1. Those who claim cleaning is not a "skilled job" should get off their keyboard, spend a day cleaning their moms house, and get back to me when they learn they are 3X slower than a pro and destroyed something with bleach-based spray.
2. It feels like nobody here actually read Adora Cheung's quotes about multiple lawsuits coinciding with investment timing. That is obviously the reason they shut the doors.
3. Those who claim flaws in matching business model are to blame are making non-quantitative assumptions. Just ask yourself, how high of a percentage of users sharing direct phone # would cause a growing company to collapse? Also the supply side risks losing stable income or insurance coverage.
I do quite a number of things much differently than HomeJoy, and quality control being a major one. There are certainly a lot of challenges and operational complexity to keep my team innovating. Japan has the highest customer service standard in the world (and hardest to satisfy customers), which is great for building a more solid foundation. If any hackers are leaving HomeJoy and want to move to Tokyo, I'm hiring!
The term "unskilled", which is commonly used to reference these types of workers, is an economic term used to distinguished types of workers by characteristics like low education levels, minimum wages, and limited economic value. The skill you are talking about is called quality assurance and customer service, which as you rightfully point out is "skilled". Finding unskilled laborers who also possess those talents are incredibly difficult to not only find but also train.
> Those who claim flaws in matching business model are to blame are making non-quantitative assumptions
Here's a really easy quantitative assumption. Go on Craigslist and get quotes for similar services direct from the workers themselves, then compare it against Homejoy. That's called a gross margin and it's incredibly low. That's an inherent flaw.
I've wondered this about every single XX-as-a-service startup. I've heard Uber is 20%, but the overhead to manage a ride-sharing service that is doing tens of thousands of dollars a day in a medium-sized city is significantly less than what is required for other XX-as-a-service startups. The only other sector I can think of where the economics even come remotely close is food delivery. All other sectors - cleaning, home repair, lawn care, painting, etc - require significantly higher marketing spend/customer for a much lower volume of transaction. In addition, as discussed here, the overhead required to ensure quality and customer satisfaction is much higher as well.
x100. There is a lot more variance between two cleaners than say two Uber drivers.
Or if this is too extreme of an example, look at what happens when you give a driver who has only driven small cars a big truck pulling a loaded trailer. They'll definitely be slower than the driver's with skill.
The truck drivers turn around 18 wheelers in an impossibly tight space there and it's jawdropping to watch.
Seeing as Tokyo apartments are freakin' tiny, you could probably get the price down to make it more mainstream palatable.
The problem isn't that going direct decimates your customer base, it's that it takes your absolute best cleaners out of your system, so that you're sending a lower-quality experience to your customers.
I'm not sure that Japan and the United States are comparable here... the pride taken in one's work, and the overall level of customer service, are astronomical in Japan, it nearly made me physically dizzy to see. Both your cleaners and your customers are hard to compare to their US equivalents.
2. I think that's just a convenient excuse for what was more likely a poorly run business.
3. It definitely seems like a match-making business to me. Perhaps things are different in Japan. I could perhaps see wanting a few different providers for diversification.
Everybody did. It seems like a convenient face-saving excuse. The company didn't grow fast enough. If the all the numbers were impressive enough, investors would've taken the risk, especially the ones that already had $40m in.
Even with everyone working through Christmas?!
The company is HouseCare. http://housecare.tokyo https://www.linkedin.com/company/mommycare The company info email address is: email@example.com
1. The cleaners were not professionals. It felt like they were just recruiting anyone who wanted a job. You could really feel this with the lack of passion from the cleaners and the severe lack of quality cleaning. Most of the people complained and were quite rude sometimes. Cleaning is very much a skill as much as it is manual labor.
2. People don't want to let just anyone into their home to clean. Especially for those that have valuables, you want someone you trust who is going to hopefully be your maid for years to come. I wouldn't want someone new every time and for that reason, I used HomeJoy only at our office but even that wasn't enough due to poor quality.
Someone on this thread further explained this well, which is that HomeJoy is at a high level, a match making service. Once you find a match, why do you need HomeJoy? Connect directly with the maid and have them come on your own schedule for a fraction of the price.
I used to feel the same way about Uber. If I found a good driver back in the day I would get his phone # and take him exclusively to the airport. Uber solved this with UberX and by having a wealth of seemingly skilled drivers that made it a true on demand service. Having to book an appointment like HomeJoy seems like it is not a true OnDemand service, just a nicer UI than any other maid connecting service.
AirBnB I feel had a similar problem. For frequent business travelers, finding the right place at the right price is awesome and I would usually try to stay at the same place and connect with people directly. AirBnB solved this with overwhelming demand for the service (the place I like may not always be available) and with their insurance policy and scheduling tools for renters.
