Came across this story today about 2 harrrravvvvaaaaard students creating yet another company thats cleans your dirty penthouse and does chores like laundry and shopping, yes those things so many of us in this new economy don't want to do and would rather pay someone hundreds a dollars a month to do...how many of these sites exist, too many to even count... I thought the only reason why these services exist in todays economy is because of the play money everyone has these days, thanks to historical wall street gains and all this free money the fed has pumped into the economy VCs are going bonkers and lending anyone and everyone money just to get in on a company they believe is going IPO in the next 3 or 4 years...but little do they know that most of these companies will disappear overnight once the recession comes and the stock market corrects, these are such niche based businesses that when a family or individual needs to cut back the first thing they will let go is their service maid or in this case, Alfred..... with just one simple recession these start ups will disappear just as quick as they popped up, this service costs $99 a month, but the question is if they are paying their employees $18 an hour + benefits how do they make money? How is it possible to make money when their employees are making $18 an hour.... seems like a good starting hourly pay since minimum wage is still under $9 an hour ...but think about it, healthcare for each worker, what about insurances, workman comp, liability insurance, unemployment insurance, what kind of margins could they possibly be running on to keep this business afloat, not adding up, this company will NOT exist in the next economic downturn...aside from that it seems like 1999 all over again, the company is run by 20 somethings that have probably never heard of the dot com bubble or that other company webvan or kozmo....
2 Harvard students were sick of their dirty apartments, so they built a company that will do your chores for you
2 Harvard students were sick of their dirty apartments, so they built a company that will do your chores for you
- JUN. 17, 2015, 3:25 PM
- 98,234
Marcela Sapone and Jessica Beck met at Harvard Business School, fresh out of stints in the finance world.
"I was working really long hours and coming back to an apartment that was a total mess," Sapone tells Business Insider.
Beck and Sapone knew how grueling working crazy hours could be, and what kind of toll it could take.
"Jess is a super, super messy person, and would never invite me over to her apartment, and when I finally went over there I had known her for eight months; she had a laundry pile the size of her kitchen table," Sapone says. "I was like, this is nuts. It was really hard to live our lifestyles without help."
Beck and Sapone hired someone off of Craigslist to come do their laundry and buy their groceries weekly, and the two split the cost. The woman they hired, Jenny, came to their apartments to take care of errands that would otherwise pile up. This was the earliest iteration of what would eventually become their company, Alfred.
"It was a little bit of an accident: We built the product for ourselves, and over time people in our apartment building said 'Hey, can I get in on that?'" Sapone says.
Today, Alfred is a startup that hires employees — Alfred Client Managers, or just "Alfreds" — to run weekly errands: things like buying your groceries, sorting your mail, dropping off packages, and taking care of your laundry for you. You pay $99 a month for the service, plus the cost of things like your groceries. Alfred has raised $12.5 million from investors including Spark Capital, New Enterprise Associates, SherpaCapital, and CrunchFund.
But when Beck and Sapone were still in Boston, they weren't sure Alfred was a company that even needed venture capital funding. "We really thought about it as a smaller business," Sapone, who is CEO of Alfred, said. "We created a bunch of postcards with different prices and different bundles of services, and we put them under the doors in all these different neighborhoods in Boston, and we got our first 10 customers that way."
Alfred's specialty early on — and what made it different from delivery services and other courier systems — was that it was optimized for standard routes. "It's kind of like a milkman run where you have one person who's going to do the errands for everyone at the same time and go on these standard routes, just like a milkman would visit a neighborhood and would pick up and take away the milk bottles from every door," Sapone says.
Sapone and Beck were still in business school while they built their company, and it wasn't easy. But any time the founders went to their customers and told them they were considering pumping the brakes on the company to focus on school, their customers would freak out and offer to pay more and more money to keep Alfred's services afloat.
"This happened from the point where people were paying $25 a week all the way up to $90 a week for the service that we have today," Sapone says. "People were paying $400 for Alfred's service in Boston when we first started."
"The entire world reaches out to you when you win"
Alfred launched in Boston in May 2013. In September 2014, Sapone and Beck left Harvard and Boston and flew out to San Francisco to take part in TechCrunch Disrupt's Startup Battlefield competition.
"Getting into Disrupt was kind of a surprise. The only thing we were trying to optimize for was not to look silly. We had kind of applied on a lark. We did a lot of our prep work the weekend before," Sapone says. "But you have to remember, we had a year's worth of data running the business, so the one thing we had going for us was we had a ton of conviction. The entire Disrupt speech was written on Post-it notes and I practiced it over and over and over again until I could do it until it didn't matter how many people were in the room."
At the end of the competition, Alfred won Disrupt.
"I've been to the New York Disrupt, and it's small. San Fran's Disrupt is pretty intimidating. I've honestly never received more emails or text messages — the entire world reaches out to you when you win," Sapone says. "And it allowed us to get a ton of customers. We went from being a really small operation in Boston to, suddenly, we had 10,000 signups."
Hello AlfredA standard handwritten note from an Alfred to a customer.
Immediately after Disrupt, Sapone and Beck decided to launch Alfred in New York and to move their company there.
In November 2014, armed with $2 million in seed funding from CrunchFund, SV Angel, and Spark Capital, Alfred launched in New York.
"When I spent time with Jessica and Marcela, I was immediately taken by a few things. First of all, they're an amazing team. Individually, they're great. Together, they're unstoppable. They're super passionate about what they're doing," Bijan Sabet, a general partner at Spark Capital, told Business Insider. "Even before they raised any money from VCs — our round was before they won Disrupt — they had bootstrapped the company themselves; they had put flyers out. They had really made it happen. Basically, they were profitable even before they had raised any venture capital. Not only had they shown great metrics — like customers loved it and all that stuff — but their obsession to detail was extraordinary."
The founders avoided initially launching in San Francisco because "New York has a higher population density and a higher availability and accessibility of the kind of vendors we want to use," Sapone says. "SF is an anomaly — it has the most on-demand services out there. And if our desire was to link all of those together, we'd want to first learn how to do that in a place where people are not used to on-demand services. The value proposition is higher when you're like, no, I can't get on-demand groceries."
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