I’ve spent the last several months looking at investment opportunities in eServices. I chose to dive into this sector because my parents run a commercial cleaning company and it’s pretty apparent that their business is in the crosshairs of lots of smart, well-funded, aggressive founders. Oh, turns out it’s a pretty popular sector these days also…
I’ll be writing a few posts about my findings in the coming weeks.
One of my key takeaways after meeting founders, employees, contractors and users of these services is that the supply side will be the key for network effects going forward. Giants in the first wave of eServices like Uber, Lyft and Airbnb built network effects by focusing primarily on the demand side of the equation. Today, however, new entrants and even these large incumbents have shifted their focus to managing/retaining the supply side.
In addition to the network effect implications, the legal and regulatory threats for eServices companies (that we’ve basically been ignoring for the last few years) are starting to appear on the supply side. Just last week, the California Labor Commission ruled that at least one Uber driver is actually an employee, not a contractor. I’d be willing to bet that there will be much, much more to this story and related issues. I’d also be willing to bet that the bulk of regulatory/legal action will come from the supply side (workers’ rights) and not the demand side (consumer protection… from what? awesome new services that make life easier?).
The following slideshare post is a summary of my findings related to the supply side. Any comments are welcome.