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Comment by tptacek | Hacker News Reader

I get the sense that many of the people involved in Homejoy are well-intentioned and hardworking. But I can't say that I think it's a bad thing that tech startups are finding it difficult to monetize unskilled labor.

The technology that most companies like these offer (with the possible exception of Uber) is a commodity. The real asset they have is the network effect. Which makes the balance of power between the tech company and the "1099 contractors" deeply suspicious. What are these companies doing for the laborers that makes them valuable enough to be skimming returns from the work?

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I think you have it wrong here. The fact that HomeJoy was actually playing in a market which required skill labor was responsible for their downfall. Think about it - if there is an HomeJoy operator who's actually good and did her job very well (and thus is skilled), next time I will want to deal with her directly (to save on cost) and not deal with HomeJoy at all. I certainly did this. In fact, many HomeJoy operators proactively offered to do this.

However, for unskilled labor, like Uber, I care a lot about needing a car right now - and dealing with drivers directly is not efficient at all. As such, Uber is doing so well in this market.

I see this a bit differently.

Uber and AirBnB caters to immediate needs for a short term engagement, so the dispatching capabilities are the real value (find me someone who can do X right now).

Homejoy is dispatching for a long term relationship, so it has a hard time staying engaged in the relationship as it progresses.

I think the skill is less important than the duration of the engagement for a dispatching service like this.

Upwork/oDesk connects people with long-term providers and are more or less able to avoid disintermediation by providing services that the providers want to take advantage of, like time tracking, payment processing, and tax documents. Companies like HomeJoy need to figure out what services their providers really crave and make those contingent upon using their platform. Maybe there isn't anything lacking like that in the home cleaning business.

Agreed! My point was not against the home cleaning industry, as it was the "dispatch-as-value-add" model. Tax and liability are probably the biggest "headaches" that could be managed by homejoy and ensure they retain their position in the relationship.

Anecdotally I pay Molly Maid to clean my apartment, because i don't want to deal with liability, legality or tax complications.

You think cleaning is skilled labor and driving isn't? Uber drivers better not be unskilled. You're putting your life in someone's hands every time you ride in an Uber (as with any car). There's almost no skill to scrubbing toilets and vacuuming rugs, and if you mess it up you get fired but no one dies. The only skill required is attention to detail and caring enough to do a good job.

I agree that it is not a very skilled job. But attention to detail (i.e. caring to clean the house) is a more rare skill than you think. I have so many operators who have to come to clean our space and have done a messy job. The difference between good and bad operators is very stark - and it is the good ones you want to deal with.

With driving, nothing of that is required. Many people are in auto mode when they are driving. Think about it - is it easier to drive vs. cleaning your place? Of course you want basic driving skills to be there - but I think the DMV licensing process and Uber ratings generally takes care of that. You are going extreme by talking about death etc. - but how many Uber journeys have resulted in that. There are millions of Uber being driven every day - and I haven't read about a single death (of the passenger).

Driving is a common skill. Most people with a license can drive a car safely. This isn't heavy equipment.

Cleaning, being good at cleaning, is an uncommon skill. I've gone through my fair share of housekeepers. When you find a good one that you trust with the keys to your home, you want to hold on to them.

I can't argue that driving is unskilled, but cleaning is certainly a skill. I've gone through several services for house cleaning in the last few years and the quality of service varies dramatically.

> The only skill required is attention to detail and caring enough to do a good job.

Thought experiment: imagine yourself cleaning 100 houses professionally for two hours. My bet is that the last house would be 2X - 3X more clean than the first.

There is no house-cleaning college. This is what "skilled labour" refers to. Driving and house-cleaning is not skilled labour.

The poster I am responding to is clearly referring to "skilled labor" in the colloquial sense, as in a worker for whom adequate performance requires more skill than a lay-person.

It appears from this article that recent worker classification lawsuits also had a part to play - http://recode.net/2015/07/17/cleaning-services-startup-homej...

From the article: > Homejoy was able to raise funding, but not enough to grow > the company as big as its founders and backers had hoped. > “We declined those investments because it wasn’t enough, and > we wanted to stay true to our vision,” Cheung said.

