9 ms·

Homehero is shutting down

67 points by rcarrigan87 9y ago

opportune 9y ago
Important to note that we're only getting one side of the story here. It would be nice to get a second opinion, ideally from an actual carer, on the DoL ruling that killed HomeHero's business model. For example, if this ruling (which forced a transition to a W-2 employee model away from 1099) actually ended up getting health insurance to a lot more employees, that could be considered a good thing to some. Of course, that ignores the fact that the regulation did probably end up putting a lot of home carers out of over-the-table work, as Kyle noted.
tptacek 9y ago
On Oct 15th 2015, the entire home care industry got rocked. The Department of Labor upheld a federal ruling stating that over 2 million home care workers would qualify for the Fair Labor Standards Act —essentially requiring all home care workers to be treated as W-2 employees and receive overtime benefits. I took a few minutes to read Home Care v. Weil and I don't think this is at all an accurate summary. What the DC circuit found (and SCOTUS, in denying cert, allowed to stand) is that third party employers of home-health workers are required to provide overtime and minimum wage protections for home health workers.
- vosper 9y ago
  So you can't be the exploitative middleman, but home care workers are still able to work directly for the people in their care, at a rate they both agree on? Seems reasonable to me, provided it doesn't also mean there can't be any kind of marketplace or clearing house that connects workers with people who would like to employ them.
  - ThrustVectoring 9y ago
    Depends on how hands-on the marketplace is. Something that works like Craigslist is probably fine, something that works like Uber probably isn't.
badrequest 9y ago
If your company was only viable if you could get away with not paying people overtime rates when they work overtime hours, then your company was never viable.
- FussyZeus 9y ago
  Exactly. Simply not paying people living wages is not a disruptive new idea, it's just exploiting your workers to provide a lower cost to your customers. You're exactly the same sort of scum you're attempting to unseat. Bring on the downvotes! You can call it whatever you want, "side hustles", "the gig economy", whatever new age bullshit the VC companies are using this week but it's the same thing: ducking labor laws to pay less than living wages to people to do work you don't want to do.
orthoganol 9y ago
So the gist is laws were upheld protecting homecare givers - minimum wage and overtime pay - and new mandated increased minimum wage, ultimately led to their decision to abandon their supposedly successful model. Their own internal "surveys", if we should even consider that, supposedly indicate these laws are not good for homecare. Maybe their business model just depended on exploiting cheap labor? Or maybe they went the way of Homejoy and are saving face, as many speculated, former employees coming forward, etc. with Homejoy that their customer retention was just really bad.
- scardine 9y ago
  I guess sites like Homejoy have a fundamental problem: professional/customer meet face-to-face, so when they find a good fit they have an incentive to cut a deal off the site books. The platform ends up littered with bad professionals, abusive customers and lots of complaints to manage.
- alanfalcon 9y ago
  I aould certainly like to hear the caregiver perspective on this. Is it truly just that the "low end" of the market hs moved away from legal status to "cash under the table"? Are caregivers overall happier (or better off) working fewer hours for less pay and dealing with the increased issues brought about by constant change when caring for a dimensia patient?
- SparkyMcUnicorn 9y ago
  Nobody likes having their costs more than doubled and having no choice but to pass that on to the customer. I'm all for fair pay and I also think people should be able to afford in-home care for those that need it. It seems evident that the latter is no longer the case. It's a hard line to walk. Caregivers are getting paid more, but demand is much lower.
- Shivetya 9y ago
  or maybe the SEIU exploited their power over politicians to force this state into a similar mess in Illinois (2009) by not only setting wages for private workers but also force compulsory unionization of all such workers. It took a 2014 Supreme Court ruling to stop the forcing of these care givers, which included people merely taking care of family, from paying union dues. Never expect actions taken by government are always to protect the workers, especially when they start hitting heart strings on the phrasing. This is about supporting their campaign base, unions push a lot of money into politics and getting such laws passed are their means of getting more into their coffers. Look at the prison story we had on the front page, the costs are almost all due to employee wages and those are driven by the most powerful union in the state . this was about protecting political interest, they don't care about care givers. this startup simply got caught in the middle.
DGAP 9y ago
I was part of a team that was attempting to compete with HomeHero, but based out of Texas. I'm curious why they didn't attempt a geographic pivot if California regulations were truly their main barrier to success in the home healthcare market.
- yesimahuman 9y ago
  Was going to say, this whole post talks about a challenging regulatory environment in California, and is clearly meant as a "told you so" reaction. However, I see no reason this had to be bound to CA.
  - mi100hael 9y ago
    You mean other places exist outside the bay area????
- deleted 9y ago
  [deleted]
nilved 9y ago
