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Marketplace - Services

Homejoy

Shut down · 2015

On-demand home cleaning marketplace that booked flat-rate cleanings online, connecting customers with independent-contractor cleaners.

San Francisco, USA2012–2015

Key metrics

$40M

Total funding

2

Funding rounds

Outcome

Shut down

Operations ended in 2015.

2015

Financial trajectory

Funding by round

$42.6M$28.4M$14.2M$0$1.7M2012Seed$38M2013Series A/B (com...

The Story

Founded

Seed

$1.7M

Series A/B (combined)

$38M

Shut down

What worked

Homejoy, originally launched out of Y Combinator as Pathjoy, built one of the first genuinely simple, one-tap booking experiences for home cleaning and used it to expand into more than 30 cities within roughly a year of launch — a pace that proved real consumer demand existed for booking home services the way people were starting to book rides and food.

What didn't work

  1. 01

    Homejoy's flat $20-an-hour pricing meant the company was losing money on a large share of the cleanings it booked

  2. 02

    Unit economics deteriorated

    By customer retention below 25% (against an industry norm closer to 70-80%) and cleaner no-show rates of 20-30% in some markets.

  3. 03

    Cleaners frequently went around the platform to book repeat customers directly, costing Homejoy an estimated 40% of potential repeat revenue.

  4. 04

    Funding window closed

    Questioning whether its cleaners were properly treated as independent contractors — landed just as a critical funding round was already shaky, investors got cold feet The round fell through

  5. 05

    Runway ran out

    The company shut down in July 2015.

Wrong Pricing ModelCAC Too HighOverexpansion

THE VENTURE TRAIL TAKE

Homejoy's failure is a useful case study in the difference between demonstrating demand and building a viable business around it.

The company proved, convincingly, that people wanted to book home cleaning online — its growth numbers showed that.

Read the full postmortem

Company details

Business model
On-Demand Service
Founded
2012
Headquarters
San Francisco, USA
Funding rounds
2
Investors
Andreessen Horowitz · Google Ventures · Redpoint Ventures · First Round Capital · Max Levchin

Founders

Adora Cheung
Co-founder & CEO; cleaned homes herself early on to learn the business firsthand
Aaron Cheung
Co-founder; Adora's brother, handled engineering and operations

Sources

  1. 01ForbesHomejoy Shuts Down, Citing Worker Misclassification Lawsuits
  2. 02RecodeHomejoy Shuts Down After Battling Worker Classification Lawsuits
  3. 03GeekWireCleaning site Homejoy to shutter July 31
  4. 04FinSMEsHomeJoy Raises $38M in Series B Funding
  5. 05TactyqalWhy Homejoy Failed?

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