Earlier this year, I hired a house cleaner. I wouldn't have done so normally, but my place was a mess, I was busy at work, and I saw an offer on Facebook that looked too good to be true — a San Francisco start-up called Homejoy was offering home cleanings in the Bay Area for $19. (Not $19 per room or $19 per hour. Just $19.) So I booked an appointment through Homejoy's website, and a day later, a young man showed up at my door.
As the cleaner laid out his tools, we made small talk, and I asked him where he lived. "Well, right now I'm staying in a shelter in Oakland," he said. I paused, unsure if I'd heard him right. A shelter? Was my house cleaner — the one I'd hired through a company that has raised $40 million in venture-capital funding from well-respected firms like Google Ventures, the one who was about to perform arduous manual labor in my house using potentially hazardous cleaning chemicals — homeless?
He was, as it turned out. And as I told this story to friends in the Bay Area, I heard something even more surprising: Several of their Homejoy cleaners had been homeless, too.
To explain why it's possible for a cash-flush tech start-up to have homeless workers, it helps to know that the man I hired through Homejoy wasn't a Homejoy employee at all. That's because Homejoy doesn't employ any cleaners — like many of its peer start-ups, it uses an army of contract workers to do its customers' bidding. To hear Homejoy tell it, it's simply the digital middleman that allows people seeking home-cleaning services to find people willing to do it. The worker dusting off a bookshelf might look like he works for Homejoy, when he's really the sole employee of John Smith, LLC. As the Washington Post wrote, "Homejoy is just organizing the masses of people who already offer their cleaning services independently."
With Uber valued at $18 billion, Airbnb valued at $10 billion, and new imitators popping up daily, Silicon Valley is clearly infatuated with the middleman model. A recent study by venture-capital firm SherpaVentures, which has invested in start-ups like Washio (Uber for laundry), BloomThat (Uber for flowers), and Shyp (Uber for packages), estimated that venture capitalists invested $1.6 billion in so-called "on-demand" start-ups in 2013 alone. SherpaVentures predicts that so-called "freelance marketplace" or "managed-service" labor models used by these companies are poised to transform industries like law, health care, and investment banking, and that fewer people have traditional full-time or part-time jobs as a result. This, in the firm's mind, is a good thing.
"Perpetual, hourly employment is often deeply inefficient for all parties involved," the report reads.
But increasingly, critics argue that the freelance model is being abused, with workers being treated as if they were on payroll without getting any of the benefits afforded to payrolled employees. Some Silicon Valley insiders are beginning to worry that start-ups' overreliance on contract workers could come back to haunt them if they run afoul of longstanding labor rules. If that happens, these high-flying disruptors could be facing serious disruption themselves.
One former Homejoy cleaner who asked to remain anonymous because he feared reprisal from his current employer told me that when he signed up for Homejoy, he was issued a cleaning kit and a uniform and given a training session at a Homejoy employee's house. The company, he said, let him make his own schedule, but encouraged him to work certain days rather than others. And although he gave Homejoy credit for letting him work without any prior professional cleaning experience, he now takes issue with the company's policy of not covering independent contractors if, for example, they get injured on the job.
"Quite frankly, I don't think that's fair," the former cleaner said. "At every organization I've worked for, I considered myself an employee."
As the cleaner laid out his tools, we made small talk, and I asked him where he lived. "Well, right now I'm staying in a shelter in Oakland," he said. I paused, unsure if I'd heard him right. A shelter? Was my house cleaner — the one I'd hired through a company that has raised $40 million in venture-capital funding from well-respected firms like Google Ventures, the one who was about to perform arduous manual labor in my house using potentially hazardous cleaning chemicals — homeless?
He was, as it turned out. And as I told this story to friends in the Bay Area, I heard something even more surprising: Several of their Homejoy cleaners had been homeless, too.
To explain why it's possible for a cash-flush tech start-up to have homeless workers, it helps to know that the man I hired through Homejoy wasn't a Homejoy employee at all. That's because Homejoy doesn't employ any cleaners — like many of its peer start-ups, it uses an army of contract workers to do its customers' bidding. To hear Homejoy tell it, it's simply the digital middleman that allows people seeking home-cleaning services to find people willing to do it. The worker dusting off a bookshelf might look like he works for Homejoy, when he's really the sole employee of John Smith, LLC. As the Washington Post wrote, "Homejoy is just organizing the masses of people who already offer their cleaning services independently."
With Uber valued at $18 billion, Airbnb valued at $10 billion, and new imitators popping up daily, Silicon Valley is clearly infatuated with the middleman model. A recent study by venture-capital firm SherpaVentures, which has invested in start-ups like Washio (Uber for laundry), BloomThat (Uber for flowers), and Shyp (Uber for packages), estimated that venture capitalists invested $1.6 billion in so-called "on-demand" start-ups in 2013 alone. SherpaVentures predicts that so-called "freelance marketplace" or "managed-service" labor models used by these companies are poised to transform industries like law, health care, and investment banking, and that fewer people have traditional full-time or part-time jobs as a result. This, in the firm's mind, is a good thing.
"Perpetual, hourly employment is often deeply inefficient for all parties involved," the report reads.
But increasingly, critics argue that the freelance model is being abused, with workers being treated as if they were on payroll without getting any of the benefits afforded to payrolled employees. Some Silicon Valley insiders are beginning to worry that start-ups' overreliance on contract workers could come back to haunt them if they run afoul of longstanding labor rules. If that happens, these high-flying disruptors could be facing serious disruption themselves.
One former Homejoy cleaner who asked to remain anonymous because he feared reprisal from his current employer told me that when he signed up for Homejoy, he was issued a cleaning kit and a uniform and given a training session at a Homejoy employee's house. The company, he said, let him make his own schedule, but encouraged him to work certain days rather than others. And although he gave Homejoy credit for letting him work without any prior professional cleaning experience, he now takes issue with the company's policy of not covering independent contractors if, for example, they get injured on the job.
"Quite frankly, I don't think that's fair," the former cleaner said. "At every organization I've worked for, I considered myself an employee."
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