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IAC’s HomeAdvisor Uses Online Dating Playbook for Global Growth

  • Newest acquisition is HomeStars, largest Canada database
  • Company has spent $100 million on global home services deals

IAC/InterActiveCorp has bought Canada-based HomeStars, its second acquisition in the past four months of an online home services company based outside the U.S.

The deal is part of IAC’s plan to add sales and expand internationally at the fastest possible pace in its business of websites that connect homeowners with contractors such as plumbers and electricians. While the company declined to disclose the transaction price, it said it has spent about $100 million on four overseas deals, including HomeStars, in the past nine years. Toronto-based HomeStars is the biggest Canadian company in the market, with a database of 2 million home service providers, IAC said. The established user base is key, said Chief Executive Officer Joey Levin.

“In order to succeed, you need a service professional network and you need a collection of consumers,” he said in a meeting with Bloomberg News. “That doesn’t transfer from country A to country B, and that’s part of the reason we’ve done a lot of M&A here.”

IAC, the online media company controlled by Barry Diller, started in home services with HomeAdvisor, whose customers and contractors are mostly located in the U.S. HomeAdvisor is the fastest growing part of IAC’s portfolio of web businesses, Levin said. After about $1 billion in investments and more than a decade of building the operation, HomeAdvisor has gathered a significant number of service professionals and consumers and is ready to replicate its success in other countries, he said.

Proven Strategy

To do so, New York City-based IAC has been following a playbook it used when it looked abroad to expand its dating services -- buy platforms with an established set of users and teach the newly added brands lessons learned from the U.S. operations. In both cases, IAC is using technology to help people find one another in their local towns or cities, which means that success in the business is dependent on being able to grow users in each locale, Levin said. One region or country might respond to a sales or marketing approach in a different way from another. Getting a quorum of loyal users in one area doesn’t necessarily bode well for the next one, so it’s hard to save money in areas like sales and marketing even with scale, he said. 

“The thing we do bring to each country is having been through it before and knowing what does and doesn’t work,” Levin said. “It’s nice to skip over all those steps when you go into a new country and say, ‘This is the right way.’”

IAC will share HomeAdvisor technology with the international businesses, but marketing and sales will be run by separately by the individual units. As with the dating sites pulled together under Match Group Inc., the HomeAdvisor group’s businesses have thus far kept distinct brands, and HomeStars will probably follow suit, Levin said.

Including the HomeStars purchase, IAC now has home services operations in the U.S., Canada, and parts of Europe, including Germany, the Netherlands, France and Italy. In October, it announced an agreement to purchase of Berlin-based MyHammer Holding AG.

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