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Homejoy (YC S10) Raises $38M as It Looks to Expand Beyond Home Cleaning

82 points by mlinsey 13y ago

hnthr0wa4y1234 13y ago
Congrats on the growth, but I certainly hope that they've found more scalable growth avenues than buying Yelp reviews and running misleading Groupons as described here: http://www.reddit.com/r/EntrepreneurRideAlong/comments/1cyg0v/homejoy_caught_buying_yelp_reviews/ http://www.reddit.com/r/EntrepreneurRideAlong/comments/1cyg0...
- calbear81 13y ago
  Funny thing is that this is totally in line with the spirit of "hacking" the system and do whatever it takes philosophy.
- HomejoyHQ 13y ago
  Homejoy and it's leadership are committed to trustworthy and fair business practices and reviews. See Adora's response from April 2013. http://blog.homejoy.com/kfJh5xY8LOe3pJZtAG9J9RD2 http://blog.homejoy.com/kfJh5xY8LOe3pJZtAG9J9RD2
heyadayo 13y ago
wow congrats guys! unbelievable growth, I love homejoy and I can't wait to see how you use this capital to scale up.
jameszhang 13y ago
This is exciting, congratulations! I just booked my first Homejoy appointment for tomorrow morning--super excited to see the results :)
starfishjenga 13y ago
Nice! :)
pg 13y ago
YC partners make notes each time we meet one of the startups, to keep the other partners up to date. Six months ago I wrote: Have raised millions from angels but having trouble raising an A round, which is very surprising. Probably because Adora is understated and female. How things have changed in six months. If you grow as fast as Homejoy has, investors eventually pay attention.
- nswanberg 13y ago
  It makes sense that it would be easier to raise some angel money than to raise venture capital, but is it typically much easier to raise millions in angel money than it is to raise an A round? Is social proof helping in the former and non-existent in the latter? Separately, have you seen a case where investors completely failed to pay attention to a growing company due to some attribute of the founder?
  - pg 13y ago
    The reason it was so surprising is that even 6 months ago Homejoy's numbers were already well above the threshold for raising a series A. Investors are always influenced a lot by the founders. Which they should be. The mistake they make is to care about slightly the wrong things.
- _sentient 13y ago
  Congrats to Homejoy on their continued success. I could see labor classification being a major stumbling block for them however, and I'm curious as to your thoughts on this. Profitability may be attainable at $20/hr given sufficient scale, but it would be completely impossible with an employee based workforce. I know SV has a culture of moving fast and breaking things, and when you look at companies like Uber and AirBNB you can see them facing a number of legal challenges around established regulations, many of which are protectionist in nature. However, worker classification seems to be an altogether different issue, as it's much broader than the relatively obscure hotel or livery laws that those companies are facing, and which vary from city to city. Worker classification impacts nearly every service-based business in the country, and is mandated on both the state and federal level. I know smart people don't invest in things that have fundamental, life-threatening flaws, so I'm curious to know how they expect to get around this issue.
avalaunch 13y ago
It's pretty disingenuous to say "We're really sorry! We're fully booked right now in this area." when you don't even service the area yet. Just be honest and say you haven't made it to my city yet. I'd respect that a lot more.
loganfrederick 13y ago
I live in Chicago and tried Homejoy a couple months ago to clean my apartment. The entire booking process was quick and smooth, and the cleaner was pleasant and did a good job. I'm glad to hear they are doing well.
wehadfun 13y ago
How do websites like this avoid getting cut out the deal. I used a similar service to find a pet sitter. The first time I booked using the website. Every time after I went directly to the pet sitter.
- nswanberg 13y ago
  By providing more than just a person to provide the service, such as having liability insurance and a pool of providers. They also likely have disincentives for the people providing the service to make deals on the side. This is why consulting companies avoid evaporation. Additionally, in the case of the pet service, they may make much of their money on one-time transactions, say for people travelling.
- ernestipark 13y ago
  Airbnb is a somewhat similar example. You can definitely make deals directly with a homeowner/tenant, but both parties are protected and there is insurance when you go through Airbnb. Peace of mind is worth a lot.
  - mgkimsal 13y ago
    What sort of insurance? My wife booked an apartment in London several months ago. Got there in November and it wasn't anywhere near what was shown on the site - same location, but size, amenities, etc were all not as advertised.