In any event, I don't feel like HomeJoy failing is indiciative of a bubble in the On Demand economy. There were inherent principles of this business that made it destined to fail that others in the space won't have a problem with.
For me personally, it felt they had little training of how to clean. Things like dusting diligently, wiping diligently, and mopping diligently just weren't done. Sometimes they'd spend way too much time in one area. One person spent 45 mins on my bathroom floor. I couldn't understand why and when I asked him to work on other areas he said, "please don't tell me how to clean."
There is definitely a skill to cleaning and unfortunately, I didn't feel they had enough training to call them skilled.
>2. People don't want to let just anyone into their home to clean. Especially for those that have valuables, you want someone you trust who is going to hopefully be your maid for years to come. I wouldn't want someone new every time and for that reason, I used HomeJoy only at our office but even that wasn't enough due to poor quality.
There was one guy that came into my apartment, and he was in the valuables room. Not much of a peep had gone by in 30 mins, so I checked in and I heard a drop of the jewelry box. He said he was just cleaning around and that an earring was missing and he was looking for it. I didn't say much because I was thinking in my mind what's he doing with an earring in the first place when I had just put all jewelry out of sight. I walked out the room and he said something like, "here it is, its put back". Its hard to describe in words, but the atmosphere was very uncomfortable at that point.
I can't tell whether he took something or not, but that was the experience Homejoy provided.
I live in a "secure building" where you need to be buzzed in or have a key fob. A Homejoy cleaner assaulted me while screaming "I'm late for a job you gotta let me in!" when I refused to let her tailgate in. When asked for identification or what unit she was trying to get to, I was simply told: "You stupid punkass bch, I work for Homejoy... ya'll <racial slur>s is paranoid."
After 6 phone calls and just as many promises of being called back, I was basically told they couldn't address my problem because I wasn't a customer.
Took the issue to the HOA and we banned Homejoy from the building.
If you are letting strangers in your house, you lock up valuables they can walk out with. For someone who uses his HN profile to state he takes security seriously...you don't seem to take basic security measures.
Having any kind of employee [or contractor] is as much removing the easiest and most typical temptations as it is hiring the right person.
Jewelry boxes, cash, credit cards, etc. should have been locked up and out of sight.
It was the experience of that interaction that mattered and I didn't feel that Homejoy lived up to that promise.
...literally all maid companies are ineffective at screening out people who might give the impression they take things. Its why its a running joke.
I get people on HN think of cleaners should be paragons of ethical morality incapable of creating a misunderstanding for $10/hr.
I'm still going to call it extremely naive to expect anything close to 100% of cleaners to meet that standard.
That was the promise made by Homejoy.
I doubt cleaning other people's shit is anyone's passion.
My Parents use AirBnb to rent out an in-law apartment they have at one of their houses (they each had a house prior to getting together). They're retired and they now treat it like their job, despite it only bringing in around $30k/year. I've recommended that they find a local cleaning person since I think they can find someone good who's willing to do it for the cleaning fee they charge ($50), but they're finicky about it being done perfectly and value their star rating (full 5 stars). So they do it themselves before every new renter arrives. Sometimes this involves driving 1.5 hours in each direction just to go up there and clean, but they insist on doing it anyways.
Similarly, I used to have a cleaning person come once a month. She was an immigrant single parent who had built up a large number of loyal, repeat clients and was making enough to send her daughter to college. Doing our dishes and vacuuming our floors probably didn't provide much enjoyment, but you can bet your ass she did it passionately because of the larger context in which she was working.
You're probably right about the actual act of cleaning...almost everyone won't have a passion for that. But your comment is incredibly myopic and shows a complete lack of understanding of human motivation.
Hmm. I would be more comfortable with "professionally". Frankly, I think that's the far better word to use here. In your comment, you even go on to doubt that almost anyone would have a "passion" for cleaning.
Professionals do an excellent job where an excellent job is required. Passion is not a factor in the quality of the work.
I don't think it's reasonable to require cleaners to be that enthusiastic, but I don't really see why somebody should feel less proud about making things nicer through cleaning than I do about achieving similar ends through coding.
You can do a perfectly good job cleaning without pretending you're so passionate about cleaning you'd just love to do it for free! (I have similar complaints about development jobs, btw -- you can do a perfectly good job and be a great employee whilst not pretending it's anything but a job, and you're doing it because you get paid, and if you weren't getting paid, you'd be seeing family/friends/dog/beach/mountains/woods/recreation of choice / etc.)
If I'm at a table service restaurant and my waiter is visibly unhappy about having to bring us food and drinks, I don't want to be an asshole by keeping on making him do that. I'd rather cook my own food at home next time. But a table service restaurant where waiters aren't bringing customers food and drink is going to go out of business pretty soon.