It's happening more and more that there are shutdown posts about startups that had minimal exposure on HN. I have never heard of this service and the post does a bad job of explaining it to people who are lacking that context.
- DanBC 9y ago
  What an unpleasant thing to say about a post that's sharing a probably unpleasant time in the founder's lives.
  - deleted 9y ago
    [deleted]
  - exogeny 9y ago
    Just because it's an unpleasant time in the founder's life doesn't mean that it's above criticism and tough discussion. Look, the dude raised tens of millions of dollars and failed. Those are facts. Simply lauding someone for being brave about the failure or even raising money in the first place is dumb. They had a large opportunity, pitched big promises in order to get their funding, and failed because they could no longer exploit a labor market. And we're supposed to ignore that because it might hurt his feelings to discuss it openly, after he himself opened himself up for that discussion by publishing a post-mortem? The positive culture of failure in startups is childish and enables the continuation of poor decision making. Business isn't a summer camp where everyone gets to hold hands and win participation trophies; people win and people lose. By not being honest about why they lost and learning the lessons from it - even at the cost of potentially hurting someone's feelings - the community does not advance.
  - nilved 9y ago
    Kind of funny that I got -4 for that comment when literally every comment in the thread says the same thing about this nameless company.
exogeny 9y ago
I think the biggest problem here, above anything else, is my first reaction: "Who the hell is Homehero, and why should I care?" Also: LOL at "The 1099 independent contractor model, below, is very attractive as it removes excess cost and restrictions for employers." Yes, it is very awesome when you get people to perform full-time labor for you without having to worry about giving them insurance or benefits or anything like that!
- zacharycohn 9y ago
  Obviously, a startup. And just because you're not in their target market, and so probably wouldn't have heard of them, doesn't mean there isn't something to learn here.
  - exogeny 9y ago
    Oh, there's plenty to learn. I just think that agnostic of the labor and regulatory issue he's describing, a much bigger problem was that we're inside of an incredibly niche, startup-focused community here on HN and the overwhelming response so far is "Who the hell are these guys, and why should I care?"
- mahyarm 9y ago
  The typical maid service before all of this is someone you hire off craigslist or word of mouth and pay directly in cash. Who may or may not be an illegal immigrant. It is pretty much a pure contractor model on it's face. Equivalent to the plumber you hire to fix your pipes, minus the licensure.
sergiotapia 9y ago
After the mandated increase in pay and W2 obligation, a lot of people just shuttered their home care businesses. Now the employer is no longer in business, and the employees are left jobless. Would there be similar results if the minimum wage increased for low-skill jobs? McDonalds employees want $X, but McDonalds can just build those autonomous cashiers which are already all over the place here in Miami. Suddenly no more jobs for people.
- stevenwoo 9y ago
  My mother is living with my sister in California and we pay I think about $25 an hour for help with eldercare. The person we chose only gets half, the agency gets the other half. Knowing what I know now, we probably should just hire people off of craigslist and give them a lot more money than the agencies give them but that would require a lot more vetting from us. These now unemployed caregivers could go on craigslist but of course without the name/insurance/reputation of some company behind them.
  - LoSboccacc 9y ago
    i surance is a big expense for a caregiver. getting a serious one off craiglist means he'll have to pay insurance out of that 25$ and individual bargain for those kind of things sucks. the only alternative would be to get an improvised caregiver, but that's worse under almost every other aspect
    - stevenwoo 9y ago
      Ah, thanks, was wondering what I was missing from the math.
  - ams6110 9y ago
    If you are telling them when, where, and how to work they are your employee and you should be paying payroll tax.
- josho 9y ago
  > After the mandated increase in pay Another perspective is that without the mandated pay increase these people were working for a wage below the poverty line. (An assumption on my part, but why else would a pay increase be forced upon a business?) So what you really mean to ask are we better off paying folks a wage below the poverty line, or force business to pay a livable wage? I think history has provided numerous examples of why labor laws are important. So, my question to you, are you unfamiliar with history and why labor laws are important?
dr_ 9y ago
I followed homehero and some of its competitors movements for a bit. Home care is not an easy business, and there are many local vendors in any given community. There's always this argument as to whether going "full stack" (providing the workers, technology - the full solution) is a better option in healthcare than just providing a software product for clients to start using. The argument Kyle makes, that is worth noting, is that existing homecare agencies started deploying software more readily than homehero may have anticipated. Thay being said, some of the messaging and marketing may have been off as well. I found it odd when they started advertising their workers as W2 heros, or something to that effect.
dataminded 9y ago
