Deep pockets may be an essential element for competing effectively in the exploding on-demand economy. Today, the on-demand cleaning services company Homejoy announced it was closing shop on 31 July, after encountering stiff headwinds in the one-two punch of legal challenges to the labor status of its cleaning contractors, and the impact on funding that four pending lawsuits was causing.
Homejoy has been confronted by a growing list of court cases, and does not have the deep pockets that other on-demand players like Uber and Handy have. Or for that matter, Google and Amazon have.
As I explore in greater depth in a new research note, Handicapping On-Demand Market Sectors, this sector of thee on-demand economy may be a place where only the strongest survive. In that report, I characterize the slew of Uber-ish companies as on-demand displacers:
Services like Uber, HomeJoy, and Handy are operating in marketplaces where there established companies use a blend of contractors and employees to provide conventional services, like home cleaning or limo/taxi driving. These newcomers are polarizing the debate — and winding up in court — by attempting to maximally displace liabilities, expenses, insurance, regulatory fees, and taxes onto workers (and local governments) while maximizing their control on the way the work is done. These companies want everything to benefit them, for maximum control and profits. This group is going to face many legal challenges, and these on-demand disruptors are drawing the attention of presidential candidates.
Google has confirmed it will be hiring around 20 of Homejoy’s product development team, as it gears up to make a massive push into the home services space. However, it may be employing a very different business model — acting as a broker for truly independent contractors, and not an Uberish umbrella corporation, trying to have it both ways.
And obviously, there is going to be a lot of tectonic change in the foundations of work because of these forces.