That's why waiters are trained to engage in emotional labor - in saying "of course sir, it's no problem" when they'd rather sigh or complain; the emotional labor is actually an important part of the job.
Personally I've never hired a cleaner because I'd feel like an asshole asking some poor stranger to scrub my toilet. But if I did hire a cleaner, and they came around and left me feeling that yes, I am an asshole for hiring them to scrub my toilet, I probably wouldn't hire a cleaner again. If you're running a cleaning company, that's not good for business.
I understand that sentiment and I was tempted to feel that way. OTOH, I realized that that sentiment in itself involved a certain amount of condescension, as it assumes that their means of making a living warrants my pity.
The service we use is owned by a very nice lady who also shows up to clean. She has an assistant and a couple of additional employees who clean other houses for her. To my mind, she is simply a fellow business owner who provides a service for a price. I hope that she is taking good care of her employees as well and, for our part, we tip to show our appreciation.
You could really feel this with the lack of passion from the cleaners and
the severe lack of quality cleaning
Whether someone can "feel" your passion about a job isn't about morality. I can do my job well, even if I feel its the equivalent of shoveling horse shit, and have zero passion for it. Whether someone is doing their job well is never a moral question. If someone didn't do the job you agreed to, its contractual; don't pay or pay a reduced rate based on the agreement and move on.
So yeah, you don't have to have passion for your job, or even like it, but if you're not going to try to do it well, just quit and let someone else take over.
I don't disagree, but I'm in the privileged position of being an in-demand tech professional who could have another job the same day I quit my current one.
The inherent problem with the "sharing economy" is that its built on using people (primary) who are economically disadvantaged who need the job (I concede that someone people who drive for Uber don't require the job, but do it do to the flexible schedule or extra income it provides). Its hard to always do a shitty job well, constantly.
This is the equivalent of a cleaner -> programmer acting "immorally" (true morality is nevertheless found outside the realm of work).
I don't see how that's immoral. You either completed a job to spec or you didn't. API works but you didn't complete the tests? You didn't do what you were paid for. No morality comes into play.
Maybe its because I've been doing this for 14 years, but I produce to the spec. Of course, I'll make recommendations during the scoping process, but what I produce matches what I've agreed to with a client or employer; no more, no less. My time is far too valuable to me to provide anything additional than to what I've committed to. If you want to give your time away for free because you think you professionally upstanding, more power to you.
In particular, I'm worried about judging people to be unprofessional simply because they are dispassionate. They are separable.
I agree with you. You can be dispassionate, but hold onto professionalism. That's actually the whole point I'm making by saying even if you are dispassionate, you should still act professionally.
This is not acceptable. No matter what you do, be a professional and strive for excellence.
And they want the same person each time whereas with drivers that doesn't matter, certainly not as much.
So one way that cleaning companies differ, and I employ cleaners for both my home and commercial properties, is that the cleaning is predictable in nature "every week, every two weeks, 3 times per month" and so on usually at a set time.  The only variable is the day that you "setup" with them. Rides don't follow the same pattern. With rides (also much simpler getting someone to the airport) you don't need the same driver and the time is typically not the same and nowhere near as frequent for the average user. With cleaning companies you want the same crew even in the sense that they get to know the lay of the land at your property (home or commercial). (Helps with pets as well). A host of differences.
 And once this time comes up it normally doesn't change and you are on autopilot.
Yep. That's what happens when you run a service business and you accept investor money: the constant pressure to grow leads you to sacrifice quality -- which leads to your downfall in the long run.
Maybe their passion wasn't cleaning your house for you and they just wanted some money to pursue real passions.
I always wondered how this business model was going to work if Homejoy's contractors could just give out their phone # at the end of their first service and the customer could just contact them directly for any future needs, instead of going back through Homejoy for any future bookings.
EDIT: on the other hand, an advantage is they don't have to worry about acquiring customers, drivers, etc, nor the regulatory overhead of the underlying business, but instead just focus on customer experience, schedule/dispatch, etc.
The Tesla analogy is perfect, though. I've never felt like car dealerships being independently owned was a useful benefit. I don't see any reason why both models can't coexist.
Eh, it was useful for car manufacturers when they were first getting going: they didn't have to put up the capital to open shop. The regulation came in when a dealership showed that a given region had high demand for the company's cars, so the company would move in across the street and undercut the franchised dealer. Obviously the franchised dealer had more clout with local politics than the auto manufacturer did - this is why all the dealership laws are state laws. It was kind of a legitimate regulation back /then/, but really has no bearing on things now (especially for a car company that has never franchised any dealers).
