11 ms·

From idea to replacing full-time salary in 4 months

331 points by instakill 15y ago

akg 15y ago
An excellent example of a valuable product that was bootstrapped from the very beginning. It's really a shame that news like this is not more prevalent. We are so accustomed to seeing media highlights of highly glamorized "overnight successes" that we forget that there are plenty of other founders out there who are starting businesses and going through the same struggles and accomplishments. More importantly, stories like this make it seem that success is within reach and not something achieved only by an elite few with well connected VCs in some well-known startup hub.
maukdaddy 15y ago
From a business standpoint this is absolutely brilliant. Everyone should be doing this, doesn't matter if you're a SaaS or selling real-world goods & services. > 2) Having Extras at checkout. When we first started, you would checkout online and just order your home cleaning and pay. Then I had the brilliant idea (seems so basic now) to have other options for people to choose extra stuff at checkout like "cleaning inside the fridge", "cleaning inside the windows", "cleaning inside closets", it was just extra money that I was leaving on the table. It took my average profit from about $45 to closer to $60 per client.
- lachyg 15y ago
  100%! You'll find a lot of the PSDtoHTML companies do this extensively.
- jczhang 15y ago
  Up-sells aren't exactly new, but it can definitely be creative.
- toyg 15y ago
  As long as defaults are "honest" (i.e. not pre-selecting extras), sure. It's a balance though: it gets really tiring to go through pages and pages of upsell attempts whenever I buy a computer from certain vendors. The real trick, I think, is to take some of the minor elements people would expect without really thinking about it, and turn them into explicit extras. It devalues the base price a little, but the gains are worth it in many cases (like here).
  - binxbolling 15y ago
    You also have to take into account the customer's psychology and not press them too hard. That is, they don't want to feel "nickel & dimed to death." Too many extras, and they may start to resent that these things weren't just included in the base package in the beginning. A load of extras thrown at them at the end can sometimes be declined (e.g. out of resentment, frustration, etc) when a higher price upfront that included those extras would've been happily paid.
  - localcasestudy 15y ago
    There is no pre-selection. The checkout takes place on one page. The only elements that are extras are standard for the industry: inside the fridge, inside the oven, and inside the windows.
patio11 15y ago
He's essentially figured out that cleaning is one of many services which would have lower barrier to entry if it were not regulated. He is, of course, right. I sincerely hope for his sake that he reinvests profits into bringing himself into compliance with e.g. employment taxes, workers comp, etc.
- chc 15y ago
  Are you saying you think it's illegal for the maids to be 1099 workers?
  - patio11 15y ago
    They're unambiguously employees - classifying them as independent contractors is illegal, and both the IRS and their state's labor board will take violent exception to it. This isn't the only problem: the post would make a great issue spotter for an employment law class.
    - dangrossman 15y ago
      I haven't read every comment he's made yet, but skimmed many of them... Why can't they be contractors? He said they're providing their own transportation and supplies. So he's just handing them clients and appointments, and a checklist of cleaning tasks to complete and a few limitations on the supplies used. Isn't that analogous to handing a contracted software developer a requirements document and a deadline?
      - ricardobeat 15y ago
        I don't know about the US, but over here if you have to follow orders, work under constant supervision or on the clock, you can't be classified as a contractor anymore (in theory).
        dangrossman 15y ago
        I understand that, but the maids are not working under constant supervision or on the clock.
ricardobeat 15y ago
It's a nice personal achievement, but I can't help myself cringing at business models of this kind. It's plain old extraction of surplus-value, adding very little to the economy as a whole. The workers would be better off operating as a cooperative, I wish they had the education to know that from the outset, and the means to implement it.
- JoachimSchipper 15y ago
  I'm not sure I completely agree. The clients get vetted cleaners; and even a cleaner coop would need someone to manage/assure quality/market, and someone with those skills can earn more than a cleaner.
  - ricardobeat 15y ago
    The cleaners are vetted/trained by one of themselves. Even if they have to hire a manager later on, he will be getting paid the worth of his contribution, not all of the profit. I'm not so sure about it either, but I have a tendency to be a bit idealistic :)
    - nopassrecover 15y ago
      They don't have to take the surplus jobs he is finding them.
      - ricardobeat 15y ago
        I'm not sure in what way your comment is a reply to mine. That is the "little" I think it's adding to the economy (matching demand/offer), yet it's just a misbalance of information and/or power that shouldn't need to exist.
        _delirium 15y ago
        It'd be interesting to figure out (though I'm not sure how to measure it) how important each of the factors are. For example, one factor is just a marketplace/organization kind of value, the same reason eBay skims n% off every sale, or TaskRabbit takes a percentage. On the other hand, I wonder if there are more structural reasons for why his employees wouldn't be able to cut out the middle-man. For example, is there a kind of class- or race-arbitrage going on, where people are more willing to deal with him because he's "like them", whereas the cleaners come from social groups that the typical clients are more scared of contacting directly, so it's easier for them to get work if he's their public face? If so, that's not his fault (he'd just be arbitraging an existing societal imbalance, which arguably actually mitigates it), but would be interesting to know about.
runjake 15y ago
"It's not scalable." "He's going to burn out." "Let's see what he has to say in a year." Am I on HN? It's interesting that what used to be a site full of risk-takers and entrepreneurs is tearing every little detail of this guy down. The gentleman tells you it's a fly-by-the-seat-of-his-pants learning experiment. He doesn't need you to tell him every little detail he's getting wrong. He's learning by actually doing it. Further, it seems a lot of commenters aren't actually reading his posts and comments -- a lot of the criticisms are already documented and addressed on his posts. Even edw519 (who I love). I was drawn to HN because of the risk-loving hackers who dared, not the naysayers who only feed my internal risk-adverse naysaying thoughts. Edit: Since I posted this comment, a large discussion around 1099s has bloomed, and I'm not referring to this excellent discussion. I'm specifically referring to the knee-jerk naysaying.
