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Homejoy says goodbye (homejoy.com)
379 points by philip1209 on July 17, 2015 | hide | past | web | favorite | 399 comments



I run a company similar to HomeJoy in Japan, and I disagree with most comments here.

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!


> Those who claim cleaning is not a "skilled job" should get off their keyboard

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.


>>That's called a gross margin and it's incredibly low.

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.


Exactly. And in typical SV fashion with the "winner takes all mentality", it's as if we can apply a Uber/Airbnb persona to seemingly any industry without understanding it's respective nuances and sociodynamics.


Winner will take all. Uber will be the Uber for X (for everything) and AirBnB (potentially) AirBnB for everything. Low margin markets are usually zero sum in the long-term.


My and mbesto's point was that making an app to get any service on demand doesn't really work except for a few high-volume, low margin markets such as ride sharing and maybe food delivery. The businesses that can be disrupted are the ones where low margins are made up by massive volume. Most service businesses actually operate the opposite way - high quality, high margin. Uber, Google, and pretty much anyone else who wants to try won't be able to successfully disrupt the majority of service business markets unless they radically alter the economics associated with the overhead costs required to maintain quality in these businesses. Slapping software with a 5 star ratings system on the consumer front end to expose your business to millions of more customers is not a radical alteration of the business fundamentals associated with many of these types of businesses.


Sorry to comment on a super dead post, but I like this comment "unless they radically alter the economics associated with the overhead costs required to maintain quality." That is my focus, but it's really challenging. The margin is comfortably high in Japan, but ignoring quality kills retention and maintaining quality brings overhead costs back up to the level of existing franchise-model businesses.


I think we all agree with the same statement then :)


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.

x100. There is a lot more variance between two cleaners than say two Uber drivers.


Due to the regulations needed to drive. Put someone with no experience driving behind a wheel and you'll quickly see how skill based driving is. Just, unlike good cleaning, we have a lot of training and experience with good driving.

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.


There's a great place to see this in action in SF: the Anchor Steam brewery in Potrero Hill.

The truck drivers turn around 18 wheelers in an impossibly tight space there and it's jawdropping to watch.


That comparison is confounded by the fact that most people, at least in the United States, get their driver's permit and license at a fairly young age, and don't have driving experience before that. A fair comparison would be between licensed and unlicensed drivers with the same amount of experience, but that's pretty hard to come by.


On the 428 day old HN thread, it looks like lots of people had problems with lack of quality

https://news.ycombinator.com/item?id=7750433


There is a skill to cleaning, but from my experience the Homejoy people were nothing special. Both times, they were basically kids, didn't do anything beyond what I would have done, one broke a plate, the other failed to clean my dirty hardwood floors (he just spread the dirt around). And it was expensive. I figured at that point Homejoy was probably limiting their market to oblivious wealthy people.

Seeing as Tokyo apartments are freakin' tiny, you could probably get the price down to make it more mainstream palatable.


>Just ask yourself, how high of a percentage of users sharing direct phone # would cause a growing company to collapse?

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.


1. Totally agree.

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.


Agree with all three of your points, especially #2. I still can't get over the fact that it took me 4 tries to be to sign up with HJ. Eventually I had to do it on my laptop because the web app on the phone was so buggy. And if the sign up flow is so badly done, I wonder what else is not executed well.


>> 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.

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.


> The company didn't grow fast enough.

Even with everyone working through Christmas?!


Not sure if the offer is rhetoric or not. No contact email, no business name. Is it related to #1 as a joke-of-sorts?

日本語を知っている必要がありますか?


I think this is him: https://www.linkedin.com/in/jjclune

The company is HouseCare. http://housecare.tokyo https://www.linkedin.com/company/mommycare The company info email address is: info@mommy-care.jp


What's the name of your company?


Will you be expanding into USA?


I wanted HomeJoy to work and tried to use the service a few times. What the failure came down to:

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.


>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.

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.


> The cleaners were not professionals.

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.


> This. Very much. 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. I walk out the room and he says something like, "here it is, its put back". Its hard to describe in words, but the atmosphere was very uncomfortable at that point.

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.


Basic security measures were taken in the valuables room. The jewels out-of-site and in the box were all fake. Whether the jewels were fake or real or whether anything was taken or not doesn't matter right now.

It was the experience of that interaction that mattered and I didn't feel that Homejoy lived up to that promise.


> 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.


>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.


> the lack of passion from the cleaners

I doubt cleaning other people's shit is anyone's passion.


You'd be surprised.

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.


> ...you can bet your ass she did it passionately...

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.


You're missing the point. The apartment is their property, even if the mess isn't.


I knew a guy who was a window cleaner. He was really and truly passionate about it. He would go to window-cleaning competitions and come home bragging about placing first in some category or another. People can take pride in a job well-done even if they job isn't prestigious.

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.