    - wehadfun 13y ago
      He is talking about the insurance AirBnb offers to host in case a guest messes up the place. A well publicized incident happened where someone trashed a person's place. The insurance AirBnb offers makes you try to use your existing policy first.
  - w1ntermute 13y ago
    Actually, Airbnb is quite different. Whereas a cleaning service is something you'll indefinitely need on a regular basis, most people will only stay at a particular Airbnb listing once. This makes the middleman model work for them.
7Figures2Commas 13y ago
Homejoy charges $20/hour and pays cleaners $12 to $15 an hour[1]. The business model is to undercut rivals[2]. Margin compression appears to be the trend in many of the saturated, highly-competitive personal services markets like home cleaning. Homejoy might have great growth, but investing nearly $50 million in margin compressed sectors seems like a stretch for venture capitalists who have typically invested in high growth, high margin technology companies. The valuation math just gets crazy. What's next? VC-led roll-ups of small, local house cleaning services a la the website roll-ups of the last boom/bubble? [1] http://techcrunch.com/2013/08/18/homejoy-behind-the-scenes/ http://techcrunch.com/2013/08/18/homejoy-behind-the-scenes/ [2] http://www.geekwire.com/2013/dirty-house-pathjoy-online-maid-service-aims-clean-seattle/ http://www.geekwire.com/2013/dirty-house-pathjoy-online-maid...
- gzp 13y ago
  The article hints at Homejoy's plans to apply their underlying technology to services beyond cleaning. It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate.
  - 7Figures2Commas 13y ago
    > The article hints at Homejoy's plans to apply their underlying technology to services beyond cleaning. That's easier said than done. More often than not, when young, fast-growing companies try to enter new markets quickly in this fashion, it doesn't have the intended outcome. > It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate. It's even easier to look at what markets Homejoy could apply its technology to, extrapolate to the point where they dominate most if not all of those markets, and say, well, this would be worth $x. Even though this is not at all likely.
kyro 13y ago
Congrats to Homejoy, but a very frustrating part about following this industry (and I guess startups in general) is the media's blatant overlooking of competitors because they just aren't part of the valley's circle. MyClean is a company I've worked with here in NYC and am a customer of that have been in the online cleaning-on-demand space before EXEC entered. They're profitable, offer a great service, and yet time and time again articles come out framing the industry as if EXEC and Homejoy are the only two players. They're hardworking guys and to see them consistently ignored is disappointing.
- EScott11 13y ago
  MyClean offers services in one domestic market (NYC). Homejoy offers services in 31. edit: link to source https://www.homejoy.com/cities https://www.homejoy.com/cities
  - 7Figures2Commas 13y ago
    And there's your opportunity: 1. Acquire MyClean for its "technology" (website and back office software). 2. Expand into other cities, either through direct investment or through the acquisition of local home cleaning services. This type of roll-up strategy was not uncommon in the first .com boom. Now, instead of VCs financing the creation of networks of websites, they can finance the creation of networks of small businesses. Double the work, half the fun, and potentially none of the profit!
- cylinder 13y ago
  And what about the fact that Homejoy got caught trying to buy Yelp reviews? Even still, their Yelp reviews are quite poor in many big markets (Yelp reviews are a major driver in this business)? In addition, their $20/hr price is unsustainable and will have to go up once they demand profitability. Two week wait times to book a cleaning may appear to indicate heavy demand, but it also indicates poor planning and resource management. Apparently all that matters anymore is how much VC money you can raise, not the underlying business. "Journalism" in this sector is so incredibly lazy.
  - 13y ago
pbreit 13y ago
On one hand, it makes little sense to continue paying a middle man for a repeating service like home cleaning. On the other, there's some value in having a diversity of vetted providers and the easy ability to switch. $38m sounds like a lot, though, at this juncture. The novelty wears off pretty quickly.
iblaine 13y ago
I've used homejoy 8 times so far. I'm shocked at how cheap it is. Every one of my cleaners has been nice. One seemed kinda cracked out but still did a decent job. Good to see homejoy continuing to expand.
grep 13y ago
Have they been around since 2010, or 2012 like Crunchbase says?