- ceejayoz 15y ago
  Some risks are bigger obstacles than others. HN has always been valuable to me for legitimate, honest feedback, including negative feedback.
- bhousel 15y ago
  You have a point. I think many of the criticisms you'll read here are coming from people who have "been there, done that" with their own businesses. The 1099 vs W2 issue is very real but (imo) totally fixable in a few days with a decent accountant and a meeting with your staff and some paperwork. He was probably fine for FY2011 to pay his maids on a 1099 for work done between when he started the business in November 3 and the end of the year. (He even stated that doesn't still work with all of them, some really were just temporary staff that didn't work out and weren't trained). He definitely needs to convert them to employees for FY2012, but it's only April and these are relatively small amounts of money. I'm pretty sure he's not trying to stick his workers with a huge tax bill in 2012. People who are suggesting that this is his "business model" are way off base. The most interesting part of this story, which nobody is talking about, is how he is using his website to allow clients to pick and choose these Godaddy-style addons (cleaning refrigerator and closets and so on). It totally makes sense for service-oriented business like cleaning and lawn care. He could probably follow the Godaddy model and operate the rest of his business at small margin and make the bulk of his money off those addons that other cleaning businesses haven't yet thought to offer.
turkeyman 15y ago
First of all, congratulations to him! Amazing success for 4 months work. However, the issue with this is, there is no incentive for the cleaners to stay with the company. My ex was with a company very similar to this one, she signed up, but after she knew the clients for a while, she realised she could cut out the middleman and increase her wages substantially. The company tried to hit her with a 900$ bill for lost profit, their reasoning was "how can we stay in business if our workers keep running of with the clients?" (what does that say about the business model?). She convinced her favourite clients to ditch the company, which allowed her to bring in more money and the clients had a cheaper rate. Further clients were found by word of mouth at that point. I think throwing up some ads in the local paper would be cheaper in the long run than lost money from going with a company like this.
- guynamedloren 15y ago
  Hmmm... that's an interesting (and scary) point. I wonder if it would make sense, from the business owner's perspective, to shuffle the employees around between clients to decrease the chances of this?
  - turkeyman 15y ago
    That seems like it would just delay the inevitable, he needs to find competent cleaners that are unwilling to strike out on their own. If he manages to keep the cleaners as contractors, then his future will be absolutedomestics.com.au. They have done incredibly well for themselves and have set themselves up exactly as this guy has. I'm thinking it must be more profitable making a decent profit while losing clients and cleaners, than taking a smaller profit and retaining clients and cleaners.
    - guynamedloren 15y ago
      > I'm thinking it must be more profitable making a decent profit while losing clients and cleaners, than taking a smaller profit and retaining clients and cleaners. Can you explain the difference in profits? Why would there be smaller profits in retaining clients and cleaners? I'm missing something here...
edw519 15y ago
This time next year on reddit: "From working my ass off 90 hours per week running a business that wouldn't scale to nice salary/benefits for 40 hours. I'm taking home the same net and I feel like I'm on vacation." I don't want to sound too snarky and I really admire OP's initiative and ability to make things happen, but this just doesn't smell right. It's easy to get excited by nice revenue in the beginning (as he should), but this new business: - doesn't scale well - is notoriously difficult to get and keep good workers - is the first thing customers eliminate when times get tough - has minimal barriers to competition - is price sensitive - is difficult work - is almost 24/7 customer service - has major tax/liability/insurance issues - provides minor personal growth opportunity It reminds me of growing up hearing the debate between 2 uncles at Grandma's every month. One ran his own grocery store and the other worked 9 to 5 for BigCo. Each thought the other had it made. Uncle A said, "You get to go home every night at 5, never work weekends, get benefits covered, and have a life. Uncle B said, "But you can grow your income as big as you want and you don't have to put up with an asshole boss." Both were right. OP is excited now, but I have a feeling that in about a year or so, he'll be feeling a lot like Uncle A.
- neonkiwi 15y ago
  It does seem to be generally true that running a business has a worse payout than a normal job, but in this case, the OP says he's spending seven hours a week on the maid business: http://www.reddit.com/r/Entrepreneur/comments/sblc6/from_an_idea_to_replacing_my_fulltime_salary_in_4/c4cqoxf http://www.reddit.com/r/Entrepreneur/comments/sblc6/from_an_...
  - personlurking 15y ago
    Interesting because my ex-girlfriend basically did what the OP did and she worked like a crazy woman from 7AM to 8PM with no days off, dealing with her team, clients, etc.
    - localcasestudy 15y ago
      I have a full time job.
DanielBMarkham 15y ago
Since everybody else is pointing out how poor his employee compliance is and that he's picked a freaking hard row to hoe, I'll praise the guy. Awesome job! This is the internet equivalent of going door-to-door. In fact, I bet you could combine this with going door to door and see sales really take off :) The scaling thing Edw brings up doesn't concern me right now: you are in the throes of kicking ass. Later on reality will sink in. But he's right -- you have some major changes to make if you really want to go long-term with this. Patio has a more legal concern: that your cleaners are really workers. I'm not so sure. I'd see a lawyer about this pronto. If these folks were already doing some cleaning before you met them, and if you make it clear that there is no office, there is no work hours, they are free to take or not take work, and that their only obligation to you is completing each job they sign up for? I think you might be fine. It's certainly a lot less control that software contractors have over them, and they're contractors. Instead of growing, I'd concentrate on making this thing hands-off. Hire a temp to do the office work, etc. Even if it eats into most of your income, once you are freed up then you'll be in a position to really expand. This "make the business a machine" is your next step. At least according to everybody I read. I liked the post. We need reminding that a little bit of hussle and not over-thinking things can take you a long ways.
