TaskRabbit is an online and mobile marketplace that matches users, who have errands and tasks that need doing, and taskers, pre-approved contractors in the area who complete the task. Boasting over two million users, TaskRabbit provides income for over 25,000 people, 10% of whom perform tasks as a full-time job and earn $5,000 – $8,000 per month. (1) In response to deficiencies in the operating model, TaskRabbit revamped the marketplace to bring closer alignment between the operating model and the firm’s value capture.
An Evolving Operating Model
1) TaskRabbit users submit tasks and specify the maximum amount they would be willing to pay to have the task completed. Tasks range from moving help to shopping & delivery. Once a task is submitted, interested taskers enter an auction and bid for tasks. The task submitter then selects the tasker of his choice who participated in the auction. (2)
2) In 2014, TaskRabbit uncovered an alarming trend: despite growth in both users and contractors, the percentage of completed tasks on the site’s marketplace was on the decline (3). Users found themselves unable to choose appropriate price ceilings for tasks, while taskers were spending large amounts of time searching for tasks. (3) In response, TaskRabbit overhauled its matching system, moving from a manual auction system to a fixed-rate services-on-demand system (4). Under the new system, the four most common tasks (handyman, housecleaning, moving, and personal assistance) are given standard hourly rates, and a matching algorithm weighed a tasker’s prior behavior, skillset, and schedule to present the three most appropriate taskers to a user (2). Taskers are expected to be ready on-demand, and the algorithm reassigns the task if it is not committed to within 30 minutes. The aim of this change was to increase the volume of completed tasks, a metric by which TaskRabbit generates revenue.
TaskRabbit derives value from the marketplace by charging users a fee for booking a task. The service fee constitutes 30% of the payment from a user. For example, for a $100 task, the tasker receives $70, which TaskRabbit receives $30. (6) To prevent disintermediation, whereby a user directly contacts a tasker to circumvent the service fee, TaskRabbit lowers the fee if a user contacts the same tasker for the same work. (6)
The revamped matching therefore complements the business model in two ways: first, by simplifying the matching system and reducing the time requirement from both the supply and demand side, TaskRabbit can drive a larger volume of completed tasks; and by setting a fixed rate on common services, TaskRabbit creates an effective floor on the dollar value of a given task and avoids a “race-to-the-bottom” result from taskers undercutting each other for tasks and eroding value capture for the company. TaskRabbit’s revamp is an example of a live business instituting dramatic change to more closely align its operating model with its business model.
(1) “How TaskRabbit Works: Insights into Business & Revenue Model” Juggernaut Powering On Demand Apps. Web. 10 Dec. 2015. <http://nextjuggernaut.com/blog/how-task-rabbit-works-insights-into-business-revenue-model/>.
(2) “Following A Drop In Completed Jobs, Errands Marketplace TaskRabbit Shakes Up Its Business Model.” TechCrunch. Web. 10 Dec. 2015. <http://techcrunch.com/2014/06/17/following-a-drop-in-completed-jobs-errands-marketplace-taskrabbit-shakes-up-its-business-model/>.
(3) “TaskRabbit Is Blowing up Its Business Model and Becoming the Uber for Everything.” The Verge. 17 June 2014. Web. 10 Dec. 2015. <http://www.theverge.com/2014/6/17/5816254/taskrabbit-blows-up-its-auction-house-to-offer-services-on-demand>.
(4) “TaskRabbit Workers Receive a Useful Lesson in Capitalist Exploitation.” Salon.com. Web. 10 Dec. 2015. <http://www.salon.com/2014/07/24/taskrabbit_workers_receive_a_useful_lesson_in_capitalist_exploitation/>.
(5) “What Is the TaskRabbit Service Fee?” TaskRabbit Support. Web. 10 Dec. 2015. <https://support.taskrabbit.com/hc/en-us/articles/204411610-What-is-the-TaskRabbit-Service-Fee->.