Handy’s Corner of the Gig Economy Is a Mess. Doesn’t Bother Startup Investors!
Companies, Health Care, Industry Research, Ondemand Platform, Services, The American Dream, Uber

Home Services need to be Cleaned Up

Originally Published in Slate

The startup world is full of ironies and poetic justices. The bubbly race to wash your clothes. The club of billion-dollar “unicorns” that boasts more than 100 members. And the undeniably messy market for on-demand cleanings and home services.

In recent months, the home-services market has repeatedly proven one of the riskiest and most muddled in the burgeoning “gig” economy. The clearest evidence of this came in mid-July, when Uber-but-for-cleaning platform Homejoy announced it was shutting down. At the time, the company attributed its exit to problems with raising money and to a lawsuit over its employment practices;other reports since have traced the collapse to substantial losses, poor customer retention, costly expansion, and Homejoy’s inability to keep its best workers on the platform.

Similar problems have plagued Handy, another Uber-but-for of the home-services sector, and Homejoy’s main competitor before it went under. Like Homejoy, Handy poured money into scaling up its operation, spending tens of thousands of dollars a week—if not more—to onboard cleaners. Like Homejoy, Handy struggled to retain those cleaners, with 20 to 40 percent becoming inactive after two to three months. Like Homejoy, Handy is in litigation over its independent contractor-based business model. On top of that, Handy has faced tough criticism about its customer service—in particular, a signup system that automatically enrolled users in repeat bookings and made it extremely difficult to cancel them.

And yet the gig economy keeps chugging. Handy said Monday that it had raised $50 million in a Series C funding round led by Fidelity Management and several of its current investors. That brings the company’s total funding to $110 million, for an unofficial valuation of around $500 million.

In its press release, Handy points to its 1 million-plus bookings (a milestone it celebrated over the summer), and that 80 percent of them come from “loyal, repeat customers.” Presumably a good deal of the company’s valuation and new funding is tied up in this claim—repeat customers are much more likely to actually pay off than one-time users—though the fact starts to sound less compelling when you wonder how many of the 80 percent were repeatedly using Handy of their own volition, and not because they couldn’t cancel those automatic recurring bookings.

“Handy has demonstrated to consumers that it is the company to trust when it comes to finding professionals to take care of their homes,” Handy co-founder Umang Dua says in the release. “Professionals love the flexibility, high-paying jobs and high demand for their services, while consumers enjoy the convenience and high quality.” It’s nice PR boilerplate that becomes less convincing once you consider the cleaners who have filed lawsuits against Handy, the customers stuck with followup bookings they didn’t want, and the customer-experience employees at Handy’s headquarters who had their jobs outsourced and were fired en masse between late 2014 and early 2015. For more on most of that, see my Slate story from this summer.

On the other hand, it’s possible that Handy, in the spirit of its sector, has started cleaning up its act. In late August, a former Handy employee notified me that the company had finally reviewed its compensation and payroll practices and issued back-pay to some customer-experience employees for their rest periods. As part of that, back-wage recipients were asked to “stipulate and agree that my accepting this payment does not constitute, for any purpose whatsoever, either directly or indirectly, an admission of any violation of law or contract or any other legal obligation whatsoever by Handy,” according to a copy of one agreement provided to Slate. They also released Handy from “any and all individual and/or class claims under the New York Labor Law and, to the extent allowable, any other federal, state or local law, related to the payment of wages, benefits or other compensation related to my employment with Handy,” so you have to assume that’s something the company was nervous about.

Could such changes, plus the Homejoy exit, be enough to pave Handy’s way toward establishing a profitable, sustainable business?Or is the market for home-cleaning and other household services fundamentally too tough? Those are questions that as of yet don’t seem to have clear answers. For now, though, Handy doesn’t need to convince the world one way or another. It just needs metrics that are aspirational enough to attract a few investors—to keep the cash flowing in from one end to be burnt up on the other. Fifty million dollars might not feel like much compared to the $1 billion rounds that Uber raises with casual regularity. But for a company in a space as murky and fraught as Handy’s, it’s an equally big vote of confidence.