I think he misses the point entirely. His business only worked if the country continued to insist that the vulnerable (elderly) can subsists off the backs of the disenfranchised and disadvantaged (home health care workers). Even if he won, the world would be a significantly worse place for it. The problem is that people are entering their later years without an appropriate safety net. Demanding that a subset of Americans work in poor conditions or at a discounted rate to cover the gap isn't OK.
- bmmayer1 9y ago
  > Demanding that a subset of Americans work in poor conditions or at a discounted rate to cover the gap isn't OK No one was demanding anything. Home care workers were working by mutual agreement with their respective employers. "The country" had nothing to do with it.
  - deleted 9y ago
    [deleted]
  - dataminded 9y ago
    Denying people without recourse protections is the same as demanding that they accept abuse.
    - Empact 9y ago
      In what sense do they not have recourse? All employment is based on mutual participation. Their recourse is to seek other employment.
  - deleted 9y ago
    [deleted]
  - Chaebixi 9y ago
    > Home care workers were working by mutual agreement with their respective employers. "The country" had nothing to do with it. "The country" can force someone into accepting the "best" bad deal ("by mutual agreement") if all the other options are worse. It's an error to stop your analysis at the agreement without considering the full context in which it was made.
tahw 9y ago
I feel like the way they told their story (being vague about the challenge until halfway down the page) implies that they realize the reason they failed is because they were exploiting contract workers just like Uber does. Good riddance to another "disruptive" company full of "geniuses" making money by throwing some javascript on top of an exploitative labor model.
gumby 9y ago
I am intrigued by all the messages pointing out that the business was predicate on unfairly low payments to workers, and when that problem was rectified, their business model stopped working. What intrigues me is that the common, tired narrative I see on this topic (from nerd friend on FB, typically) is more of a Libertarian/Ayn Rand oriented "the government shut down people who had had the freedom to work below a living wage, as should be their choice." As it happens I disagree with that libertarian view, but even if I didn't, I'm glad to see a more complex understanding of business models and sympathy for the staff.
nowarninglabel 9y ago
Is there something new here? This is the same post that was posted here 3 months ago.
wehadfun 9y ago
What added benefit did homehero add to justify their costs? Either way the majority of people who work in this industry do not get paid a lot for what they do. It is hard to argue that they should get paid less to support the middle men
af3 9y ago
How it is different than Gitlab? They also hire almost contractors only.
mladenkovacevic 9y ago
Can anyone name one of these "gig-economy" startups that treats their contract workers fairly?
Chaebixi 9y ago
> We launched with a workforce of vetted independent contractor (1099) caregivers, who we endearingly referred to as “Heroes”. How often are pompous titles like that just cheap window-dressing meant to hide some kind of underlying smelly ugliness? I'm getting really skeptical whenever I come across them. What are some other examples? I know I've seen stuff like this before, but the only other ones I can think of are title/job descriptions like "guru" or "ninja," which are similar but don't quite cover the same space.
- bjl 9y ago
  Apple 'Genius' definitely falls in that category.
  - prawn 9y ago
    Subway's "Sandwich Artist"? They're following a formula for assembling a pretty basic roll, and often taking instruction from the other side of the counter. Sounds about as far from artistry as you can get.
  - callalex 9y ago
    Are apple geniuses 1099 or w2?
  - learc83 9y ago
    I worked at geek squad during college, my job title was "Counter Intelligence Agent".
- dullgiulio 9y ago
  It's basically newspeak to make people with absolutely no ties, legal or financial to one company ("independent contractors") feel some allegiance, or some team spirit. Alienation is getting new worrying meanings every day.
  - Chaebixi 9y ago
    > It's basically newspeak to make people with absolutely no ties, legal or financial to one company ("independent contractors") feel some allegiance, or some team spirit. "Newspeak job titles" seems like a good name for this phenomenon.
scottfr 9y ago
I know this is supposed be about unnecessary regulation killing a company that was bringing wins to both homeowners and providers, but... am I reading this right: "By the Summer of 2015, we had onboarded over 1,200 Heroes, provided care to a few hundred clients ... In June 2015, we raised a $20 million Series A, bringing total funding to $23 million." So two years and $3 million dollars after they launched, they had only "provided care to few hundred clients". And using those metrics they somehow raised another $20 million dollars? It seems like they had other problems then a change in the regulatory landscape.
- LoSboccacc 9y ago
  with 10 heroes per customer it must have been stellar service
  - swrobel 9y ago
    Snark is so easy but thoughtful analysis is hard. Marketplace businesses necessitate having adequate supply and demand to keep both sides happy. Rarely can you scale them in lock step.
- rcarrigan87 9y ago
  Home care is a really hard business. We aren't just talking about scaling up cab rides. This in putting min wage workers in sick individuals homes. Moving slow is advised.
aresant 9y ago