- tptacek 15y ago
  He has a "detaileddddddd" checklist of how he wants the work done and a training program. His lawyer is going to tell him that they're employees. What's worse is, the better he does, the more clear-cut this issue gets. His key business metric is employee turnover, and anything he does to improve this increases the likelihood that his employees will be relying on him for most of their wages. This is a "too good to be true" scenario. He's defined a fixed-price service with rigorous standards to be delivered across a major metro area with 8 known-good workers and is making $1000/month on it. To be compliant, some of that has to give: his business will have to look more like a placement or dispatch service, or he'll have to make way less money. The IRS reclassification thing will be painful.
  - DanielBMarkham 15y ago
    Thanks. I only read the initial post. Yeah, you can't get into how to do the work. Also using anything called employee turnover is a dead stop. But I still think it's salvageable, simply because there are so many independent cleaners out there already. This industry is heavily independent. I think he really needs to look at his structure, pronto. I'll play devil's advocate just a bit more for the crowd. Many times startups skirt all sorts of rules and regulations when getting off the ground. I'm okay with that -- startups are always a bit subversive, and if you listen to your accountant and lawyer you'd never take any risk at all. But you can't go on like that for very long. EDIT: Here's a possible setup: place the jobs on cards and put on the wall. Have the cleaners bid for the jobs. The checklist could just be the terms of contract completion, and you'd have to make sure the checklist was not a job description. Whether or not the contractors conspire to set the price or anything is none of your concern. You're simply a clearing house for very small cleaning contracts. I think it's very doable. His business and income is really in chasing down people who need cleaning and people who can provide it. That doesn't have to have anything to do with employees. But it won't work as you've described it. I was just blogging about this. Many times you find value and struggle with the model. http://news.ycombinator.com/item?id=3847651 http://news.ycombinator.com/item?id=3847651
AnthonyJoseph 15y ago
This is scalable, I am not sure why people are saying it isn't. In its current form, no, but if he puts it into high gear and takes it to the next level, there is no reason he couldn't repeat this model, hire managers etc and be completely hands off. But, that is not what I would do necessarily, I would get my franchise papers in order ASAP, and start marketing this online, there are a lot of good keywords to go after (how to start a cleaning company etc). Get it to the point where he knows exactly how to repeat this in any city and make XX,XXX$/yr for the "owner". Figure out a franchising model, where the owner of the franchise can learn how to repeat your success, and you get part of the profits/or a franchise fee (hell you could "loan" them the money at interest). Nothing sells better than telling people that you can teach them how to leave their job, make 60,000$/yr, and actually be able to do it.
tptacek 15y ago
He's not withholding. Chances are good his workers aren't paying taxes either. According to the manual the IRS uses to train its worker classification auditors, the three most important factors are: Instructions to workers: Your worker is probably an employee if you require him or her to follow instructions on when, where, and how work is to be done. This is a very important factor. However, if you tell your electrician you want blue switch plate covers instead of white, you are not exercising control to a degree that would make the person an employee. Job training: If your company provides or arranges for training of any kind for the worker, this is a sign you expect work to be performed in a certain way; therefore, the worker is your employee. Training can be as informal as requiring the worker to attend meetings or work along with someone who's more experienced. Worker's ability to make a profit or suffer a loss: An employee may be rewarded, disciplined, demoted, or fired depending on job performance, but only an independent contractor can realize a profit or incur a financial loss from his or her work. In other words, an employee will always get paid; an independent contractor, however, has a financial stake in his enterprise. Also: Importance of the worker's services: If a worker provides services that are integral to the success of your business, the worker is likely your employee. Personal performance of services: An independent contractor should have the freedom to hire assistants or subcontract work to other workers or firms at his or her expense (this is where profit or loss could enter the picture). If you require the worker to perform the work personally, that's a sign of control and therefore indicative of employee status. Ouch. This scheme is going to work until he starts issuing 1099s and the government (maybe after months or years) notices them and goes after the workers for their (extremely expensive) self-employment taxes. Which, because they're probably making the prevailing rate for housekeepers (high teens per hour) is going to threaten to drive them into bankruptcy and thus cause a stink.
- bhousel 15y ago
  You are correct that the maids are employees, but since he only just started this business, it seems like a very fixable problem to convert them to employees. I ran some numbers on a free paycheck calculator site (paycheckcity.com) and assuming the following: Washington DC, wage of $20/hr, 30 hrs/week, married (2 exemptions), the numbers come out to: Weekly Gross Pay $600.00 Federal Withholding $29.81 Social Security $25.20 Medicare $8.70 Washington DC (ouch) $28.00 --- Net Pay $508.29 So, he might need to set aside $100/employee/week.. The taxes aren't necessarily a business-killer.
yeureka 15y ago
My mom started a cleaning business some time ago. I wanted to try Javascript and promote her business so I wrote a quote calculator that takes into account number of rooms, number of bathrooms, area size, etc... (shameless plug) If you understand portuguese have a go at: http://abelhinha.net/calculadora.html http://abelhinha.net/calculadora.html
- septerr 15y ago
  Nice.
septerr 15y ago
Some of the best things of MIB - ------- Organizing We can organize your closet (in whatever way you would like), and thoroughly clean and organize the items in your kitchen, or even spend time restoring your china to their full glory. Refrigerator / Freezer Cleaning We’ll dispose of expired items, & remove racks and compartments to deep clean them as well as the walls of the fridge. Errand Services Need a personal assistant for the day or just need someone to drop your car to the mechanic or to run to the mall for you? Name it and we’re there to take care of any errands you may have. $60 for first two hours ($35 per hour after). ------- Clean is something people like. To people like me it gives peace of mind and freedom to think and work on other things. But cleaning is something a great many of these people don't like to deal with. A cleaning service has to be a moneymaker.