With current ride sharing apps, a lot of that goes away. You don't worry about tampered meters and being driven the long way around, because the trip is GPS tracked on both sides for example. You don't have to worry about getting in a random car in a city with a complete stranger, because reputation systems have pre-vetted your drivers and your driver's cars. a If taxi drivers get angry at you for using credit cards or for short trips, you can complain to a central agency that will deal with it. In developing (and some developed) nations, these ride sharing apps have a better safety margin than the local regulations do. Inefficient systems like taxi lineups at airports are not necessary anymore.
The international nature of these ride sharing apps also give you a universal set of rules as you travel, and make it you can communicate your destination without being able to speak the language. The advantages go on and on. The companies making and creating these things don't really matter, but the general app really does and we shouldn't smother them with regulations.
Whatever those safety elements are, I've certainly never experienced them. Theoretically they're there, I guess, but my (admittedly anecdotal) experience has been that Uber is safer in every way than taxis are.
* Obviously, whether the guy is going to try and kidnap you. Well, Uber has rating, but the background checks are pretty flimsy. Still, I'll concede that it may well be just as good.
* The second thing affects non-customers and it's ensuring the roads aren't congesting with a glut of taxis driving around looking for fares all day (with all the attendant problems that causes). While the average car spends 2 hours or less on the road in a day a taxi or an Uber is going to spend a lot more than that. I'm not really convinced Uber has an answer to that.
There are also issues like insurance/liability and so on that are rarely encountered, but are something of a big deal if they do come up. And there's the worker protection aspect of it.
Ever hear of this thing called supply and demand?
"Cleaners are unable to provide any additional information before jobs are assigned. For example, a Cleaner cannot tell Homejoy that while she may have picked different zip codes or cities as part of her territory, she only wants to stay within one zip code, or within one small part of a zip code, each day. Instead, if a Cleaner chooses Oakland and San Francisco as part of her territory, Homejoy alone determines whether the cleaner will stay in Oakland on a given day, stay in San Francisco on a given day, or travel in between the two cities multiple times on a given day. Furthermore, Cleaners cannot tell Homejoy whether they want a little or a lot of down time between each job, or each job start time or end time. Cleaners cannot tell Homejoy how much driving they prefer to do, whether the jobs need to be near public transportation, whether the Cleaners prefer to be stuck in rush hour traffic or instead on routes that are reverse commutes, how many jobs the Cleaners want to perform each day, or whether or not they want to return to a previous customer."
I don't think this creates a very big moat - that's essentially what Uber started out as (dispatch for private driving companies that already existed); they started letting anyone drive in order to meet demand.
If all the services are interchangable (and now, at least for ridesharing, it seems like they are), the winner will be the app that's used by default.
You would use the same house cleaning professional over and over again but you will likely never ride with the same Uber driver again. This means that the Homejoy house cleaner can bypass Homejoy but the Uber drivers/users can't do without it.
In theory, having your "own" driver would not be a bad thing. But the main difference is in scheduling.
With taxis and Uber, you want a car to show up in 10 minutes at any time of the day without advance booking. This requires a large pool of drivers on standby and a middleman to handle the communication.
A cleaner can visit pretty much any time during the week, and is usually pre-booked for every week indefinitely into the future. This doesn't need a middleman, since you can arrange the details directly.
Consider there are only 40,000 taxi drivers in New York.
All it takes is for a company to find the top 5-50% of Uber/Lift drivers in a city offer them a minimum income of a few k/month assuming they take A% of rides and work y hours and boom instant driver network. Sure, doing it now when Uber is flush with cash is a bad idea, but after it pop’s there is no way they can stay competitive without paper thin margins long term.
Sure there is - the IRS says their drivers are employees and they need to provide multiple years worth of backpay/benefits. Any competitor that's been doing that already wins.
Don't get me wrong there currently very popular and profitable so they don't need to worry about a Pets.com style crash. However, the barriers to entry are relatively low just look at Lyft. Eventually investors are going to want to get their money back, so they either start issuing dividends or face a hostile takeover.
Are they? Everything I've read indicates that they are not.
The quickest numbers I could find were leaked in 2014.
est yearly rev run rate city
$312 mm nyc
$141 mm dc
$150 mm chicago
$815 mm total
edits: made table
AKA: Uber pays a lot to get ex: NYC and LA drivers, wins both markets, lowers payouts to make money. New competitor shows up in NYC so Uber dramatically raises rates in NYC and not LA. Then, before that competitor moves to LA a lot of drivers are going to get pissed there stuck with low rates. Basically, by attacking one city, Uber is forced to either raise rates in all its cities’ which it can't afford or piss off all their drivers.
