WaHome, a Seoul-based on-demand home cleaning service, has landed $1 million in seed funding, which it will use to hire more engineers, build features for its Android and iOS apps, and launch in more Korean cities before tackling expansion in Hong Kong and Japan.
John Lee and Edward Hahn founded WaHome in May after looking for proven business models that could take off in Korea. Before WaHome, chief executive officer Lee studied at the Cornell School of Hotel Administration before working with GoGoVan as an investor. The Hong Kong-based company lets users book moving vans through its apps, skipping traditional call centers.
Since many Korean housecleaning services also operate around call centers, which cost a membership fee to join but are often slow to confirm appointments, Lee and Hahn decided a more efficient app-based booking system would also prove successful. Hahn says that there are 100,000 home cleaning transactions a day in Seoul (200,000 throughout South Korea), but that only about 20 percent of customers like their current service, leaving the industry ripe for disruption.
Running an on-demand service, however, also comes with many potential pitfalls. Hahn and Lee are quick to address comparisons to HomeJoy, the San Francisco home cleaning startup that raised $40 million and expanded into 35 cities before shutting down in July after being hit with multitude issues, including worker classification lawsuits and poor customer retention rates, that made it difficult to get followup funding.
“Questions about HomeJoy are a no brainer, so we bring it up first,” says Hahn.
WaHome did legal research and found out that in South Korea, they could train their contractors without losing their independent status. This means cleaners offer better and standardized services, which in turn means more return customers. The company claims that half of its 1,200 current users hire a WaHome cleaner once a week.
WaHome also wants to avoid HomeJoy’s difficulties by keeping its contractors satisfied. For example, the company’s goal is to guarantee them at least eight sessions, or about 32 hours, of work a week. Cleanings cost about $40 per session and WaHome is passing all of that to cleaners, which means that each takes home about $1,300 a month after taxes (the company plans to make revenue by increasing prices after gaining more market share).
“We’re seeking new cleaners and making sure they are satisfied with the amount of work they are getting,” says Lee. “As we comply more data, we’ll put it into our algorithm and stagger demand for different areas.”
WaHome now has about 350 cleaners on its platform. After expanding its current services into new cities, the startup will add other verticals, like home maintenance. The startup has to compete against traditional house cleaning call centers, but its founders are confident that people will turn to WaHome in order to avoid annoyances like the subscription fees both customers and cleaners have to pay. Many services also require cleaners to wait in a call center until they get a booking.
“It was very draconian,” says Hahn. “It was a very archaic structure and they are asking to be disrupted.”