To be fair, in places that aren't the Valley wash-and-fold services are a dime a dozen, the product is heavily commoditized, and availability is high. You wouldn't need a high-tech web-based provider of laundry, because there's a perfectly good low-tech one already doing it, doing it cheap, and doing it well.
This is not a case of a new product being upmarket before working its way downmarket. It's a case where something that exists at rock-bottom prices everywhere else is being introduced to the Valley at a premium, because for some crazy reason the SF/Bay hasn't figured out laundry by now.
This feels like a business that solves a Bay Area Problem. The question is how many other geographies are there where there is sufficient demand, insufficient development of local alternatives, and the income level to support this kind of pricing.
I think it's safe to say that this sort of service doesn't stand a stone cold chance in hell in a place like NYC, where laundromats are everywhere, pick-up-drop-off services a dime a dozen, competition fierce, prices low, and being VC-funded with a cool mobile app doesn't earn you many (if any) points.
It's really nothing "tech" about this business at all. The only reason it's on HN is because it's a YC company. All the challenges are basically business challenges. SV seem to have created a culture were you can ride on the merits of technology without any actual substance.