I had no idea there were competitions. That must be satisfying. I looked it up and man they're fast!

https://www.youtube.com/watch?v=t8JCG-ww3Fg


I have an ex who LOVED to clean. She got a lot of satisfaction from improving peoples' living space and she was awesome at it. Anytime something was dirty, she would have a natural compulsion to clean it and you had to drag her away if she got distracted while she was supposed to be doing something else. Maid work would be a dream job for her.


People can take pride in all sorts of work.


Yeah, but complaining their cleaner wasn't "passionate" mostly comes off as being pissy your poorly-paid short-term menial labor didn't fluff your ego enough for being so awesome to pay him or her.

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.)


A lot of jobs involve what sociologists call "emotional labor" - jobs where, to be an effective worker, you can't always show your first-choice emotions.

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'd feel like an asshole asking some poor stranger to scrub my toilet.

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.


That's an interesting concept... but doesn't it apply to every job?


Only for customer-facing jobs. People don't care how much Bangladeshi children hate sewing shrts for them.


Their boss doesn't want them to show emotional restraint?


Their boss wants them not to stop working but (I imagine) could not care less if they cry or smile as they work. Do you agree it would be harder for them if they were required to smile and make small talk as they worked? If you want another example of not having to do emotional labor, think of a rock star who gets away with throwing tantrums at his manager or quitting halfway through a show - zero emotional restraint required.


Workers cannot express (unrestrained) anger towards their boss. Can you? Rock stars cannot express anger towards their audience. I mean, I suppose they can, but it increases the chances of unemployment.


I don't think the replies meant "passionate" as in "man I am so STOKED to clean your apartment, brah!" What they meant was "cares enough to do a good job."


Obviously not, because the OP enumerated passion and quality separately.

   You could really feel this with the lack of passion from the cleaners and 
   the severe lack of quality cleaning


Just as much as I doubt checking me out in a check-out line is anyone's idea of "passion", but it's still rude and unprofessional to not show me courtesy. You don't get a moral blank-check just because you don't like your job.


> You don't get a moral blank-check just because you don't like your job.

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.


You're interpreting it too literally. "Passion" in this case simply means "actually gives a fuck and tries to do a good job" as opposed to "doing the bare minimum."

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.


> 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.


I don't think so. Remember, this is the same crowd who constantly is bombarded with recruiter spam seeking people who are "passionate" about development.


To expand on what you said below, imagine someone hires you to code up a simple API. You get started, but then decide you just don't like your job so you write 50% tests and hand it back to the client. Let's say the 50% of other tests weren't needed because your code actually ran perfect. "Here" you coldly tell him and walk off. Was it fair that you did a poor job for the client because you didn't like the work? Did you not technically complete the job, but in a shoddy, unprofessional fashion?

This is the equivalent of a cleaner -> programmer acting "immorally" (true morality is nevertheless found outside the realm of work).


> Did you not technically complete the job, but in a shoddy, unprofessional fashion?

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.


haha ok. Now what about comments in the source code? Should that be specified too? What about SRP inside the code-base? Should that be specified? Come on, we all know when we're pissing off and doing our best. I'm not say we need to do an absolutely amazing job for every person that gives us money, but me personally, I like to think of myself as professionally upstanding because I want to make my employer's dollars count by doing the best I can.


> I'm not say we need to do an absolutely amazing job for every person that gives us money, but me personally, I like to think of myself as professionally upstanding because I want to make my employer's dollars count by doing the best I can.

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.


Courtesy and passion are different things. Let's not devalue the word.


You're mistakenly drawing a parallel between the two words. I am saying a cashier that is not passionate about their job is not _entitled_ to be uncourteous and therefore act unprofessionally.


I'm agreeing with that. I am totally fine with cashiers who are clearly dispassionate about their job and act professionally. I can see "the lack of passion," but it doesn't impact their professionalism.

In particular, I'm worried about judging people to be unprofessional simply because they are dispassionate. They are separable.


> 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.


Go to Switzerland or Japan. Especially in the former, dirt anywhere is a national disgrace. The road crews take serious pride in the condition of the roads, for example.


One of the things you're paying for is for the service provider to "act as if".


...and welcome to the coastal American attitude to service.

This is not acceptable. No matter what you do, be a professional and strive for excellence.


"Taking pride in what I do, and doing it well" is a kind of passion that transcends "Is this the best job ever?" and one I've definitely seen cleaners and other people with "bad" jobs care deeply about.


I've had the opposite experience: the many different Homejoy cleaners I got were all very good or excellent. Perhaps that is because I live in the south of Chicago, where there are many people desperate for a decent job.


"People don't want to let just anyone into their home to clean."

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. [1] 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.

[1] And once this time comes up it normally doesn't change and you are on autopilot.


>>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.

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.


> 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.

Maybe their passion wasn't cleaning your house for you and they just wanted some money to pursue real passions.