 

Filld just raised $3.25 million to make sure you'll never have to pump your own gas again
Companies, Ondemand Platform, Technology Platforms

Filld: You’ll never have to pump your own gas again

On-Demand Start-Up:

Filld, a startup that delivers gas on-demand, day or night, has raised $3.25 million in seed funding in a bid to take on the gas station model…. CEO Aubuchon says the early adopters of the app have been drawn to the ability to have your tank filled overnight, and indeed this does seem convenient. Tap on the app, go to bed, and wake up with a full tank. You have just removed one annoying detail from your life.

Unlike one of its main competitors in the space, Purple, Filld’s trucks are certified to determine exactly how much gas you need. While Purple can only fill a set amount — let’s say 10 or 15 gallons at a time — Filld uses a similar pump to one you’d find at a gas station, which clicks when it’s done. All you have to do is tell Filld to fill it up.

After setting up your profile on Filld, the app is simple. You order the gas like you would order an , by placing a pin at the location, and one of Filld’s trucks comes and fills your tank. If you have a locking gas tank door, you have to leave it open a crack for them.

 

 

Companies, Ondemand Platform

Amazon building it’s own On-Demand Workforce for the last mile

Amazon recently introduced Amazon Flex, a new service where people use an app that alerts them to fetch packages, etc. from Amazon warehouses and them to customers homes in under one hour. The drivers get paid $20 an hour, which is better than minimum wage. This could be the beginning of a larger delivery strategy. Forget the drones. Forget the USPS partnership. This is probably more cost effective and can build some interesting loyalty, especially if the human touch works. Amazon wants to own the last mile.

Having a crowd-sourced delivery service enables Amazon to learn from some of it’s not-so well known ventures such as Mechanical Turk, where businesses and developers can access an on-demand scalable workforce and Amazon Services, where you can sell your own products. Both of these have taught Amazon how to deal with numerous variables involving small dollar transactions.

To be successful, there are some interesting logistical challenges for Amazon. It will have to focus on setting up mini warehouses around key cities, develop or license effective mapping software and figure out how to vent drivers. For the driver, it is important to figure out

  • what kind of insurance Amazon will or will not provide.
  • how the company will conduct background checks
  • how the company will monitor you (the driver’s behavior)

Note: In Seattle, the City Council is considering a bill that would allow for-hire drivers to unionize.

This story was first reported a while back by Geekwire, but tomorrow’s Wall Street Journal will be providing more informaiton.

 

 

 

Companies, Gadgets and Apps, Industry Research, Mobile, Ondemand Platform, Services

On-Demand Apps – The Opportunity

Your Smartphone is really your On-Demand Device! According to an organization called On-Demand Economy (no relation to this company, but maybe we should join forces), keeps its fingers on the pulse of this new world. It’s recent 2015 Mobile Consumer Survey indicates that ‘things haven’t even started yet!.’ Mobile On-Demand Apps are only being used by 5% of the Smartphone population (that does sound low, though)

Highlights from the Survey (which you can find below) include:

  1. Mobile app developers are competing aggressively for installs, but the battle for users doesn’t stop
    there – only 1/4 of the apps installed on a smartphone are used each week (slide 8)
  2. Unpaid marketing channels are the most common means of discovery (slide 9)
  3. Smartphone owners are still hungry for great new apps (slide 10)
  4. Although not a primary means of discovery, mobile advertising is still an effective tool for promoting app awareness and installs (slide 11)
  5. Awareness levels of new on-demand services are still relatively low with the exception of Uber(slide 12)
  6. Penetration rates of different mobile commerce services differ by age, gender and location given the various value propositions and consumers needs (slide 13 & 14)
  7. We are in the midst of the next evolution in digital commerce: web -> mobile web -> apps (slide 15)
  8. iOS users demonstrate higher purchasing activity than Android users (slide 16
  9. Every consumer vertical needs to have a mobile strategy (slide 17)
  10. Offering a promotion / credit is an attractive value proposition to get a user to make their first purchase through a mobile app (slide 18)
  11. Appealing to the optimal mobile consumers is challenging as promotions / credits may get a first purchase, but do not necessarily change long term purchasing behavior or customer loyalty (slide 19)
  12. On-demand services are just beginning to hit their stride, and the market opportunity is massive (slide 20)



The best slide is the one that shows usage of On-Demand Apps is still low (with the exception of Uber.)
Screen Shot 2015-09-17 at 10.22.18 PM
For more info, check OnDemandEconomy.com
Being Freelancer, Freelancers, Industry Research, Ondemand Platform, People

Research: Today’s Independent Worker

According to MBO Partners (State of Independence profiling survey) the definition of an independent worker is anyone older than 21 years old that describes themselves as one of the following:

  • An independent consultant/contractor
  • Self-employed,
  • A freelance worker ,
  • A temporary worker,
  • A fixed term contract worker
  • An on-call worker
  • A small business owner with fewer than a few employees

Some of these people are sole-preneurs or just as individuals having side gigs. Most of these folks are independent workers because they:

  1. Want control over the kind of work they do
  2. Want the flexibility to determine when and where they work, and
  3. Want the autonomy to work in the way they believe best.

