Software specialists now push contractors
The Denver Business Journal - November 10, 2006 - by Bob Mook
After selling Recruiting Solutions International Inc. (RSI) to a large information services company for
millions of dollars in 2004, Mark Henninger was content to spend his days sailing around the Baja
peninsula -- for a little while.
Henninger, 43, and Chris Boyd, 40, the chief techie behind RSI, regrouped and started plotting their
next big idea, between jam sessions and beer.
The result: BestContractors.com, an online resource for people seeking contractors for home renovations.
In hatching the concept, the duo built on their experience at RSI, where Henninger and Boyd developed
process-management software that helped employers screen online applications.
Henninger, who had no formal training in software development prior to RSI, said the two started
BestContractors.com with $150,000 of their own money.
"When we launched, we practically gave the software away [at a rate of] $50 per user. By the time
we sold the company, we charged our last client a $250,000 set-up fee and $25,000 a month," Henninger said.
RSI's revenue-generating potential drew the attention of Ceridian Corp., the largest payroll and human
resources provider in Canada and the United Kingdom, which purchased the software company for $11
million in 2004. Based in Minneapolis, Ceridian (NYSE: CEN) employs about 9,433 people.
With the newly found riches, Henninger bought a boat docked in Cabo San Lucas, a city on the Baja
California peninsula. Henninger says he's rented the boat to a number of celebrities, including actors
Pierce Brosnan, Sean Penn and Robin Wright Penn.
While the sale allowed Henninger to enjoy a life of luxury, he may have underestimated RSI's value.
"One of our competitors sold for $100 million," he said. "If we waited a little longer, we could have
probably sold for more than we did."
Still, Henninger and Boyd also realized they did a lot of things right at RSI. "We wanted to get into
Web-based, process-management software again," he said. "But we wanted to combine that with
the concept of 'paid local search,' which is really what the Google phenomenon is all about."
After much brainstorming, developing and recruiting, Henninger and Boyd formally launched
BestContractors in late 2005.
Henninger said the home-improvement market was a "no-brainer" because there's currently no
way for homeowners to comparison shop for contractors online -- with the exception of ServiceMagic,
a Golden-based company that matches homeowners with about 43,000 contractors who provide
home repairs and remodeling.
The difference, Henninger said, is that BestContractor customers have the opportunity to choose from
a wider range of businesses, while ServiceMagic customers submit an online form and receive three
options for a particular job. ServiceMagic contractors place bids for the leads.
Under the BestContractors model, contractors pay a monthly fee ranging from $250 to $800. But
Henninger said the site gives customers and contractors an online forum for communicating the
specifications of a home-renovation project. All contractors are screened and asked to sign a
contract -- outlining a code of ethics -- before subscribing to the site.
Toby Hertel, president of AAA Home Improvement in Lakewood, said having tried both ServiceMagic
and BestContractors, he prefers the latter.
"We've paid for several leads that basically led to nothing," Hertel said. "[BestContractors] allows us
to find out if a customer is serious or not before spending a lot of time and effort on them."
Hertel said he was intrigued with the concept because he thought of it himself before BestContractors
approached him. Although Hertel advertises in directories and elsewhere, he claims that BestContractors
has yielded his best results for the money.
While only 700 companies currently subscribe to BestContractors, Henninger expects the number to
"explode" in the next few months as the startup begins to launch a massive marketing campaign. The
site drew 40,000 unique visitors in October.
The company serves contractors in Denver, Dallas, Miami and Minneapolis, and plans to expand its base
into New York City and Los Angeles before year-end. BestContractors plans to go nationwide in the next two years.
Locally, BestContractors established a partnership with KUSA TV (Channel 9), which will run its ads on TV
and a link on its Web site. The company has developed a similar partnership with NBC-Universal affiliates
in markets where it will expand.
"Partnering with mainstream media is a major part of this business," Henninger said.
BestContractors.com, which employs 30 people in its 2,500-square-foot office in the Curtis Park neighborhood,
plans a massive expansion in the next 18 months after it receives a round of venture capital.
Henninger says the company is putting together a multimillion-dollar round of VC financing that will
be announced soon.
The company is negotiating to lease a 12,000-square-foot warehouse within walking distance of its
headquarters to be used as a call center.
"We had an office in LoDo before, but when we needed to expand, we made a conscious decision to do
something gritty," Boyd said, regarding the move to the ripe-for-gentrification Denver neighborhood.
While many companies outsource their call-center operations, Henninger said BestContractors won't follow suit.
"Customer service is so core to our business that we want to make sure we really own it," he said.
The founders of BestContractors say they devote up to 80 hours a week on the company. But Henninger
is confident the investment will pay off.
Ultimately, he said BestContractors hopes to sell out to a larger player -- and for a great deal more
than what he and his partner fetched with their last company.
DETAILS
Company: BestContractors.com
Address:
14142 Denver West Parkway, Suite 255, Lakewood, CO 80401
Phone: 303-629-8320
Employees: 30
Bob Mook, technology and telecommunications reporter for the Denver Business Journal, writes a monthly
column on emerging businesses. Reach him at 303-866-9678 or via e-mail at bmook@bizjournals.com.
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