Something at the core of a lot of the systemic problems with these "sharing economy"/"p2p market" companies is that they assume workers and sellers are fungible, and are thus in something approximating perfect competition[1]. Instead, much like the dating example in the article, they are actually a Matching Market[2]: there is some close-to-optimal arrangement of buyers to sellers. Long-term happiness with the services involves finding the best fit, rather than just the first sufficient fit.
The auction system of old TR allowed for discovery of these fits via the auction mechanism. I expect that much like a lot of other econ theory mechanisms in addition to the success stories in the article, it led to a lot of large scale usability friction. In the end, it looks like TR chose a smoother system with worse individual outcomes. The holy grail then is a system that elicits information about fit without leaking too much information and being easy to use at the same time.
>like Uber, Lyft, Airbnb, and the rest of the renting economy. (Please, let’s stop calling it the “sharing economy”: Sharing doesn’t involve money.)
This really does hit the mark in qualifying the sort of feeling I get when Airbnb and Uber talk about the sharing economy. The big winners don't seem to be of the "sharing/driving a couple hours a week" variety, but of the "capitalists running their usual games" variety.
Not that there's a major issue on this, but the way these companies present themselves as "helping soccer moms make a little cash" has always felt slightly disingenuous.
The problem, as the article points out, is that many of these companies may be misclassifying their workers. Uber has been sued over this[1], and most recently, Handy was sued for a variety of labor violations, including misclassification[2]. Ironically, I pointed out that a description of Handy's operations published in an article raised questions about classification a few weeks before the lawsuit was filed[3].
There's nothing wrong with self-employment (it's great), but most of these startups in no way, shape or form represent the true "1099 economy." It's a total misnomer.
Yep. The proper reply would be, "Thanks. But, I don't work for your company and am not bound by those rules. In fact, it's the policy of journalists to seek the truth regardless of your company policy."
I think their issue is that TaskRabbit contractors can't talk to journalists without going through corporate PR. (While nothing prohibits a journalist from asking, I'm sure the contractors would be terminated for speaking with journalists if corporate found out.)
I made an app for a ChallengePost hackathon in this area, http://rackspacemobile.challengepost.com/submissions/28855-o... . I think TaskRabbit and similar services have a tremendous opportunity to build a base of passionate and trusted workers, but instead they're gouging them (25% commission past the first introduction is absurd) and misunderstanding why every worker I've talked with feels betrayed (from lack of trust on TR's part related to communication from worker to employer, to an oversimplification of scheduling that actually prevents workers from committing to multiple jobs in a day).
Or maybe the business is running smoothly and they're minting money so they just don't care what a minority of dissatisfied-but-loud customers/workers say.
Good article. Task Rabbit v1 was great, I have no idea what these people were thinking by changing their formula. From a hirer perspective the new version sucks.
Well, actually I do have an idea what they were thinking. Some VC or MBA probably convinced them to move to this system to create a bigger barrier to entry and increase the proprietary-ness of their product. "Just a market" is not nearly as sexy sounding as "machine learning black magic matching algorithms."
I imagine they wanted people to be able to get quotes really quickly rather than wait on a bidding process. And work with fewer, dedicated taskers than a myriad that included no-hopers.
IIRC, Flight Fox changed tack in a similar way, going from their original scheme of people bidding to ending up a lot more like a regular travel agent but where you pay up front to even work with them.
If the Taskers are complaining and the customers aren't too happy either, then I see an opportunity here for someone to step in and provide services like the TR of the old.
Well, objectively speaking, it seems like the old model wasn't working. It wasn't scalable. Without standardizing something -- be it the buyer-description-input track, or the tasker-bidding-assignment track -- you have an ad hoc system that is not particularly efficient at allocating supply to demand. (Or even particularly good at standardizing supply and demand in the first place).
This new system seems to fit the classically snarky definition of a compromise: a situation nobody is completely happy with.
