Kia Kokalicheva of Fortune: Her insider’s view of the future of on-demand

This is Part 3 of a three part series with Kia Kokalitcheva, a Reporter at Fortune. We chatted with Kia to learn more about the topics that she knows best — reporting on Bay Area tech and startups. You can listen to the entire conversation on the What I Know Best podcast, and be sure to subscribe to learn from other experts across the Quibb network in coming weeks.

If you want to geek out about on-demand startups, a chat with Kia Kokalitcheva (Reporter at Fortune) won’t disappoint. She’s focused part of her coverage at Fortune on that category, trying to understand the micro trends in this much buzzed about segment. After covering the space for a couple years, what has she learned? What’s she most excited about for the future of on-demand? We chatted with Kia, to hear what unique insights she’s learned in spending hours and hours researching, and talking to hundreds of people who are building some of the most compelling on-demand companies.

On-Demand vs. Gig Economy vs. Sharing Economy

Definitions matter, but the type of companies represented by Uber, TaskRabbit, Getaround, HotelTonight, and Postmates all fall under the same category — for some people. The clarity around what the various companies do and how it relates to the startup ecosystem is lacking, and for good reason. Kia believes that the similaries and difference in the companies and their models are tough to be 100% certain about, as the point of view that you’re applying matters a lot. She chose the term ‘on-demand’ as it’s most representative of the bigger opportunity in the space, and has become the most publicly accepted and understood.

“I think people use it interchangeably. I don’t think it’s interchangeable 100%, but I do think it’s a big Venn diagram that overlaps a lot basically.”

The 3 things that matter: Speed, frequency, and necessity

Kia believes that Ecommerce giant Amazon’s impact on the on-demand category is underestimated. The role that the company has played with respect to new consumer expectations of speed have been massive, even though they’re not typically thought of as a leader in the space until very recently.

“They are basically creating this standard of same day delivery or next day delivery or whatever it is that … People buy things on Amazon all the time and so that’s created that sort of expectation.”

Food delivery services have had a similar impact, according to Kia. The potential for food delivery services to get faster and better by implementing a dedicated layer of technology got consumer exposure through those types of products, enabling the spread of those norms well beyond the verticals that had anything similar to an on-demand model in the past: “…people were using Seemless and GrubHub so why would they get food from someone that’s not going to deliver”

Other important factors for on-demand startups include the frequency at which someone needs the service. High frequency means that it’s easier for a habit to become established, and for an on-demand product’s offering to become entrenched in someone’s life and habits. There’s also the importance of the service — things like eating are clearly base human needs, so the ability for an on-demand service to meet that need is high. Others focused on less important services have trouble building products that are able to sustain themselves over time.

“Do I think we need everything on-demand, like shoeshine on-demand? Probably not.”

The service industry will be on-demand

Covering funding announcements, the big tech companies, and new product releases can be fun — but Kia believes that covering on-demand companies means she’s basically writing about the future. Getting a glimpse into how the world will run is what makes the topic so compelling.

“…the reason why I’m interested in all of these companies is really because we are talking about them right now like they’re this exotic new trend and it’s all new and shiny and different and we don’t know what’s going to happen or any of that. I really think that by and large we are looking at what all of these service sectors are going to look like in a few years. You can kind of see that in a couple of categories. How they are changing consumer standards.”

Troubles brewing for on-demand

There are still many nay-sayers about the on-demand category, people who think about the services as those built by Silicon Valley people for themselves and their friends. The potential for many of the products to reach outside the valley has been questioned, and recently got some points of confirmation when on-demand cleaning startup Homejoy — a YC and early on-demand darling — shut down abrubtly.

There are massive challenges in buildling a successful multi-million (or billion) dollar company in the space, that’s for sure. Kia has seen a lot of companies getting funded, some that in her opinion don’t really have what it takes to make it big.

“I think there’s been a lot of money flooding in generally speaking into startups and you see a lot of me too’s, you see a lot of startups coming in and just saying “Oh, we’re going to be the Uber of this” or sort of mildly or sufficiently proving their viability of their on-demand idea. Investors are just forking over money. Especially at the earlier stage where the checks are smaller, they just want to invest sometimes.”… “I think you’ll see a lot of companies dying out, you’ll see a lot of consolidation”

There are also a lot of issues currently in the Bay Area with supply of people to actually do the work. It’s a double edged sword, as most of these companies all need to over-staff in order to be able to keep their speed of service up to expectations of what it means to really be on-demand.

“…there is sort of a finite number of people who have the skills and resources to do these things and who want to and for whom the money will make sense.”…”Who should they spend the next couple of hours working for? If you think about it a lot of the promise of these startups is speed and efficiency and there’s almost a tendency to over staff because you want to make sure that you won’t have to make your customers wait or you won’t be able to fulfill an order or request.”

Surge pricing is one way to deal with this, to try to incentivize more people to become active service providers when there’s a lot of demand. In the early stages of many of these companies, that means losing a lot of money quickly, paying for people who aren’t necessarily doing any work.

Kia believes “It’s going to be fine”, and that this early phase is a lot about experimentation, with massive impacts on the future of the service industry.

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