Good points. I came to write 1) that they were trying to turn a match-making business into a transactional business (apparently unsuccessfully) and 2) that the labor problems sound more like an excuse for what was likely just a poorly run business.


they increased their prices more than 75% a year ago, which signaled that they didn't have a sustainable model.

http://techcrunch.com/2014/07/25/homejoy-home-services/?fb_c...


I used Homejoy and I liked it's ease of use. But after the cleaning lady they sent me was done, she offered me her direct phone # and told me I could contact her directly for any future cleaning needs.

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.


A prediction about "sharing economy" companies. Almost all of them are tacking on a thin rind of web/mobile UI and smart dispatch technology to an existing service. The long-term winners will be companies like Flywheel that recognize this and focus on providing that service to existing operators, much like payment processors. This, of course, is perceived as a smaller market since they can't count revenue the same way.

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.


Absolutely, however another "advantage" of many "sharing economy" companies is that they skirt regulations that incumbents must adhere to.


The real question to ask in this case is whether those regulations should be there in the first place.


Disregarding the competitive aspect, it's absurd to me that people praise banning Uber and Tesla for the "consumer safety" of taxis and car dealerships.


There is a significant consumer safety element to the way Taxis are regulated. The fact that this is used to protect a monopoly is a separate issue and I agree that it is a real problem.

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.


> I've never felt like car dealerships being independently owned was a useful benefit

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).


If by "legitimate" you mean "useful" or "good" (as opposed to the law not being passed through the established legislative process, because that criticism wouldn't make sense), then even then it was illegitimate. If the manufacturer can come in and undercut the dealer, they should. Unfortunately, the dealer was local and the manufacturer often wasn't. The same reason any protectionist measures are created.


I think taxi regulations are there to deal with a world way before mobile computing. The regulations addressed at it's heart an information asymmetry between taxi drivers and riders, especially with tourists.

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.


> There is a significant consumer safety element to the way Taxis are regulated.

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.


Well, I'd say they're twofold:

* 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.


> it's ensuring the roads aren't congesting with a glut of taxis driving around looking for fares all day

Ever hear of this thing called supply and demand?


You're missing the point, which is that the costs are not borne by customers but by everyone on the road. Supply and demand is not a mechanism to solve this kind of problem


In the case of using the "independent contractor" loophole to avoid paying UI, social sec tax, minimum wage, etc, it's an issue of making sure everyone plays by the same rules. Operators who abide by these rules should not be punished for doing so.


The quote from one of the lawsuits suggests that the 'independent contractors' really weren't very independent...

"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."

http://arstechnica.com/tech-policy/2015/03/startup-workers-s...


I can't wait until Uber starts scheduling drivers at min wage plus bennies and makes even more money.


Are you implying that taxes/regulations are punitive?


No I am implying that companies that avoid paying them are getting an unfair advantage versus the companies that treat their workers as employees.


Regulations exist for a reason, some maybe old or irrelevant but they all evolved in response to the industries they regulate.


There's a such thing as regulatory capture.


Agreed, but that doesn't discredit all evolved regulations.


If that was the question, then these companies would be lobbying to get rid of those regulations. Far too many of them see their ignoring of regulations to be a competitive edge.


Lobbying is expensive and time consuming. If you ignore regulations and do a good job, the population will lobby for you, for free.


Exactly. The new entrant into a market isn't the one who can afford to get into the lobbying game.


> The long-term winners will be companies like Flywheel that recognize this and focus on providing that service to existing operators, much like payment processors.

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.


Uber is different than Homejoy.

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.


> you will likely never ride with the same Uber driver again.

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.


Defaults can change really quickly. Unlike Facebook Uber has basically zero network effect between cities. So, a competitor can win one or two small cities and just keep growing.

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.


If Uber "pops" it will be because the ride sharing industry died. There is no scenario where Uber becomes MySpace to a competitor.


> There is no scenario where Uber becomes MySpace to a competitor.

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.


It's debatable whether the ride sharing industry can survive if drivers are classified as employees (which is why Uber and others are working on self-driving cars).


It's not debatable; there are plenty of companies that do it already.


There is no scenario that's rather optimistic of you.

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.


>and profitable

Are they? Everything I've read indicates that they are not.

http://www.bloomberg.com/news/videos/2015-06-30/uber-loses-m...


Actually, everything I've read says they are in mature cities. Leaked numbers say they're stupendously profitable in their oldest markets: nyc, sf, etc. They are losing money overall because they subsidize drivers when they move into new markets. But the key is always to look at existing markets.

The quickest numbers I could find were leaked in 2014.

   est yearly rev run rate  city
   =======================  ====
   $212+mm                  sf
   $312 mm                  nyc
   $141 mm                  dc
   $150 mm                  chicago
   =======                  =======
   $815 mm                  total

http://www.businessinsider.com/uber-revenue-rides-drivers-an...

edits: made table


I guess the larger question is how do drivers respond when their rates get dropped after a market is mature. I imagine the answer is different depending on the market.


