The idiom ‘where there’s muck, there’s brass‘, quite simply, means that if there’s a dirty or unpleasant job to be done, there’s money to be made.
While the notion of ‘brass’ meaning money has been around since the 18th Century, and the essential elements of the expression were penned by John Ray in A Collection of English Proverbs in 1678 (“Muck and money go together”) that actual saying is a 20th Century creation that grew from the 19th Century expression “Where there’s muck, there’s money”.
History lesson now over, the idea of paying someone else to take care of the jobs you don’t have the time, skills, tools or will required to do yourself is nothing new, but with the rise of the Web, along has come a new breed of domestic service companies.
It’s the potential of this domestic services market that caused TaskRabbit to refocus its efforts around this core, after having started life with a broader remit.
With growth markets comes money, and despite the highly unglamorous services on offer, angels and venture capitalists are tripping over themselves to back the likes of Homejoy, Hassle.com, Helpling, Handy (recently rebranded from Handybook), Housekeep and Mopp. Clearly Mopp didn’t get the memo about domestic service companies beginning with an ‘H’. No matter, it has since been acquired by Handy anyway, so will sooner or later fall transition across to using the Handy brand.
(For ease of reading, we’ve split this article over several pages, but if you’d rather view it on one page, just click here.)
Why all the interest?
This one is quite simple really. What everyone wants in life is a little convenience. Previously, if you wanted to book someone to come to your home, you’d need to scout around calling a number of people looking for the best quote.
Now, there is a fully digitized services market with people clamoring for the chance to come and help you out whenever you have a job you don’t want to take care of yourself. More than that though, it’s not just the technology simply allowing people and service providers to connect seamlessly, it’s that people are starting to actually use the services.
The growth of services like Uber mean that people are getting increasingly used to having whatever they want, where they want, when they want. You need your laundry washed and returned to you? Sure.
Of course, the cost of this convenience, is, well, the cost. In the UK, cleaning services start at around £10-£13 per hour. In the US, at around $25. It’s not exactly prohibitively expensive, and indeed, because there’s no required on-going commitment, the services attract people who otherwise haven’t booked a cleaner in the past.
According to a Tork (makers of cleaning products) study in 2012, the European cleaning market has an estimated annual turnover of €60 billion, although it’s worth pointing out that this includes hospitals, schools and workplaces, as well as the domestic market. Other estimates range up as high as $400 billion.
Perhaps it’s unsurprising that a company that makes cleaning products would find the market booming in its own survey, but even away from the contracted business arrangements of things like cleaning hospitals or offices, the cleaning sector certainly appears to be a massively growing market.
The 5 Hs
Helpling, for example, is a Rocket Internet-backed company that didn’t exist in December last year. In January 2014, it was just an idea. Eighty days later, it launched in four German cities. A couple of months later, it launched in four additional countries – France, Sweden, the Netherlands and Austria.
It’s not just about expansion into new countries though – once there, you need to quickly move into new markets within the country. In total, since the start of 2014, Helpling has launched in 130 cities.
“If you look at the competitors, the next one comes in at about 30-40 cities in total, so the speed at which we are opening new cities within the countries is enormous. In Italy, we just started really, really recently in a beta stage and we’re now already live in seven cities” Helpling’s head of communications, Philipp Hinz, told TNW.
Hinz didn’t want to disclose exactly how much has been sunk into the company so far, but launching in 130 cities before you secure your first seed round isn’t bad going. Indeed, Helpling’s expansion is so rapid that it since writing this it announced new launches in Australia, Brazil and Italy, with Spain soon to follow.
Helpling’s co-founder Benedikt Frank explained the rationale behind the incredible expansion rate.
“We focus on markets where we can reach a market leadership quickly. We still are the only provider in the Netherlands, Sweden and Austria. In France, we have the largest coverage across the country. In Germany, our main competitor is the black market which still covers 90 percent of the cleaning business in households,” he said. “Our strength is to understand local markets, particularly local customer needs and regulations. We then adapt our product quickly and successfully.”
And why put so much faith in the business after such a short time, rather than trying to prove itself in any one market first? One word: opportunity.
