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.
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.
* 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.
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."
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.
> 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.
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.
> 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).
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.
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
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.)
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?
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.
> 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.
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.
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.
> 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.
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.
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.
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.
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.
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.
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.
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.
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.
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)".
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).
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.