As somebody with an interest in the space I appreciated the honest breakdown of the challenges and failures, 100% agree that this is a tough market. But this part stood out: "We were charging clients 30–40% less than industry average, and we were paying caregivers 25% higher than industry average. Both sides were winning." Both sides were winning at the expense of Homehero's investors and the viability of the business model. It is damn easy to grab market share in nearly any price-sensitive marketplace by underpricing service or over-pricing HR but it will ALWAYS ALWAYS catch you. And while the W2 math / wage wouldn't be completely solve by bringing pricing to parity, it certainly would have had a huge impact and maybe provided enough runway to drive the scale efficiency.
deft 9y ago
So basically they shut down because the law was forcing their 'employees' or whatever to get paid properly and they could no longer extract surplus value. Sounds like a good thing :) Maybe if they really wanted to fix things they'd do it as a non-profit.
palakchokshi 9y ago
I'm going to try and address each of the "negative" impacts this person states of the DOL ruling 1.In a survey we conducted internally, the cost for live-in/24-hour care doubled from $250 to $550 per day average in Los Angeles, pushing the price above a skilled nursing facility on a per day basis. At the rate he mentions of $250 per day, hourly wages would be $10.4 for 24/7 live in care giver. So he was paying less than minimum wage in California. Let's revise that number to meet the minimum wage. It comes to $360. That number of $550 is inaccurate. The correct number is $480 (8 hours of regular pay at $15 per hour if you are in California and 16 hours of $22.5 per hour) So in California the cost went up from 360 to 480. That's a 33% increase not the over 100% increase he states. 2.Families were forced to reduce caregiver hours or fire their agency completely (and go under the table). This seems to suggest that families were ok with exploiting the care givers even if they had to go "under the table". What kind of care givers will take less than mandated by law? Ones that can be exploited because of their immigration status? 3. Hundreds of thousands of caregivers who were unable or unwilling to be employed as W-2 workers were either removed from their families or let go by their domestic referral agency. ????what?? unable to be employed as W-2? why? Is it because they are not legally allowed to work in the country without a permit? Not willing to work as W-2?? I don't understand why someone would not want to work as a full time W-2. Are they trying to avoid paying taxes? Either ways this is a choice that the caregiver has to make. They would rather make $10.41 and hour than go to $15 or $22.5? Something doesn't smell right. 4. Seniors struggled with “continuity of care” issues as agencies started rotating multiple caregivers in and out of houses throughout the day to avoid overtime costs. This had an especially negative impact on Alzheimer’s and dementia patients. I get this. I do. My grandmother was bedridden for 12 years and we had a live in caregiver and I know my grandmother would sometimes get confused and scared if we got a replacement when the caregiver was on vacation. 5.The additional rotations in shifts increased gas, parking and transportation costs and added a layer of complexity to scheduling. This is a problem for the agency. This is where you can have your USP. Don't cry about it. Figure out a kick ass algorithm to reduce scheduling complexity. 6.Caregivers saw their working hours and income reduced, seniors weren’t able to get the 24/7 care they needed, and home care agencies saw a significant a decline in revenue from live-ins. Caregivers only saw a reduction in working hours and income because agencies didn't want to pay overtime and pass the cost down to the family.
Mz 9y ago
So, they have a problem paying $15/hour while claiming to pay better than average and talking about how harmful this was to live-in caregivers. I am reminded of the recent story on HN about a family that had a slave. https://news.ycombinator.com/item?id=14350059 https://news.ycombinator.com/item?id=14350059 These guys are too busy trying to figure out how to get rich to take care of their grandmother themselves. Instead, they want to pay people a pittance to do it for them and then whine about how hard it is to find good care givers. As I said in the discussion about "My Family's Slave," it tends to not work well to pay people to care. That tends to result in paying people to pretend to care. But, the other side to that is that expecting people to care while you don't care enough about their welfare to make sure they get paid adequately and get adequate time off, etc. is just incredibly broken. It is a horrible form of hypocrisy that has little hope of failing to become abusive. This is often a gendered issue. Women often do "caring" work and then no one wants to pay them. On the one hand, I would like to see more marketplaces with 1099 employees that actually work well. On the other hand, I have trouble feeling like this was not an exploitative and ugly model. Why didn't you just go take care of your grandmother yourself instead of creating an entire business to avoid having to do the caring work she required? Caring about money above all else makes for a poor boss. Or relative.
evanwolf 9y ago
The supply of skilled, vetted labor exists at the higher regulated prices in most locations. The demand for the service exists in most locations at today's lower prices. Even squeezing out inefficiencies to lower costs and improve convenience/quality/flexibility/coverage, the only way this works is if wages are subsidized. Few people can afford a full time employee, let alone the 3+ needed for 24 in-home hour care.
swrobel 9y ago
In case anyone is wondering what they're up to now: https://news.ycombinator.com/item?id=14501081 https://news.ycombinator.com/item?id=14501081 https://blog.goharvey.com/homehero-rebrands-as-an-integrative-medicine-company-called-harvey-742766b8dce0 https://blog.goharvey.com/homehero-rebrands-as-an-integrativ...

