TaskRabbit is a two-sided crowdsourced marketplace model that connects TaskPosters, people who need help completing tasks to Taskers, people who are willing to complete the tasks.
How it Works:
- TaskPoster posts a job and is able to view 3 contractors that meet their needs
- Taskers are able to accept or cancel the job
- The payment is processed by TaskRabbit when the Tasker completes the job
Evolution of Business
As the company grew, they had to make some changes to the service in order to better manage the crowd and make sure both sides of
the marketplace were properly incentivized. There were three major shifts the company made.
First, they removed the auction-based task system originally put in place and instituted a direct hire model. Taskers felt the auction-based system was encouraging TaskPosters to offer lower wages and that in order to ‘win’ a job they had to accept lower wages than
they normally would. As a result of this dissatisfaction, TaskRabbit started to notice reduced crowd participation on the Tasker side through lower bid rates. The company was smart to make this change to keep the Taskers properly motivated since crowd participation is key to the success of a crowdsourced marketplace.
TaskRabbit also increased the accountability of the Taskers in order to better manage the quality of the experience. Taskers were required to respond within 30 minutes to job
assignments, update their availability information and even wear TaskRabbit uniforms. These measures taken helped to ensure a higher quality experience for the TaskPosters which in turn incentivizes them to use the service again or recommend it to friends.
Finally, TaskRabbit switched from a task rate to an hourly rate system. TaskPosters were miscalculating the amount of time the task would take to complete and therefore Taskers were investing more time than expected for a pre-agreed rate. The hourly rate allowed for more flexibility if tasks took longer and was more aligned with the way Taskers were comfortable being paid.
TaskPosters are provided with an easy solution to finding Taskers that have been vetted. The safety checks performed by TaskRabbit create a level of trust for its users. Additionally, every task is insured, which further increases this trust.
Taskers are able to make quick, easy money on their own schedule. They can select jobs that they want to do
with the flexibility to do them when they want at the price they want.
TaskRabbit gets a 30% commissions on each transaction between the TaskPoster and the TaskRabbit. Additionally, they charge a 5%
trust and safety fee that is added to the total of the task.
While TaskRabbit has done a good job scaling the business, they certainly face several challenges that could impact the future of the business. First of all, they are a location-constrained marketplace, which makes crowd participation and size that much more important. Additionally, they run the risk of meeting challenges around whether the Taskers are considered independent contractors or TaskRabbit employees, which could have income tax implications for the business.
The company has been able to scale through indirect network effects. With the new model that is hire only instead of auction-based, they are removing the visibility of the Tasker network and I worry that might impact their ability to scale since the TaskPosters are only getting 3 options now.
Finally, when thinking about incentivizing the crowd, it is clear this community is motivated by extrinsic motives and since multi-homing is possible, there is a risk that a new competitor could enter and offer lower commissions and easily steal the user base.
It will be interesting to see how they handle these challenges and also to see what will happen with Uber now in the mix.