robomartin 15y ago
When someone suggests a business idea like this one I come back with this: "It's a great business idea. It will provide you with the freedom to choose which 20 hours of the day you want to work, including weekends." Here's the reality: He gets huge points for going out and "getting into the game". Who knows? This might be what he loves and ends-up thriving despite the hard work and long hours. There are lots of businesses like that. And, frankly, the fact that they don't scale matters not to a huge percentage of business owners. The greatest thing about this is that you have a (presumably) young man learning about the realities of business. Succeed or fail, he will be better for it. And, should he choose to move on and do something else he'll be a million times better prepared to make the right decisions and do well. He will succeed, regardless of whether this first venture does or not.
pier0 15y ago
It looks to me the idea may not be the best one and his success will not be easy to replicate (for those that are thinking to do the same in their cities), but the discussion the story generated is very interesting in two ways: 1)there are bits of localcasestudy's experience that can be used by other businesses irregardless of what sector they are 2)the moral of the story is that if you want to run your own business you can do it. And it doesn't necessarily have to be a tech startup looking to raise funds.
sparknlaunch12 15y ago
This is a really impressive story. Sure there are some obstacles and challenges - but this is the fun of very real life business. The guy has taken a traditional business and applied all the buzz of the web (social media, lean, etc etc) to establish a profitable business in 4 months. I would love to hear from others willing to share similar experiences of turning an idea into one business (cleaning), then repeating the process again (lawn services). This kind of sharing is what makes these communities priceless.
- localcasestudy 15y ago
  Thanks, if I duplicate it that would be crazy! We'll see, I'm excited!
localcasestudy 15y ago
Hi folks, OP from the reddit thread here. I'll answer questions. disclaimer: This is my first time posting here. Disclaimer #2: I'm no expert. Disclaimer #3: See Disclaimer #2 again. I just tried something and it took off. Will it work long term I have no idea. Where I am now is just the reality of where I am now. Have I made mistakes, you bet your life on that! Okay, I'll scroll through and try to respond to anything I can.
- joering2 15y ago
  hi there. I dont even know your name, and reading thoroughly reddit, I couldnt find it anywhere either. my impression is you are extremely business-smart person that is just learning business. You are not afraid of making mistakes knowing every mistake is an opportunity to learn new things, plus most mistakes can be fixed. please write a after-post about your financial situation after converting every emp into w2 as I think you are fully aware by now they would not pass "irs 20 questions to be 1099" rule. btw: too bad you are not located in the New York City. I have been let go my work recently and thinking about doing something else than 8-5 w2. I read between the lines reading you and felt chemistry that we both could learn alot and accomplish alot business-wise (of course, I could be wrong...) I would like to connect with you. would you please email me? (my address is in my HN profile). btw #2: thanks for sharing your story. I sure learnt new stuff today.
  - localcasestudy 15y ago
    Sory to hear about your work situation. Hope something pans out if you decide to go back, but yeah in the meanwhile, it may be a good time to start something. Thanks for the kind words of encouragement. I tried to email you but didn't see the link to do it after I got to your profile (not sure if it's because I'm so new here or I'm just blind). Please send me a message on the maid site and I'll respond right away.
    - joering2 15y ago
      I did send you an email last night to booking@... hope you got it!
bannerts 15y ago
Has anyone tried to consider the numbers involved with this business? About how long does it take for two maids to clean a house (or in other words, how many houses can two maids clean in one 8-10 hour day?)? Also, about how many maids do you have working for you? In trying to come up with a ball-park figure: My guess would be that each pair of maids could bring in about $600-800 a day in revenue (cleaning 4-5 homes). Of this it would seem that about $400-500 goes to paying the maids (say , $200-250 per maid), with about $75 dollars going to daily expenses (gasoline, cleaning materials, etc), leaving whatever remains going to other major business expenses and profit. If his workers are busy 20 days a month, it would seem that a bunch of the so-called monthly costs of being an employer (say around $750 per month per employee) only comes out to be around $75 dollars a day (per pair of maids). I have no clue as to what this value actually is (or how much of it would be part of their hourly wage), I'm just guessing. All in all though, I would guess that for each maid he has, on average it is costing him around $275-325 per day while bringing in around $300-400 per day. If their is any truth to the numbers above (which one number being off could dramatically mess everything up), it would appear that he is bringing in about $50-75 per maid. If he prices his service to keep that profit in mind (to make at lease $50 per maid per day), then having a staff of 10 maids could end up making around $100-150k a year. And I suppose the scaling would seem to work pretty linearly; if he doubles the number of mades or how much he brings in per maid, then his profit would double as such. Of course there are things like insurance and training (perhaps those costs total 10% of each maids daily wage and is included in that value)... Based on these numbers though, having 10 maids would require having 25 homes to clean each day (or about 500 per month). I see that he has given out 2254 lunches so far (if I really wanted to make an accurate estimate of the business he is doing). Anyhow, is there anything major that I'm missing in these numbers? I'm just trying to make an estimation..
dkrich 15y ago
I can't help but think a lot of people find fault with this because they don't want to believe that it could be possible to start a business this way because they didn't think of it first. But you know full and well that whatever employment law and tax compliance requirements exist can be overcome and overcome fairly easily. Why look past the entire story to point out the few things that could fuck him up? And to those talking about the lack of scalability, etc. I ask you: how many businesses have you started that employ people? How many businesses of this kind have you run? If the answer is <1 you are not qualified to make those assumptions.

