The business of “on-demand” services was recently rocked when it was announced that promising startup, Homejoy, abruptly shut down. On the back of this departure is Handy, which has raised $64 million for its on-demand services, has recently risen to $1 million per week profits, and which is looking to expand into furniture delivery and assembly services.
Many of these same services were offered by Homejoy, but why did it fail while Handy (https://www.handy.com/) is succeeding? After all, the concept is pretty much exactly the same between the two businesses.
Like all things in the business world, execution was the key. Homejoy struggled to raise enough money to keep operating, a problem that Handy has not suffered from by comparison. Without investment money, a company can’t continue to operate. As a result, Homejoy could not move out of the startup phase and into the world of real capital.
Another reason was a lack of quality services. Homejoy, while offering the same basic cleaning and repair concepts as Handy, failed to satisfy their customers. Complaints about lackluster work ethic and execution were rampant with Homejoy, causing many investors to be wary of a company that was already building such a negative reputation.
One problem that was likely only noticeable to workers inside the business was a lack of respect for their cleaners. Homejoy classified their workers as contractors, rather than employees. As a result, they could be let go at any time and were paid very low wages. These employees sued the startup over this classification. The resulting fall-out made Homejoy damaged goods.
In fact, Handy was interested in purchasing Homejoy at one point, and buying their customer base. However, the problems surrounding this star-crossed company caused them to change their minds. As a result, Homejoy is dead-in-the-water just as Handy continues its rapid climb to success. In just two years, they’ve gone from yearly revenue of $3 million to $52 million.
A large part of that success is that Handy does what Homejoy did not. They carefully vet their employees to ensure they are worthwhile. They also pay them fair wages and classify them as employees. As a result, their happy employees are working hard and satisfying their customers in a way that Homejoy just couldn’t do.
The success of Handy shows that there is a place in the business world of on-demand cleaning services. As long as the services are high-quality, there is a place for it.