Those above cities are, I believe, post rate drops. Also other leaked numbers have said Uber continues to grow. My guess is driver happiness doesn't impact Uber's business much; our economy seems to generate enough desperate people that they have a nearly never ending stream of people willing to drive for $5/hour (a reasonable estimate of an UberX driver's true net comp.)


Seems like much of that short-term profit would easily be negated by increased frequency of maintenance due to wear-and-tear on driver vehicles.


Saying the barriers to entry or low is completely uninformed. The incumbent has a massive advantage in driver/rider liquidity that is nearly impossible to overcome. Lyft is the perfect example in that it still massively trails Uber in every one of its markets despising having very deep pockets and for many, a more attractive product.


IMO, Lyft's mistake is attacking more than one market at the same time. Spending 100M to just get NY is a good investment and there are far smaller cities out there with lower barriers to entry. Further, if you can demonstrate that Uber only raises rates after they show up you can build up a lot of hate in the driver’s community.

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 they play it smart Uber will never die, but I've seen lots of companies fail because a competitor showed up and forced them into a vicious cycle of cutting quality to keep profits up, which drove out customers, etc.

If the good drivers stop working for Uber because Uber is squeezing them, for example, Uber may get a reputation for having poor drivers.


I think ride sharing companies like Uber are a bit different though because the dispatch system (the element of coordination and availability) is critical for that type of service.

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.


There is a great deal of schlep involved in generating supply and demand, and more importantly developing good technical controls to promote quality and reduce fraud, and the human support to handle the disputes and quality issues that slip through the cracks. There is nothing thin about the layer. Interchangeable maybe, but Uber et al are not going to be replaced by pure software anytime soon.


Dispatch services where by design you interact with a variety of vendors work because there's no value in building long-term relationship on either side.

But dispatch services where worker-customer relationship can evolve into long-term are indeed not adding much value outside of the original lead generator.


Nope. The Uber/Lyft experience is so far superior, for both drivers and riders, that it is the obvious eventual winner. How drivers are employed/compensated is a mere technicality. Uber could pay some drivers minimum wage + benefits and probably make even more money.


Comparing HomeJoy to ridesharing companies, I see that both had telephone analogues: You can call a taxi company, and there are lots of agencies you can call for cleaners.

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.


Recurring business is really tough when you're effective just introducing customers to other businesses. Thumbtack handles this by not even addressing the recurring aspect, and focusing on getting good introductions. Recurring revenue is great, but how does a matchmaking service continue to provide value once a good fit had been found?


Just to elaborate:

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.


It never occurred to me to try hiring my HJ cleaner directly... If i have to travel and reschedule, i can just push a button on my phone and reschedule. I never have to worry about writing checks or tipping (thinking about it in hindsight.. does that make me a jerk?). The time I had an issue, their support made the experience "magical"

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...


Not too sure about Thumbtack, but Home Advisor basically just buys Google Ads to get consumer traffic, then turns around and sells the lead to contractors at a higher rate. If contractors spent 20 minutes figuring out how to set up a Google Ad campaign, they could easily outbid Home Advisor for the exact same customer. I feel like this is pretty much the same thing Thumbtack does, with a few logistical differences. These business models really seem unsustainable (or rather uncompetitive) with any service professional that takes his or her business seriously and doesn't mind putting in the work to market themselves. These companies are basically playing Google Ad arbitrage.


Going through Homejoy instead of direct offers you Homejoy's bonded protection and insurance, plus refund platform. This is worth something.


Sure, but is it worth their margin? The market resoundingly answered "no".


Er, I always went through them. So did many others. They stated they are folding primarily because of lawsuit pressure, not referral issues.


> They stated they are folding primarily because of lawsuit pressure, not referral issues.

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.


The gig economy works for things like driving because there's little benefit in having the same person do the job every time because the job varies (the pickup and dropoff places are different, the time of day is different, etc). There's no reason to care about who is doing the work. When it comes to things like cleaning that is very different. Who you let in to your house matters. Homejoy's benefits are worth something while you're 'auditioning' cleaners, but once you find one who's good at cleaning, reliable and honest then those advantages evaporate and you're better off hiring the cleaner directly.


Protection and insurance are most valuable the first time I hire someone, in case they are a nutcase or thief.


I've had the exact same experience with Vint (https://www.joinvint.com/) - Go through personal trainers until you find one you like and then move off the app. The hourly cost will be lower but the personal trainer will still make more money.

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.


It's not just that rides are a commodity, they also have an immediacy effect. I don't care who drives me, but I care that they pick me up in the next 3 or 4 minutes. When an uber driver gives me a card that's great, but it's kind of worthless because they're unlikely to be nearby. Hell in the time it takes me to call them I can likely have another car at my front door if I just use the app.


