Handicapping On-Demand Market Sectors

1. Summary

The legality of the business model of certain on-demand service companies, like Uber and Homejoy, has led to a cultural debate about the relationship between on-demand workers and the services that profit from treating those workers as independent contractors instead of employees. Despite the claims that the workers want to be independent contractors, the traditional tests that government labor boards use to assess subcontractor classification are not clearly met in this new work marketplace.

While the jury is still out, some companies are sidestepping the issue and simply bring their workers aboard as employees, like Shyp has done, and others — like Zirx and Luxe — are contemplating. Other have found the economics of full-time workers prohibitive, and have shut their doors, like Homejoy has (see Homejoy calls it quits, Google scoops tech team).

Given the mounting questions and legal actions, the heady and explosive era of on-demand companies that fit the ‘Uber for x’ business model may be coming to a close, and we may be seeing only well-capitalized behemoths — like Uber, Google, and Amazon — playing in the on-demand displacers sector, going forward.

In this research note, I put On-Demand on the Stand, and explore the Implications for Business.