Independent Contractor vs. Employee : Handy

Handy screen shot 2015-08-02 at 3.02.33 pm

I just read an excellent article, This home-cleaning service shows everything that startups do horribly wrong by ALISON GRISWOLD of Slate, republished on Business Insider, about Handy, the New York based cleaning service. The articles looks well researched, and primarily covers the hot topic of work classification: Independent Contractors vs. Employee. A fascinating topic increasingly in the media because of the winner take all economics of the Internet and the inequality that results from such a concentration of economic power.

Below is my take on Handy’s business model, its problems, and how to potentially resolve it. Which is a blueprint for many collaborative consumption businesses being launched and growing.

“Based on this article it seems Handy has made a slight mistake in defining its business. It seems they define Handy as an online cleaning service which results in the company wanting to define how the work is done and then running afoul is employment laws. However, if the company understands that as an online marketplace business it is really in the business of facilitating the creation and development of the relationship between someone needing cleaning services and someone offering cleaning services, in other words a communications business, then it would develop online tools in this sense and not create problems of itself with regard to labor laws. Instead of training cleaning crews with a prescribed way of doing the job – which implies too much control and thus an employer/employee relationship – or hiding behind language to hide this relationship – our customers ask – just allow the customer to tell the cleaner what they want done and how using a form.

By creating the tools necessary to facilitate combination between the two parties in the cleaning marketplace and a feedback loop for quality control, Handy can effectively delegate how the job is done to the hiring and executing parties to the transaction. This allows the company to maintain a clear separation between itself and the independent contractors executing the jobs. And, more importantly, gives Handy the tools necessary to acquire a whole host of data about how people want their cleaning done, what products they prefer, what techniques, and so on. Information useful to many interested ecosystem members opening up other avenues of value creation through the sale of data, hyperlocal consumption habits, content creation, advertising, e-commerce, transactions (of course), and so on.”