67 points by rcarrigan87 9y ago

Important to note that we're only getting one side of the story here. It would be nice to get a second opinion, ideally from an actual carer, on the DoL ruling that killed HomeHero's business model. For example, if this ruling (which forced a transition to a W-2 employee model away from 1099) actually ended up getting health insurance to a lot more employees, that could be considered a good thing to some. Of course, that ignores the fact that the regulation did probably end up putting a lot of home carers out of over-the-table work, as Kyle noted.

tptacek 9y ago

On Oct 15th 2015, the entire home care industry got rocked. The Department of Labor upheld a federal ruling stating that over 2 million home care workers would qualify for the Fair Labor Standards Act —essentially requiring all home care workers to be treated as W-2 employees and receive overtime benefits. I took a few minutes to read Home Care v. Weil and I don't think this is at all an accurate summary. What the DC circuit found (and SCOTUS, in denying cert, allowed to stand) is that third party employers of home-health workers are required to provide overtime and minimum wage protections for home health workers.

vosper 9y ago
So you can't be the exploitative middleman, but home care workers are still able to work directly for the people in their care, at a rate they both agree on? Seems reasonable to me, provided it doesn't also mean there can't be any kind of marketplace or clearing house that connects workers with people who would like to employ them.
- ThrustVectoring 9y ago
  Depends on how hands-on the marketplace is. Something that works like Craigslist is probably fine, something that works like Uber probably isn't.

badrequest 9y ago

If your company was only viable if you could get away with not paying people overtime rates when they work overtime hours, then your company was never viable.

FussyZeus 9y ago
Exactly. Simply not paying people living wages is not a disruptive new idea, it's just exploiting your workers to provide a lower cost to your customers. You're exactly the same sort of scum you're attempting to unseat. Bring on the downvotes! You can call it whatever you want, "side hustles", "the gig economy", whatever new age bullshit the VC companies are using this week but it's the same thing: ducking labor laws to pay less than living wages to people to do work you don't want to do.

orthoganol 9y ago

So the gist is laws were upheld protecting homecare givers - minimum wage and overtime pay - and new mandated increased minimum wage, ultimately led to their decision to abandon their supposedly successful model. Their own internal "surveys", if we should even consider that, supposedly indicate these laws are not good for homecare. Maybe their business model just depended on exploiting cheap labor? Or maybe they went the way of Homejoy and are saving face, as many speculated, former employees coming forward, etc. with Homejoy that their customer retention was just really bad.

scardine 9y ago
I guess sites like Homejoy have a fundamental problem: professional/customer meet face-to-face, so when they find a good fit they have an incentive to cut a deal off the site books. The platform ends up littered with bad professionals, abusive customers and lots of complaints to manage.
alanfalcon 9y ago
I aould certainly like to hear the caregiver perspective on this. Is it truly just that the "low end" of the market hs moved away from legal status to "cash under the table"? Are caregivers overall happier (or better off) working fewer hours for less pay and dealing with the increased issues brought about by constant change when caring for a dimensia patient?
SparkyMcUnicorn 9y ago
Nobody likes having their costs more than doubled and having no choice but to pass that on to the customer. I'm all for fair pay and I also think people should be able to afford in-home care for those that need it. It seems evident that the latter is no longer the case. It's a hard line to walk. Caregivers are getting paid more, but demand is much lower.
Shivetya 9y ago
or maybe the SEIU exploited their power over politicians to force this state into a similar mess in Illinois (2009) by not only setting wages for private workers but also force compulsory unionization of all such workers. It took a 2014 Supreme Court ruling to stop the forcing of these care givers, which included people merely taking care of family, from paying union dues. Never expect actions taken by government are always to protect the workers, especially when they start hitting heart strings on the phrasing. This is about supporting their campaign base, unions push a lot of money into politics and getting such laws passed are their means of getting more into their coffers. Look at the prison story we had on the front page, the costs are almost all due to employee wages and those are driven by the most powerful union in the state . this was about protecting political interest, they don't care about care givers. this startup simply got caught in the middle.

DGAP 9y ago

I was part of a team that was attempting to compete with HomeHero, but based out of Texas. I'm curious why they didn't attempt a geographic pivot if California regulations were truly their main barrier to success in the home healthcare market.

yesimahuman 9y ago
Was going to say, this whole post talks about a challenging regulatory environment in California, and is clearly meant as a "told you so" reaction. However, I see no reason this had to be bound to CA.
- mi100hael 9y ago
  You mean other places exist outside the bay area????
deleted 9y ago
[deleted]

nilved 9y ago

It's happening more and more that there are shutdown posts about startups that had minimal exposure on HN. I have never heard of this service and the post does a bad job of explaining it to people who are lacking that context.

