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 st…
Except that article is dead wrong. The court decisions were a convenient scapegoat that had nothing to do with the shutdown whatsoever.
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…
they increased their prices more than 75% a year ago, which signaled that they didn't have a sustainable model.
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.
>>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…
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.
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…
>> 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 $40m in.
Their boss doesn't want them to show emotional restraint?
Their boss wants them not to stop working but (I imagine) could not care less if they cry or smile as they work. Do you agree it would be harder for them if they were required to smile and make small talk as they worked? If you want another example of not having to do emotional labor, think of a rock star who gets away with throwing tantrums at his manager or quitting halfway through a show - zero emotional restraint…
Workers cannot express (unrestrained) anger towards their boss. Can you? Rock stars cannot express anger towards their audience. I mean, I suppose they can, but it increases the chances of unemployment.
I pity the man who wants a coat so cheap that the man or woman who produces the cloth or shapes it into a garment will starve in the process.
My sincere question is - Why not just make them employees? It does increase the cost of the service from 20$ to 30$ an hour, I would still have the service but use it at half the frequency. But I will be glad knowing the cleaner is treated fairly.
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.
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.
Of course! That's why I explicitly said everyone has their wisdom to share. Nevertheless, we all must pan our knowledge in some form or another.
Looks like theres more to this story: http://recode.net/2015/07/17/google-hires-homejoys-technical... Perhaps that success is coming sooner than even I had anticipated.
I personally reject that definition of success. Acquihires happen all the time.