82 points by mlinsey 13y ago

Congrats on the growth, but I certainly hope that they've found more scalable growth avenues than buying Yelp reviews and running misleading Groupons as described here: http://www.reddit.com/r/EntrepreneurRideAlong/comments/1cyg0v/homejoy_caught_buying_yelp_reviews/ http://www.reddit.com/r/EntrepreneurRideAlong/comments/1cyg0...

calbear81 13y ago
Funny thing is that this is totally in line with the spirit of "hacking" the system and do whatever it takes philosophy.
HomejoyHQ 13y ago
Homejoy and it's leadership are committed to trustworthy and fair business practices and reviews. See Adora's response from April 2013. http://blog.homejoy.com/kfJh5xY8LOe3pJZtAG9J9RD2 http://blog.homejoy.com/kfJh5xY8LOe3pJZtAG9J9RD2

heyadayo 13y ago

wow congrats guys! unbelievable growth, I love homejoy and I can't wait to see how you use this capital to scale up.

jameszhang 13y ago

This is exciting, congratulations! I just booked my first Homejoy appointment for tomorrow morning--super excited to see the results :)

starfishjenga 13y ago

Nice! :)

pg 13y ago

YC partners make notes each time we meet one of the startups, to keep the other partners up to date. Six months ago I wrote: Have raised millions from angels but having trouble raising an A round, which is very surprising. Probably because Adora is understated and female. How things have changed in six months. If you grow as fast as Homejoy has, investors eventually pay attention.

nswanberg 13y ago
It makes sense that it would be easier to raise some angel money than to raise venture capital, but is it typically much easier to raise millions in angel money than it is to raise an A round? Is social proof helping in the former and non-existent in the latter? Separately, have you seen a case where investors completely failed to pay attention to a growing company due to some attribute of the founder?
- pg 13y ago
  The reason it was so surprising is that even 6 months ago Homejoy's numbers were already well above the threshold for raising a series A. Investors are always influenced a lot by the founders. Which they should be. The mistake they make is to care about slightly the wrong things.
_sentient 13y ago
Congrats to Homejoy on their continued success. I could see labor classification being a major stumbling block for them however, and I'm curious as to your thoughts on this. Profitability may be attainable at $20/hr given sufficient scale, but it would be completely impossible with an employee based workforce. I know SV has a culture of moving fast and breaking things, and when you look at companies like Uber and AirBNB you can see them facing a number of legal challenges around established regulations, many of which are protectionist in nature. However, worker classification seems to be an altogether different issue, as it's much broader than the relatively obscure hotel or livery laws that those companies are facing, and which vary from city to city. Worker classification impacts nearly every service-based business in the country, and is mandated on both the state and federal level. I know smart people don't invest in things that have fundamental, life-threatening flaws, so I'm curious to know how they expect to get around this issue.

avalaunch 13y ago

It's pretty disingenuous to say "We're really sorry! We're fully booked right now in this area." when you don't even service the area yet. Just be honest and say you haven't made it to my city yet. I'd respect that a lot more.

loganfrederick 13y ago

I live in Chicago and tried Homejoy a couple months ago to clean my apartment. The entire booking process was quick and smooth, and the cleaner was pleasant and did a good job. I'm glad to hear they are doing well.

wehadfun 13y ago

How do websites like this avoid getting cut out the deal. I used a similar service to find a pet sitter. The first time I booked using the website. Every time after I went directly to the pet sitter.

nswanberg 13y ago
By providing more than just a person to provide the service, such as having liability insurance and a pool of providers. They also likely have disincentives for the people providing the service to make deals on the side. This is why consulting companies avoid evaporation. Additionally, in the case of the pet service, they may make much of their money on one-time transactions, say for people travelling.
ernestipark 13y ago
Airbnb is a somewhat similar example. You can definitely make deals directly with a homeowner/tenant, but both parties are protected and there is insurance when you go through Airbnb. Peace of mind is worth a lot.
- mgkimsal 13y ago
  What sort of insurance? My wife booked an apartment in London several months ago. Got there in November and it wasn't anywhere near what was shown on the site - same location, but size, amenities, etc were all not as advertised.
  - wehadfun 13y ago
    He is talking about the insurance AirBnb offers to host in case a guest messes up the place. A well publicized incident happened where someone trashed a person's place. The insurance AirBnb offers makes you try to use your existing policy first.
- w1ntermute 13y ago
  Actually, Airbnb is quite different. Whereas a cleaning service is something you'll indefinitely need on a regular basis, most people will only stay at a particular Airbnb listing once. This makes the middleman model work for them.

