What I learned about online-to-offline(justinkan.com)
justinkan.com
What I learned about online-to-offline
http://justinkan.com/exec-errands-post-mortem
13 comments
1. Good help is hard to find. If you're smart and capable, you're above that $20/hr line, and if you're not... well you're just not.
2. Service business is hard. Customer support can eat up your time, money, and energy day in, day out. Maybe if one had worked in retail in their youth they would understand it.
3. One of the more homegrown trends the past few years has been maid service. There's a vibrant community on Reddit and blogospheres revolving around setting up maid services in various localities. They all build off the same model. Good to see that it's validated by Exec switching to focusing on that.
In the end, these businesses revolving around re-organizing labor structures and managing people result in the inevitable grand truth: people are complex creatures, sometimes a person is good, sometimes a person is bad, then sometimes a person is cheap, and sometimes a person is expensive.
But we keep insisting on using an iPhone app to sort human beings into quantifiable skillsets then driving down the costs to utilize them. Everyone serves as little cogs in our lives commanded by our remote control. So future.
2. Service business is hard. Customer support can eat up your time, money, and energy day in, day out. Maybe if one had worked in retail in their youth they would understand it.
3. One of the more homegrown trends the past few years has been maid service. There's a vibrant community on Reddit and blogospheres revolving around setting up maid services in various localities. They all build off the same model. Good to see that it's validated by Exec switching to focusing on that.
In the end, these businesses revolving around re-organizing labor structures and managing people result in the inevitable grand truth: people are complex creatures, sometimes a person is good, sometimes a person is bad, then sometimes a person is cheap, and sometimes a person is expensive.
But we keep insisting on using an iPhone app to sort human beings into quantifiable skillsets then driving down the costs to utilize them. Everyone serves as little cogs in our lives commanded by our remote control. So future.
Right. The problem was his misconception with society on the side of the errand runner. All he seemed to have experience with was the exec who has tasks needed to be done.
On that note, something like this in a society with very high unemployment and a large casual labor market could possibly do well (granted, people were wealthy enough to own smartphones). My partner's family in India would constantly go through servants/maids/gardners/etc because there're so many people willing to work.
On that note, something like this in a society with very high unemployment and a large casual labor market could possibly do well (granted, people were wealthy enough to own smartphones). My partner's family in India would constantly go through servants/maids/gardners/etc because there're so many people willing to work.
One of my parents is Egyptian and when she was growing up they had multiple "servants" but each with a different speciality. One was the transportation (pick up/drop off) guy, one did cleaning, one was the handy man, one was the doorman/concierge type person, one did shopping, someone watched the kids, etc.
In effect, there were no errands for the family to ever run because they had one servant that specialized in one thing but that servant did it for all the families on the block resulting in a full time job. All the affluent city blocks had their own network of specialized servants.
In effect, there were no errands for the family to ever run because they had one servant that specialized in one thing but that servant did it for all the families on the block resulting in a full time job. All the affluent city blocks had their own network of specialized servants.
Surprised nobody is talking about how Homejoy is killing it with the exact same model that exec pivoted too.
Perhaps because talking about that doesn't invalidate the points he's making? It's a hard business.
Surprise! You are! :)
One observation I have made is that when you are transparently keeping a percentage of revenue from the person actually providing the service, there is often a huge disconnect between what is perceived as fair, and what is required to make the service work.
By the time you factor in credit card fees, provision for loss, marketing, the economics don't work unless you are keeping 30%, and then the people providing the service feel ripped off.
Unless the service is inherently viral with zero marketing costs, it is really hard to strike a good balance.
By the time you factor in credit card fees, provision for loss, marketing, the economics don't work unless you are keeping 30%, and then the people providing the service feel ripped off.
Unless the service is inherently viral with zero marketing costs, it is really hard to strike a good balance.
Some of those things, like credit card fees, don't really count as you keeping it.
Is this Justin's 3rd or so exit? Anyone know why he decided to exit the market so quickly? I got the sense that exec was just getting off the ground.
It seems like the business-as-a-startup failed, but remained as a normal cleaning company: the kind that might provide a perfectly good living to someone motivated to manage a herd of cleaners, but not a massively-growing software-based company.
Obviously I'm just guessing, but:
I assume that the margins weren't just there, given they took 20% of $25, they'd need crazy volumes to be profitable or even break even.
They weren't growing fast enough? "merging" with Handybook provided better synergies a well established vertical + market share in NYC & SF for the combined entities.
Also, I think that cleaning is a crowded market, and Handyman services seems like a market that has higher potential for growth.
I assume that the margins weren't just there, given they took 20% of $25, they'd need crazy volumes to be profitable or even break even.
They weren't growing fast enough? "merging" with Handybook provided better synergies a well established vertical + market share in NYC & SF for the combined entities.
Also, I think that cleaning is a crowded market, and Handyman services seems like a market that has higher potential for growth.
I wonder what he thinks about focusing on one geography vs. opening it up.
Another thing I would add, is that people often don't correctly estimate how much of a pain it can be to deal with customer/worker issues day in and day out. Most tech companies have limited support access, which greatly reduces their exposure to angry clients.
But when you're in a services business you are pretty much forced to spend hours each day talking with angry customers, unreliable providers, and helping resolve seemingly endless conflicts. You can mitigate some of this with better systems and tech, but ultimately this burden only increases as you scale. At the end of the day there will always be a subset of your customers who are belligerent, unreasonable, or trying to con you outright. And that's to say nothing of unreliable/dishonest workers.
It can be a great business to be in, but you will need a thick skin, velvet tongue, and something of an indomitable spirit.