331 points by instakill 15y ago

akg 15y ago

An excellent example of a valuable product that was bootstrapped from the very beginning. It's really a shame that news like this is not more prevalent. We are so accustomed to seeing media highlights of highly glamorized "overnight successes" that we forget that there are plenty of other founders out there who are starting businesses and going through the same struggles and accomplishments. More importantly, stories like this make it seem that success is within reach and not something achieved only by an elite few with well connected VCs in some well-known startup hub.

maukdaddy 15y ago

From a business standpoint this is absolutely brilliant. Everyone should be doing this, doesn't matter if you're a SaaS or selling real-world goods & services. > 2) Having Extras at checkout. When we first started, you would checkout online and just order your home cleaning and pay. Then I had the brilliant idea (seems so basic now) to have other options for people to choose extra stuff at checkout like "cleaning inside the fridge", "cleaning inside the windows", "cleaning inside closets", it was just extra money that I was leaving on the table. It took my average profit from about $45 to closer to $60 per client.

lachyg 15y ago
100%! You'll find a lot of the PSDtoHTML companies do this extensively.
jczhang 15y ago
Up-sells aren't exactly new, but it can definitely be creative.
toyg 15y ago
As long as defaults are "honest" (i.e. not pre-selecting extras), sure. It's a balance though: it gets really tiring to go through pages and pages of upsell attempts whenever I buy a computer from certain vendors. The real trick, I think, is to take some of the minor elements people would expect without really thinking about it, and turn them into explicit extras. It devalues the base price a little, but the gains are worth it in many cases (like here).
- binxbolling 15y ago
  You also have to take into account the customer's psychology and not press them too hard. That is, they don't want to feel "nickel & dimed to death." Too many extras, and they may start to resent that these things weren't just included in the base package in the beginning. A load of extras thrown at them at the end can sometimes be declined (e.g. out of resentment, frustration, etc) when a higher price upfront that included those extras would've been happily paid.
- localcasestudy 15y ago
  There is no pre-selection. The checkout takes place on one page. The only elements that are extras are standard for the industry: inside the fridge, inside the oven, and inside the windows.

patio11 15y ago

He's essentially figured out that cleaning is one of many services which would have lower barrier to entry if it were not regulated. He is, of course, right. I sincerely hope for his sake that he reinvests profits into bringing himself into compliance with e.g. employment taxes, workers comp, etc.

chc 15y ago
Are you saying you think it's illegal for the maids to be 1099 workers?
- patio11 15y ago
  They're unambiguously employees - classifying them as independent contractors is illegal, and both the IRS and their state's labor board will take violent exception to it. This isn't the only problem: the post would make a great issue spotter for an employment law class.
  - dangrossman 15y ago
    I haven't read every comment he's made yet, but skimmed many of them... Why can't they be contractors? He said they're providing their own transportation and supplies. So he's just handing them clients and appointments, and a checklist of cleaning tasks to complete and a few limitations on the supplies used. Isn't that analogous to handing a contracted software developer a requirements document and a deadline?
    - ricardobeat 15y ago
      I don't know about the US, but over here if you have to follow orders, work under constant supervision or on the clock, you can't be classified as a contractor anymore (in theory).
      - dangrossman 15y ago
        I understand that, but the maids are not working under constant supervision or on the clock.

ricardobeat 15y ago

It's a nice personal achievement, but I can't help myself cringing at business models of this kind. It's plain old extraction of surplus-value, adding very little to the economy as a whole. The workers would be better off operating as a cooperative, I wish they had the education to know that from the outset, and the means to implement it.

JoachimSchipper 15y ago
I'm not sure I completely agree. The clients get vetted cleaners; and even a cleaner coop would need someone to manage/assure quality/market, and someone with those skills can earn more than a cleaner.
- ricardobeat 15y ago
  The cleaners are vetted/trained by one of themselves. Even if they have to hire a manager later on, he will be getting paid the worth of his contribution, not all of the profit. I'm not so sure about it either, but I have a tendency to be a bit idealistic :)
  - nopassrecover 15y ago
    They don't have to take the surplus jobs he is finding them.
    - ricardobeat 15y ago
      I'm not sure in what way your comment is a reply to mine. That is the "little" I think it's adding to the economy (matching demand/offer), yet it's just a misbalance of information and/or power that shouldn't need to exist.
      - _delirium 15y ago
        It'd be interesting to figure out (though I'm not sure how to measure it) how important each of the factors are. For example, one factor is just a marketplace/organization kind of value, the same reason eBay skims n% off every sale, or TaskRabbit takes a percentage. On the other hand, I wonder if there are more structural reasons for why his employees wouldn't be able to cut out the middle-man. For example, is there a kind of class- or race-arbitrage going on, where people are more willing to deal with him because he's "like them", whereas the cleaners come from social groups that the typical clients are more scared of contacting directly, so it's easier for them to get work if he's their public face? If so, that's not his fault (he'd just be arbitraging an existing societal imbalance, which arguably actually mitigates it), but would be interesting to know about.

runjake 15y ago

"It's not scalable." "He's going to burn out." "Let's see what he has to say in a year." Am I on HN? It's interesting that what used to be a site full of risk-takers and entrepreneurs is tearing every little detail of this guy down. The gentleman tells you it's a fly-by-the-seat-of-his-pants learning experiment. He doesn't need you to tell him every little detail he's getting wrong. He's learning by actually doing it. Further, it seems a lot of commenters aren't actually reading his posts and comments -- a lot of the criticisms are already documented and addressed on his posts. Even edw519 (who I love). I was drawn to HN because of the risk-loving hackers who dared, not the naysayers who only feed my internal risk-adverse naysaying thoughts. Edit: Since I posted this comment, a large discussion around 1099s has bloomed, and I'm not referring to this excellent discussion. I'm specifically referring to the knee-jerk naysaying.

