ServiceTitans- How dad’s gift turned a multi-billion dollar company

ServiceTitans is a cloud-based platform that helps home services companies streamline operations, improve customer services and increase sales. Two Armenian American college students, Ara Mahdessian and Vahe Kuzoyan met on a ski trip organized by the Armenian Student Association at Stanford and the University of California and became friends. It was not too long till they discovered that they had something in common: their dads were small business owners.

The two college students noticed that small businesses like their dads were often overlooked when it came to the aspect of technological innovations, most especially the jobs that had to make you get your hands dirty like plumbing, air condition repair, electrical and garage door repair, and so on. At that point, they began their research using their dads first as their case studies, then other people of different backgrounds of small or menial jobs.

After their college graduation, before heading off to Silicon Valley to look for jobs as programmers that year, they both decided to work on a little project as a gift for their dads, to make their contracting businesses easier. This project was a desktop program that actually helped their dads out with advertisement and also payment, as cashing paychecks was awfully stressful. They also helped in the aspect of inventory management as their dads worked in construction and plumbing which used quite a number of inventories.

For five years, from 2007 to 2011, Ara and Vahe worked on the project alone where they faced a lot of challenges. In fact, according to Vahe in an interview with HETQ, “we started 2007 and until 2011 it was just Ara and I. It was not a fun process as we went from one failure to another, it was an exercise to stay alive and not die”. In those five years, they were able to develop a very deep understanding of their customers, and they were able to deduce a specific pain point that every industry faced, which was an advertisement. According to Vahe, “When you’re in the plumbing business in the U.S., you have to find channels to advertise your business to reach customers. So 99% of the work in this business comes from the phone”. The solution they gave to this problem was that they built a platform that basically connected the users’ phones to the client’s database and then gave a report.

Since other people in their dads’ line of business faced the same problems, they decided to open up their solution to the public and in 2012, ServiceTitan was founded.

Since ServiceTitan was the only company at that point in time with the solution to that problem, it was no surprise they got their first batch of clients in no time.

With this first set of customers, they were able to raise a few thousand dollars but ran out really fast because they invested heavily in the growth of their staff, growing organically from 10 to 60 staff.

The decision to invest in staff strengthened the efficiency of the company as the company was now able to not only work on a desktop application but was able to gradually make the switch to becoming a cloud-based platform. The decision turned out to be a favorable decision as the company started to attract the attention of investors. After talking to their best investor, based on their fast-paced growth and their credibility from the reviews customers gave, the company got an investment deal which was the sum of 18 million dollars in 2015.

At the time of the investment, their customers were estimated to be about 200 to 300 customers. With the investment, they were able to employ more workers to aid the growth of the company. The company grew steadily to 700 employees, marking the beginning of major investments in the company.

After landing their first major round of investment in 2015, the co-founders of one of L.A.’s fastest-growing startups had to make a major decision. ServiceTitans was flush with cash. It was time to start hiring more employees. But where should they go? “Some people were asking if we could move to Santa Monica, or move downtown,” said Vahe Kuzoyan, ServiceTitan’s president and co-founder. So Kuzoyan called an all-hands meeting and laid out all the potential locations that made sense for the company.

During the COVID-19 pandemic, ServiceTitan’s clients in home maintenance saw an uprise in the level of securing jobs, owing to the fact that everyone stayed at home, and the more they stayed at home, the more they became conscious of every little detail of their homes. The need for remote jobs also rose, which attracted more customers to their company’s platform.

According to Mahdessian, “at the beginning of the COVID-19 pandemic, it was wild. Lockdowns happened and everybody literally shut their doors and wouldn’t let anyone in”. But as people got comfortable with the lockdown safety procedures and got comfortable with social distancing, businesses picked up very rapidly, because people realized that the homes, they were stuck in required a lot of work.

ServiceTitan’s rapid growth through the COVID-19 pandemic emphasized the essential nature of the home and commercial service industry.

The ability for technicians to work in a truly contactless way, powered by the software. The way this growth was made possible during the pandemic was by pushing out new features to assist contractors with the new realities of contactless customer interactions, remote access to software, and much more.

ServiceTitans interviewed hundreds of customers in order to be able to develop a contractors playbook, along with an online community for contractors, to share their best practices with one another.

In 2021, the company got a 200 million dollar investment from Thoma Bravo. They also acquired Aspire Software, a St. Louis company that provides the same kind of end-to-end software for landscapers that ServiceTitan does for other types of trades, for an undisclosed sum.

Early in the same year 2021, the company also acquired ServicePro, a Columbus Ohio company, specializing in software for pest control and lawn care contractors.

ServiceTitan doubled its key financial metrics in 2001 and 2022. Annual subscription revenue rose from 100 million dollars to more than 250 million dollars in 2022, and its customer base has expanded in a similar fashion.

In 2019, 2,500 clients with a combined workforce of 50,000 were using ServiceTitans software. In 2022, that rose to 7,500 clients with 100,000 workers. The company’s funding and valuation have grown in tandem.

By 2020, ServiceTitans was valued at $1.65 billion. The new cash infusion from Thoma Bravo brings its total funding to nearly $1.1 billion and places its valuation close to the 10 billion dollar mark.

Mahdessian, ServiceTitan’s chief executive officer said that there is still enough room to grow as more than 3 million Americans work in the trades, with millions more in landscaping and lawn care. “We originally started in plumbing, HVAC, and electrical trades because that is where Vahe’s and my core expertise were, due to the work our parents did. But our mission from day one has always been to help all hard-working contractors across all trades, and we want to help all of them reach the level of success they deserve,” Mahdessian said.

Fermin Rivera, the owner of Red Apple Air in L.A.’s Harbor City neighborhood, said that ServiceTitans has transformed how he manages his 15-person HVAC operation. After he saw a colleague posting about the company on Facebook a few years back, he looked into it and decided to sign up. “Once we made the switch, it was like, ‘Oh, we’re playing big now.’” The software has helped him automate part of his marketing and customer relationship operations. He easily creates a menu of special HVAC packages for customers and track performance across his team. “It gives you a bunch of information. You’ve got all your metrics up in your face,” Rivera said. “It just keeps getting better and better.”

Byron Deeter, an investor who sits on ServiceTitan’s board, and led its first big round of funding as a partner, at the venture capital firm Bessemer Venture Partners, said that the company’s relationship with its blue-collar customer base was key to its growth. “They steadily listen to customer pain points, and the customers take them to the next opportunity,” Deeter said. The interesting thing is that the customers talk with each other, even competitors, so it is very hard to win their business. But when you do, the bonds are deep and tight,” Deeter said. “They don’t switch on a whim. They borough complex buying decisions. They talk to a lot of industry folks, but that’s what’s beautiful: When the snowball starts rolling downhill, it gets big, fast.”

Rumors about ServiceTitans going public, have been swirling since autumn 2021 when Reuters reported that the company had started preparations for an IPO in early 2022. The business insider also reported that ServiceTitan had filed confidential IPO paperwork with plans to go public at a valuation of 18 billion dollars.

As of the time of writing, ServiceTitans has not gone public.