TLDR. Summary: Burn was too high.
..because they didn't have a business plan.
Why Homejoy Failed
261–270 of 342 posts
Re: Why Homejoy Failed
#262Earlier quoted context omitted.
Just had the same issue with Handy. They notified my girlfriend 20 hours before an appointment that our requested cleaner was unavailable, and when we canceled charged us $15 for canceling within 24 hours. After 4 different attempts to cancel we gave up and called American Express. They blocked Handy from charging the card again and did a chargeback for every dollar we ever spent with them.
How can Handy survive in the real world where workers reasonably call in sick with less than 24 hours notice if their customers behave like this?
Well one easy way would be to not charge a cancellation fee when you don't provide the agreed upon service!
Re: Why Homejoy Failed
#263I operate my business on such a tight budget it seems almost criminal for a business to fail with $40 million to work with. I could spend many lifetimes growing my business with that kind of money. IMO you don't force a market to grow. You accept what the market gives you and then you grow into the market as it allows you to grow. Not the other way around. This is one of the biggest flaws in how investors expect thei…
That's the old bootstrap vs VC money argument, but bootstrapping doesn't work for a lot of business. You can't make an Uber or Google or Facebook or Twitter without VC money, it simply can't happen.
I'm not saying forego funding, but what I am saying is if VCs took a longer view and didn't throw tons of money at companies that haven't proven the need for it, expecting unrealistic returns, we would probably have a much higher success rate in SV startups than is the case today.
Even though funding was required in the businesses you listed, none of them would've grown to the size they are unless the market demanded it.
I know this sounds obvious, but it seems to be a counter point to the behavior I see in SV startup stories.
Re: Why Homejoy Failed
#264Earlier quoted context omitted.
> Effectively, from transaction #1 you're in a perfectly replicable pattern - Cleaner X comes to your house every Y weeks and works for Z hours. This is the key failure. Anyone's whose regularly procured cleaning services knows the dance. You find a reputable cleaning service, they send out a cleaner. If you don't like them, you keep asking for a different one. When you find one you like, you ask them what they'd cha…
So, is a "one time referral fee" business model the key to success? This is effectively the yellow pages model, where cleaners pay for leads via advertising placements, and own the long-term relationship with the customer.
Probably, and for far more than just cleaning. For example, tutoring companies do all sorts of ridiculous things to try to prevent "disintermediation," but they take such massive cuts of a tutor's fees that a compatible student and tutor can split the difference (i.e. each take half of the company's 20% cut) and both benefit. Why on earth wouldn't they?
Re: Why Homejoy Failed
#265Earlier quoted context omitted.
Just had the same issue with Handy. They notified my girlfriend 20 hours before an appointment that our requested cleaner was unavailable, and when we canceled charged us $15 for canceling within 24 hours. After 4 different attempts to cancel we gave up and called American Express. They blocked Handy from charging the card again and did a chargeback for every dollar we ever spent with them.
How can Handy survive in the real world where workers reasonably call in sick with less than 24 hours notice if their customers behave like this?
In real world, if your regular cleaner calls in sick, you don't pay for that visit. If you really need some cleaning done you talk to him to come a few days before the usual scheduled date. It is a 1:1 relationship and often with the cleaner in the stronger position.
Apps like Handy want to invert that, but in the case of Handy they basically failed to provide the consistent quality and a critical mass of cleaner to offset people reluctance to engage with cleaners like this. This lead to the kind of frustration the parent describe. The real loss for Handy is not the cancellation or even the loss of that customer for good, the real loss is that they lost the recommendation of that customer and recommendation is the main way your currently chose a cleaner.
Re: Why Homejoy Failed
#266Earlier quoted context omitted.
In old-economy-speak what you just said basically translates as "you entered a crowded market". When you're standing on an unknown, rainy street corner far away from home, a taxi's services are urgently required, and not abundant. When you're lounging on your sofa and start contemplating how it would be nice for someone else to bin the pizza boxes, it's the opposite on both counts. Moreover, I don't see the money men…
I've been lurking on this thread waiting for someone to mention that post. I'm really surprised it took this long.
Well, it was mentioned quite a bit in the linked article.
Re: Why Homejoy Failed
#267Earlier quoted context omitted.
Huh. The Uber driver could rob you too; they could rape or murder. They could kidnap. They have, really, far more opportunities to harm you. But the ol' housekeeper is alone in getting assumed to be a thief. Probably this was not meant. But its been a hot button, the casual assumption that housekeepers are thieves, since forever. I guess I read that into the comment too readily.
Yes, the Uber driver could rob you or worse, but they would also be guaranteed to get caught, so they probably won't do it. I think you are picking on a rather objective and dispassionate observation about incentives to take a grandstanding against classism, I appreciate the sentiment but the execution is flawed.
Guilty as charged. But those cold dispassionate observations can inject casual bias as well as heated comments. That was what was galling. The 'oh you know how the domestic help is always stealing stuff' injected casually was more than my bs-meter could handle.
Re: Why Homejoy Failed
#268Earlier quoted context omitted.
Just had the same issue with Handy. They notified my girlfriend 20 hours before an appointment that our requested cleaner was unavailable, and when we canceled charged us $15 for canceling within 24 hours. After 4 different attempts to cancel we gave up and called American Express. They blocked Handy from charging the card again and did a chargeback for every dollar we ever spent with them.
How can Handy survive in the real world where workers reasonably call in sick with less than 24 hours notice if their customers behave like this?
Figuring that out is kind of integral to Handy's business model. they're essentially playing matchmaker between customer and service provider, which means their business begins and ends with customer service.
If you pay for Bob to come over and clean your kitchen because you know Bob does great work, it's perfectly reasonable for me to call you up and say, "Bob's sick today, can I send Jed over instead?" But it's also perfectly reasonable for you to say "no, so cancel my appointment for today." It is not reasonable for me to charge you a cancellation fee under that scenario.
Re: Why Homejoy Failed
#269I'm reminded by a simple but powerful message one of my professors delivered to my MBA class a few years ago. "You can't just look for a gap in the market. You also need to verify there's a market in the gap." Homejoy most likely saw opportunity in the first sentence, but it appears they may not have spent time thinking about the second (or didn't research a broad enough segment of the market). 'Disrupting' a market…
I love that saying. However, don't forget that a lot of really, really smart people put money into Homejoy because they felt Homejoy had solved the market (i.e. there was a market in the gap). It's not enough to just say, in retrospect, "... they may not have spent time thinking about the second (or didn't research..."). That's just clearly not the case here - they spent plenty of time on that as did their investors. Sometimes it comes down to the fact that they left out key components, the founders weren't capable, the market didn't react as anticipated, etc.
Re: Why Homejoy Failed
#270Earlier quoted context omitted.
How can Handy survive in the real world where workers reasonably call in sick with less than 24 hours notice if their customers behave like this?
Well one easy way would be to not charge a cancellation fee when you don't provide the agreed upon service!
Did/does Handy promise to provide a particular individual?