ceejayoz 15y ago
Some risks are bigger obstacles than others. HN has always been valuable to me for legitimate, honest feedback, including negative feedback.
bhousel 15y ago
You have a point. I think many of the criticisms you'll read here are coming from people who have "been there, done that" with their own businesses. The 1099 vs W2 issue is very real but (imo) totally fixable in a few days with a decent accountant and a meeting with your staff and some paperwork. He was probably fine for FY2011 to pay his maids on a 1099 for work done between when he started the business in November 3 and the end of the year. (He even stated that doesn't still work with all of them, some really were just temporary staff that didn't work out and weren't trained). He definitely needs to convert them to employees for FY2012, but it's only April and these are relatively small amounts of money. I'm pretty sure he's not trying to stick his workers with a huge tax bill in 2012. People who are suggesting that this is his "business model" are way off base. The most interesting part of this story, which nobody is talking about, is how he is using his website to allow clients to pick and choose these Godaddy-style addons (cleaning refrigerator and closets and so on). It totally makes sense for service-oriented business like cleaning and lawn care. He could probably follow the Godaddy model and operate the rest of his business at small margin and make the bulk of his money off those addons that other cleaning businesses haven't yet thought to offer.

turkeyman 15y ago

First of all, congratulations to him! Amazing success for 4 months work. However, the issue with this is, there is no incentive for the cleaners to stay with the company. My ex was with a company very similar to this one, she signed up, but after she knew the clients for a while, she realised she could cut out the middleman and increase her wages substantially. The company tried to hit her with a 900$ bill for lost profit, their reasoning was "how can we stay in business if our workers keep running of with the clients?" (what does that say about the business model?). She convinced her favourite clients to ditch the company, which allowed her to bring in more money and the clients had a cheaper rate. Further clients were found by word of mouth at that point. I think throwing up some ads in the local paper would be cheaper in the long run than lost money from going with a company like this.

guynamedloren 15y ago
Hmmm... that's an interesting (and scary) point. I wonder if it would make sense, from the business owner's perspective, to shuffle the employees around between clients to decrease the chances of this?
- turkeyman 15y ago
  That seems like it would just delay the inevitable, he needs to find competent cleaners that are unwilling to strike out on their own. If he manages to keep the cleaners as contractors, then his future will be absolutedomestics.com.au. They have done incredibly well for themselves and have set themselves up exactly as this guy has. I'm thinking it must be more profitable making a decent profit while losing clients and cleaners, than taking a smaller profit and retaining clients and cleaners.
  - guynamedloren 15y ago
    > I'm thinking it must be more profitable making a decent profit while losing clients and cleaners, than taking a smaller profit and retaining clients and cleaners. Can you explain the difference in profits? Why would there be smaller profits in retaining clients and cleaners? I'm missing something here...

edw519 15y ago

This time next year on reddit: "From working my ass off 90 hours per week running a business that wouldn't scale to nice salary/benefits for 40 hours. I'm taking home the same net and I feel like I'm on vacation." I don't want to sound too snarky and I really admire OP's initiative and ability to make things happen, but this just doesn't smell right. It's easy to get excited by nice revenue in the beginning (as he should), but this new business: - doesn't scale well - is notoriously difficult to get and keep good workers - is the first thing customers eliminate when times get tough - has minimal barriers to competition - is price sensitive - is difficult work - is almost 24/7 customer service - has major tax/liability/insurance issues - provides minor personal growth opportunity It reminds me of growing up hearing the debate between 2 uncles at Grandma's every month. One ran his own grocery store and the other worked 9 to 5 for BigCo. Each thought the other had it made. Uncle A said, "You get to go home every night at 5, never work weekends, get benefits covered, and have a life. Uncle B said, "But you can grow your income as big as you want and you don't have to put up with an asshole boss." Both were right. OP is excited now, but I have a feeling that in about a year or so, he'll be feeling a lot like Uncle A.

neonkiwi 15y ago
It does seem to be generally true that running a business has a worse payout than a normal job, but in this case, the OP says he's spending seven hours a week on the maid business: http://www.reddit.com/r/Entrepreneur/comments/sblc6/from_an_idea_to_replacing_my_fulltime_salary_in_4/c4cqoxf http://www.reddit.com/r/Entrepreneur/comments/sblc6/from_an_...
- personlurking 15y ago
  Interesting because my ex-girlfriend basically did what the OP did and she worked like a crazy woman from 7AM to 8PM with no days off, dealing with her team, clients, etc.
  - localcasestudy 15y ago
    I have a full time job.

DanielBMarkham 15y ago

Since everybody else is pointing out how poor his employee compliance is and that he's picked a freaking hard row to hoe, I'll praise the guy. Awesome job! This is the internet equivalent of going door-to-door. In fact, I bet you could combine this with going door to door and see sales really take off :) The scaling thing Edw brings up doesn't concern me right now: you are in the throes of kicking ass. Later on reality will sink in. But he's right -- you have some major changes to make if you really want to go long-term with this. Patio has a more legal concern: that your cleaners are really workers. I'm not so sure. I'd see a lawyer about this pronto. If these folks were already doing some cleaning before you met them, and if you make it clear that there is no office, there is no work hours, they are free to take or not take work, and that their only obligation to you is completing each job they sign up for? I think you might be fine. It's certainly a lot less control that software contractors have over them, and they're contractors. Instead of growing, I'd concentrate on making this thing hands-off. Hire a temp to do the office work, etc. Even if it eats into most of your income, once you are freed up then you'll be in a position to really expand. This "make the business a machine" is your next step. At least according to everybody I read. I liked the post. We need reminding that a little bit of hussle and not over-thinking things can take you a long ways.

