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Comment by bedros | Hacker News Reader

Homejoy the house cleaning startup has a very similar business model to Wag. and as Homejoy failed because clients would directly hire the cleaners vs going through Homejoy; Wag will be destined to the same failure unless they use scare tactics to block clients from hiring contractors directly

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A platform isn’t destined to fail just because there’s a high rate of disintermediation.

Generally, the root cause for these sorts of businesses failing is when their customer acquisition cost exceeds their customer ltv.

Disintermediation causes customer churn which results in lower customer lifetime value. But, it’s only one of many important levers that determine the health of a platform business.

I think Homejoy failed for more reasons than Disintermediation. One major issue all the early versions of this model missed is that a service like this are not a car ride. One time service volume doesn't cover customer acquisition. Logistics and customer service plays a huge role as well. Homejoy had a hard time handling not normal situations like: cleaners not showing up, substandard work (subjective), or locked doors. It appeared to me that scale was the main mission.

BTW, how do you justify cutting out the company in these services? Because they are contractors? If they were FTE's would it be different? Seriously asking because I want to understand.

Then Wag will suffer the same fate as the rest of the gig economy companies: proprietors with skills/means don't need Wag to land clients, and they aren't about to give Wag the rights to their relationships with new clients, and those without skills or means will flood Wag's pool of workers.

Damned if they do and damned if they don't.

Hopefully.

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