If the good drivers stop working for Uber because Uber is squeezing them, for example, Uber may get a reputation for having poor drivers.
This is different from cleaning because people don't need down-to-the-minute availability.
Homejoy had to find a way to lock their cleaners into ongoing agreements to prevent them from bypassing them.
I agree that it's natural with these services for consumers to want to 'bypass' the middleman if possible.
Unfortunately, under capitalism, creating value and capturing it are two very different things. There are a lot of business ideas which have potential to create amazing value for society, but these businesses will not be able to exist because they are not capable of capturing that value.
But dispatch services where worker-customer relationship can evolve into long-term are indeed not adding much value outside of the original lead generator.
Besides tapping instead of calling a human (which is annoying), what is the big win for rides? For me, it's the map. When I'm told my taxi will be there in five minutes, I can see the progress on the map. I never believe a taxi company when they say, "10 minutes." Sometimes it's five, sometimes I call them back after twenty minutes to ask where my taxi is.
For the next sharing economy startup founders, ask yourself what you can do in real time for users. This is ridiculous, but for another cleaning company, you might provide the cleaners with GoPros and allow the user to stream what they see, so you can watch them clean.
Technically, you could set that up yourself with nanny-cams, but imagine contacting a service (via app or web page), having them clean your home, and watching it happen (or knowing that they know you can watch it happen). That bypasses the whole "call me personally" problem. If I call the cleaner personally, I don't get the cleaner-cam.
To me, if you're going to give me an app or a web page, give me something in real time that I care about.
Thumbtack also services a very wide range of verticals, which allows them to succeed purely as a matchmaker. It's an inherent flaw in what folks like Homejoy were doing (although they had aspirations of a larger vertical focus).
I need thumbtack like 3 or 4 times a year. I need Homejoy once ever.
Also if a cleaner ever started to get lazy and cut corners, i have the option to just chose another one... that gives me a lot of influential power even if i never have to use it.
Those benefits are what made the service worthwhile for me... If I wanted to find a cleaner at the lowest rate and handle all the overhead myself i could just look on craigslist...
I haven't seen any reasons for the closing. Where was this mentioned?
Edit: More reading turned up a shady Re/Code article proclaiming that the Uber decision shuttered Homejoy. Loads of clickbait, nothing firm in the way of substantiating the title.
I've also had Uber Black drivers give me their personal limo service business cards. The difference is that a cab is a commodity while a personal trainer is something that needs to click on a personal level.
I see no future for Vint even though I loved it when I used it.
The magical secret to its success: the cleaner that would visit your home was an employee, not a contractor. That meant the company could control and guarantee the quality of the service provided and would be able to have its cleaners sign non-competes if necessary.
What these companies need to do is provide an ease-of-use, reliability, and security so that the customer is incentivized to use the official way over doing it under the table. Sure you could pay the cleaning lady directly, but having it automatically debited from your credit card is much easier.
> We hope that you are able to continue your relationship with your current cleaner, independently of Homejoy.
All companies that contract to contractors have this issue and it probably isn't solvable using the same model. For instance Home Depot and Lowes will contract out service to contractors and I've had them, on every single occasion, give me their information to contact them directly in the future.
That model does not work for HomeJoy.
We do a number of things to prevent it, but it ultimately comes down to providing enough value to the supply side of your market. If you build a product that drives real, ongoing value for your service pros, they will be much less incentivised to cut you out of the transaction. The same is true for the demand side.
Also, lawn care has a reduced risk profile compared to services that take place inside the home (maids/babysitting, etc). There is no key hand-off and the nature of the service is somewhat less intimate. Our customers don't need to be present for the work, which both reduces this risk and boosts the value of our platform as a means of managing your service.
For Homejoy, saying "we are bonded and insured" reduces reluctance for a first you or when on-demand service is the primary consideration. But for recurring service, having trust with an individual beats the crap out of being able to point to the contract or collect against a bonding agency if something goes wrong.
[aside: I found Adora Cheung's presentation for How to Start a Startup thought provoking: http://startupclass.samaltman.com/ ]
To incentivize that, you could offer discounts for neighbors who use the service together. If Homejoy had a bunch of apartments in one location, then cleaners would make more money per day.
Also, routing optimization is a fairly hard problem and requires significant critical mass in a geo. Pretty hard for individual service providers to build this on their own. The closest thing may be a small-town service pro who has been in business for 30 years and eventually reached sufficient mass / frequency to optimize his routes, but that's a rare case.
Which inherently reduces the degree to which the service is attractive to contractors compared to other marketing channels (which is really what it is for them), which reduces the contractors on the service, which reduces the value to consumers.
That it works in some industries doesn't mean that its an easy solution which works profitably in all industries.