tptacek 15y ago
He has a "detaileddddddd" checklist of how he wants the work done and a training program. His lawyer is going to tell him that they're employees. What's worse is, the better he does, the more clear-cut this issue gets. His key business metric is employee turnover, and anything he does to improve this increases the likelihood that his employees will be relying on him for most of their wages. This is a "too good to be true" scenario. He's defined a fixed-price service with rigorous standards to be delivered across a major metro area with 8 known-good workers and is making $1000/month on it. To be compliant, some of that has to give: his business will have to look more like a placement or dispatch service, or he'll have to make way less money. The IRS reclassification thing will be painful.
- DanielBMarkham 15y ago
  Thanks. I only read the initial post. Yeah, you can't get into how to do the work. Also using anything called employee turnover is a dead stop. But I still think it's salvageable, simply because there are so many independent cleaners out there already. This industry is heavily independent. I think he really needs to look at his structure, pronto. I'll play devil's advocate just a bit more for the crowd. Many times startups skirt all sorts of rules and regulations when getting off the ground. I'm okay with that -- startups are always a bit subversive, and if you listen to your accountant and lawyer you'd never take any risk at all. But you can't go on like that for very long. EDIT: Here's a possible setup: place the jobs on cards and put on the wall. Have the cleaners bid for the jobs. The checklist could just be the terms of contract completion, and you'd have to make sure the checklist was not a job description. Whether or not the contractors conspire to set the price or anything is none of your concern. You're simply a clearing house for very small cleaning contracts. I think it's very doable. His business and income is really in chasing down people who need cleaning and people who can provide it. That doesn't have to have anything to do with employees. But it won't work as you've described it. I was just blogging about this. Many times you find value and struggle with the model. http://news.ycombinator.com/item?id=3847651 http://news.ycombinator.com/item?id=3847651

AnthonyJoseph 15y ago

This is scalable, I am not sure why people are saying it isn't. In its current form, no, but if he puts it into high gear and takes it to the next level, there is no reason he couldn't repeat this model, hire managers etc and be completely hands off. But, that is not what I would do necessarily, I would get my franchise papers in order ASAP, and start marketing this online, there are a lot of good keywords to go after (how to start a cleaning company etc). Get it to the point where he knows exactly how to repeat this in any city and make XX,XXX$/yr for the "owner". Figure out a franchising model, where the owner of the franchise can learn how to repeat your success, and you get part of the profits/or a franchise fee (hell you could "loan" them the money at interest). Nothing sells better than telling people that you can teach them how to leave their job, make 60,000$/yr, and actually be able to do it.

tptacek 15y ago

He's not withholding. Chances are good his workers aren't paying taxes either. According to the manual the IRS uses to train its worker classification auditors, the three most important factors are: Instructions to workers: Your worker is probably an employee if you require him or her to follow instructions on when, where, and how work is to be done. This is a very important factor. However, if you tell your electrician you want blue switch plate covers instead of white, you are not exercising control to a degree that would make the person an employee. Job training: If your company provides or arranges for training of any kind for the worker, this is a sign you expect work to be performed in a certain way; therefore, the worker is your employee. Training can be as informal as requiring the worker to attend meetings or work along with someone who's more experienced. Worker's ability to make a profit or suffer a loss: An employee may be rewarded, disciplined, demoted, or fired depending on job performance, but only an independent contractor can realize a profit or incur a financial loss from his or her work. In other words, an employee will always get paid; an independent contractor, however, has a financial stake in his enterprise. Also: Importance of the worker's services: If a worker provides services that are integral to the success of your business, the worker is likely your employee. Personal performance of services: An independent contractor should have the freedom to hire assistants or subcontract work to other workers or firms at his or her expense (this is where profit or loss could enter the picture). If you require the worker to perform the work personally, that's a sign of control and therefore indicative of employee status. Ouch. This scheme is going to work until he starts issuing 1099s and the government (maybe after months or years) notices them and goes after the workers for their (extremely expensive) self-employment taxes. Which, because they're probably making the prevailing rate for housekeepers (high teens per hour) is going to threaten to drive them into bankruptcy and thus cause a stink.

bhousel 15y ago
You are correct that the maids are employees, but since he only just started this business, it seems like a very fixable problem to convert them to employees. I ran some numbers on a free paycheck calculator site (paycheckcity.com) and assuming the following: Washington DC, wage of $20/hr, 30 hrs/week, married (2 exemptions), the numbers come out to: Weekly Gross Pay $600.00 Federal Withholding $29.81 Social Security $25.20 Medicare $8.70 Washington DC (ouch) $28.00 --- Net Pay $508.29 So, he might need to set aside $100/employee/week.. The taxes aren't necessarily a business-killer.

yeureka 15y ago

My mom started a cleaning business some time ago. I wanted to try Javascript and promote her business so I wrote a quote calculator that takes into account number of rooms, number of bathrooms, area size, etc... (shameless plug) If you understand portuguese have a go at: http://abelhinha.net/calculadora.html http://abelhinha.net/calculadora.html

septerr 15y ago
Nice.

septerr 15y ago

Some of the best things of MIB - ------- Organizing We can organize your closet (in whatever way you would like), and thoroughly clean and organize the items in your kitchen, or even spend time restoring your china to their full glory. Refrigerator / Freezer Cleaning We’ll dispose of expired items, & remove racks and compartments to deep clean them as well as the walls of the fridge. Errand Services Need a personal assistant for the day or just need someone to drop your car to the mechanic or to run to the mall for you? Name it and we’re there to take care of any errands you may have. $60 for first two hours ($35 per hour after). ------- Clean is something people like. To people like me it gives peace of mind and freedom to think and work on other things. But cleaning is something a great many of these people don't like to deal with. A cleaning service has to be a moneymaker.