“To answer this question we have to look at the evolution of e-commerce. It all started with fast moving consumer goods. Then people started booking travel online such as flights and hotels. Local and home services are next in line as digitizing them will bring all the same advantages: convenience, speed, flexibility. That’s why we believe it is the next online megatrend.”
Next up – Handy >
Despite Helpling’s the rapid expansions, rival Handy isn’t going to be scared off by a little competition in the market.
It’s another company that’s really going on a tear to cement itself into the market place through sheer scale. Founded in 2012, it offers a slightly broader range of services – TV or picture hanging, painting, plumbing, electrical services etc – than some of its competitors. At its core, there’s still a strong cleaning business driving it forward.
To date, it has raised more than $42 million in funding across its seed and Series A and B rounds, from the likes of General Catalyst Partners, Highland Capital Partners and Revolution Growth Fund, among others.
With that cash and since its launch in 2012, Handy snapped up Exec at the start of 2014, and Mopp last month. It’s looking for market penetration and local share, rather than expansion into hundreds of new cities, Handy’s founder Oisin Hanrahan told TNW.
“The acquisition of both Exec and Mopp allow us to go deeper into the markets and quickly add liquidity,” he said. “Our focus is on gaining depth in our markets and building out market fundamentals. We don’t want to risk scaling too quickly and are committed to becoming the market leader in every market we’re in.”
According to Hanrahan, the home services market is a “$400 billion global opportunity” and that it now has the technology “to reinvent how people use home services and disrupt a traditional industry” which has seen little change. It should be pointed out here that the $400 billion figure refers to other services in addition to cleaning.
Next up – Homejoy >
Another well-known company in the sector is Homejoy, which is now operating in North America, the UK and Germany, and has attracted investments totalling more than $40 million across its 2014 rounds. As with most of the others here, it focuses its efforts on cleaning and strives to achieve a quality of service for customers that speaks for itself, co-founder Adora Cheung told us.
We are seriously passionate about the work we do. And that translates to the customer and cleaning professional experience. Our focus has always been to make day-to-day home life easier for clients, and facilitate convenient, flexible work opportunities for home service professionals. We take care to verify our cleaning partners so our clients feel good about trusting who performs their services. I don’t spend much time focusing on our competitors so I couldn’t tell you if these attributes are unique to us or not, but they are the foundations of what we do.
Now, Homejoy is a growing business with millions in funding behind it, but it wasn’t always that way. It actually grew out of Cheung’s desire to avoid using her co-founder brother’s dirty bathroom.
“My brother and I graduated from Y Combinator in 2010, and worked tirelessly for two years on different ideas before literally running into the need for dependable home services ourselves. My brother’s apartment was so in need of cleaning that I would literally walk down the street two blocks away, and buy something to eat at the deli so I didn’t feel bad about using their bathroom,” she explained. “We started Homejoy in July of 2012 and since the beginning of 2013 have grown the company to over 30 locations across North America, the UK, and Germany. Having worked as a cleaner myself, I know the value and level of intensity of the work.”
However, those couple of years searching for the right business weren’t wasted – it allowed technology to develop further, and more importantly, it gave consumers time to get comfortable with using digital services as a replacement for traditional roles.
“Tech has made everything faster, simpler and often outsourced – but domestic services have somehow remained the bastion of the individual. Maid services have remained stubbornly traditional until the last few years. So, in many ways, investors are playing catch-up to a prospect that they didn’t really notice before,” Cheung said. “Customers are now ready and willing to trust tech in the home, to outsource their home cleaning and spend that time on things that are more profitable or more pleasing to them.”
Next up – Hassle.com >
Hassle.com is another company duking it out in Europe to grab market share as fast as possible, but it didn’t start out as a platform for organizing a cleaner – it started out as Teddle, a general online marketplace for domestic services. However, after seeing that the majority of its users were booking cleaners using it, the company decided to pivot.
“The pivot was the best thing we ever did. Our sales soared and we had a strong proof of concept to take to VCs. Soon after we raised $6 million from the well respected VC, Accel Partners and Ventech in May 2014. We were the first – and remain the only – British company in this space to raise such a significant Series A,” Hassle.com’s cofounder and CEO Alex Depledge told us.
Since that round of funding, Hassle.com has expanded into most major UK cities, as well as launching in Dublin and one other (currently unannounced) European city. Depledge said that in the last six months, Hassle’s revenue has increased by 10 times and the team has grown from just five people to more than 20.
