Handy’s Choice for Profitability is the Painful Path
Oisin Hanrahan is the CEO of Handy, which is an on-demand startup for home-cleaning, was worried about the backfiring of the company’s strategy. Therefore, the leadership team decided to have an online on boarding process for all of their twenty-eight markets. Therefore, the new system was rolled in January 2015 for Washington, D.C., and Miami. However, both founders had to close their Series C venture of $50 million capital funding. The new capital was a relief as well as a new stress.
Many investors Hanrahan and Dua talked to were mostly concerned about additional investment in this category. Everyone around them was struggling to raise funding and even startups in Silicon Valley were failing. Therefore, they had no other choice but to go for the online onboarding. Hanrahan’s prediction was that it would save millions of dollar per year. Hence, Dua agreed, and they rolled it out in January 2015.
Dua’s concern of sudden decrease in onboarding turned out to be true. Handy.com canceled huge amount of bookings due to more demand and less supply of pros (cleaners). As a result, there were too many customer complaints. The only way left for Handy was to sacrifice their growth for more profit. This strategy worked for them, and the next eighteen months were great.
Dua and Hanrahan met at Harvard Business School as classmates. They also shared an apartment in Massachusetts. Though their third roommate didn’t join the team, his nasty habits gave them the idea they needed. They realized that on-demand cleaning was an unclaimed and huge opportunity. Finally, they launched the company in 2012. There was strong competition with companies like Exec, Mopp, and Homejoy. The biggest lesson Handy learned was not to expand to new markets. Now Handy has more customer density in the market, and this business model is working very well for them.