Depends. I like being able to schedule rides to the airport in advance, so I know exactly when I'm going to be picked up. And the rate will be pre-determined.


The only situation where it's nice to have a known driver is when you are scheduling a ride in advance, i.e. to the airport or something. In those cases, I frequently call a day ahead to a driver I know.


When I lived in New York, I was a customer of a home cleaning start-up that magically managed to avoid all of the legal quagmires and platform defections that plague sharing economy companies.

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.


For these sorts of businesses (Upwork, Homejoy, etc.) Legal protections and payment processing are reasons to encourage people to stay in the system.


It's tough being a middleman parasite.


This was very common with AirBnb as well at the beginning: you could exchange private information with the host and then pay them directly. However, over time it just made more sense to use AirBnb's interface.

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.


Humorously this is in their FAQ about the close:

> We hope that you are able to continue your relationship with your current cleaner, independently of Homejoy.

http://blog.homejoy.com/faqs/


> But after the cleaning lady they sent me was done, she offered me her direct phone # and told me I could contact her directly for any future cleaning needs.

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.


For Home Depot and Lowes, lead generation for contractors is just a way for them to sell more building materials that need installation. They don't care if you call the contractor directly for your next installation job, as long as the materials come from them.

That model does not work for HomeJoy.


I ran the same business as Homejoy but on a smaller scale in Germany before stopping last year (for a variety of reasons that I won't go into here). What you mentioned is the main reason we focused on holiday lettings and B2B cleanings.


This is exactly their problem. I wonder if LawnLove will have the same problem?


Founder of Lawn Love here. We think a lot about disintermediation risk.

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.


I think one of the issues with Homejoy and disintermediation is that cleaning inside the home is well up the intimacy scale. It's different from say a commercial cleaning service. The risk for the customer is that next time they will send someone different. The new person will be more of an unknown quantity whereas the current cleaner, if they are good, is exactly who the customer wants sent out next time. When this happens, the customer benefits more from coordinating their schedule with the individual cleaner than from the on-demand scheduling via Homejoy.

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/ ]


Do you schedule the customers close by to minimize travel time for your lawn care guys? I know cleaners that drive across town to jobs, effectively losing money while they're stuck in traffic. I don't know if Homejoy did that.

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.


Yep, that's one of our primary value props. Once we reach critical mass in a market we're able to do job clustering and route optimization. More jobs per day + less time spent burning fuel sitting behind a steering wheel means much better economics for our lawn pros.


Aren't lawn care providers already pretty much doing this by means of fragmentation? (i.e. in one suburban town, there are only 3 providers that serve the whole area) What additional value do you guys provide that isn't already there?


That's not actually the case for a market of any scale. More like 1000 providers / market. :)

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.


Or Handy


FWIW Thumbtack and many other companies have the same problem, and it can be solved by just charging the cleaners more money for the initial introduction. Instead of charging 20% of the first cleaning, charge 50% or 100% or 200% and let them own the customer (Thumbtack charges fixed amounts but it is the same principle).


> FWIW Thumbtack and many other companies have the same problem, and it can be solved by just charging the cleaners more money for the initial introduction.

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.


I would wager that the answer is to provide some other value to the contractors, but I have no idea what that could be.


Easy recurring payments, payment processing, scheduling, job details (customer A gets the whole 9 yards, customer B only needs X, Y and Z), easy customer communication, etc. But I'm not a cleaner so I have no idea if those are worth it.


Give new customer priority to the contractors that have a high in-service retention rate, perhaps. If you have a history of customers who stop using the service after contracting with you, you stop getting customers.


If this sunk them I am shocked that no one saw this coming. I asked about this on HN over a year ago [0]. There are 2 things they could have done.

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.

[0] https://news.ycombinator.com/item?id=6855047


Are we sure that was the problem?


Even after meeting my doctors, I still use ZocDoc to schedule appointments. It's much easier for me to find the ideal appointment time when I can put my schedule and the doctors schedule side-by-side as opposed to calling the receptionist. If the doctor built a high-quality scheduling app, I might still use ZocDoc because it would likely be easier to remember how to get there.


I think a real value is if you add many service types together in one platform and you can manage all of your household in one website/app. Then you can still get the cleaning lady's number, but you don't want to, because you have a much better overview when you can use the app for all the services you buy.


I believe that the cleaners were not supposed to be allowed to give out their number to be contacted directly. If they did so and Homejoy found out, they could be kicked out of Homejoy. That said, it would not surprise me in the least if a great many cleaners did it anyway.


There are ways to solve this, like stored value. http://platformed.info/network-effects/


I agree that match-making is the more correct model for house cleaning. But there are certainly ways to minimize what you describe. The threat of dismissal, for one.


It's the same as going around Ebay and contacting a seller directly. You lose any of the protection that the servicing company (Homejoy) provides.


