
Homejoy (YC S10) Raises $38M as It Looks to Expand Beyond Home Cleaning - mlinsey
http://techcrunch.com/2013/12/05/homejoy-38-m/
======
pg
YC partners make notes each time we meet one of the startups, to keep the
other partners up to date. Six months ago I wrote:

    
    
      Have raised millions from angels but having trouble
      raising an A round, which is very surprising. Probably 
      because Adora is understated and female.
    

How things have changed in six months. If you grow as fast as Homejoy has,
investors eventually pay attention.

~~~
nswanberg
It makes sense that it would be easier to raise some angel money than to raise
venture capital, but is it typically much easier to raise millions in angel
money than it is to raise an A round? Is social proof helping in the former
and non-existent in the latter?

Separately, have you seen a case where investors completely failed to pay
attention to a growing company due to some attribute of the founder?

~~~
pg
The reason it was so surprising is that even 6 months ago Homejoy's numbers
were already well above the threshold for raising a series A.

Investors are always influenced a lot by the founders. Which they should be.
The mistake they make is to care about slightly the wrong things.

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kyro
Congrats to Homejoy, but a very frustrating part about following this industry
(and I guess startups in general) is the media's blatant overlooking of
competitors because they just aren't part of the valley's circle. MyClean is a
company I've worked with here in NYC and am a customer of that have been in
the online cleaning-on-demand space before EXEC entered. They're profitable,
offer a great service, and yet time and time again articles come out framing
the industry as if EXEC and Homejoy are the only two players. They're
hardworking guys and to see them consistently ignored is disappointing.

~~~
cylinder
And what about the fact that Homejoy got caught trying to buy Yelp reviews?
Even still, their Yelp reviews are quite poor in many big markets (Yelp
reviews are a major driver in this business)? In addition, their $20/hr price
is unsustainable and will have to go up once they demand profitability. Two
week wait times to book a cleaning may appear to indicate heavy demand, but it
also indicates poor planning and resource management.

Apparently all that matters anymore is how much VC money you can raise, not
the underlying business. "Journalism" in this sector is so incredibly lazy.

~~~
HomejoyHQ
Homejoy and it's leadership are committed to trustworthy and fair business
practices and reviews. Check out Adora's response from April 2013.
[http://blog.homejoy.com/kfJh5xY8LOe3pJZtAG9J9RD2](http://blog.homejoy.com/kfJh5xY8LOe3pJZtAG9J9RD2)

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7Figures2Commas
Homejoy charges $20/hour and pays cleaners $12 to $15 an hour[1]. The business
model is to undercut rivals[2].

Margin compression appears to be the trend in many of the saturated, highly-
competitive personal services markets like home cleaning. Homejoy might have
great growth, but investing nearly $50 million in margin compressed sectors
seems like a stretch for venture capitalists who have typically invested in
high growth, _high margin_ technology companies. The valuation math just gets
crazy.

What's next? VC-led roll-ups of small, local house cleaning services a la the
website roll-ups of the last boom/bubble?

[1] [http://techcrunch.com/2013/08/18/homejoy-behind-the-
scenes/](http://techcrunch.com/2013/08/18/homejoy-behind-the-scenes/)

[2] [http://www.geekwire.com/2013/dirty-house-pathjoy-online-
maid...](http://www.geekwire.com/2013/dirty-house-pathjoy-online-maid-service-
aims-clean-seattle/)

~~~
pg
Running a startup in a low margin business is one of those things that seems
like a bad idea till it's not. In this case the definitive counterexample
happened 19 years ago: Amazon.

~~~
madebylaw
The main difference to me is that Amazon has a massive moat (in the Buffet
sense) to prevent other competition from building an identical service. What's
to stop someone from building a HomeJoy clone and undercutting them even
further?

~~~
pg
As a retailer they do, but they don't as AWS, so a moat may not be necessary.
It would still be nice of course. I can think of some possible ideas, but I
should save that convo to have with Adora.

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avalaunch
It's pretty disingenuous to say "We're really sorry! We're fully booked right
now in this area." when you don't even service the area yet. Just be honest
and say you haven't made it to my city yet. I'd respect that a lot more.

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hnthr0wa4y1234
Congrats on the growth, but I certainly hope that they've found more scalable
growth avenues than buying Yelp reviews and running misleading Groupons as
described here:
[http://www.reddit.com/r/EntrepreneurRideAlong/comments/1cyg0...](http://www.reddit.com/r/EntrepreneurRideAlong/comments/1cyg0v/homejoy_caught_buying_yelp_reviews/)

~~~
HomejoyHQ
Homejoy and it's leadership are committed to trustworthy and fair business
practices and reviews. See Adora's response from April 2013.
[http://blog.homejoy.com/kfJh5xY8LOe3pJZtAG9J9RD2](http://blog.homejoy.com/kfJh5xY8LOe3pJZtAG9J9RD2)

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wehadfun
How do websites like this avoid getting cut out the deal.

I used a similar service to find a pet sitter. The first time I booked using
the website. Every time after I went directly to the pet sitter.

~~~
ernestipark
Airbnb is a somewhat similar example. You can definitely make deals directly
with a homeowner/tenant, but both parties are protected and there is insurance
when you go through Airbnb. Peace of mind is worth a lot.

~~~
mgkimsal
What sort of insurance? My wife booked an apartment in London several months
ago. Got there in November and it wasn't anywhere near what was shown on the
site - same location, but size, amenities, etc were all not as advertised.

~~~
wehadfun
He is talking about the insurance AirBnb offers to host in case a guest messes
up the place.

A well publicized incident happened where someone trashed a person's place.
The insurance AirBnb offers makes you try to use your existing policy first.

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loganfrederick
I live in Chicago and tried Homejoy a couple months ago to clean my apartment.
The entire booking process was quick and smooth, and the cleaner was pleasant
and did a good job. I'm glad to hear they are doing well.

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pbreit
On one hand, it makes little sense to continue paying a middle man for a
repeating service like home cleaning. On the other, there's some value in
having a diversity of vetted providers and the easy ability to switch. $38m
sounds like a lot, though, at this juncture. The novelty wears off pretty
quickly.

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iblaine
I've used homejoy 8 times so far. I'm shocked at how cheap it is. Every one of
my cleaners has been nice. One seemed kinda cracked out but still did a decent
job. Good to see homejoy continuing to expand.

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jameszhang
This is exciting, congratulations! I just booked my first Homejoy appointment
for tomorrow morning--super excited to see the results :)

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heyadayo
wow congrats guys! unbelievable growth, I love homejoy and I can't wait to see
how you use this capital to scale up.

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grep
Have they been around since 2010, or 2012 like Crunchbase says?

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starfishjenga
Nice! :)

