Handy’s Efforts to Become a Lean, Mean Cleaning Machine

The start-up industry has always been about rapid change to capture market openings. Now, the industry itself is shifting its focus from never-ending growth to profitability. Start-up founders have to navigate a new world of investor goals. Handy, Inc. is sharing its efforts to transform into the kind of company venture capitalists want to see in 2017.

Co-founders Oisin Hanrahan and Umang Dua initially focused on growth. Their on-demand home-cleaning service has acquired two competitors, launched in 28 cities, hired over 100 staff and raised over $100 million dollars. In 2014, investors asked the co-founders to slow down operations and focus on raising profitability. It was an unusual request in the start-up world, but Hanrahan and Dua listened.

Handy.com focused on its existing markets and made several changes to its business model. Many of their in-person customer support staff were fired. Some of their work was taken over by chatbots, some was outsourced to American call centers, and some was no longer necessary. By focusing on improving quality rather than pushing for new cities, Handy has improved customer experience and decreased the need for customer service.

They’ve also improved their overall business model. Rather than burning cash to acquire new customers, they’re starting to rely on word-of-mouth from satisfied customers. They’re running fewer discounted promotions, and all of their cities have reached a positive gross margin. They expect to start turning a profit in 2017. For investors who would love to see the start-up reach every major city before slowing down, Handy’s decisions may be disappointing. In today’s market, though, venture capitalists are looking for profitability first. Handy is poised to deliver it in just a few months.