I feel this way about AirBnB as well.


I'd wager that most AirBnB stays are one-offs on vacation. Home cleaning is recurring, making it more vulnerable to the "here's my phone number" weakness.


Agreed, but also I want a business with a name worth protecting to be on the hook when I have a room booked, not just some homeowner.


AirBnB's that business now. They used to claim they were only a matchmaking service and any risks were to be worked out between the homeowner and renter, but after some really bad publicity c. 2011, they've really doubled-down on customer service and insurance. Everyone I've known whose had a bad experience with AirBnB lately has had it turned into a good experience.


"Everyone I've known whose had a bad experience with AirBnB lately has had it turned into a good experience."

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)".


The difference with AirBnB is its usually a one-off situation rather than an ongoing relationship.

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.


AirBnB goes to a lot of lengths to make sure you at least have to book through them the first time. They filter out phone numbers and email addresses in messaging, even if you try and get clever (like spelling out phone numbers).


You can split them into two numbers which look like zip codes (in the US anyways).

555-123-1234 would become

"55512

part 2

31234"

I've done this to get around the issue when trying to get in touch with the property owner.


I get the sense that many of the people involved in Homejoy are well-intentioned and hardworking. But I can't say that I think it's a bad thing that tech startups are finding it difficult to monetize unskilled labor.

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?


I think you have it wrong here. The fact that HomeJoy was actually playing in a market which required skill labor was responsible for their downfall. Think about it - if there is an HomeJoy operator who's actually good and did her job very well (and thus is skilled), next time I will want to deal with her directly (to save on cost) and not deal with HomeJoy at all. I certainly did this. In fact, many HomeJoy operators proactively offered to do this.

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.


I see this a bit differently.

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.


Upwork/oDesk connects people with long-term providers and are more or less able to avoid disintermediation by providing services that the providers want to take advantage of, like time tracking, payment processing, and tax documents. Companies like HomeJoy need to figure out what services their providers really crave and make those contingent upon using their platform. Maybe there isn't anything lacking like that in the home cleaning business.


Agreed! My point was not against the home cleaning industry, as it was the "dispatch-as-value-add" model. Tax and liability are probably the biggest "headaches" that could be managed by homejoy and ensure they retain their position in the relationship.

Anecdotally I pay Molly Maid to clean my apartment, because i don't want to deal with liability, legality or tax complications.


You think cleaning is skilled labor and driving isn't? Uber drivers better not be unskilled. You're putting your life in someone's hands every time you ride in an Uber (as with any car). There's almost no skill to scrubbing toilets and vacuuming rugs, and if you mess it up you get fired but no one dies. The only skill required is attention to detail and caring enough to do a good job.


I agree that it is not a very skilled job. But attention to detail (i.e. caring to clean the house) is a more rare skill than you think. I have so many operators who have to come to clean our space and have done a messy job. The difference between good and bad operators is very stark - and it is the good ones you want to deal with.

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).


Driving is a common skill. Most people with a license can drive a car safely. This isn't heavy equipment.

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.


I can't argue that driving is unskilled, but cleaning is certainly a skill. I've gone through several services for house cleaning in the last few years and the quality of service varies dramatically.

> 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.


There is no house-cleaning college. This is what "skilled labour" refers to. Driving and house-cleaning is not skilled labour.


The poster I am responding to is clearly referring to "skilled labor" in the colloquial sense, as in a worker for whom adequate performance requires more skill than a lay-person.


It appears from this article that recent worker classification lawsuits also had a part to play - http://recode.net/2015/07/17/cleaning-services-startup-homej...


From the article: > Homejoy was able to raise funding, but not enough to grow > the company as big as its founders and backers had hoped. > “We declined those investments because it wasn’t enough, and > we wanted to stay true to our vision,” Cheung said.

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?


Mostly clickbait...one of many problems the company faced.


Thats what I figured the problem was.


> the balance of power between the tech company and the "1099 contractors"

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.


It seems like you're a 1099 as soon as you give a client your phone number to cut out HomeJoy. The law might not agree, but it certainly seems well within the spirit. Seems very common too (at least based on the HN comments).


I think Homejoy would be in the clear if they were more of a two-sided marketplace. If users could hire specific cleaners based on their ratings, and cleaners were free to set their own rates, that strikes me as more 1099 appropriate.

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.


> What are these companies doing for the laborers that makes them valuable enough to be skimming returns from the work?

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.

http://blog.sfgate.com/techchron/2014/07/22/homejoy-hikes-ho...

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.


Getting them more customers is incredibly valuable!

I've heard this as a need from literally every service provider I've ever used. They relish referrals.


That depends. It's incredibly valuable if the provider retains those customers. But if the service is set up to fence off the customer relationship from the provider, that's a much harder argument to make!


It's complicated. If dealing with the service makes buying easier, it can grow the market.

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.


