The Rise and Fall of HomeJoy.
HomeJoy will officially close down this July 31. But How they started out as Brother and sister with an idea scaled to United States, Canada, UK and France. What challenges they faced and how they finally shut down is the story I am going to tell you.
HomeJoy was started by siblings Adora and Aaron Cheung. Adora had done computer science from Clemson University and had a masters in economics from the University of Rochester.
While Aaron had done Chemical engineering from Massachusetts Institute of Technology.
They first started a company called PathJoy, in 2009–2010. All they wanted to do was to create and big company and make people happy. So, they thought about life coaches and therapists.
And, they started using the product themselves. What they found out was Life coaches and therapists were people they wouldn’t use themselves so this wasn’t the problem they really had they were not really passionate about it themselves. Yet they tried working on it for over a year and then they failed.
If you just start from T=0 and think about this before you build any product I think you can save yourself a lot of headache down the road from doing something you don’t want to do.
— Adora Cheung
Then, they started HomeJoy. To get a first hand experience at cleaning, they started as cleaners themselves. They quickly found out that they were very bad cleaners.
So, they started to learn. They went and brought books about “how to clean” and “cleaning supplies”.
But Adora realised and she says:
“but it is sort of like basketball, you can read and learn about basketball but you’re not going to get better at it if you don’t actually train and throw a basketball into the net.”
So, they decided that one of them was going to have to learn how to clean or at-least get trained by a professional. They applied for jobs at cleaning companies.
Adora learned how to clean from training at the cleaning company, but more importantly she learned
How a local cleaning company worked ? What problems they faced? What were the inefficiencies in the industry. For example she says: Booking customers and optimising cleaners schedules were done really badly
She found out why a local company could not become Big.
The other thing Adora did was Obsess over the industry she was in.
Obsessing over who her competitors where, google searching similar kinds of companies, reading their S-1's. Sit on their earnings calls.
Most of the time she didn’t find anything, but sometimes she found these gold nuggets that made doing all the hassle worthwhile.
Doing this makes you an expert in your industry and thats how you build people’s support when you are building the product.
The second thing they did was optimising customer segments.
Ideally you want to build your product for everybody in the world that is going to use your product but, initially because you are small you want to corner off a certain part of the customer base and really optimise for them. It is just about focus whether you optimise for college grads or middle aged parents.
This strategy has really been pursued by most successful startups. As, Jessica Livingston says:
“Successful startups almost always start narrow and deep. Apple started with a computer Steve Wozniak made to impress his friends at the Homebrew Computer Club. There weren’t a lot of them, but they were really interested. Facebook started out just for Harvard University students. Again, not a lot of potential users, but they really wanted it. Successful startups start narrow and deep partly because they don’t have the power to reach a big audience, so they have to choose a very interested one. But also because the product is still being defined. The conversation with initial users is also market research”.
The next thing they did was storyboard the customer experience of How they are going to solve the problem ?
- Things like How does the customer?
- Then they come to your website, What does the text say ?
- What happens when they sign up ?
- After they have used the product ? How does they feel ? Comments and ratings.
They tried to visualise the flow and user experience of using their product.
After doing this, After having the knowledge about the industry and deciding on the whole user experience they started building the minimum viable product.
For building a Minimum Viable product, They were going to have their product positioning down. What it means is that saying we do “X,Y and Z in one sentence.”
They had a problem with this, but finally decided to position the company as:
Get your place cleaned for $20 an hour.
So, with this idea in mind they their MVP. Now the next question they were facing was How to get the first few users to try it ?
They thought of some ideas.
They themselves could use it. There parents, friends and co-workers were also potential customers. But, they needed more feedback. They tried communities like Hacker news and Show HN and a few respected community mailing lists.
They tried all there but faced difficulties, cause they were the only two cleaners and friends and family were kind enough but they didn’t many of them living nearby.
They started going on the street and offering their services, almost everybody said no. But then they had an idea on a hot weather day they started handing out cold water bottles for free. This gilt tripped most of the visitors to signup with them.
