The On Demand Economy 2.0
In 2008 TaskRabbit launched and set the stage for an entirely new industry. Before the industry was called the ODE (on demand economy) there was TaskRabbit providing a platform for people to request assistance for any task. With the launch of Alfred, a company that provides people with dedicated helpers for all their tasks the ODE has come full circle. Over the next few years we will see a whole new wave of ODE companies exist and they will look different from the ODE businesses of today. This post is going to investigate what I think those companies will look like.
Alfred is an evolution of TaskRabbit. Rather than request tasks for things like laundry, grocery shopping, cleaning etc. Alfred handles everything. Alfred has made it easier for customers to have all their odds and ends taken care of through one point person instead of multiple. Before jumping into why the timing for Alfred is perfect it’s important to note how verticalized the ODE has become.
Uber for X
Every industry has taken the uber model and created a new consumer experience, from cleaning, eating, laundry, anything that can be consumed has been transformed by this new ODE movement. As a result TaskRabbit has become a jack of all trades and a master of none. I don’t know the TaskRabbit revenue or user #s but I can’t think of any single scenario where I’d look to TaskRabbit instead of a more specialized ODE provider. Here are a couple examples of the ODE services I use on a monthly basis:
FlyCleaners- Dry Cleaning
Handy- Home Cleaning
Uber- Transportation
Postmates- Food
Instacart- Groceries
I’m fairly certain that the use cases for TaskRabbit cover all 5 of the examples, but as a consumer I like trusting services that specialize in one thing. There is a cadence of how I use each product and because each specialize in providing a specific value it’s easy to think of them when I’m in need of one of their services. I associate TaskRabbit with everything and as a result I associate it with nothing and have paralysis of when I think of an appropriate time to use it.
So what’s this have to do with Alfred? Alfred sees the opportunity to fill the void by providing a central point person who can help with everything. From a business perspective Alfred provides an account manager to every customer where TaskRabbit doesn’t. The account manager is this assistant who automates your errands. From the consumer perspective it makes it easier to deal with one person instead of many. Additionally, Alfred benefits from a different business model, one of recurring revenue. This is a big advantage for growing the operations, understanding LTV (life time value) and knowing the metrics of CAC (customer acquisition cost).
I caught the news of the Alfred seed round last week and can only imagine how attractive this model must have been to investors. It makes things simple for the Alfred team to fine tune their margins and acquire users. Lots of ODE services are dying for this type of recurring revenue and with Alfred’s value prop that model just fits, where with TaskRabbit that model could never work.
Most importantly though the timing for Alfred is opportune because consumers are facing more and more options of where to automate their life through the ODE. As the choices become greater the value prop of simplicity and centralization grows. When I first heard about Alfred I didn’t understand the value, it seemed like a point of friction. However if Alfred is going to save consumers time and energy managing multiple service providers then it’s going to be easier for consumers to work through just them. Alfred is making all these errands completely invisible by being trustworthy enough to have a key into your home. Meaning Alfred is someone who by design you don’t meet. You don’t need to set up times when you’ll be home for pick up / delivery or anything else. Crazy.
If Alfred is the ODE coming full circle from it’s inception then what should we expect to come next?
After all there is tons of $ being poured into the space. We even have funds like Sherpa Ventures dedicated to funding the next big winners in the ODE. I’d argue we’ve reached maximum saturation in each vertical where there are maybe 2 or 3 contenders fighting for the top spot. For transportation we have uber / lyft. For home cleaning we have handy / homejoy etc. I think the only companies in the ODE of today that will continue taking funding are these top contenders and they’ll take growth capital until a clear winner is defined.
So where does the seed and early stage $ go for the funds like Sherpa?
ODE 2.0
Right now the ODE is comprised of consumer service providers, but these service providers are going to birth B2B service providers. Button is probably the first one to garner success in this category. Button is a means to connect the experiences of various apps when two experiences tied together can be complementary - reserving a table in resy and then requesting an uber to arrive at your dinner.
If I were looking to start a company in the ODE I wouldn’t be asking where can I bring instant gratification to a consumer behavior. That’s been completely tapped out and is just an arms race at this point. Instead I’d be asking what types of services will need to exist to support these ODE players and how can these experiences be opportunistically linked.
We’re moving from B2C opportunities to B2B in the ODE and it’s happening now.
In summary, the ODE Version 1 is all about the birth and maturation of the consumer providers and the next wave or Version 2 will be all about the businesses built on top of them, we will see a stack emerge. Alfred is the beginning of that stack and I’m excited to see who else will join them. I’d bet the bulk of seed $ focused on the ODE will fund the winners of Version 2 because Version 1 is the ODE opportunity of yesterday.
