Ask HN: Startup Lessons from Homejoy | Hacker News Reader

Ask HN: Startup Lessons from Homejoy

7 pointsdiminish6 comments

During startup school class the lesson I enjoyed the most was Lesson 4: Building products, talking to users and growing. I watched the video many times.

http://startupclass.samaltman.com/courses/lec04/

Homejoy's recent exit is quite interesting and valuable. What lessons do you see there? Any ideas are welcome.

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From what I've read there are a few lessons: (1) what is your value as a middleman, and why wouldn't providers go around you? (2) Make sure customers are happy. Homejoy didn't get reliable cleaners, which hurt their brand. (3) Adjust to regulatory changes. Homejoy claims switching from workers from 1099 to employees caused them to close.

Uber does well on all these. Customers don't need a regular driver, they just need any car right now. Uber is 10X better than taxi service and customers love it. Uber aggressively crashes through regulatory hurdles. Homejoy failed, but Handy and Amazon Home Services and Thumbtack are still around. Google might jump in, too. So it might be an issue with Homejoy, not with the business model.

The major lesson is ask why your business has not been done before. If your business could have been done before technology and it hasn’t, then just creating a app is not going to make it viable all on its own.

Also avoid businesses where your margins are wafer-thin and you are competing with undocumented labor.

This probably won’t be a popular opinion here, but think about how you are going to be able to scale early on. It is fine to start out doing things manually as a way to delay building infrastructure, but you really need to think right from the start about how you are going to be able to scale and make a profit.

It had product-market fit. But, was a no-margin business. Although Uber is the same, it makes it up with surge pricing. Still, it was a good try and I am sure some startup will figure out a business model in future.

Many people said their product wasn't very good, in the last HN thread.

Yup. They grew well but their quality didnt scale with them. I imagine their churn was horrendous, because when I left their platform there was nothing to try and recapture me.

I think quality was the result of no-margin business. They could have fixed it (through training & skilled/hired employees) if they had good margins. Today's TC article was bang on - http://techcrunch.com/2015/07/31/why-homejoy-failed-and-the-...

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