1. Hire and provide real value to the cleaners contract Uber to drive the cleaners to the houses, That would have solved the classification issue and the middle man issue
2. Charge the cleaners to be on the site, let verified purchasers leave reviews, and offer an optional payment gateway.
Minor nitpick on this... it's doubtful that it 'turned into a good experience', as much as "AirBnB was able to compensate, monetarily or otherwise, for the bad experience (which still exists)".
If you use AirBnB to visit NYC once every 3-4 years, its a very different situation than someone coming to clean every 2 weeks.
555-123-1234 would become
I've done this to get around the issue when trying to get in touch with the property owner.
The technology that most companies like these offer (with the possible exception of Uber) is a commodity. The real asset they have is the network effect. Which makes the balance of power between the tech company and the "1099 contractors" deeply suspicious. What are these companies doing for the laborers that makes them valuable enough to be skimming returns from the work?
However, for unskilled labor, like Uber, I care a lot about needing a car right now - and dealing with drivers directly is not efficient at all. As such, Uber is doing so well in this market.
Uber and AirBnB caters to immediate needs for a short term engagement, so the dispatching capabilities are the real value (find me someone who can do X right now).
Homejoy is dispatching for a long term relationship, so it has a hard time staying engaged in the relationship as it progresses.
I think the skill is less important than the duration of the engagement for a dispatching service like this.
Anecdotally I pay Molly Maid to clean my apartment, because i don't want to deal with liability, legality or tax complications.
With driving, nothing of that is required. Many people are in auto mode when they are driving. Think about it - is it easier to drive vs. cleaning your place? Of course you want basic driving skills to be there - but I think the DMV licensing process and Uber ratings generally takes care of that. You are going extreme by talking about death etc. - but how many Uber journeys have resulted in that. There are millions of Uber being driven every day - and I haven't read about a single death (of the passenger).
Cleaning, being good at cleaning, is an uncommon skill. I've gone through my fair share of housekeepers. When you find a good one that you trust with the keys to your home, you want to hold on to them.
> The only skill required is attention to detail and caring enough to do a good job.
Thought experiment: imagine yourself cleaning 100 houses professionally for two hours. My bet is that the last house would be 2X - 3X more clean than the first.
I'm sorry but shutting the company down because the round you could raise wasn't as big as you hoped feels like wimping out. Alive beats true to your vision and dead. In "The Hard Thing About Hard Things", Ben Horowitz coins the term WFIO (pronounced wiff-e-o) for that "We're Fucked, It's Over" feeling that entrepreneurs get on a regular basis. Lawsuits spooking investors is certainly bad but hardly even qualifies.
Given how big an issue the worker classification issue is for the whole economy, I could see the regulatory issues getting sorted out over the next few years. Quitting seems like a premature move to me. How do the investors who put $40m into the company feel? Who's going to invest in this team again? Who's going to go work there?
That hits the nail on the head. A 1099 contractor has to cut some 30%-40% off their wage to support things like self-insurance, etc (or add yea much). If you're "working" for a gig provider, you're not a 1099 employee by the inherent nature of the thing. Granted, you're not in a normal employer-employee relationship, but neither are you a skilled freelancer contracting your labor out on wages you yourself set and negotiated.
While I fully support the idea of TaskRabbit, Lyft, Uber, Homejoy et al, certain realities have to be faced squarely: they are not being real about the nature of their business. They really are something like employers, with something like employees.
Cheung is likely correct that a third legal category needs to be created (neither 1099 freelancer nor true employee), but in the absence of that, it seems profoundly more ethical to consider the workers employees.
The recent US Dept. of Labor interpretation suggests the same: see "Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss?" at http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.h...
Of course then you're even more at risk of disintermediation, so you're probably charging for listings. It's a useful business but a smaller one.
As someone who used to build/sell websites to small cleaning companies, real estate agents, tradesmen, etc.
Marketing+Parts+Labor was the formula for almost all of their costs. Marketing represented ~20-25% for the few that were willing to discuss it with me.
That is in line with what Homejoy was asking for [25%].
Homejoy providers had direct access to the customer base they interacted with and could siphon off those clients they built a relationship with relatively easily. I know that is what I did once I found one I liked.
I've heard this as a need from literally every service provider I've ever used. They relish referrals.
I driver Uber more because it is easier to get a cab. They alone are already making more than the entire taxi industry in SF.
If anything, it seems Homejoy's problem is in making it too easy for their cleaners to find retained customers.
I never ordered from a cleaning service before Homejoy, and I doubt I'll bother with it after Homejoy. It's a useful service to me, but I'm not going to call half a dozen random guys on their cell phones to find one that will work for me.
