Even in the midst of a tech boom, there is the occasional bust.
Homejoy, the on-demand cleaning service, is shutting down at the end of the month, the company said Friday.
The San Francisco company was smack dab in the middle of one of the fastest-growing startup sectors — on-demand marketplaces, or apps that connect people with a service or product. This sector includes Uber and Airbnb. Homejoy offered a Web platform for people to find and hire professional cleaners.
But things went very wrong, as they often do in Startupland.
“Although we succeeded in many ways, we also faced obstacles. There are still many unresolved challenges in the home services space. We gave it our all, but regretfully, we have made the difficult decision to cease operations. Homejoy will officially close its doors on July 31st,” the company wrote on its website.
The company, founded by sister-and-brother team Adora and Aaron Cheung in 2012, hadn’t raised venture capital funding since 2013. And it was recently hit with lawsuits from its contract workers for misclassification of its labor force; Homejoy, like most on-demand startups, use independent contractors to do the tasks offered on its site. These workers don’t receive benefits although they often rely on the job as their sole income.
Several companies — including Uber, Lyft, Shyp, Washio, Postmates and Instacart — have been sued by workers for misclassifying them as independent contractors.
Those lawsuits made fundraising that much harder, Adora Cheung told Re/code. And Homejoy doesn’t have the war chest to fight the legal battles that other companies have, such as Uber.
The California Labor Commissioner recently ruled that a San Francisco Uber driver was an employee, not an independent contractor. Uber is appealing that decision. Other companies have bowed to the mounting pressure from workers: Instacart, Shyp and Eden have all decided to reclassify their independent contractors as employees.
Homejoy had recently been exploring a sale, according to the San Francisco Chronicle, and was in talks with New York-based Handy, a home cleaning and minor repair booking company.
Homejoy raised about $40 million from Y Combinator, PayPal founder Max Levchin, First Round Capital, Redpoint Ventures, Andreessen Horowitz and Google Ventures. It operated in 35 cities in the United States, France, the U.K., Canada and Germany and had 100 employees and roughly 1,000 cleaning professionals.
The company will fulfill any existing appointments but will not book any new appointments, it said. It has asked customers to continue using the professional cleaners that were contracted through Homejoy, but employ them independent of the website.
Handy told the San Francisco Business Times it will offer $1,000 bonuses to Homejoy professionals who sign up to work for its platform. Handy has also been sued by its independent contractors.
Several Homejoy employees appear to already have new jobs. Google told Re/code that it had hired around 20 members of Homejoy’s product and engineering team will be joining Google to build out the company’s technology for matching local professionals, such as lawn mowers, painters, plumbers and cleaners — with online users.
Homejoy logo from homejoy.com
The post Homejoy shuts down amid lawsuits over worker misclassification appeared first on SiliconBeat.