Startups That Imitate Uber Getting Sued, Losing Money
Handy is a home cleaning mobile app that provides on-demand residential cleaning services, and now startups in Russia, Finland, Germany, and Australia are trying to mimic its business strategy.
In Finland, Moppi (Finnish for mop) provides on-demand cleaning, a profession “largely viewed as beneath the dignity of most Finns.” In Russia, Qlean launched an app “very similar” to Handy, and the Russian startup hopes to expand its home and apartment cleaning service to Asian markets soon. And in Australia, startup Whizz just raised $2 million for its on-demand home cleaning app.
“Local competitors are naturally the traditional cleaning service providers,” said Moppi founder Matti Tiainen. “Globally speaking, the U.S. based Handy is perhaps the most well-known, growing fast and has taken its first steps in Europe. The biggest competitor in Europe is the Berlin based Helpling, also seeing rapid growth,” Tiainen said.
If these startups sound similar, it’s because they are. And if the concepts sound familiar, it’s because startups like Qlean, Moppi, and Handy have been pitched from their conception as the “Uber of cleaning.” But these startups are also facing many of the same challenges as Silicon Valley breakout Uber.
First, Handy still isn’t earning a profit after three years in business; similarly, leaked internal documents recently revealed that Uber is bleeding cash for the second year in a row. And even more troubling, both Uber and Handy are facing multiple lawsuits from their “independent contractors,” who claim the companies treat them like employees in all but name. Unlike Handy’s disgruntled contractors, Tiainen says his workers earn 20% more than they would from other Finnish cleaning services.
The “gig-based” economics behind startups like Uber and Handy, which rely on huge numbers of “independent contractors,” are controversial and divisive. What’s more, none of these new cleaning service apps are going after the commercial cleaning industry, limiting their potential for growth. According to the U.S. Census Bureau, there are about 51,000 commercial cleaning services in the U.S., with an estimated industry value of $78 billion.