Similarly, ride volumes are way up after Lyft and Uber come to town. Before, there is a lot of demand that is simply going unfilled.
While a bit off topic, I was really happy to see this sort of comment from you. I'd love to buy you a coffee or beer in Chicago sometime.
But they were really just selling cleaning services for below cost–on the backs of 1099 workers. It's a worse model than Groupon and I can't fathom how the founders or investors thought it would work.
It all feels icky to me.
I guess this is the playbook, right? Doesn't matter if you build a sustainable company or not. As long as you raise crazy amounts of VC $ you're considered a success.
Home cleaning is a well established business. The market is well served by multiple traditional companies. A Bootstrap 3.0 website and mobile app aren't really going to change that much. It's an uphill battle and trying to take the Uber model of skirting worker protection laws is your only real source of competitive advantage over time.
Technology doesn't change the basic factors of the business
in any meaningful way.
Perhaps Homejoy expanded too fast? They overdosed on funding? Deadlines and progress meetings became too dreadful? Or maybe there are regulatory issues they could not resolve?
I think there is more to this than a shoddy business model imitating Pets.com.
What doesn't work is selling a service–cleaning or otherwise–for $20 when you have to pay the contractor $50 and a CAC of $12 (spitballing BTW).
At least Groupon shared the deal price with the restaurant and had some built-in virality.
At least Uber doesn't have to deal with drivers trying to end-around the marketplace and go directly at customers.
I know you were spitballing, but the one time I looked at Homejoy, it most definitely wasn't on the cheaper side of the coin, quite the opposite.
Anyone care to give numbers?
The quality of the cleaning had deteriorated over time and the price was higher than independent cleaners I later found through personal referrals.
I had 4 different Homejoy cleaners. The very first one was awesome and I thought, "Wow, this is great". Then every single cleaner after that was terrible. Two of them started wet mopping before vacuuming or using a dry swiffer, thus pushing wet dirt around. Another one let the toilet brush sit in the toilet in a way that the entire brush, handle and all, fell in. When I came over to oversee her, to make sure she doesn't do other things like that, she got angry and refused to work until I went into another room.
As other's have said, the model sucks. In order to make money, you need to charge above market rates to get your cut. In order to justify that, you need to offer something to both sides of the market. The customer expects convenience and high quality service. If you cannot provide both those things, why would people use Homejoy? And of course, what are you offering the service provider to stay on your platform?
Lastly, there was no Android app and the web app had so many bugs that even the sign-up flow was hit or miss. The sign-up flow! Logging in from my phone never worked and I always had to use a laptop. Unreal.
I would have kicked her out. Yikes.
I had a cleaner through a personal referral in Seattle, who for $60, cleaned my place so well that I'd be happy just coming home to the neat and spotless apartment. When I moved out of Seattle, she packed up my stuff for $160. Movers would have charged >$700. Needless to say, I paid her a lot more than the $160 that she was asking for. When you have had service professionals like that in the past, the crappy and rude service from Homejoy contractors feels even worse.
Someone else wrote a similar thing about a cleaner who took 45 minutes to clean the bathroom floor and then got angry when the customer asked them to move to the next room to clean.
Another person wrote how they suspect the cleaner attempted to steal their jewelry.
I will see if I can dig up the contact info for that cleaner. It was over phone and I left Seattle three years ago. Will try!
Its hard not to be disheartened when a pair who seem to have worked as hard as they have still don't make it with an idea. I just hope they keep going.
That being said, I talked to several (10-15) people who used Homejoy at least once. The responses I got from most of those people was that the cleaners weren't professional. In fact several of them mentioned that cleaners didn't know what Homejoy was. They were sent for cleaning by their contractors. In other terms, the cohort I talked to had a really low NPS for Homejoy.
I think Homejoy wasn't able to nail down that user experience of their real product (i.e. Cleaning) no matter how amazing their on-boarding/booking experience was.
It must be very disheartening for the founders and the team. All the best to the their next adventures!
Most successful technology companies sell bits, with high fixed costs but very small marginal costs. This means if you grow really big, your fixed cost growth will eventually flatten out but your profit can continue to grow. Facebook, Google, AirBnb, Uber.
If you are selling something in the real world, especially if you are owning the whole process, then your marginal costs are going to be pretty high, which means your profit margin is going to be lower. This is completely fine and a ton of businesses run like this, but these businesses have to be very careful with their fixed costs. You can't grow like your average tech startup because this model is different than most tech startups.
The exact reason they are going out of business is less important than the fact that a business with high marginal costs is very fragile. A slight increase in a high marginal cost can destroy your profit margin, whereas if your marginal cost is extremely low then you are much more resilient.