Only if the customer base is growing. Otherwise, it is just taking revenue from another provider.


Homejoy expected that a better service would increase the customer base. I don't hire a maid currently, but if it were easy to find a trustworthy and thorough maid, I might.


Yes, more customers, but I don't know if the end result was more money?


But the convenience increases the size of the market, benefiting both customers and laborers.

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.


What does Apple or steam offer developers for their 30% cut ? customers and ultimately revenue to sustain themselves. An open marketplace has incredible value if its popular. Tech is the easy part of most startups.


... Apple builds the platform their apps run on. HomeJoy doesn't build houses, or manufacture sponges.


Apple builds the marketplace, just like Steam or HomeJoy. The fact that it's Apps are also based on their tech is irrelevant in this context. Steam also just provides a Marketplace without meaningful technology and has revenue in the hundreds of millions and nobody seems to complain.


Hey Thomas!

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.


So Forbes named Homejoy one of the hottest startups of 2013 (and they make a 30 under 30 list). They raise money from top-tier VCs and angels. Adora does quite a bit of speaking (it seems) on growth, regional expansion, and startup inspiration. They expanded to 30+ markets.

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.


Exactly this. I always felt that this was just another doomed startup that couldn't possibly survive. Curious how we'll revise our views on the company and Adora.

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.


I thought about this. Someone made a reddit article outlining how to do this and the profit margin depended on skirting the 1099 rules. This isn't a scalable business. Technology doesn't change the basic factors of the business in any meaningful way. I setup plans, bought a domain, had a partner but, never ended up doing it. My partner was disgusted with it as we were planning and over time convinced me.

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.
I think this is the key point. Add to it the loose coupling with the workforce may make the sharing economy model rattle. One exception I can think off is AirBnB.


I firmly believe this business model can work. I know of a local business that is going into its 6th year of operations. Cleaning houses is a large part of their revenues. They match house cleaners, handymen, grocery shoppers, cooks and assistants with professionals starved for time. The model is subscription-based and they have some large companies which give out these subscriptions as a bonus/perk to their employees.

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.


You are comparing apples to potatoes. Every city has cleaning and janitorial service companies (I worked for one in high school). Obviously that model works. We pay our housekeeper $60/week and she's amazing.

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.


"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)."

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?


Higher prices, questionable convenience, and poorer service.

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.


>she got angry and refused to work until I went into another room.

I would have kicked her out. Yikes.


I was tempted. The atmosphere got very uncomfortable. I canceled all my recurring appointments after that cleaning.

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.


Can you refer me that personal cleaner? I am in that same situation. Used to use Homejoy but looking for someone good. Can provide references to you if you don't trust an anonymous HN guy! Thank you.

mike.anon@hotmail.com


Hi icelancer,

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!


I would be very happy to find such a person in Seattle.


I'll try to dig up their contact info


I never used the Homejoy service, but I was in the audience for the Startup School Europe talks last year where Adora gave a fantastic speech (Notes: http://theinflexion.com/blog/2014/07/26/notes-from-startup-s...) about going through so many ideas and working so hard to get to Homejoy. The talk's ending had a 'And look, we made it, so you can too' feel, and I had no idea that they were doing anything but crushing it after all those years of grinding work.

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.


I get the opposite reaction when I hear of someone grinding away until they've got a startup. I understand that investors invest in people. But the idea has to have a life of it's own, and a value on its own. I remember when urban adventure games were a thing, and a thing that tended to attract very energetic people. But it was shown that no matter how much hustle you've got, urban adventure games are not an investable thing.


Even if an idea is valuable, implementation is rarely a simple process.


The question that comes to my mind is: should an entrepreneur really "fake it till you make it"?


Yes. Especially in a game where you are dependent on raising capital, you always need to have an air of confidence about you.


Yes - even if you're not an entrepreneur


That's really just another way of advocating practice.


Success comes primarily from doing the right things, not working hard. If you work hard, but are doing the wrong things, your chances of success are slim to none.


makes you wonder how many other startups are in the same boat.


I never used Homejoy, as they were pretty pricey. I have cleaners charging me 1/3 of what Homejoy quoted.

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!


At the end of the day, this is a lesson in unit economics. If you want to make a successful startup, your unit of sale better be super profitable.

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


They've raised almost $40M in funding:

https://www.crunchbase.com/organization/homejoy


I wonder if they will be returning any money to investors and if so how much.


If they shut down due to lawsuits, don't debt holders (plaintiffs) get priority access to remaining cash?


According to Recode article they were looking to raise more money. Am curious how could they have burned $40mil in ~1.5 years..


Loss leading sales that attracted 1 time customers that either never came back and/or decided to cut them out.


Just goes to show you that all the money in the world can't save a bad business model.


My problem with Homejoy/Handy etc. is the high degree of unpredictability in the quality of each cleaning. My conclusion is that for something like home cleaning, you want to find a regular person -- not someone new each week.