Other highlights:

  •  Independent workers continue overall to be satisfied with their path. Independent workers’ satisfaction remains strong, with 82% reporting that they are either highly satisfied (63%) or satisfied (19%) with their work style. Only 7% reported being dissatisfied. The vast majority plan to continue as independent workers, with 76% indicating they will either continue as solopreneurs (61%) or build a larger business (15%). All of these numbers are consistent with prior years
  • Despite the economic recovery and a much stronger traditional job market, the number of independent workers continues to grow. The number of solopreneur workers, those committed to the independent work path, rose to 17.9 million in 2014. This is up from 15.9 million — 12.5% — since our base year study in 2011. This growth, which is substantially higher than the 1.1% growth in the overall U.S. labor force during the same period, indicates a continued, structural shift towards independent work.
  • Independents make a clear and positive economic impact on the US economy. Solopreneurs generated about $1.1 trillion in total income in the past year. They also spent more than $150 billion on non-payroll/contractor expenses. These independents earn income both globally and locally: About 1 in 8 do business overseas generating roughly $38 billion in exports while a robust $710 billion came from their metro areas. A little more than 10 million U.S. households receive at least half of their income from independents.
  • Independents hire other independents. Although the vast majority of independent workers are solopreneurs and don’t have traditional employees, they don’t work alone. During the past year, 38% of solopreneurs spent a total of $92 billion hiring the equivalent of 2.2 million full-time workers via contract hiring.
  • One in seven independents plans on building a bigger business. A little more than 2.5 million solopreneurs plan to launch larger businesses. These nascent entrepreneurs will build businesses that will create additional traditional jobs and spur greater economic activity.
  • The challenges of independence felt more manageable over the past year. Independent workers are acutely aware of the risks and responsibilities they face. In particular, they feel challenged by their uncertain income stream (57%), concerns about retirement (38%) and worries about a lack of job security (34%). Yet, while navigating these challenges is a natural part of this work path, the perceived burdens and challenges of independence have slightly but consistently declined from the base year of 2011.
  • Women and men have different reasons for being independent. Men and women choose to be independent at nearly identical rates, have similar satisfaction levels and plan on staying independent at similar rates. They also have consistent views on the challenges associated with being independent. But there is one area where men and women differ: they have different reasons for being independent. Women tend to be more interested in flexibility and developing fulfilling work that fits into their lifestyle. Men tend to focus on being in control, being their own boss and maximizing their income.
  • Independents use multiple revenue streams to reduce risk. Most solopreneurs (60%) have more than one revenue generating activity, with 19% having either a full (4%) or part-time (15%) traditional job. Those with multiple revenue generating activities and jobs report doing this to have a steady source of income, which reduces their overall financial risk.
  • Part-time Side-Gigger independent workers are focused on supplementing their income. In 2014 we expanded on three years of survey research to include not only the solopreneurs who, on average, work full-time, but also “Side-Giggers”— independent workers who work regularly as independents but do so on a part-time basis alongside traditional jobs, retirement or family care activities. 12.1 million Americans fit this description and share many attributes with their 17.9 million solopreneur colleagues. But while flexibility, autonomy and control are the key reasons solopreneurs choose this path, most Side-Giggers (58%) are working as independents primarily to supplement their income. A little more than 40% also report they do what they love which may result in a more committed solo business in the future.
  • The independent workforce will continue to grow. Given the structural shifts in the economy, sustained interest in control over one’s career/personal life, and lowering hurdles to entry, the solopreneur workforce is forecast to grow to 24.5 million by 2019. When we add today’s Side-Giggers into the fold, we expect the number of active, self-realized independents to grow from 30 million today to nearly 40 million by 2019.