When do on-demand startups expand to new markets?

Ronny Kerr · May 13, 2016 · Short URL: https://vator.tv/n/4562

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: KPMGJavelin Venture PartnersSAP Startup Focus ProgramBread and ButterKapor Center for Social ImpactLyftAvison YoungTubemogulWendel Rosen and Dictionary.com.

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Ronny Kerr

I am a professional writer with a decade of experience in the technology industry. At VatorNews, I cover the zero-waste economy, venture capital, and cannabis. I'm also available for freelance hire.

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YourMechanic

Startup/Business

Joined Vator on

YourMechanic, the mechanic that comes to you, is a venture-funded, award-winning auto repair technology startup that enables car owners to get their vehicles fixed conveniently and economically at home or work.

ZIRX

Startup/Business

Joined Vator on

ZIRX Mobility Services is a full-service platform that empowers auto manufacturers, dealerships and fleet owners to provide unique customer experiences and manage backend operations more efficiently.

ZIRX is available nationally and is currently operating across many of the nation’s top metro regions, including San Francisco, Seattle, Los Angeles, San Diego, New York, Boston, Washington, D.C. and Chicago.

Headquartered in San Francisco, ZIRX was founded by in 2014 by Internet veterans who have built marketplace businesses in e-commerce and advertising. The company is funded by Bessemer Venture Partners, Norwest Venture Partners and Trinity Ventures.

Deliv, Inc.

Startup/Business

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Company description: Deliv is a crowdsourced same-day delivery service for large national multichannel retailers. Deliv partners directly with retailers and prices same-day delivery the same, or lower, than standard delivery. In partnering directly with retailers, the Deliv “same-day delivery” button becomes a native part of the checkout experience.

Deliv drivers are made up of highly educated, experienced customer service and sales personnel. They are rated by customers and by Deliv’s operations team so the platform is able to prioritize the allocation of jobs to those with the highest ratings. 

Business model: By partnering directly with retailers, Deliv allows the retailer to retain their direct relationship with the customer.  Deliv believes in giving the customer, and retailer, the ultimate experience with easier purchase, superior delivery personnel and low prices. The Deliv “same-day delivery” button is integrated into the retailer’s checkout screen. The Deliv platform incorporates smart routing and full transparency including the ability for shoppers to watch their delivery on a map real time from pick up to their doorstep.

Competitive advantage: Deliv differs from other same-day delivery services by partnering directly with retailers and pricing same-day delivery the same, or lower, than standard delivery. This makes the traditionally premium service significantly more attractive to both consumers and retailers, driving significant volume and scale.