HomeJoy and Building Product

Earlier this summer, HomeJoy went out of business after having raised $40 million. There’s a couple reasons it went bust, this is a really great analysis. The summary is that home-services is a high-touch market with a high barrier to establishing trust between cleaner and client. Service must be good, and on top of that, after trust is established, a facilitation platform provides little value. Therefore HomeJoy facilitated the initial transaction (and sometimes didn’t do a good job of providing high-quality cleaners), but even if the connection went well, HomeJoy provided little value in repeated cleanings for the cleaner, except for taking money. Although HomeJoy failed, Cheung still has some relevant startup lessons shared.

  • Understand your target market. Cheung mentioned in the beginning she bought cleaning supplies, went to clean other people’s houses, and really tried to learn why current cleaning services were not scalable. For any market, even if you can’t be a target user, you should at the very least talk with and understand target users’ motivations, needs, and problems.
  • To get from 0 to 1 to 2 to 3, do things that don’t scale This is often stressed that getting your initial users is difficult and requires personal attention. Cheung went out to a Mountain View street fair, handed out bottles of water, and asked people to book cleaning services. This isn’t a scalable approach, but for the very first customers, you’re going to have to put a lot of personalized effort in.
  • Build for your current scenario. Don’t build automated processes for thousands of users when you don’t even have 10. Make sure to build the MVP. Cheung suggests building out user scenarios and user flows to figure out how exactly the user finds out about your product and how they interact with it from start to finish. If you can sketch out this process, you can determine the MVP needed to get by.
  • Do shitloads of research to understand your industry. Cheung performed a ton of research by reading up and understanding her competitors. She read through quarterly financials, S-1s, and more. Her comment?

There are these golden nuggets that you’ll find once in a while and you won’t be able to find them unless you actually go through the work”.

  • Figure out a one-liner with DIRECT value in the beginning. Many times, we like to paint the ‘why’ and share a brilliant mission statement. But unless you’ve got lots of customers and traction, this may not be as helpful as directly sharing your value. HomeJoy initially positioned itself as a “an online platform for home services, you start with cleaning and you can choose blah blah blah. It just went on for paragraphs and paragraphs.” Then, it found the go-to one-liner:

Get your place cleaned for $20 an hour.” 

Short, simple, and to the point.

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