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Why Homejoy Failed

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Re: Why Homejoy Failed

#151

Post by SilasX »

tptacek wrote: post #57

But on this particular holiday, a booking had slipped through unnoticed, due to a website malfunction, according to a former employee. Rather than cancel an appointment at the last minute, Homejoy’s cofounder and CEO Adora Cheung grabbed a toilet brush and a vacuum cleaner. Then she headed to San Francisco’s Mission Dolores neighborhood and scrubbed. “The customer had no idea,” said Arjun Naskar, one of the earliest…

>Semi-related reminder: tip your hotel housekeepers.

Wait, what? What's the semi-relation there?

I really hope it's not going to be another variant of "it's a hard job, therefore the tipping model obviously makes more sense there than a pure wage model".

Re: Why Homejoy Failed

#152

Post by akshatpradhan »

zippergz wrote: post #67
untog wrote: post #25

I think this is a demonstration of the limits in "app-ing" an industry. Uber worked fantastically because it leans heavily on the geolocation facilities in a smartphone - you're always moving, getting picked up from different places, by cars located in different places. Homejoy had none of that. You rarely move home, and your cleaner rarely does either. Effectively, from transaction #1 you're in a perfectly replicabl…

"In reality, inviting someone into your home is a very personal thing, and people much prefer to build a relationship with someone that they might pay a little more on a regular basis, than get a different person each time." Yes, for sure. I've had professional home cleaners for nearly 10 years now. And over the course of those years, I've had many conversations with friends and neighbors who do as well (e.g. in givi…

>I can't imagine using a service that sends someone different every time, or even someone for whom I can't see reviews and receive references before the first visit. This is a service that requires putting a lot of trust in the service provider.

The alternative is if Homejoy would have treated Cleaners as employees and properly trained them. A properly trained and paid Cleaner as an employee would have provided that trust you seek.

Re: Why Homejoy Failed

#153

Post by sib »

maxlamb wrote: post #109
jusben1369 wrote: post #15

Homejoy raised $40 million. I doubt it was ever even close to Unicorn valuation. Am I wrong or is this headline fairly misleading?

How much a company raises and its valuation are two completely different things.

While that is true, it is also unusual for a Series B round to represent less than 10% equity in the target company, so it would be safe to assume a post-money valuation of no more than $400MM.

Re: Why Homejoy Failed

#154

Post by ThomPete »

TheOtherHobbes wrote: post #144
ThomPete wrote: post #16

Compare it to the Danish facility company ISS [1] whos been around since 1901 has more than 500K employers and is in more than 75 countries and pay their employers a fair salary. No freelance contracts or anything like that. The real challenge isn't growing a company like that, it's being profitable from day one. And so the real innovation is going to be a company that find a way to either completely automate many of…

The flaw in the model is that companies like these do not exist to provide a service to customers - they exist to persuade investors they're worth funding. Homejoy was primarily a cash hoover, not a carpet cleaner. On that basis it worked okay for a while. But the emphasis on Insane Growth [tm] as a metric for potential unicorn-hood meant that customer care, customer retention, and service quality - never mind basic…

I agree.

Also ISS was actually so modern that my own mom who was a simple cleaning lady had stock in the company and this is 20 years ago.

So actually disrupting them requires something more than underpaying your workers.

Re: Why Homejoy Failed

#156

Post by jusben1369 »

ghaff wrote: post #23
jusben1369 wrote: post #15

Homejoy raised $40 million. I doubt it was ever even close to Unicorn valuation. Am I wrong or is this headline fairly misleading?

Well, there's no formal definition of "unicorn valuation." But $40 million is a fair bit of money to raise and, if you figure 10x return as a target ballpark, that brings you up to $400 million which is at least in the ballpark of $1 billion.

I think Unicorn is very specific and $1 billion is the amount

Re: Why Homejoy Failed

#157

Post by ssharp »

untog wrote: post #25

I think this is a demonstration of the limits in "app-ing" an industry. Uber worked fantastically because it leans heavily on the geolocation facilities in a smartphone - you're always moving, getting picked up from different places, by cars located in different places. Homejoy had none of that. You rarely move home, and your cleaner rarely does either. Effectively, from transaction #1 you're in a perfectly replicabl…

Care.com is doing similiar things with housekeeping services, although they started with matching child care providers to parents and seem to just be expanding into new verticles -- housekeeping, pet watching, etc. I think it's a good strategy. I'd rather use one app to handle those types of tasks than have to manager a Homejoy, Petjoy, and Kidjoy account.

Re: Why Homejoy Failed

#158

Post by strommen »

> But he said they were forced to rely on [deeply discounted first time Homejoy cleanings] heavily because of intense competition with their chief rival, Handy, which employed a similar strategy.

This is one of the bizarre aspects of VC that is bad for the economy as a whole. A regular business that is aiming for profit must be careful about how much it spends on customer acquisition. A VC-backed business that is aiming for "unicorn" growth must spend whatever is necessary, even if it's not sustainable. And the collateral damage is that traditionally profitable businesses (in this case, non-app-ified home cleaners) are priced out of the market.

Re: Why Homejoy Failed

#159

Post by debacle »

> Home cleaning represents an estimated $400 billion global market

Any limited critical thinking will show that this number is likely off by 1-2 orders of magnitude. Your median US homeowner is spending $0 on home cleaning a year, and the average is likely very close to that. Outside of the US and Europe, labor costs drive that small amount to almost nothing. I would be amazed to learn that the actual size of the market was over $10 billion.

Re: Why Homejoy Failed

#160

Post by debacle »

ssharp wrote: post #157
untog wrote: post #25

I think this is a demonstration of the limits in "app-ing" an industry. Uber worked fantastically because it leans heavily on the geolocation facilities in a smartphone - you're always moving, getting picked up from different places, by cars located in different places. Homejoy had none of that. You rarely move home, and your cleaner rarely does either. Effectively, from transaction #1 you're in a perfectly replicabl…

Care.com is doing similiar things with housekeeping services, although they started with matching child care providers to parents and seem to just be expanding into new verticles -- housekeeping, pet watching, etc. I think it's a good strategy. I'd rather use one app to handle those types of tasks than have to manager a Homejoy, Petjoy, and Kidjoy account.

The regulatory ecosystem around child care is much better and the baseline of quality control is much greater.
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