TaskRabbit Quadruples Its Business, Says It Will Turn Profitable in 2016
By Jeff Bercovici San Francisco bureau chief, Inc. Magazine
One of the first on-demand services, the startup is no unicorn--and that's suddenly looking like an advantage.
In the past six months, as valuations for many of the biggest on-demand companies have stalled or backslid, it's become painfully clear that there's a world of difference between a service that's growing fast and one that's on track to become profitable.
As other startups have pursued a strategy of raise fast and spend fast, TaskRabbit, one of the first on-demand offerings, has played the role of tortoise, not hare. While its slower-growth approach hasn't made it a billion-dollar "unicorn" yet, it has brought TaskRabbit to a place most of those unicorns have never seen: the verge of profitability.
CEO Leah Busque credits her fiscal restraint to the company's beginnings during the financial crisis. "I've always operated the company in a very capital efficient, very unit-economics-driven way," she says. The former IBM engineer conceived TaskRabbit--a platform for hiring freelancers to do small jobs--in Boston in 2008, on a cold night when she didn't want to leave the house to buy dog food.
For TaskRabbit, the biggest change came in 2013 when it began operations in London and used the expansion to test out a new model. Instead of an auction model, where consumers post jobs and contractors bid on them, in the new system, contractors post their hourly rates, taking a step out of the booking process.
The move wasn't immediately popular with "taskers," who complained they were essentially being asked to make blind bids. "We knew it was going to be tough," Busque says. "We definitely went through a transitional period where we knew we would have to hand-hold the community."
For the taskers who went along with it, though, the result was a 400 percent increase in earnings, the company says. Because the company still allows workers to set their own rates, it has never been vulnerable to the kind of worker-misclassification lawsuits that have dogged on-demand startups like Uber, Instacart, and now-defunct Homejoy.
In 2014, the company adopted the new model in all 19 of its markets, paving the way for a 2015 in which TaskRabbit's revenue also quadrupled. A tightening of the company's focus on home services like cleaning and handyman work and a somewhat more aggressive use of paid channels for user acquisition, with advertising now bringing in 35 percent of new business, helped fuel the growth. Add it all up and TaskRabbit says it is in line to become profitable in 2016.
In the newest iteration of its service, this week TaskRabbit is launching "Instant Matching," which lets you book a job within five minutes and have it completed within 90 minutes. Busque says speeding up service is a natural evolution of the product as its users book more of their jobs through mobile devices. "I founded the company before the words sharing economy even existed," she says.
"We've seen the whole arc and the whole landscape really shift and change over the past seven or eight years, which has been a lot of fun for me as a founder."