With that primarily UK focus, you might assume that Hassle is perhaps less ambitious to push out into new regions, but that isn’t the case – it’s just taking a more measured approach to each market, rather than launching in as many places as it can immediately.
“It would be interesting to compare everyone’s definition of launching or expanding in to a city. Some of our competitors operate more like agencies than like marketplaces which means they don’t display the service providers on the site before booking,” Depledge said. “Therefore, a launch or to ‘go live’ requires nothing more than a localised landing page.”
Hassle.com, on the other hand, is more of a marketplace in which vetted cleaners can offer their services directly to clients, with the company taking a small cut of the transaction.
“Our strategy is to ‘own’ each city we enter therefore we’re more about focusing on delivering quality of service and less about how many cities we can launch in a quarter. I’m not at all worried about the competition.”
Next up – Housekeep >
The companies we’ve looked at today are all active in more places than smaller rivals like Housekeep but with so much happening in the space all at once, even small rivals with traction are worth paying attention to. While the other four largely focus on simplicity of arrangement, Housekeep is hoping to bring a more personalized service to the table.
Launched in January this year, it’s only available to people in London – and not even all parts of London at that. Nonetheless, it has plans to simultaneously introduce new services and launch in new cities in “the next few months”, Housekeep’s founder Avin Rabheru told us.
With $1 million in funding secured just three months after launch (from the likes of the Pentland Group and the founders of Kabbee and Streetcar) and rapid expansion plans about to get underway, clearly the opportunity is big enough to entice new players into the market despite it being heavily contested.
According to Rabheru, the home cleaning market is worth £4 billion, and Housekeep is looking to get a slice through its focus on customers’ needs and thorough recruitment processes.
We’re obsessed with delivering excellent service. For customers, this means we go through an on boarding call with each customer to talk through exactly how they want their home organised. At our core though, we know that to deliver quality cleaning you need to have the right cleaners. We’re also therefore investing heavily in recruiting, training and monitoring cleaners, meaning customers always receive a consistent, quality clean.
The common thread among those companies – despite the varying go-to-market strategies – is that none of them seem to have struggled to raise cash.
While digitization of service industries isn’t really anything new, there’s an added advantage for the current crop of cleaning companies that doesn’t really apply to other industries like taxis or apartment rental – the legislation looks to be on their side.
While Uber’s plight to launch in practically every city around the world has come under pressure in some countries and Airbnb has had some high-profile problems in a few cities, the ‘Ubers of the cleaning world’ don’t have those sort of problems.
Hassle’s Depledge argues that this market is actually harder to disrupt than those others
They are attractive [to investors] because in the consumer space there isn’t actually too much left to disrupt. eCommerce has been done, and then done again. However so many people have tried to disrupt local based services and failed.
It is a tough gig to crack but with all the technology and services at our fingertips today it will happen and that company or companies will make a lot of money and will be difficult to unseat.
Helpling said that while being put alongside companies like Uber is a benefit in one sense (they’re reasonably well established and get a lot of press), it also means that some people don’t see the different regulatory environments for the two services.
“The big difference is that is our model is 100 percent legal and we put a lot of effort into assuring the quality. Not only do they [cleaners] have to present licenses but they also have to undergo a cleaning test – we ask them a couple of questions and they have to prove they have worked as a cleaner somewhere else before,” Helpling’s Philipp Hinz said. “We’re really 100 percent on the safe side… with the model that we are providing, we say there is no reason for undeclared work any more and our idea is to bring part of the shadow economy into the ‘white market’.”
This idea that digitizing this particular service industry could bring a level of security and reliability that could previously have been hard to ensure. Have you ever had a cleaner that was a recommended by a friend or family member that actually turned out to be not very good? It can be hard to sever that relationship due to the emotional trap of the recommendation, despite the fact that they could be working without the relevant permits too.
With millions invested already in all of these companies, the domestic services juggernaut doesn’t seem to show any signs of slowing. Indeed, it’s just now looking at how to expand into offering new services – need that picture hanging? No problem.
Wherever it heads next and however it fares, there’s as much truth in the expression ‘Where there’s muck, there’s brass’ as there ever was in the 19th Century.