These are some of the old school ways to get customers when you are small.
Airbnb also recruited users by going door to door in New York and convincing people to signup for their service.
One they started getting more and more users, they started getting customer feedback. They gave a phone number people could call. Then they started giving out customer surveys after every visit. They started tracking customer retention and Customer Lifetime Value CLV. They started wacthing reviews and ratings.
At this time, Adora was aware of the Honesty curve, some people will lie to you, not because they are bad.
Like, your mom will be proud of you no matter what. Your friends and family will give you an honest feedback upto an extent. If you sell a product for free people some how feel obligated and lie to you as a form of reciprocation. thinking for a free product this is good.
Only people giving you the truth will be the one who have paid hard earned money for it.
So, they were getting a lot of feedback and asking questions to their customers. There were a lot of things that were suggested by customers but they asked themselves about why the customers were saying what they were saying.
Then they started optimising their product even further.
They had this hiring ritual that everyone from sales exec to engineers had to go for a test clean.
HomeJoy had an initial undisclosed funding from Y-combinator, and other notable VCs including Google Ventures. They raised a total of $38 million dollars in series A and B.
To reduce costs like many in the sharing economy, many companies are getting contract workers to do the job.
Contract workers only get paid for the hours that they work, People in silicon valley found out that many HomeJoy workers were homeless people.
It was difficult for them to get by with the money they were earning.
Washington Post and IBT even wrote an articles on this which you can find here and here.
But, charging more money wasn’t an option cause another startup called exec closed down precisely for charging a lot of money.
Because, they were hiring people at such a low amount of money. Cleaners weren’t particularly interested in working really great for the company.
On top of this they were getting stiff competition from competitors like Handy and others in America as well as Europe.
Another problem came up when Cleaners started making side deals with clients themselves.
Take this snippet from Washington Post article:
“Homejoy charges customers $25 to $35 an hour, and cleaners now make between $14 and the low-$20s, depending on experience. But Samantha found that giving the company a cut of those proceeds wasn’t worth it, especially because she felt that managers were unavailable when she had problems, and that the company didn’t give anything back in the form of insurance, time off or retirement plans.”
Then came the lawsuits…
HomeJoy says it is not a cleaning company at all. It is just a marketplace for cleaners to connect with people who need them.
here is some from there terms of service:
“THE COMPANY DOES NOT PROVIDE CLEANING SERVICES, AND THE COMPANY IS NOT A CLEANING SERVICE PROVIDER. . . . THE COMPANY OFFERS INFORMATION AND A METHOD TO OBTAIN SUCH THIRD PARTY CLEANING SERVICES, BUT DOES NOT AND DOES NOT INTEND TO PROVIDE CLEANING SERVICES OR ACT IN ANY WAY AS A CLEANING SERVICE PROVIDER, AND HAS NO RESPONSIBILITY OR LIABILITY FOR ANY CLEANING SERVICES PROVIDED TO YOU BY SUCH THIRD PARTIES.”
Contractors also come with certain restrictions like
You can’t tell them ..
What to wear ?
How much to charge ?
What cleaning agents to use ?
But companies want to give a standardised experience to the customers.
Independent contractors filed employee classification lawsuits, that were last straw on the Camel’s back according to Adora.
They really needed funding to get along, they even got some funding but was not enough to grow.
“We declined those investments because it wasn’t enough, and we wanted to stay true to our vision,”
— Cheung said.
You can read the last blog post of HomeJoy here.
Startups like HomeJoy are a rare breed. The entrepreneurs weren’t stupid people they had lots of industry experience and were backed by the top VC’s in the Bay Area.
They grew fantastically when they started out. People like Paul Graham bragged about them. This goes on to say that even the best of us can sometimes fail.
At the point of this writing. HomeJoy’s technical team has been hired by Google to build a company similar to HomeJoy.
Hi, I am Mohammed Lakkadshaw. I build web and mobile applications for startups and entreprises. website.
Note:- All the quotations used here are taken from press articles written about HomeJoy over the years.
Opinions stated here are my own.