DanBC 9y ago
What an unpleasant thing to say about a post that's sharing a probably unpleasant time in the founder's lives.
- deleted 9y ago
  [deleted]
- exogeny 9y ago
  Just because it's an unpleasant time in the founder's life doesn't mean that it's above criticism and tough discussion. Look, the dude raised tens of millions of dollars and failed. Those are facts. Simply lauding someone for being brave about the failure or even raising money in the first place is dumb. They had a large opportunity, pitched big promises in order to get their funding, and failed because they could no longer exploit a labor market. And we're supposed to ignore that because it might hurt his feelings to discuss it openly, after he himself opened himself up for that discussion by publishing a post-mortem? The positive culture of failure in startups is childish and enables the continuation of poor decision making. Business isn't a summer camp where everyone gets to hold hands and win participation trophies; people win and people lose. By not being honest about why they lost and learning the lessons from it - even at the cost of potentially hurting someone's feelings - the community does not advance.
- nilved 9y ago
  Kind of funny that I got -4 for that comment when literally every comment in the thread says the same thing about this nameless company.

exogeny 9y ago

I think the biggest problem here, above anything else, is my first reaction: "Who the hell is Homehero, and why should I care?" Also: LOL at "The 1099 independent contractor model, below, is very attractive as it removes excess cost and restrictions for employers." Yes, it is very awesome when you get people to perform full-time labor for you without having to worry about giving them insurance or benefits or anything like that!

zacharycohn 9y ago
Obviously, a startup. And just because you're not in their target market, and so probably wouldn't have heard of them, doesn't mean there isn't something to learn here.
- exogeny 9y ago
  Oh, there's plenty to learn. I just think that agnostic of the labor and regulatory issue he's describing, a much bigger problem was that we're inside of an incredibly niche, startup-focused community here on HN and the overwhelming response so far is "Who the hell are these guys, and why should I care?"
mahyarm 9y ago
The typical maid service before all of this is someone you hire off craigslist or word of mouth and pay directly in cash. Who may or may not be an illegal immigrant. It is pretty much a pure contractor model on it's face. Equivalent to the plumber you hire to fix your pipes, minus the licensure.

sergiotapia 9y ago

After the mandated increase in pay and W2 obligation, a lot of people just shuttered their home care businesses. Now the employer is no longer in business, and the employees are left jobless. Would there be similar results if the minimum wage increased for low-skill jobs? McDonalds employees want $X, but McDonalds can just build those autonomous cashiers which are already all over the place here in Miami. Suddenly no more jobs for people.

stevenwoo 9y ago
My mother is living with my sister in California and we pay I think about $25 an hour for help with eldercare. The person we chose only gets half, the agency gets the other half. Knowing what I know now, we probably should just hire people off of craigslist and give them a lot more money than the agencies give them but that would require a lot more vetting from us. These now unemployed caregivers could go on craigslist but of course without the name/insurance/reputation of some company behind them.
- LoSboccacc 9y ago
  i surance is a big expense for a caregiver. getting a serious one off craiglist means he'll have to pay insurance out of that 25$ and individual bargain for those kind of things sucks. the only alternative would be to get an improvised caregiver, but that's worse under almost every other aspect
  - stevenwoo 9y ago
    Ah, thanks, was wondering what I was missing from the math.
- ams6110 9y ago
  If you are telling them when, where, and how to work they are your employee and you should be paying payroll tax.
josho 9y ago
> After the mandated increase in pay Another perspective is that without the mandated pay increase these people were working for a wage below the poverty line. (An assumption on my part, but why else would a pay increase be forced upon a business?) So what you really mean to ask are we better off paying folks a wage below the poverty line, or force business to pay a livable wage? I think history has provided numerous examples of why labor laws are important. So, my question to you, are you unfamiliar with history and why labor laws are important?

dr_ 9y ago

I followed homehero and some of its competitors movements for a bit. Home care is not an easy business, and there are many local vendors in any given community. There's always this argument as to whether going "full stack" (providing the workers, technology - the full solution) is a better option in healthcare than just providing a software product for clients to start using. The argument Kyle makes, that is worth noting, is that existing homecare agencies started deploying software more readily than homehero may have anticipated. Thay being said, some of the messaging and marketing may have been off as well. I found it odd when they started advertising their workers as W2 heros, or something to that effect.

dataminded 9y ago

I think he misses the point entirely. His business only worked if the country continued to insist that the vulnerable (elderly) can subsists off the backs of the disenfranchised and disadvantaged (home health care workers). Even if he won, the world would be a significantly worse place for it. The problem is that people are entering their later years without an appropriate safety net. Demanding that a subset of Americans work in poor conditions or at a discounted rate to cover the gap isn't OK.

