Homejoy was (at least at one point) the fastest growing company in YC history according to PG[1], and if you go back and read the press, particularly around its funding, it was treated like it was already a success.
Its rapid demise is a good reminder that growth isn't profit, and funding from top tier investors doesn't actually signal that you are building a sustainable business.
Incidentally, I have pointed out the employee misclassification issue numerous times[2][3], and wrote last year[4]:
> It's going to be very interesting in the coming years to see which of these on-demand companies continue to thrive because I personally think it's inevitable that many of them are going to be forced to reclassify their workers as employees. I suspect some investors aren't giving this enough consideration in their due diligence.
If investors are now doing their due diligence (gasp) and realizing that many of these portfolio companies are not going to be able to effectively defend against misclassifcation class actions, Homejoy is not going to be the last of these highly-funded on-demand companies to literally hit a wall.
Its rapid demise is a good reminder that growth isn't profit, and funding from top tier investors doesn't actually signal that you are building a sustainable business.
Incidentally, I have pointed out the employee misclassification issue numerous times[2][3], and wrote last year[4]:
> It's going to be very interesting in the coming years to see which of these on-demand companies continue to thrive because I personally think it's inevitable that many of them are going to be forced to reclassify their workers as employees. I suspect some investors aren't giving this enough consideration in their due diligence.
If investors are now doing their due diligence (gasp) and realizing that many of these portfolio companies are not going to be able to effectively defend against misclassifcation class actions, Homejoy is not going to be the last of these highly-funded on-demand companies to literally hit a wall.
[1] http://www.reddit.com/r/EntrepreneurRideAlong/comments/1uyr6...
[2] https://news.ycombinator.com/item?id=8489834
[3] https://news.ycombinator.com/item?id=8468863
[4] https://news.ycombinator.com/item?id=8709632