TaskRabbit’s Stalled Revolution
TaskRabbit was founded in 2008 with a big idea. On the company's website and app, people make money by assembling strangers’ Ikea furniture or cleaning their bathrooms.
There’s nothing particularly exciting about other people’s chores, but Leah Busque, a former IBM engineer who started the company, had grand ambitions. “Our mission is to revolutionize how people work,” she told Bloomberg TV last year.
TaskRabbit showed up on the heels of the iPhone, when a generation of online platforms were emerging to allow people to sell access to their cars, apartments, and power drills. Their creators said this had the potential to be better for customers, but also for workers, because it gave them more flexibility. TaskRabbit quickly grabbed a place alongside Uber, Airbnb, and Lyft as a symbol of what was being called the sharing economy—and would later be known as the on-demand economy, gig economy, or, simply, the Uber economy. Its peers have grown into the biggest startups in existence.
TaskRabbit’s own reality has been much more modest. By March 2015, Uber drivers were handling 70,000 rides every day in New York City alone. That same month, Taskers -- the company's current name for its workers -- were completing about 550 jobs per day, according to Bloomberg’s analysis of previously unreported documents TaskRabbit shared with potential investors. TaskRabbit was telling its backers it could be profitable in the near future but needed more money. To raise a new funding round last summer, it significantly lowered its valuation and also took the unusual step of raising some of the money through a crowdfunding website.
Competitors had less buzz but more business: Thumbtack, which also connects handymen to prospective clients, did $1 billion in gross bookings last year, making it about 30 times TaskRabbit’s size.
TaskRabbit declined to make executives available for interviews. But Tod Francis, a managing director at Shasta Ventures, one of TaskRabbit’s investors, said that what looked like the company falling behind was actually a decision to improve the health of its business, even it meant forgoing maximum growth. “We proactively retrenched,” he said. According to Francis, TaskRabbit has doubled its business over the last year, even without the subsidies that ride-hailing and delivery companies have used to increase volume. TaskRabbit executives have said repeatedly over the last 18 months that the company would be profitable by the end of 2016. They’ve backed away from that claim but insist it will get there soon.
Despite TaskRabbit’s setbacks, policymakers, academics, and journalists regularly include it on the short list of the industry’s major players. When a U.S. congressional committee called a hearing this spring about tax policies for on-demand workers, TaskRabbit’s vice president of marketing testified. Health and Human Services officials recently deputized the company to help spread the word about Obamacare.
Saif Benjaafar, who runs the Sharing Economy Initiative, a research project at the University of Minnesota, credits TaskRabbit with helping create a movement. “It certainly pioneered this business model built around the flexible workforce,” he said. Its problem, he said, was that it tried to give its users too much freedom over the type of services and the prices it charged. The most successful companies exerted as much control as possible to create more focused services. “There are some natural limits to the TaskRabbit model,” said Benjaafar.
Leah Busque founded TaskRabbit with her husband, Kevin. One evening the couple was going to dinner, then realized they needed dog food. They would have been happy to pay someone to run the errand. Busque left her job at IBM to create a company to make that possible.
Busque ran TaskRabbit out of her house, then Zipcar’s office in Cambridge, Massachusetts, then from San Francisco, where the company became an object of fascination to the media. Busque spoke compellingly about how TaskRabbit wasn’t just a business but a way to use the internet to create a version of old-fashioned neighborliness on a massive scale. At first, customers would post a request, and Taskers would bid on the job. Busque wanted to create a flexible marketplace for workers, where customers could go to find all kinds of services.
TaskRabbit was tantalizingly close to some huge opportunities. In its early days, a good amount of the traffic on TaskRabbit’s website was requests for rides to the airport. But building a ridesharing service required singular concentration to match riders to drivers in real time. Also, the questions about insurance and regulation were complex. TaskRabbit never nurtured the business. So Lyft, a company whose founders Busque was friendly with, started recruiting drivers from TaskRabbit. Their company took off faster than TaskRabbit ever had.
TaskRabbit began to stagnate. In 2013 it laid off a significant chunk of its workforce. In 2014, the company scrapped the auction process and conceded it needed to focus on a few categories: house cleaning, handyman services, moving, and delivery. The quirkier stuff still exists—the Chicago Tribune highlighted the funniest TaskRabbit jobs posted by Cubs fans during the World Series, including a request to go around Chicago, buying newspapers when the team won. But the site’s design downplays everything but its core services.
The changes were painful. It generated $2.1 million in revenue in 2014, losing $8.6 million. In the presentation it showed investors in early 2015, it said it could bring $6.5 million in revenue in 2015 and $25 million in 2016. It was a hard sell.
TaskRabbit raised money from existing investors, while also selling some shares through DreamFunded, an equity crowdfunding website. According to documents circulated by DreamFunded, the company was asking for a $40 million valuation. TaskRabbit has not made its previous valuations public. But the DreamFunded transaction valued each share at less than a third of their value from a previous fundraising round in 2012, according to an analysis of financial filings by research firm CB Insights.
According to TaskRabbit, its underlying problems were solved by the 2014 changes. But many people who work in the on-demand economy said the company seems to have downgraded its ambitions.
Busque stepped down as chief executive officer this spring after having a baby, and Stacy Brown-Philpot, the company’s operating chief, took over. Brown-Philpot, a former Google executive, has been vocal about sustainable growth and maintaining the company’s unit economics—how much it makes per transaction. In September she described the sharing economy as “sort of an old term,” in an interview with Recode. “We’ve moved from, you know, neighbors helping neighbors to being a business where you can get home services on demand,” she said.
TaskRabbit sees several paths forward. The majority of its business is in four cities—San Francisco, Los Angles, New York, and London. It wants to expand its smaller markets. The company has also made a big deal out of a partnership with Amazon.com. The e-commerce giant includes Taskers among the providers listed on Amazon Home Services, which is essentially Amazon’s version of TaskRabbit. The startup declined to provide any details about the performance of the Amazon deal. If Amazon wanted to buy the company, Brown-Philpot said at a conference last month that she’d consider it.
Tom Erickson, one of Busque’s early advisors, is convinced that TaskRabbit’s big idea is still alive. The outsized success of other companies doesn’t take away from what Busque has achieved, he said. “When you start a business, you try a bunch of different things, and you don’t know which is going to work,” he said. “The public is fickle.”
A previous version corrected the year TaskRabbit was founded in the first paragraph.