bmmayer1 9y ago
> Demanding that a subset of Americans work in poor conditions or at a discounted rate to cover the gap isn't OK No one was demanding anything. Home care workers were working by mutual agreement with their respective employers. "The country" had nothing to do with it.
- deleted 9y ago
  [deleted]
- dataminded 9y ago
  Denying people without recourse protections is the same as demanding that they accept abuse.
  - Empact 9y ago
    In what sense do they not have recourse? All employment is based on mutual participation. Their recourse is to seek other employment.
- deleted 9y ago
  [deleted]
- Chaebixi 9y ago
  > Home care workers were working by mutual agreement with their respective employers. "The country" had nothing to do with it. "The country" can force someone into accepting the "best" bad deal ("by mutual agreement") if all the other options are worse. It's an error to stop your analysis at the agreement without considering the full context in which it was made.

tahw 9y ago

I feel like the way they told their story (being vague about the challenge until halfway down the page) implies that they realize the reason they failed is because they were exploiting contract workers just like Uber does. Good riddance to another "disruptive" company full of "geniuses" making money by throwing some javascript on top of an exploitative labor model.

gumby 9y ago

I am intrigued by all the messages pointing out that the business was predicate on unfairly low payments to workers, and when that problem was rectified, their business model stopped working. What intrigues me is that the common, tired narrative I see on this topic (from nerd friend on FB, typically) is more of a Libertarian/Ayn Rand oriented "the government shut down people who had had the freedom to work below a living wage, as should be their choice." As it happens I disagree with that libertarian view, but even if I didn't, I'm glad to see a more complex understanding of business models and sympathy for the staff.

nowarninglabel 9y ago

Is there something new here? This is the same post that was posted here 3 months ago.

wehadfun 9y ago

What added benefit did homehero add to justify their costs? Either way the majority of people who work in this industry do not get paid a lot for what they do. It is hard to argue that they should get paid less to support the middle men

af3 9y ago

How it is different than Gitlab? They also hire almost contractors only.

mladenkovacevic 9y ago

Can anyone name one of these "gig-economy" startups that treats their contract workers fairly?

Chaebixi 9y ago

> We launched with a workforce of vetted independent contractor (1099) caregivers, who we endearingly referred to as “Heroes”. How often are pompous titles like that just cheap window-dressing meant to hide some kind of underlying smelly ugliness? I'm getting really skeptical whenever I come across them. What are some other examples? I know I've seen stuff like this before, but the only other ones I can think of are title/job descriptions like "guru" or "ninja," which are similar but don't quite cover the same space.

bjl 9y ago
Apple 'Genius' definitely falls in that category.
- prawn 9y ago
  Subway's "Sandwich Artist"? They're following a formula for assembling a pretty basic roll, and often taking instruction from the other side of the counter. Sounds about as far from artistry as you can get.
- callalex 9y ago
  Are apple geniuses 1099 or w2?
- learc83 9y ago
  I worked at geek squad during college, my job title was "Counter Intelligence Agent".
dullgiulio 9y ago
It's basically newspeak to make people with absolutely no ties, legal or financial to one company ("independent contractors") feel some allegiance, or some team spirit. Alienation is getting new worrying meanings every day.
- Chaebixi 9y ago
  > It's basically newspeak to make people with absolutely no ties, legal or financial to one company ("independent contractors") feel some allegiance, or some team spirit. "Newspeak job titles" seems like a good name for this phenomenon.

scottfr 9y ago

I know this is supposed be about unnecessary regulation killing a company that was bringing wins to both homeowners and providers, but... am I reading this right: "By the Summer of 2015, we had onboarded over 1,200 Heroes, provided care to a few hundred clients ... In June 2015, we raised a $20 million Series A, bringing total funding to $23 million." So two years and $3 million dollars after they launched, they had only "provided care to few hundred clients". And using those metrics they somehow raised another $20 million dollars? It seems like they had other problems then a change in the regulatory landscape.

LoSboccacc 9y ago
with 10 heroes per customer it must have been stellar service
- swrobel 9y ago
  Snark is so easy but thoughtful analysis is hard. Marketplace businesses necessitate having adequate supply and demand to keep both sides happy. Rarely can you scale them in lock step.
rcarrigan87 9y ago
Home care is a really hard business. We aren't just talking about scaling up cab rides. This in putting min wage workers in sick individuals homes. Moving slow is advised.

aresant 9y ago

As somebody with an interest in the space I appreciated the honest breakdown of the challenges and failures, 100% agree that this is a tough market. But this part stood out: "We were charging clients 30–40% less than industry average, and we were paying caregivers 25% higher than industry average. Both sides were winning." Both sides were winning at the expense of Homehero's investors and the viability of the business model. It is damn easy to grab market share in nearly any price-sensitive marketplace by underpricing service or over-pricing HR but it will ALWAYS ALWAYS catch you. And while the W2 math / wage wouldn't be completely solve by bringing pricing to parity, it certainly would have had a huge impact and maybe provided enough runway to drive the scale efficiency.

