From failure to $37M funding with Adora Cheung – Homejoy
Luckily, I live in San Francisco where you can get anything as a service (e.g. lunch, dinner, whiskey, washing, your fridge… even WordPress support!). When I read about a service that offered pre-screened cleaners for $20 per hour, I tried it out the following week.
First I will share what I learned from founder and CEO Adeora Chung at Startup Grind, then I’ll give you my first-hand review of the Homejoy service.
Look for inefficiency
Adora’s brother and co-founder, Aaron, sounds like most 20-something guys I know. He lacks motivation in a very specific area of his life. Cleaning. He lived like a slob with Adora as his room-mate, but finally caved and decided to hire a cleaner. He quickly realized:
- Established cleaning companies were prohibitively expensive
- Cleaners from online classifieds were unscreened… and potentially axe-murderers
Aaron realized that other people faced this problem. After some further research, Adora noted that most cleaning companies operate on tiny margins and pay their cleaners minimum wage. This is not because it’s a bad business, but rather, most cleaning companies are inefficient, relying on man-hours, instead of systems. Adora dug deeper, finding more and more broken business processes. From candidate screening to recruitment to training, the smaller cleaning companies were operationally challenged. Like all good engineers, Adora saw this as a system with inputs and outputs.
Adora had finally found a problem that could be solved with a better system.
Keep it simple
When you’re starting out with a new business, it’s difficult to be concise, clear and specific about who you are, what you do and what problem you solve. Some founders rely on the we’re X for Y formula, kind of like… “Spotify meets Grinder, but for rental cars.”
Other founders will give you a verbose explanation, which is well done by one of our favourite HBO shows:
Pied Piper is a multi-platform technology based on a proprietary universal compression algorithm that has consistently fielded high Weisman Scores™ that are not merely competitive, but approach the theoretical limit of lossless compression.
Adora and her brother stumbled and faltered on their offer multiple times. At one point, Adora rewrote gossip content on a media site to generate a small amount of revenue to keep their lights on, while they hacked away on project after project. Adora and Aaron toyed with the idea of an online video coaching support service, but serendipitously landed on their house cleaning platform idea.
An early customer research game changer was asking potential customers a very simple question.
Would you pay $20 per hour for a reliable cleaner?
The overwhelming response was YES! They had a clear offer, a captive market and a big idea of how to do it. Now, they needed to execute. They set out on their path to deliver a house clean from just $20 per hour.
Growth hack at the grassroots
HomeJoy acquired their early customers the old fashioned way. Instead of trying to game SEO or launch an advertising campaign, they attended local fairs in their Palo Alto neighborhood and distributed flyers about their service.
Was it scalable? No. Was it successful? Not the first time around.
Their flyers tanked, but they came up with a simple idea that grabbed people’s attention.
Palo Alto gets hot. Fair patrons get thirsty. Problem = solution. Adora and Aaron handed out free bottles of icy cold water with Homejoy flyers.
This tiny tweak helped to attract their first customers. Simple ideas like this can generate enough interest to get your business off the ground.
Learn the ropes
Great entrepreneurs are self aware.
Adora knew that she wasn’t a natural born cleaner, but realized she needed to learn how to clean to run a cleaning company. Instead of avoiding the discomfort of scrubbing toilets and cleaning ovens, she threw herself headfirst into the industry. She gave herself a self-guided apprenticeship in the field, learning about cleaning chemicals, how to clean a room with maximum efficacy and what to do when something breaks while in a customer’s house.
This trial-by-fire also opened Adora’s eyes to more operational inefficiencies. She submitted dozens of job applications, but only heard back from a handful of companies. Instead of screening and processing applicants, the cleaning companies she applied to manually processed each application and wasted time on back and forth with applicants.
Armed with her apprenticeship, she was ready to shake up the cleaning world.
Systems = success
The business systems that Adora, Aaron and their team have developed demonstrate their engineering ability. This systems approach shows throughout their business, from allowing customers to retain preferred cleaners on their booking platform through to their automated followup of bookings. Here are some sample questions that job applicants are asked to submit before approval of a real-world cleaning trial:
1. Why do we color-code microfiber cloths?
2. You can spray all-purpose cleaner directly on electronic equipment. True or False?
3. You should mop before you sweep or vacuum. True or False?
4. If a client is not home, it’s okay to use a client’s supplies without their permission. True or False?
5. It is unprofessional to take personal calls while working at a client’s home. True or False?
6. You are at a client’s home and you see a $20 bill on the table. There is no note or message on the table indicating what it is for. There is a wallet on the table. What do you do?
7. You see a pile of unfolded clothes on the floor in your client’s bedroom. What do you do?
I failed, so I’m not going to become a cleaner any time soon.
The quiz doesn’t guarantee quality applicants and doesn’t test attitude or behavior, but the Homejoy recruitment process is still lightyears ahead of other cleaning companies. I’ll argue that HomeJoy’s secret sauce is systematically solving the big, painful problems that hold most cleaning companies back from success. Co-founder Dan talks about pain and pleasure in more depth.
A personal touch counts
A tiny yellow Homejoy sticker. A handwritten message on a cleaning checklist. A fruity smelling candle.
These little ‘touches’ are tested as data points by Homejoy. They are exercises to increase retention, satisfaction and lifetime value. Adora mentioned they are hiring data scientists to delve into the formula for a successful customer experience and measure which personal touches have an influence on a customer returning for another clean.
Build strategic relationships
Adora is a Y Combinator alumni and has strong relationships with tech influencers. This worked in her favor while she was trying to raise capital.
Her relationship with Paul Graham paid dividends as he injected capital to keep the company afloat, then later tweeted the graph above, whipping VC firms into a frenzy.
Homejoy has grown rapidly and it shows.
My first and second cleaners weren’t up to par, but when I landed on my third cleaner Beverly, I was sold. I wrote out a specific checklist of tasks and set expectations up front. She delivered.
I’ve had shaky early-adopter experiences with a number of San Francisco based ‘service as a service’ companies, but I know from personal experience that training, retaining and motivating great staff is difficult for any startup to execute. We share these struggles in our monthly reports.
Check out some Homejoy reviews here and let me know – would you try Homejoy? Does it solve a problem for you at the right price?