38 karma · joined August 28, 2012
What did Homjoy do that these guys aren't?
Tidy gave it a shot for a while and has pivoted to SaaS. They also used contactors. (edit: looks like they are still cleaning with contractor also)
For reference: https://www.irs.gov/newsroom/understanding-employee-vs-contr...
I'm saying, at the most basic level, unless the company is specifically offering a "match making" service, the service provider is stealing from the company by cutting the company out of revenue they expected to collect. None of these services advertise as match makers. Examples of match makers in this space are yelp, angies list, thumbtack, home adviser. They each have a clearly different busines model from Wag.
Like I said though, this applies to any company. If a company has made the effort to attract and close the customer with some expectation of LTV, that value can be realized in a couple of ways. 1. Providing service to that customer in perpetuity. 2. Selling that customer to a service provider at a price that provides a profit. If the service provider cuts the company out without compensation, the provider has taken unfair advantage by being on both sides of the transaction, having nothing invested and being compensated for the work completed before stealing the customer.
*"In the case the match making firm is providing no value, I think most contractors would eventually decide to take a customer on directly."
I think you are applying the idea of value in the wrong place. The company has no obligation to provide anything except agreed upon financial compensation to the service provider. It's the break down in value to the customer where many of these services have fallen. In that case the customer can shop for a new service. It does not mean that the service provider can use their unfair advantage and build a business from the unhappy customer. Because in that case, the "match maker" did provide value. It provided the LTV of that stolen customer to the service provider. This, again, is why Wag is also applying a fee to the service provider. For the provider, stay on the platform, get paid or pay for the customers to build your own thing. What's wrong with that?
With respect to your "enough value" statement, I understand. It also requires regular reminders about the level of service the customer gets from the company, not the individual. But that can't be all. Seriously, lots of businesses are like this. They need to trust their team to hold up their side of the basic work agreement.
Take a bar for example. If the bartender starts skimming cash through one of the various means, that's clear theft and depending on the amount, can be a felony. The threat of getting caught might be enough for most but, it still happens. It's messy dealing with people and we unfortunately need to do things that protect the company.
I'm not sure what valuation and funding have to do with a business model. Walmart looses more than 300mil in in theft per year. Should they be looking to get out of retail? This is just one problem every business has to deal with in one way or another.
source from 2015 but reported shrink is still around 1%: https://www.reuters.com/article/wal-mart-stores-theft/correc...
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.
In my experience with HomeJoy and Exec (now HandyBook), they understand the value of recurring revenue and are actively pushing for customers to have regular service. For this kind of service, I would think that would be very normal.