Need to get a faucet fixed? Need to find a personal trainer? Need to hire a carpenter for a home repair?
Think about how people normally find service providers to meet these and similar needs. They either ask or friend or go straight to a search engine to start sorting through possibilities. Once they’ve jotted down several potential choices, they start calling around to see who’s available and how much it will cost.

Redbeacon, which launched in September 2009, was founded to make this process more efficient. You can log onto Redbeacon’s Web site, describe a job you need done, and Redbeacon will search its massive database of service providers to find three to five companies in your area to bid on your job. You’ll look at the quotes, the ratings and reviews from others who have used the provider, the background checks provided by Redbeacon, and make a selection. You then click on one button that says “Book It” and the appointment is set. Redbeacon is free to the user. It makes money by taking a 10 percent commission on the jobs it books for service providers.
Redbeacon is now a fast-growing company that’s raised $7.4 million in funding and is expanding its most popular services to the top 50 cities in the United States.
But rather than coming out of the gates fast, Redbeacon deliberately got off to a fairly slow start. And while it’s now expanding rapidly in certain areas, part of the company is still growing slowly as it continues to get to know its users and tests and retests the usability of its site.

Discussion Questions
1. Look at the material in this chapter under the heading “Preparing for Growth.” Evaluate the degree to which Redbeacon has been sensitive to the three issues under this heading.
2. Look at Figure 13.2, which depicts the organizational life cycle. Which stage of the organizational life cycle is Redbeacon currently in? What issues will the founders of Redbeacon have to be sensitive to during this particular stage? What issues, if any, do you think will be problematic for Redbeacon?
3. The section of the chapter labeled “Day-to-Day Challenges of Growing a Firm” lists four primary challenges: cash flow management, price stability, quality control, and capital constraints. Briefly comment on how Redbeacon has dealt with each of these challenges. Which of the four challenges do you think will pose the greatest challenge for the founders of Redbeacon moving forward?
4. Evaluate Redbeacon’s future initiatives. Do you think Redbeacon should be more open to developing a parallel Groupon or LivingSocial type of strategy and offer daily deals featuring local service providers? Do you agree with its overtures to Google, Yahoo!, and Bing? How likely is it that one of these companies will partner with Redbeacon?
Finally, do you think it’s a good strategy for Redbeacon to develop co-branding strategies with organizations such as the moms’ groups as mentioned in the case?

Application Questions
1. Many observers have noted that Thumbtack.com, a Redbeacon rival, is rolling out its nationwide service more quickly than Redbeacon is. Do you think Redbeacon has been too timid in terms of the pace of its growth? Does Redbeacon risk falling behind if it doesn’t expand as rapidly as Thumbtack.com?

2. Make a list of five things that start-ups can learn from Redbeacon regarding how to manage the early growth of an entrepreneurial firm.

Transcribed Image Text:

FIGURE 13.2 Organizational Life Cycle Sales Introduction Early growth Continuous growth Time Maturity Decline