TaskRabbit: Say to No to Chores
TaskRabbit uses mobile technology to save consumers from chores.
Rise of the On-Demand Economy
As a HBS student, my most valuable commodity is my time. In the precious, fleeting moments of spare time, the last thing I want to do is chores. Enter TaskRabbit: an app that connects you with a personal assistant in a matter of minutes to do basically any chore you don’t want to. Founded in 2008, TaskRabbit has been a pioneer in the on-demand economy that includes apps such as Uber, Airbnb, and Instacart. The cornerstone of the on demand economy Is the rise of peer-to-peer marketplaces, in which people rent or buy goods and services from others through mobile technology. [i] The on-demand economy is attracting more than 22.4 million consumers annually and $57.6 billion in spending, with the market for on-demand home services at $8.1 billion. [ii] Unsurprisingly, almost half (49%) of on-demand consumers are millennials (age 18-34), but this is a growing trend of older consumers. Clearly, this represents a huge opportunity for companies like TaskRabbit.
TaskRabbit Business Model
TaskRabbit is an online peer to peer marketplace that connects consumers with local help. Users can connect with help in a matter of minutes. First, a user logs onto their mobile device and selects from a list of common chores. The user can then select same day service or set up an appointment at a convenient time. TaskRabbit then matches the user with a local tasker. Within the app, users can communicate and pay taskers within the app. The company generates revenue by taking a cut of each transaction. Task Rabbit’s value proposition is to save users time and increase productivity, by providing cost effective solutions for chores and tasks.
TaskRabbit supports its customer promise in the following ways:
- Sleekly designed mobile app, preset with common tasks
- Tasks can be booked within minutes using the mobile app
- Users can communicate with and track taskers in app
- All payments are made within the app, after the task has been completed
- Transparent pricing that is clearly displayed before booking
- 24-hour free cancellation policy
- Taskers undergo extensive background checks and in-person on boarding
- TaskRabbit Elite allows user to book the highest rated taskers
I believe TaskRabbit is poised to win and here’s why:
- Strategic growth: TaskRabbit CEO Stacey Brown-Philpot says the company is already generating operating income in each of the 19 cities it operates in and is close to overall profitability.[iii] This is rare for an industry in which companies typically prioritize growth over profits.
- Generates Value & Productivity for consumers: Millennials value work/life balance, wellness, and convenience because we are busy! We are willing to pay for services that make our lives easier. Users can hire a maid or a handyman, but finding a trustworthy one takes time and effort. TaskRabbit solves this problem by vetting for you. TaskRabbit also allows users to find help for random one off tasks. Cleaning your house to host a party or preparing for a cross-country move is stressful and time consuming. TaskRabbit helps normal people solve every day problems and frees up their time for more important things.
- Strategic Partnerships: TaskRabbit has partnered with Amazon’s home services offering and Brown-Philpot has hinted at additional partnerships. I could definitely see TaskRabbit partnering with Ikea to help customers set up their new furniture.
- Taskers are Independent Contractors: One of the key elements of on-demand services is that taskers are independent contractors. This provides flexible part-time work for employees and it is also cheaper for employers since they do not have to pay benefits. These models are particular beneficial to people who are under or unemployed. TaskRabbit has been one of several on-demand companies talking to policy makers about the idea of “portable benefits” for contract workers in this emerging industry. [iv] Many executives feel that Obamacare has helped grow the industry, though the future of the Affordable Care Act remains to be seen.
- Willingness to innovate: TaskRabbit originally started with an auction model in which users posted jobs and taskers bid on them. After declining use and frustration from both sides, the company shifted to a standard pricing model. The highest rated taskers are available for a premium.
TaskRabbit is an interesting business concept that has the potential become a big player in the on demand economy, but there are still a few risks. Changing consumer behavior is difficult. Their service is something that consumers can do themselves. Convincing consumers of their value and positioning themselves appropriately to key target customers will be key in driving TaskRabbit’s future success.
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Student comments on TaskRabbit: Say to No to Chores
I would argue than an important part of the TaskRabbit operating model is that its operations are hugely human capital-intensive. Compounded with the fact that TaskRabbits business model relies heavily on localized network effects, it could be very difficult to repeatedly scale operations in different locations. There may also be large local variations, and TaskRabbit may need to consider shifting the business or operating model based on local conditions. For example, in some geographies it may be more important to build trust between the buyers and suppliers. Therefore, I would hope that Task rabbit carefully assesses any adjustments that may need to be made to the operating model before entering new markets.
I appreciated the insight into TaskRabbit given that I have never used the app myself. While I think the business model is interesting I have several concerns that make me less enthusiastic about their future. One, the business/operating model seems easy to replicate. Is there a unique mechanism in place to keep both users and providers of the service on the app exclusively? For example, on average do providers of a service make more money listing on task rabbit vs. another app? Two, I am skeptical about the quality of the service providers. While TaskRabbit may do a background check, do they guarantee that the service provider is good at performing a given “task”. Is there an opportunity to make such a guarantee (i.e. TaskRabbit will redo a given task if the provider you booked does a terrible job?). Lastly, similar to the comment above, I think the success of this model heavily depends on local network effects (which can be difficult to build if you don’t have substantial capital to market aggressively / undercut your competition) and can not be leveraged when expanding to new markets.
I did love your suggestion to have them expand into Ikea furniture! I do think however that if that service takes off Ikea will notice and likely offer its own installation in a more competitive price.
Thanks, Tracy. I think TaskRabbit is basically creating market efficiencies for everyday tasks – allowing people to put a price on every minute of their day and then trade off with those who have different values. It’s the Uber for everything else besides car rides. I think an app/website like this could really penetrate the market in terms of tasks like furniture moving, dog walking, grocery shopping, or picking up basic goods.
At my internship this past summer, we planned on using TaskRabbit to do bring in anonymous users (remotely and in-office) to test our live video platform. However, there simply was not enough people on the TaskRabbit site to bring in. We found exponentially more people on CraigsList and Reddit. How is TaskRabbit going to differentiate itself from these other, established platforms? There’s not much true additional value TaskRabbit is providing, which gives me concerns about their future prospects.
Hi Tracy! Thanks for the interesting blog post. In echoing some of the previous comments, I see TaskRabbit as primarily a marketplace for errands / chores, connecting labour with those who need it. It would be interesting to understand whether the company has explored partnering with new-age digital startups that could automate some tasks for customers. Through well-negotiated commercial agreements, these could be highly lucrative partnerships, bringing more customers to the automation software startups, and expanding margins for TaskRabbit (A customer needs flight options researched, and wants to identify and book a hotel for a vacation? No need for TaskRabbit to pay the labour cost anymore if they have partnered with a robot company that can essentially do this!).
Tracy, thanks for an interesting read! While I think TaskRabbit fills in a void within its industry and certainly provides value for the consumer, I have a few concerns regarding the future viability of this company: First, the switching costs appear to be low in this sector; in other words, what is stopping other entrants in the market and what is stopping end users from switching from one entrant to another? I think we will may even see a trend towards more specialized entrants – similar to Homejoy – who could potentially offer a competitive advantage in a particular area relative to TaskRabbit due to specialization?
Secondly, even though Taskers are currently classified as independent contractors, is there any risk of unionization or increased employment regulation as we have seen in the case of Uber? If not, should TaskRabbit take more of an initiative in providing workmen’s compensation or health insurance, leveraging its economies of scale? For example, the NYC taxi industry takes a portion of each fare and allocates that to the driver’s health insurance. Would be curious to get your thoughts!