The article implies a third option: keeping the open-bidding system of old, but focusing on a vertical or two, instead of trying to be all things to all potential tasks. This might be a better solution, but again, you run into standardization and supply/demand allocation inefficiencies. Less of them, but they're still there.
There seems to be a good reason why "second-generation" sharing economy services, like Uber and Airbnb, do really well, while services like TaskRabbit don't. These newer services are on tightly controlled rails, they're standardized (or at least standardizing), and they're operating in specific verticals. They are in the variance-minimization business. Old-model TaskRabbit was in the variance-creation business.
It was working, just not enough relative to all the capital they raised. The marketplace was growing 8% month over month, since forever. They wanted faster growth but couldn't get it, so pivoted.
Exactly. The folks who put in roughly $40 million wanted a $500+ million exit in 18 months. And that just wasn't going to happen with the numbers they had.
It seems like they were running about $500K a year. Even with 100% growth per year, it's going to take 6 years to begin moving $40 million annual revenue. The investors aren't going to wait for that long. And, as people have pointed out, once I use TaskRabbit, why don't I contact the task person directly next time?
Isn't 8% month over month something like 150% year over year, how much faster growth did they need, or has the market really come to expect 1,000% year over year to be worthy of funding?
> Well, objectively speaking, it seems like the old model wasn't working. It wasn't scalable. Without standardizing something -- be it the buyer-description-input track, or the tasker-bidding-assignment track -- you have an ad hoc system that is not particularly efficient at allocating supply to demand.
But this adhoc system was working for the buyers and the sellers! TR had a pretty solid growth rate (8%/mo, as mentioned in another comment), which is pretty solid. Why would you want to switch to a system which both parties do not like? When has pissing off the majority of your customers ever been a successful strategy?
Or maybe the problem is there's just no way to make a TaskRabbit-style business model work; you end up having to screw the workers (with moves like those described in the article), the users (with rates that are higher than people are willing to pay), or the investors (by burning through cash without a path to profitability).
It sounds like TaskRabbit, faced with that predicament, decided to screw the workers, which is disappointing but unsurprising.
Some platforms have seen a lot of success from doing something limited and simple really well (Instagram, Twitter, etc) rather than trying to be a tool for everything. Maybe that's a parallel?
I think lack of growth is a more accurate issue. TaskRabbit wasn't in the business it wanted to be in - they were a matchmaker not a middleman, and match making only turns a profit at huge scales - dating is pretty much the entire human race, so they can only go downhill from that opportunity.
Seems ripe for a Craigslist-type model: keep the code and servers as simple and efficient as possible, cover costs by charging for one or two high-value services that make sense, and let everything else function as a free marketplace.
This is a terrible thought, but my honest first thought when I read the title was, ”Yikes. Someone arranged a ’Most Dangerous Game‘-style scenario over TaskRabbit?“
in marketplaces there is always one side that is in oversupply , it is clear that in Taskrabbit their case the workers are in oversupply and they are constrained by getting "employers" in.
These p2p "sharing economy" sites are begging for a solution that's actually p2p. The star-rating of users could be maintained by a modified form of bitcoin. I don't know what the business model would be, but that's pretty much the point.
A p2p distributed ad network would be interesting, if the money can flow back to the server operators maintaining the network. Overall though I just meant there really wouldn't be a profitable business model, much like BitTorrent, and that would be a good thing I think by eliminating a powerful middleman.
The auction system of old TR allowed for discovery of these fits via the auction mechanism. I expect that much like a lot of other econ theory mechanisms in addition to the success stories in the article, it led to a lot of large scale usability friction. In the end, it looks like TR chose a smoother system with worse individual outcomes. The holy grail then is a system that elicits information about fit without leaking too much information and being easy to use at the same time.
[1] http://en.wikipedia.org/wiki/Perfect_competition
[2] http://people.duke.edu/~aa88/articles/WorldCongressSurvey.pd...