High fixed costs + low marginal cost = Good
High fixed costs + high marginal cost = Be careful
Our regular cleaner(which I found through nextdoor) recently had to quit. It was enough to upset me for a bit because finding a quality and consistent and affordable cleaner is very hard. Luckily I was able to find another promising cleaner from nextdoor.
When looking for a regular cleaner, one of the things I have learned is that you want a "career" cleaner. You don't want someone who is doing it as a past time to make some extra cash. That might work with Uber/driving but it doesn't seem to work with cleaning that well. If a non-serious Uber driver cancels the ride, you just call another one. If your cleaner doesn't show up, you can easily lose a day before finding a replacement(and hoping he/she delivers).
Until your Uber driver takes a left turn onto Shoreline Boulevard without looking, and nearly kills you.
Its rapid demise is a good reminder that growth isn't profit, and funding from top tier investors doesn't actually signal that you are building a sustainable business.
Incidentally, I have pointed out the employee misclassification issue numerous times, and wrote last year:
> It's going to be very interesting in the coming years to see which of these on-demand companies continue to thrive because I personally think it's inevitable that many of them are going to be forced to reclassify their workers as employees. I suspect some investors aren't giving this enough consideration in their due diligence.
If investors are now doing their due diligence (gasp) and realizing that many of these portfolio companies are not going to be able to effectively defend against misclassifcation class actions, Homejoy is not going to be the last of these highly-funded on-demand companies to literally hit a wall.
However, the writing is on the wall for any "sharing economy" service that is simply a technology wrapper for non-SSN'd workers in the US. A couple of challenges that aren't solved by technology:
1. Many unskilled labor positions, especially those that incorporate illegal immigrants, are paid in cash.
2. The price points are absurdly low to create any sort of margin to sustain a business (I can only assume most of these companies are doing < 10% gross margin)
3. Response of workers turns sour when they realize the system inevitably becomes indentured servitude.
4. "Rigorous background checks" - I have yet to see how technology has made background checks any more "rigorous" or how this has allowed companies to scale the quality of workers.
5. Scaling quality - many of these services (moreso for services like Thumbtack) start by hiring skilled people (usually MBA students, aspiring actors, etc) who are looking to earn a few extra bucks for fairly unskilled activities. People enjoy the service since they not only get a higher quality service but also because "it comes with a smile". There is only a limited pool of these type of workers, which inevitably means the supply side of the business gets eliminated at a certain scale.
I think there might be a place for these type of businesses, but perhaps not in the venture world.
At no time have we gone out and hired "MBA students or aspiring actors" to fill our provider directory. From day one all of our providers were actually working in their industry prior to signing up with us.
Further, I would say that we don't have the same quality problem that Homejoy does. If you submit a request on our site, you'll get a choice between several providers at different price points and quality points. You choose the provider. Poor providers will get low ratings and will either have to lower their prices or exit the system.
Out of curiosity, given you're a marketplace how do you handle reoccurring work then? Or do you focus entirely on net new business?
To be clear, I'm not saying that an MBA student or an aspiring artist can't decide to start a home cleaning business and sign up with our service.
I'm no longer with the company, but I will say that the entire time that I was there, at no point was our business model based on recruiting/training unexperienced people to fill our verticals. In fact, our biggest worry was getting enough high-quality experienced providers.
I'm not privy to future plans, but currently any recurring work is just an added benefit to our service providers.
If this is true, than there would be a massive supply shortage. Point is, pick one argument (undocumented) or the other (undocumented) and you're going to have a biz model flaw.
> which is plenty to operate such a business.
"such a business" - Sure, but not a tech driven one.
Don't understand the second point either. 20% margins is plenty. See: http://abovethecrowd.com/2013/04/18/a-rake-too-far-optimal-p...
And tech-driven businesses have lower marginal costs thus can succeed with lower gross margins.
Look further into the company and you see things like the founders saying working on Christmas Eve is ok. Presentations where they say luck is irrelevant and working hard and smart are the keys to success. That's some American Psycho sh*t.
It also lends credibility to the 'not a bubble' discussions if stage C investors are showing restraint but that is a different discussion.
Yes, It's Not a Bubble(TM) if companies with significant and obvious legal risk are only raising $30+ million Series Bs but not $100+ million Series Cs.
Employment class action attorneys couldn't have designed companies more vulnerable to lawsuits if they tried. Some of these VCs should have just written checks directly to the class action attorneys.
Where they failed was in providing an adequate supply of cleaners (no one available for weeks on occasion) and last-minute cancellations without substitutes.
Never did a cleaner solicit me to hire direct, but I DO think Homejoy should leave their customers with a way to reach the cleaners I did like for rehiring. Why not, after all?