I'm sorry but shutting the company down because the round you could raise wasn't as big as you hoped feels like wimping out. Alive beats true to your vision and dead. In "The Hard Thing About Hard Things", Ben Horowitz coins the term WFIO (pronounced wiff-e-o) for that "We're Fucked, It's Over" feeling that entrepreneurs get on a regular basis. Lawsuits spooking investors is certainly bad but hardly even qualifies.

Given how big an issue the worker classification issue is for the whole economy, I could see the regulatory issues getting sorted out over the next few years. Quitting seems like a premature move to me. How do the investors who put $40m into the company feel? Who's going to invest in this team again? Who's going to go work there?

Mostly clickbait...one of many problems the company faced.

Thats what I figured the problem was.

> the balance of power between the tech company and the "1099 contractors"

That hits the nail on the head. A 1099 contractor has to cut some 30%-40% off their wage to support things like self-insurance, etc (or add yea much). If you're "working" for a gig provider, you're not a 1099 employee by the inherent nature of the thing. Granted, you're not in a normal employer-employee relationship, but neither are you a skilled freelancer contracting your labor out on wages you yourself set and negotiated.

While I fully support the idea of TaskRabbit, Lyft, Uber, Homejoy et al, certain realities have to be faced squarely: they are not being real about the nature of their business. They really are something like employers, with something like employees.

Cheung is likely correct that a third legal category needs to be created (neither 1099 freelancer nor true employee), but in the absence of that, it seems profoundly more ethical to consider the workers employees.

It seems like you're a 1099 as soon as you give a client your phone number to cut out HomeJoy. The law might not agree, but it certainly seems well within the spirit. Seems very common too (at least based on the HN comments).

I think Homejoy would be in the clear if they were more of a two-sided marketplace. If users could hire specific cleaners based on their ratings, and cleaners were free to set their own rates, that strikes me as more 1099 appropriate.

The recent US Dept. of Labor interpretation suggests the same: see "Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss?" at http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.h...

Of course then you're even more at risk of disintermediation, so you're probably charging for listings. It's a useful business but a smaller one.

> What are these companies doing for the laborers that makes them valuable enough to be skimming returns from the work?

As someone who used to build/sell websites to small cleaning companies, real estate agents, tradesmen, etc.

Marketing+Parts+Labor was the formula for almost all of their costs. Marketing represented ~20-25% for the few that were willing to discuss it with me.

http://blog.sfgate.com/techchron/2014/07/22/homejoy-hikes-ho...

That is in line with what Homejoy was asking for [25%].

Homejoy providers had direct access to the customer base they interacted with and could siphon off those clients they built a relationship with relatively easily. I know that is what I did once I found one I liked.

Getting them more customers is incredibly valuable!

I've heard this as a need from literally every service provider I've ever used. They relish referrals.

That depends. It's incredibly valuable if the provider retains those customers. But if the service is set up to fence off the customer relationship from the provider, that's a much harder argument to make!

It's complicated. If dealing with the service makes buying easier, it can grow the market.

I driver Uber more because it is easier to get a cab. They alone are already making more than the entire taxi industry in SF.

If anything, it seems Homejoy's problem is in making it too easy for their cleaners to find retained customers.

Only if the customer base is growing. Otherwise, it is just taking revenue from another provider.

Homejoy expected that a better service would increase the customer base. I don't hire a maid currently, but if it were easy to find a trustworthy and thorough maid, I might.

Yes, more customers, but I don't know if the end result was more money?

But the convenience increases the size of the market, benefiting both customers and laborers.

I never ordered from a cleaning service before Homejoy, and I doubt I'll bother with it after Homejoy. It's a useful service to me, but I'm not going to call half a dozen random guys on their cell phones to find one that will work for me.

Similarly, ride volumes are way up after Lyft and Uber come to town. Before, there is a lot of demand that is simply going unfilled.

What does Apple or steam offer developers for their 30% cut ? customers and ultimately revenue to sustain themselves. An open marketplace has incredible value if its popular. Tech is the easy part of most startups.

... Apple builds the platform their apps run on. HomeJoy doesn't build houses, or manufacture sponges.

Apple builds the marketplace, just like Steam or HomeJoy. The fact that it's Apps are also based on their tech is irrelevant in this context. Steam also just provides a Marketplace without meaningful technology and has revenue in the hundreds of millions and nobody seems to complain.

Hey Thomas!

While a bit off topic, I was really happy to see this sort of comment from you. I'd love to buy you a coffee or beer in Chicago sometime.

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