When do on-demand startups expand to new markets?

Diverse set of companies, from a retail delivery service to on-demand lawn mowing, share their views

Bambi's fireside chat with Handy CEO Oisin Hanrahan at Vator Splash yesterday was the first of three sessions in a row dedicated to the tech sector with too many names, from "on-demand" to "sharing economy" to "flexible economy" to "zero-waste economy."

The second session brought together a diverse set of leaders to discuss how their companies are putting every idle minute and asset to work.

Panelists (right to left in the photo) included Art Agrawal (Founder and CEO, YourMechanic), Sean Behr (Founder and CEO, ZIRX), Ken Davis (Founder and CEO, TaskEasy), and Daphne Carmeli (Founder and CEO, Deliv), and the session was moderated by Mike Walsh (Partner, Structure Capital).

Here were a few key takeaways from the session.

Expanding to new markets

The first question Mike posed to the panelists was about new markets: how does an on-demand company know when to expand?

"When Uber goes into a new market they must respond in minutes," said Davis, who jokingly added, "Your lawn grows but it doesn't grow very fast."

His argument was that "on-demand" is a flexible term. For Uber, on-demand means having a car ready to pick up a passenger in minutes, so choosing to launch a new city is a much more complicated affair for the company. TaskEasy, on the other hand, has up to a week to deliver its services, meaning it was able to launch nationally before figuring out exactly how it would bring its services to every specific locale. As it receives service requests, it has time to find the workers to respond.

YourMechanic is much more like Uber in that it closely monitors supply and demand, with Agrawal saying the company "never opened in a city that didn’t have internal demand already." (Los Angeles, for example, had four times the demand of the typical city.) And with demand, the company must figure out how many mechanics it needs and with what skillsets to properly fulfill requests.

In addition to the range of timeliness required, there's also the factor of whether you're serving consumer or enterprise. Deliv technically works on both sides, but because the partnership with retailers is so crucial to the business, Carmeli says the company follows the demand from those retailers.

Similarly, Behr said "we only go to a new market when a company brings us there." That's definitely more the norm on the enterprise side of startups.

Key performance indicators (KPIs)

When it comes to tracking data to be successful, every company on the stage has their own unique set of KPIs.

For Deliv, which could be working with a retailer that has 100 stores in a certain radius, it's all about optimization of routes. Carmeli says the company works closely with the retailer and reviews their data around location and inventory of different stores so they can optimize delivery routes.

Behr, echoing Carmeli again, called ZIRX a "time-based business" and likened his service to the airlines where you have a strong expectation of timeliness.

TaskEasy, again, proved to be a unique creature. Davis said "pricing lawns accurately" was one of the company's most important challenges, which is why they use satellite imagery of lawns to evaluate both size and shape to determine pricing.

Independent contractors vs. employees

In regard to the ongoing discussion around categorizing the workers in this emerging economy as freelance or full-time, Davis spoke for the panel when he said, "We’re all paying attention to it."

Like Hanrahan just before, he believes that the industry will change, regulations will be rolled out, and companies will simply have to adapt. Still, specifics seem to be scant. Nobody can describe what it is exactly those regulations will require, but everyone assumes they're coming.

Thanks to our amazing top-tier Splash Spring 2016 sponsors: KPMG, Javelin Venture Partners, SAP Startup Focus Program, Bread and Butter, Kapor Center for Social Impact, Lyft, Avison Young, Tubemogul, Wendel Rosen and Dictionary.com.