On a humid day in 2005, American Broadcasting Company chief executive Lloyd Braun stood by a floor-to-ceiling glass window in his private offices on the 45th floor of the Ivory Tower building on the upper west side of Manhattan. It was a cloudy day, but as Braun stared down over the ant-sized people of Manhattan, he had every reason to be satisfied. The results of the latest monthly audience testing had just arrived on his desk and the data suggested that his new series Grey’s Anatomy, a medical drama about an attractive group of hospital interns — was set to be a hit¹.
Meanwhile, on the other side of the country in Palo Alto, an awkward founder named Jawed Karim was patiently uploading a 90 second homemade video of himself at the zoo engaging in small talk in front of a bunch of rather ordinary looking elephants. He had just put the finishing touches on an MVP for his new startup Youtube and wondered if anyone would want to watch his intentionally low key video. He wasn’t particularly optimistic.
Over the years that followed, Grey’s Anatomy went on to become one of the highest grossing television shows of all time, amassing more than 22 million viewers and being nominated for 25 Primetime Emmy Awards. In 2020 Grey’s Anatomy owner ABC gathered an audience of over 298 million people and generated about $1.1 billion in revenue (source: wiki).
That video about the zoo elephants? It has now received over 157 million views whilst YouTube overall now generates more than 1 billion hours of video viewing per day (yes, per day) and earned about $19.7 billion in revenue in 2020. That’s almost 20x the size of ABC which was founded almost 60 years earlier (source: statista).
So how did a website for uploading low-res videos come to surpass and dwarf the creator of over one thousand mega hit shows including The Bachelor, Family Feud and Roseanne?
I believe that a significant part of this story can be explained by the long tail of video content and that this same phenomenon exists in the local services space.
Note¹ I have no idea whether the non-statistical details of these stories are correct… I’ve just been reading way too many biographies recently and wanted to try writing my intro like one :)
Is the opportunity worth the friction?
When creating a business to address a specific market, an important consideration is market feasibility. In simple terms, a market feasibility study asks: is the size of the market that a person (or business) intends to address (ie. total addressable market or TAM) large enough to make incurring the costs of addressing that market worthwhile? Asked in another way: is the size of the estimated market opportunity worth the friction²?
Looking at the overall local service economy, we can see that there are a number of service industries (markets) that have significant TAMs and are clearly feasible (eg. cleaning) whilst other service industries appear to be unfeasible because the TAM is either too small or too difficult to estimate (eg. the “get my drone out of tree” service industry).
Note² Friction not only includes financial costs but also the perceived effort, risk and opportunity cost of establishing and operating a business to provide a type of service.
The long tail within a service industry
One of the reasons that makes it difficult to estimate the TAM opportunity for many local services industries is the range of different variables involved in providing that service (as compared to physical products, which are mainly standardised). For example, in relation to cleaning, variables include:
- Timing: When does the home need to be cleaned? When are we both available?
- Location: Where is the home located?
- Specifics: What needs to be cleaned? Do we need to use organic products?
In the context of feasibility, each combination of variables for a particular service could be considered to be its own service industry since addressing each of those combinations of that service would present additional friction. In other words: cleaning isn’t just one service industry, it’s actually made up a long tail of many smaller service industries!
The long tail of potential new service industries
I believe that the potential to grow the service economy is absolutely enormous because people can solve almost any problem if we give them the tools and empower them. There are so many customer problems which right now are either not identified as problems, are ignored as problems or are left as unsolved problems — and these problems could (should!) be getting addressed by a service solution. We should be creating many, many more new service industries!
So in addition to the long tail that exists within many existing service industries, there is also a long tail of potential new service industries.
In summary, the long tail of services is made up of:
- The long tail of combinations of variables within a service industry; plus
- The long tail of potential new service industries
Reducing friction to unlock the long tail
Currently, the high degree of friction involved in creating a new service industry means that a significant part of this long tail of services does not yet exist.
At Airtasker, one of the most important functions of our marketplace is to reduce this friction by:
- enabling our Customers and Taskers to easily create brand new service industries through user generated content (posted tasks, listings)
- facilitating critical steps of an end-to-end service transaction including Payments, Connections and Reputation — and making each of these steps simpler and easier
By reducing friction through our marketplace, Airtasker is able to unlock the long tail of services — and I believe this is super important because the long tail of services is absolutely massive.
To keep unlocking the long tail of services, I believe it’s critical that we:
- preserve access to the ultimate long tail of services by enabling Customers to create brand new service industries by posting tasks in our Open Marketplace
- extend the long tail of services even further by enabling our Taskers to create brand new service industries through Listings
- keep working to lower the friction involved with facilitating end-to-end transactions and creating new service industries. Less friction means unlocking more opportunity.
Big discoveries in the long tail
Although by reducing friction we can unlock a long tail of smaller service industries, simply enabling a large number of new service industries to exist also allows Airtasker users to “try more things” (experiment). And sometimes these experiments can seem crazy at first but pay off big later on.
This means that unlocking the long tail not only allows us to discover smaller new service industries — it also enables the discovery of huge new service industries which simply needed a chance to exist first in order to demonstrate their potential.
For example — we needed to unlock the trampoline assembly service industry first to discover that this industry could create a $10,000 per month income for a single Tasker.
Airtasker’s unique perspective
Why do other local service companies like Urban Company (mainly cleaning), Deliveroo (food delivery) and Uber (transport) focus predominantly on improving an existing service industry? Why does it seem like we at Airtasker are so uniquely excited about the long tail?
I believe the answer is that it’s much more intuitive to improve something that already exists (eg. making a slightly better cleaning service or a slightly faster food delivery service) compared to empowering other people to create an opportunity that could potentially exist (eg. creating a service industry for trampoline assembly or spider removal).
But I truly believe that people are smarter and better than we may intuitively assume — and if we create the space for them to unleash their skills: we can solve an almost infinite number of customer problems with an infinite number of new service industries.
Circling back to our initial story of how ABC was eventually dwarfed by Youtube: ABC was focussed on improving something that already existed — better scripts, better actors, better cinematography etc means better television programs. This makes total sense and results in the development of some amazing content. It’s a reasonable business too!
But Youtube was focussed on empowering other people to create entirely new forms of content — reaction videos, how-to guides, videos of kittens playing on keyboards. This almost infinite range of videos was a much larger opportunity and one that was pretty hard (perhaps impossible) to imagine in the early days of Youtube when the founder uploaded the first video of himself at the zoo.
At Airtasker, I truly believe that this is day 1 and the same long tail phenomenon will play out in the services economy over the coming weeks, months and years. If we simply give people the tools and empower them to create new service industries — to unlock the long tail — we are on to something truly massive.