deft 9y ago

So basically they shut down because the law was forcing their 'employees' or whatever to get paid properly and they could no longer extract surplus value. Sounds like a good thing :) Maybe if they really wanted to fix things they'd do it as a non-profit.

palakchokshi 9y ago

I'm going to try and address each of the "negative" impacts this person states of the DOL ruling 1.In a survey we conducted internally, the cost for live-in/24-hour care doubled from $250 to $550 per day average in Los Angeles, pushing the price above a skilled nursing facility on a per day basis. At the rate he mentions of $250 per day, hourly wages would be $10.4 for 24/7 live in care giver. So he was paying less than minimum wage in California. Let's revise that number to meet the minimum wage. It comes to $360. That number of $550 is inaccurate. The correct number is $480 (8 hours of regular pay at $15 per hour if you are in California and 16 hours of $22.5 per hour) So in California the cost went up from 360 to 480. That's a 33% increase not the over 100% increase he states. 2.Families were forced to reduce caregiver hours or fire their agency completely (and go under the table). This seems to suggest that families were ok with exploiting the care givers even if they had to go "under the table". What kind of care givers will take less than mandated by law? Ones that can be exploited because of their immigration status? 3. Hundreds of thousands of caregivers who were unable or unwilling to be employed as W-2 workers were either removed from their families or let go by their domestic referral agency. ????what?? unable to be employed as W-2? why? Is it because they are not legally allowed to work in the country without a permit? Not willing to work as W-2?? I don't understand why someone would not want to work as a full time W-2. Are they trying to avoid paying taxes? Either ways this is a choice that the caregiver has to make. They would rather make $10.41 and hour than go to $15 or $22.5? Something doesn't smell right. 4. Seniors struggled with “continuity of care” issues as agencies started rotating multiple caregivers in and out of houses throughout the day to avoid overtime costs. This had an especially negative impact on Alzheimer’s and dementia patients. I get this. I do. My grandmother was bedridden for 12 years and we had a live in caregiver and I know my grandmother would sometimes get confused and scared if we got a replacement when the caregiver was on vacation. 5.The additional rotations in shifts increased gas, parking and transportation costs and added a layer of complexity to scheduling. This is a problem for the agency. This is where you can have your USP. Don't cry about it. Figure out a kick ass algorithm to reduce scheduling complexity. 6.Caregivers saw their working hours and income reduced, seniors weren’t able to get the 24/7 care they needed, and home care agencies saw a significant a decline in revenue from live-ins. Caregivers only saw a reduction in working hours and income because agencies didn't want to pay overtime and pass the cost down to the family.

Mz 9y ago

So, they have a problem paying $15/hour while claiming to pay better than average and talking about how harmful this was to live-in caregivers. I am reminded of the recent story on HN about a family that had a slave. https://news.ycombinator.com/item?id=14350059 https://news.ycombinator.com/item?id=14350059 These guys are too busy trying to figure out how to get rich to take care of their grandmother themselves. Instead, they want to pay people a pittance to do it for them and then whine about how hard it is to find good care givers. As I said in the discussion about "My Family's Slave," it tends to not work well to pay people to care. That tends to result in paying people to pretend to care. But, the other side to that is that expecting people to care while you don't care enough about their welfare to make sure they get paid adequately and get adequate time off, etc. is just incredibly broken. It is a horrible form of hypocrisy that has little hope of failing to become abusive. This is often a gendered issue. Women often do "caring" work and then no one wants to pay them. On the one hand, I would like to see more marketplaces with 1099 employees that actually work well. On the other hand, I have trouble feeling like this was not an exploitative and ugly model. Why didn't you just go take care of your grandmother yourself instead of creating an entire business to avoid having to do the caring work she required? Caring about money above all else makes for a poor boss. Or relative.

evanwolf 9y ago

The supply of skilled, vetted labor exists at the higher regulated prices in most locations. The demand for the service exists in most locations at today's lower prices. Even squeezing out inefficiencies to lower costs and improve convenience/quality/flexibility/coverage, the only way this works is if wages are subsidized. Few people can afford a full time employee, let alone the 3+ needed for 24 in-home hour care.

swrobel 9y ago

In case anyone is wondering what they're up to now: https://news.ycombinator.com/item?id=14501081 https://news.ycombinator.com/item?id=14501081 https://blog.goharvey.com/homehero-rebrands-as-an-integrative-medicine-company-called-harvey-742766b8dce0 https://blog.goharvey.com/homehero-rebrands-as-an-integrativ...