robomartin 15y ago

When someone suggests a business idea like this one I come back with this: "It's a great business idea. It will provide you with the freedom to choose which 20 hours of the day you want to work, including weekends." Here's the reality: He gets huge points for going out and "getting into the game". Who knows? This might be what he loves and ends-up thriving despite the hard work and long hours. There are lots of businesses like that. And, frankly, the fact that they don't scale matters not to a huge percentage of business owners. The greatest thing about this is that you have a (presumably) young man learning about the realities of business. Succeed or fail, he will be better for it. And, should he choose to move on and do something else he'll be a million times better prepared to make the right decisions and do well. He will succeed, regardless of whether this first venture does or not.

pier0 15y ago

It looks to me the idea may not be the best one and his success will not be easy to replicate (for those that are thinking to do the same in their cities), but the discussion the story generated is very interesting in two ways: 1)there are bits of localcasestudy's experience that can be used by other businesses irregardless of what sector they are 2)the moral of the story is that if you want to run your own business you can do it. And it doesn't necessarily have to be a tech startup looking to raise funds.

sparknlaunch12 15y ago

This is a really impressive story. Sure there are some obstacles and challenges - but this is the fun of very real life business. The guy has taken a traditional business and applied all the buzz of the web (social media, lean, etc etc) to establish a profitable business in 4 months. I would love to hear from others willing to share similar experiences of turning an idea into one business (cleaning), then repeating the process again (lawn services). This kind of sharing is what makes these communities priceless.

localcasestudy 15y ago
Thanks, if I duplicate it that would be crazy! We'll see, I'm excited!

localcasestudy 15y ago

Hi folks, OP from the reddit thread here. I'll answer questions. disclaimer: This is my first time posting here. Disclaimer #2: I'm no expert. Disclaimer #3: See Disclaimer #2 again. I just tried something and it took off. Will it work long term I have no idea. Where I am now is just the reality of where I am now. Have I made mistakes, you bet your life on that! Okay, I'll scroll through and try to respond to anything I can.

joering2 15y ago
hi there. I dont even know your name, and reading thoroughly reddit, I couldnt find it anywhere either. my impression is you are extremely business-smart person that is just learning business. You are not afraid of making mistakes knowing every mistake is an opportunity to learn new things, plus most mistakes can be fixed. please write a after-post about your financial situation after converting every emp into w2 as I think you are fully aware by now they would not pass "irs 20 questions to be 1099" rule. btw: too bad you are not located in the New York City. I have been let go my work recently and thinking about doing something else than 8-5 w2. I read between the lines reading you and felt chemistry that we both could learn alot and accomplish alot business-wise (of course, I could be wrong...) I would like to connect with you. would you please email me? (my address is in my HN profile). btw #2: thanks for sharing your story. I sure learnt new stuff today.
- localcasestudy 15y ago
  Sory to hear about your work situation. Hope something pans out if you decide to go back, but yeah in the meanwhile, it may be a good time to start something. Thanks for the kind words of encouragement. I tried to email you but didn't see the link to do it after I got to your profile (not sure if it's because I'm so new here or I'm just blind). Please send me a message on the maid site and I'll respond right away.
  - joering2 15y ago
    I did send you an email last night to booking@... hope you got it!

bannerts 15y ago

Has anyone tried to consider the numbers involved with this business? About how long does it take for two maids to clean a house (or in other words, how many houses can two maids clean in one 8-10 hour day?)? Also, about how many maids do you have working for you? In trying to come up with a ball-park figure: My guess would be that each pair of maids could bring in about $600-800 a day in revenue (cleaning 4-5 homes). Of this it would seem that about $400-500 goes to paying the maids (say , $200-250 per maid), with about $75 dollars going to daily expenses (gasoline, cleaning materials, etc), leaving whatever remains going to other major business expenses and profit. If his workers are busy 20 days a month, it would seem that a bunch of the so-called monthly costs of being an employer (say around $750 per month per employee) only comes out to be around $75 dollars a day (per pair of maids). I have no clue as to what this value actually is (or how much of it would be part of their hourly wage), I'm just guessing. All in all though, I would guess that for each maid he has, on average it is costing him around $275-325 per day while bringing in around $300-400 per day. If their is any truth to the numbers above (which one number being off could dramatically mess everything up), it would appear that he is bringing in about $50-75 per maid. If he prices his service to keep that profit in mind (to make at lease $50 per maid per day), then having a staff of 10 maids could end up making around $100-150k a year. And I suppose the scaling would seem to work pretty linearly; if he doubles the number of mades or how much he brings in per maid, then his profit would double as such. Of course there are things like insurance and training (perhaps those costs total 10% of each maids daily wage and is included in that value)... Based on these numbers though, having 10 maids would require having 25 homes to clean each day (or about 500 per month). I see that he has given out 2254 lunches so far (if I really wanted to make an accurate estimate of the business he is doing). Anyhow, is there anything major that I'm missing in these numbers? I'm just trying to make an estimation..

dkrich 15y ago

I can't help but think a lot of people find fault with this because they don't want to believe that it could be possible to start a business this way because they didn't think of it first. But you know full and well that whatever employment law and tax compliance requirements exist can be overcome and overcome fairly easily. Why look past the entire story to point out the few things that could fuck him up? And to those talking about the lack of scalability, etc. I ask you: how many businesses have you started that employ people? How many businesses of this kind have you run? If the answer is <1 you are not qualified to make those assumptions.