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).


> You don't want someone who is doing it as a past time to make some extra cash. That might work with Uber/driving

Until your Uber driver takes a left turn onto Shoreline Boulevard without looking, and nearly kills you.


That is hardly an Uber problem. In fact, professional cab drivers are famous for dangerous driving. Example: http://www.nydailynews.com/new-york/nyc-crime/taxi-driver-in...


Homejoy was (at least at one point) the fastest growing company in YC history according to PG[1], and if you go back and read the press, particularly around its funding, it was treated like it was already a success.

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[2][3], and wrote last year[4]:

> 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.

[1] http://www.reddit.com/r/EntrepreneurRideAlong/comments/1uyr6...

[2] https://news.ycombinator.com/item?id=8489834

[3] https://news.ycombinator.com/item?id=8468863

[4] https://news.ycombinator.com/item?id=8709632


As tptacek said, I'm sure many of the people who created and work for these businesses are well intended and hard working, and we have to applaud them for that.

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.


Cofounder of thumbtack here. I think you misunderstand our business model. We don't hire anybody; we're just a marketplace. A request comes in, we connect it with qualified professionals, and then they bid directly on the job.

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.


Fair enough, thanks for clarifying. I'm having a hard time finding the article but I believe a FastCo/Wired/etc (one of those sites) did a longform article about how many of those type of workers (students, actors, etc) existed on Thumbtack, which was further backed up by someone who had interviewed with you. That was the basis for my conclusion.

Out of curiosity, given you're a marketplace how do you handle reoccurring work then? Or do you focus entirely on net new business?


Interesting. I haven't seen the article, but if it says what you say it does then I think they've got it wrong.

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.


I think you're off on most of your points. Obviously the startups are not using undocumented workers. The risks are far too high. Gross margins are more like 20%, which is plenty to operate such a business. Not sure how it's indentured servitude compared to any other sort of job. Not sure your point about background checks. Supply & demand works out the numbers.


> Obviously the startups are not using undocumented workers.

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.


Not sure what you mean. Prices would be set in order for supply and demand to even out. The startup is unlikely to use undocumented supply because of risk.

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.


Their HQ was a mess. If your business is cleaning then you should have cleaning in your blood and dream about pine sol when you sleep. I get the sense that the company was started for the sake of starting any company. In doing so they created a company without any vision.

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.


The holy grail of success isn't working hard, vision, or values. The holy grail is understanding the competitive environment so well that you impose a sustainable competitive advantage that isn't easily copied and a strategy that executes like hell. This is why Musk, Jobs, Buffett were/are so successful. This is also why Uber is absolutely crushing any other competitor in the U.S.


And the recode story (http://recode.net/2015/07/17/cleaning-services-startup-homej...) which has a bit more clarity. Trying to fund raise a sharing economy business just after Uber gets a bad court decision on the employee/contractor question is hard. It is almost like having your company go back to being a 'seed round' level risk for some investors.

It also lends credibility to the 'not a bubble' discussions if stage C investors are showing restraint but that is a different discussion.


> 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.

Oh wait[1][2].

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.

[1] http://www.businessinsider.com/instacart-raised-220-million-...

[2] http://time.com/3748438/instacart-lawsuit/


I agree 100%. The VC should have put all the class action law firms in this area on a retainer.


Except that article is dead wrong. The court decisions were a convenient scapegoat that had nothing to do with the shutdown whatsoever.


Homejoy customer here. For me, they succeeded in making home cleaning accessible to a guy in his early 30s who clicked a few buttons past a Facebook ad to schedule 2x/mo cleaning - a big stress reliever and quality of life improver. I never used a cleaning service prior to Homejoy.

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?


There is a ton of analysis in this post about what went wrong. As someone who runs a service marketplace business, I know how hard it is scale this type of business (scaling quality, managing a remote workforce, supply churn, repeat usage and all the other things...). The founders had worked long and hard to succeed (knowing them first hand). They also happen to be incredibly nice people - always willing to help others. All the best to Adora & Aaron. I look forward to seeing what you launch next!


For a house with 4 roommates, this service worked great as a solution to the "tragedy of the common [space]" problem. We've been using them for a year or more now and I'll be sad to see them go. I hope they follow through on putting people in touch with the actual cleaners.


How are you not in touch with the person who cleaned your house for a year?


Easy (Homejoy customer here). They show up at the scheduled time, say hello, clean, leave. I'm sure it's a personal relationship for some customers but wasn't for me.


(1) It was a different person every time, and (2) all booking is done online, with SMS interactions piped through Twilio.


Not necessarily for #1. After my first cleaning was good, I requested the same cleaner for all following appointments.


this isnt that abnormal. i used to not see my cleaning lady for many months at a time. just left a $50 on the counter every wednesday on my way to work, came home to clean house, folded clothes, everything in its place... it was awesome.


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