As Homejoy fades, Google ramps up development of its on-demand home services platform – a new competitor to independent cleaning businesses.
ICYMI (text for “In case you missed it”), Homejoy went out of business on July 31st after leading a massive disruption to many cleaning companies in the markets where they operated:
- Promising fast, convenient, and cheap online scheduling of a cleaning service to consumers
- Drying up the labor supply running 5 to 15 advertisements a day on Craigslist, and
- Promoting pay as high as $1,000 day a while only working the hours you want.
For obvious reasons, Homejoy’s closure was a cause for celebration for many, while others are proud to say they knew it would never work, proving that an online cleaning service will never work.
Too Early to Celebrate
However, just because Homejoy has closed does not mean the end of the threats and opportunities that are driven by technology companies looking at home services. In fact, despite Homejoy closing, they actually proved quite definitely that consumers will book a cleaning online and millions of them did.
In addition, while Homejoy has closed, second generation on-demand platforms like Handy show no signs of shutting down yet; even some of the European platforms like Helpling and Hassle.com are now looking at entering the US market.
Bye Bye Homejoy, Hello Google Home Services
As the first on-demand maid service, Homejoy raised over $40 million in venture capital, which is more than most cleaning companies will make in sales during their lifetime. This seems like a large amount of money to most of us, but in the world of big time venture capitalist investors, it is actually just a small bet: if they are successful, they will have a piece of a multi-billion dollar home services space.
Understand, cleaning was just the start. What these companies want to create is a single platform to book every cleaner, plumber, electrician, handyman and landscaper that steps foot on your property, and to take a small piece of every transaction. Google and Apple get a small piece of every piece of software, music and video downloaded on their platforms and it is a very lucrative business. Amazon is well on their way to getting a tiny piece of every physical thing purchased online. Now the tech giants are fighting over creating the next massive online market place for home services. It is common for the first few tech companies in a new space to fail, only to be followed by others that eventually succeed and dominate. In fact this creative destruction is just part of the process of creation in the tech space. This is why you often hear terms like Web 1.0, 2.0 and 3.0. Homejoy was on-demand home services version 1.0. We are about to enter phase 2.0.
Enter Google. Google Ventures was arguably Homejoy’s most prominent financial backer.
When we look back, we will see that Homejoy was a lot like Napster for our industry. While Napster as a company failed, it succeeded in changing the way consumers demanded easier, faster and cheaper access to the music, software and movies they wanted. This change in consumer mindset is what changed our economy to one where the company providing the technology to enable the digital access gets a small piece of every transaction. Through Napster, the tech companies learned just how far they could push the limits before it was brought down by lawsuits, much as Homejoy helped define the limits before they were brought down by employee misclassification lawsuits. Now the next generation of companies knows the legal boundaries. They will not make the same mistakes, but they will learn from everything Homejoy did right.
So while many small business owners were celebrating the day that Homejoy announced its closing, many missed a smaller but equally important news story: Google hired the entire technical team that created the Homejoy system and added them to the Google Home Services project team. The people who created the Homejoy platform all got job offers at Google before the announcement was even made that Homejoy was closing. Stop and really think about what that means for a few minutes. Most cleaning companies I know get the vast majority of their business from Google searches. Google just hired the entire Homejoy technical team to work on a new platform for them called Google Home Services.
Homejoy as a company failed, but the consumer expectation it created stands to make Google and other home services platforms like Amazon billions of dollars serving the new consumer.
So what does this mean? What will Home Services 2.0 look like?
In the short term what this will probably look like is Google Flights. Try Googling the phrase “Best airfare to Dallas Texas.” What pops up at the top of the page is a box listing flights you can book using Google Flights before the regular search results.
I suspect Google will begin to do much the same, basing its new home services on-demand platform on what we’ve known as Google Local and Google Places. Consumers’ search results will go beyond simply the website, phone number and ratings, and will be augmented to empower consumers to actually buy the service right in your Google Plus profile. All for a small transaction fee of course, not unlike that of Paypal, eBay, Amazon Seller Services and others that you may already be using for personal or professional transactions. Those who do not want to pay may no longer show up on local search results.
Google Home Services Version 3.0
The reason companies like Google and Apple don’t fret over their failures is because they have a long term vision – and it doesn’t have anything to do with what you can do on their devices and platforms now but how instead they are often building a platform for 10 and 20 years out, to deliver things the consumer cannot even imagine now, but all in a closed system they control and own.
In February 2014, Google invested $3.2 billion to acquire Nest, which sells internet connected home automation devices such as the Learning Thermostat, which lets homeowners control their heating and air via an app and even learns preferences (colder at night) to prevent the need to program and adjust manually. Nest has since introduced new devices including connected home security cameras. This is where the future is going: the connected home. And here’s what it will look like for the consumer:
Consumers will search for a cleaning service using Google. They will book the appointment within the Google platform. When the technician arrives at the assigned day and time, the Nest/Google locks on the door will recognize that the technician is there because the tech will have the corresponding app on his/her own Google Smart Phone, which will let the tech into the home, but only at the assigned time.
The NEST security cameras in the house will be activated to record as soon as the front door opens and will notify the homeowner that the schedule tech has arrived and is in the home. The Nest/Google thermostat may even turn on the air conditioning 30 minutes before the technician arrives, in compliance with the service agreement which the Nest/Google thermostat can access also via the Google app connection between the home and the tech.
When the technician leaves, the Google/NEST system will record to the second when they left the home to ensure proper billing. The consumer is billed on the Google Pay platform, and the thermostat is returned to the away temperature settings. The consumers do not need to give out any keys or garage codes. The technician can only get in at the assigned day and time, and only if they have the assigned smart phone which was dispatched to do the job. The consumer will know to the second how long the technician is in the home and can record them or even log in in real time to see what they are doing while they are cleaning their home using their security cameras. There are no checks to forget or invoices, and everything is billed in real time.
The good news is that it appears that Google learned from their experience as an investor in Homejoy that they do not want to deal with consumers and cleaners day in and day out. In all of Google’s history they have always preferred to have very little direct interaction with consumers. Have you ever been able to find a number to call them for anything or even chat with a live person online? If anything, their experience as an investor in Homejoy, watching that company grapple with subjective service complaints and cleaner personal life issues only heightened this desire to keep their distance from the day to day issues. We’re more likely to see Google build a system to automate all of the items in the example above, and to invite companies, which will manage both the cleaners and the client interactions, to apply and pay to be listed on their platforms, just as Amazon Home Services does now in select markets.
This is how Google can achieve dominance – by creating a massive consolidation as it finds 2-3 “trusted” companies in each market to list in their search results. Google will not technically choose the companies, but their review system will quickly pick the best 2 or 3 tech-enabled companies in each market which will then become the top listed companies. This is a massive opportunity for those who will be at the front of the tech trends driving consumers to an on-demand mindset, and a career-ending threat to those who choose to ignore them.
Derek Christian is the owner of My Maid Service with locations in Cincinnati, OH and Dallas, TX, as well as a business coach through Cleaning Business Builders and publisher of CleaningBusinessToday.com. Derek is now an investor in several cleaning companies including My Maid Service Dayton and Real World Services Columbus.