7Figures2Commas 13y ago

Homejoy charges $20/hour and pays cleaners $12 to $15 an hour[1]. The business model is to undercut rivals[2]. Margin compression appears to be the trend in many of the saturated, highly-competitive personal services markets like home cleaning. Homejoy might have great growth, but investing nearly $50 million in margin compressed sectors seems like a stretch for venture capitalists who have typically invested in high growth, high margin technology companies. The valuation math just gets crazy. What's next? VC-led roll-ups of small, local house cleaning services a la the website roll-ups of the last boom/bubble? [1] http://techcrunch.com/2013/08/18/homejoy-behind-the-scenes/ http://techcrunch.com/2013/08/18/homejoy-behind-the-scenes/ [2] http://www.geekwire.com/2013/dirty-house-pathjoy-online-maid-service-aims-clean-seattle/ http://www.geekwire.com/2013/dirty-house-pathjoy-online-maid...

gzp 13y ago
The article hints at Homejoy's plans to apply their underlying technology to services beyond cleaning. It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate.
- 7Figures2Commas 13y ago
  > The article hints at Homejoy's plans to apply their underlying technology to services beyond cleaning. That's easier said than done. More often than not, when young, fast-growing companies try to enter new markets quickly in this fashion, it doesn't have the intended outcome. > It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate. It's even easier to look at what markets Homejoy could apply its technology to, extrapolate to the point where they dominate most if not all of those markets, and say, well, this would be worth $x. Even though this is not at all likely.

kyro 13y ago

Congrats to Homejoy, but a very frustrating part about following this industry (and I guess startups in general) is the media's blatant overlooking of competitors because they just aren't part of the valley's circle. MyClean is a company I've worked with here in NYC and am a customer of that have been in the online cleaning-on-demand space before EXEC entered. They're profitable, offer a great service, and yet time and time again articles come out framing the industry as if EXEC and Homejoy are the only two players. They're hardworking guys and to see them consistently ignored is disappointing.

EScott11 13y ago
MyClean offers services in one domestic market (NYC). Homejoy offers services in 31. edit: link to source https://www.homejoy.com/cities https://www.homejoy.com/cities
- 7Figures2Commas 13y ago
  And there's your opportunity: 1. Acquire MyClean for its "technology" (website and back office software). 2. Expand into other cities, either through direct investment or through the acquisition of local home cleaning services. This type of roll-up strategy was not uncommon in the first .com boom. Now, instead of VCs financing the creation of networks of websites, they can finance the creation of networks of small businesses. Double the work, half the fun, and potentially none of the profit!
cylinder 13y ago
And what about the fact that Homejoy got caught trying to buy Yelp reviews? Even still, their Yelp reviews are quite poor in many big markets (Yelp reviews are a major driver in this business)? In addition, their $20/hr price is unsustainable and will have to go up once they demand profitability. Two week wait times to book a cleaning may appear to indicate heavy demand, but it also indicates poor planning and resource management. Apparently all that matters anymore is how much VC money you can raise, not the underlying business. "Journalism" in this sector is so incredibly lazy.
- 13y ago

pbreit 13y ago

On one hand, it makes little sense to continue paying a middle man for a repeating service like home cleaning. On the other, there's some value in having a diversity of vetted providers and the easy ability to switch. $38m sounds like a lot, though, at this juncture. The novelty wears off pretty quickly.

iblaine 13y ago

I've used homejoy 8 times so far. I'm shocked at how cheap it is. Every one of my cleaners has been nice. One seemed kinda cracked out but still did a decent job. Good to see homejoy continuing to expand.

grep 13y ago

Have they been around since 2010, or 2012 like Crunchbase says?