Sramana Mitra: Is that a commission model or a markup model?
Min Alexander: There’s a gross margin. We want to be competitive on price, but we’re also saving time and convenience. Then we’re able to deliver our services for ordering and tracking through a digital interface.
Sramana Mitra: What is the gross margin for your business?
Min Alexander: On a retail level, we definitely want to keep this at a healthy level. Retail tends to be higher than some of the institutions. It really depends on the size of the work. For example, our average work order for a homeowner will be about $3,500. Last year, it was about $2,200 per transaction.
That margin also varies by region and size of work. When you go into our larger work orders, it’s not atypical for us to run a $200,000 renovation work. On the larger side, our margins will be different.
Sramana Mitra: Are we talking about 15%?
Min Alexander: North of 15%.
Sramana Mitra: What did you start with? It’s like a marketplace model.
Min Alexander: The MVP was the original v1 of PunchList where we had handymen who were franchised to take on the work when we got an order from a broker. The franchise’s original model was started by Jimmy Banyas, Rich Estes, and Tim Wolf. They’re still strong supporters of the company. I really like their input into a lot of what we’re building.
When I first joined, it was a vision of not continuing the franchise, but what do we do with the data? The MVP was an easy standardized handyman service where we’re able to outreach brokers to create no-fee estimates to let them know how much the services are and whether they use our service or not. Now we’ve evolved significantly.
Now we do have a much more robust technology infrastructure where we’re able to provide same-day estimates for no fee. Right now, we have over 400 work orders. We have markets that are nearing a million dollars.
Sramana Mitra: How did you get the brokers engaged?
Min Alexander: Based on relationships. It can’t be understated. Brokers are professionals. They take pride in their work. An average homeowner is only buying 1.7 properties in their lifetime. When you think about the experience, they don’t amass enough to say, “Here are the 20 things I need to look out for.” Whereas a high-performing broker might sell two to three homes in a month.
We’re here not to displace brokers but to empower their work. When you buy a house, not only is it a time of anxiety for the seller, but it’s also a time when buyers can get cold feet. Speed and quality are key. We provide the templates where pricing is super transparent so that negotiations don’t become adversarial. Sellers can decide if they’ll do the work or give credit.
Sramana Mitra: How did you get to these brokers? Were they your past relationships in your previous work? You’re not exactly a marketplace, but you do have a large number of suppliers working for you. You are sitting in the middle and putting it all together. Where did the early set of brokers who started working with you come from?
Min Alexander: It’s mixed, but a lot of it was cold calling and office visits. Then tapping into networks. Caroline One in Charleston really helped us start our business. Very earlier on, they were investors in PunchList. We’re very close to the Carolina One community. That was relationship-based. Certainly a lot of cold callings, meetings, and demos.
