors are not willing to spend $2,000 a month on a lead generator for 20 or 30 calls,” he said. “The vendors can’t afford to pay for these programs since the Great Recession.” The big challenge facing Serviz and its competitors, Broekman believes, is the hot-and-cold habits of online customers. Traditionally, if a service company delivered great experience at a good price, it could count on repeat business, but that logic doesn’t work online. “Getting the attention of the consumer today has never been harder,” Broekman explained. “People may stumble on something new they’ll try tomorrow. It’s hard for a business to run in such a fickle market. And I think we are more fickle here in Los Angeles.” Geographic expansion Serviz’s growth strategy is geographical. ClubLocal had pilot programs in Dallas and San Francisco, but after Serviz became an independent company it shut down those operations and re-launched exclusively in Los Angeles. It now has a presence from Ventura County to the Mexican border. Every market requires the company to open a physical office where the sales force can recruit vendors, conduct interviews and monitor the iPad appointments. Gordon’s goal is to expand to the top 20 cities in the U.S. in the next two years, and then go international. That follows the pattern he used at ReachLocal, where local sales teams signed up small business owners for web marketing programs. The venture capital money will mostly go toward online marketing on search engines and social media, and on entering new cities, Gordon said. The company also plans to expand its service offerings. In addition to basic home improvement, it currently covers plumbing, appliance repair, house cleaning, mobile auto detailing and iPhone repair. But eventually, Gordon wants to add auto repair, medical and dental appointments and tax or legal services to the list. “We think this is a huge, multi-decade opportunity,” he said. “Relative to ReachLocal, it’s 10 times bigger. We could get acquired or become a large public company, because you are talking about so many dollars. Uber created a killer app for a $100 billion industry, and there are more opportunities like that ahead of us than behind us.”
