Three former Trade Me executives, James MacAvoy, Richard Humphries, and Sam Morgan (yes, the Sam Morgan), have invested in an online platform called Goodnest, that seeks to take the pain out of finding someone reliable to clean your home.
MacAvoy, who was also the founder of online movie rental company Fatso, says the idea came about when they realised the part technology could play in easing the pain experienced by people looking for household and professional services. Think Uber for cleaners.
MacAvoy estimates the household cleaning market is worth about $250 million annually.
While working at daily deals company Treat Me, which he was managing at the time, he says he saw consumers regularly snapping up vouchers for cleaning, electrical repairs, lawnmowing and landscaping services.
Pains and gains
“In some cases, the services weren’t cheap, so the question was why there is such a success in such a space, why is the sector doing so well,” MacAvoy says.
Similar checks around sites in the US and UK showed the same, and led to the conclusion that there is a “lot of pain” around using home and garden maintenance services.
“Basically, people were using the old habits – those of directories, the old fashioned phone books, or relying on companies that offered these services without a proper planning or booking system.”
Goodnest is there, he says, to ease customers’ pain of dealing with traditional services. In the process, the company is cutting out the ‘middleman’, such as franchises, and delivering more dollars to the cleaners, he adds.
The company offers cleaning at $20 per hour, using environmentally-friendly cleaning products from Ecostore. Home owners looking for cleaners go to the site to make a booking, and are matched with an available cleaner.
The company’s services are available in eight cities, seven in New Zealand and one in Sydney. There are plans to add offices in Melbourne, Brisbane and Perth.
MacAvoy says all the cleaners have been interviewed and vetted by GoodNest. “We won’t put a cleaner out there whom we won’t personally use ourselves,” MacAvoy says.
Customers have shown relative ease and comfort at adapting technology, he says, and six months after launch the company, the number of householders on the books is "in the four figures". Kiwis have also been remarkably comfortable about allowing cleaners into their homes. “99% of those who use our site for the first time are happy to let us know where their key is, or give us their alarm code.”
(L) James MacAvoy and his business partner Richard Humphries
Run completely on the cloud, the Britomart-based company relies on Google AdWords and social media for marketing.
“Around a quarter of sales come via AdWords and the rest is word of mouth. When I was younger, and slightly greener, I spent hundreds of thousands on billboards, but never knew how much business we were getting off them. We spend a lot of time on Google Analytics so I know exactly what my return on investment is,” he says.
MacAvoy is no newbie to trend spotting. Formerly a consultant and online manager at Xero, he also founded Fatso (since divested), and led a management buyout of Treat Me in 2013, while it was under Trade Me. Humphries, who worked at Trade Me, started online outdoor hardware store, Trade Tested. MacAvoy and Humphries have 40% each in Goodnest while Morgan has, 20%, held through his investment company Jasmine Investment Holdings.
Sam Morgan’s investment happened naturally given their previous association, MacAvoy says. “He came on board a few months after we launched, and is quite engaged with what’s going on. He is interested to see ‘disruption’ at work.”
MacAvoy is using this initial platform as an early project, with the view of delivering similar systems across other professional services.
In America, a similar business called Homejoy recently raised US$38 million in an initial public offering.
Locally, Goodnest has another competitor in SpongeHero, an online cleaning service started by two Stanford graduates.
What about competition?
MacAvoy says the technology platform is nothing complicated yet it has the impact of disrupting traditional business. What’s really more complex, is that of managing the operations of running the business, he adds.
Although anyone can set up another online booking system, not everyone can manage operations well.
“The front-end of the platform is not the hard part. The hard part is the operational aspect – the 'what if we have cleaners who want to work in pairs', or 'what if there are three people wanting to clean a place; how do we reward those who are the best with more work, how we manage people',” he says.
Carrying the business through and making it work, managing training, and selecting the right equipment, involve challenges which had put him through some “steep learning curves”, he says.
And while Treat Me is sales-centric, requiring the business to deal with between 5,000 and 6,000 businesses annually to get them to participate on the site, Goodnest works mostly by word of mouth. "This gives us the luxury on working on the back end, to make it work really well," MacAvoy says.
For now, MacAvoy says is having a buzz having taken an old industry, and making improvements to it, to be able to drive the price down.