5 ms·

what happened?

jbondeson 11y ago
The biggest is probably that the home care industries operate on such a shoe string budgets that there really isn't all that much room for a middleman to take a cut. This isn't taxis where you can bank on regulatory arbitrage to take a cut. They seemed to be trying to make money on customer acquisition and scheduling, but I'm sure they realized too late that their partner companies don't spend a huge amount of money on those activities.
- _delirium 11y ago
  > This isn't taxis where you can bank on regulatory arbitrage to take a cut. If anything, the incumbents are better positioned to arbitrage the law/regulations in this case. An online service like this leaves a paper trail, which makes it much harder to use the "shortcuts" common in the cleaning industry: use of undocumented immigrants, underreporting of taxable income, etc. Much easier to do that in a pure cash business with informal booking.
smt88 11y ago
Many stories about their problems, but here's one: http://fusion.net/story/142578/homejoy-uber-for-x-startups-may-be-in-trouble/ http://fusion.net/story/142578/homejoy-uber-for-x-startups-m... And maybe the main one: http://recode.net/2015/07/17/cleaning-services-startup-homejoy-shuts-down-after-battling-worker-classification-lawsuits/ http://recode.net/2015/07/17/cleaning-services-startup-homej...
- kevinkimball 11y ago
  thanks, I had missed this
- devy 11y ago
  If Uber have had defend their case and employee classification, perhaps HomeJoy may get their next round of funding and not have to close...but year, the timing sucks.
- anseljh 11y ago
  Wow. Lots of doublespeak from the founder in the Re/code piece. While it's true that "The [California Labor Commission’s] Uber decision...was only a single claim", I'm not so sure it was "blown out of proportion." You could also see it as the tip of a big iceberg. Presumably, that's what the investors they were courting thought.
- legutierr 11y ago
  If Homejoy cleaners were going to be classified as employees, entitled to minimum wage and subject to being verified as citizens or legal residents, then this seems like the right move. I can't see how they would ever be able to compete on price with all of the independent outfits out there that employ undocumented workers. It's one thing to sell your services at a loss while you're growing. In the home-cleaning business, though, there will never be a shortage of undocumented immigrants willing to work for less than minimum wage, quite possibly at a higher quality level. There would be no way to ever raise prices to fully cover costs without immediately losing out to that competition.
acdha 11y ago
I'm assuming it's related to the legal minefield of trying to avoid compensating their workers as employees: http://arstechnica.com/tech-policy/2015/03/startup-workers-sue-to-be-recognized-as-employees-not-mere-contractors/ http://arstechnica.com/tech-policy/2015/03/startup-workers-s...
- dragonwriter 11y ago
  That's probably part of it, but also, to the extent that they were bona fide contractors, the cost of actually policing them to prevent direct contracting with and referrals from the people they were matched with through Homejoy was probably a problem. Contracts may theoretically restrict this behavior, but actually policing them is non-trivial.
  - acdha 11y ago
    Yeah, I think that's part of the general cost breakdown here: something like house cleaning is already very competitive so there's a pretty narrow range where you can convince workers to give you a cut without pricing the service out of consideration. Successful attempts to do that rely on high volume, which is completely incompatible with the kind of things you mention or even basic customer service and quality review.
dude_abides 11y ago
They got in trouble with lawsuits because of the recent Uber employee vs contractor verdict. In addition, they were bleeding cash in customer acquisition so that didn't help too. The lawsuit was the trigger but the bleeding of cash was the fundamental reason.

what happened?

The biggest is probably that the home care industries operate on such a shoe string budgets that there really isn't all that much room for a middleman to take a cut. This isn't taxis where you can bank on regulatory arbitrage to take a cut. They seemed to be trying to make money on customer acquisition and scheduling, but I'm sure they realized too late that their partner companies don't spend a huge amount of money on those activities.

_delirium 11y ago
> This isn't taxis where you can bank on regulatory arbitrage to take a cut. If anything, the incumbents are better positioned to arbitrage the law/regulations in this case. An online service like this leaves a paper trail, which makes it much harder to use the "shortcuts" common in the cleaning industry: use of undocumented immigrants, underreporting of taxable income, etc. Much easier to do that in a pure cash business with informal booking.

smt88 11y ago

Many stories about their problems, but here's one: http://fusion.net/story/142578/homejoy-uber-for-x-startups-may-be-in-trouble/ http://fusion.net/story/142578/homejoy-uber-for-x-startups-m... And maybe the main one: http://recode.net/2015/07/17/cleaning-services-startup-homejoy-shuts-down-after-battling-worker-classification-lawsuits/ http://recode.net/2015/07/17/cleaning-services-startup-homej...

kevinkimball 11y ago
thanks, I had missed this
devy 11y ago
If Uber have had defend their case and employee classification, perhaps HomeJoy may get their next round of funding and not have to close...but year, the timing sucks.
anseljh 11y ago
Wow. Lots of doublespeak from the founder in the Re/code piece. While it's true that "The [California Labor Commission’s] Uber decision...was only a single claim", I'm not so sure it was "blown out of proportion." You could also see it as the tip of a big iceberg. Presumably, that's what the investors they were courting thought.
legutierr 11y ago
If Homejoy cleaners were going to be classified as employees, entitled to minimum wage and subject to being verified as citizens or legal residents, then this seems like the right move. I can't see how they would ever be able to compete on price with all of the independent outfits out there that employ undocumented workers. It's one thing to sell your services at a loss while you're growing. In the home-cleaning business, though, there will never be a shortage of undocumented immigrants willing to work for less than minimum wage, quite possibly at a higher quality level. There would be no way to ever raise prices to fully cover costs without immediately losing out to that competition.

acdha 11y ago

I'm assuming it's related to the legal minefield of trying to avoid compensating their workers as employees: http://arstechnica.com/tech-policy/2015/03/startup-workers-sue-to-be-recognized-as-employees-not-mere-contractors/ http://arstechnica.com/tech-policy/2015/03/startup-workers-s...

dragonwriter 11y ago
That's probably part of it, but also, to the extent that they were bona fide contractors, the cost of actually policing them to prevent direct contracting with and referrals from the people they were matched with through Homejoy was probably a problem. Contracts may theoretically restrict this behavior, but actually policing them is non-trivial.
- acdha 11y ago
  Yeah, I think that's part of the general cost breakdown here: something like house cleaning is already very competitive so there's a pretty narrow range where you can convince workers to give you a cut without pricing the service out of consideration. Successful attempts to do that rely on high volume, which is completely incompatible with the kind of things you mention or even basic customer service and quality review.

dude_abides 11y ago

They got in trouble with lawsuits because of the recent Uber employee vs contractor verdict. In addition, they were bleeding cash in customer acquisition so that didn't help too. The lawsuit was the trigger but the bleeding of cash was the fundamental reason.