“How I took on $100s of millions of VC-funded competitors & won”

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A few years ago it seemed like every venture capitalist tried to create the “Uber of cleaning services.”

Why did so many of them fail? Why did Michael Scharf’s MyClean service continue to grow?

Catch the interview to find out.

Michael Scharf

Michael Scharf

MyClean

Michael Scharf is the founder of MyClean, a full-service cleaning and janitorial company.

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Full Interview Transcript

Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com. It’s the place where I do interviews with entrepreneurs about how they built their businesses.

Back in 2013, I interviewed a guy who had an online site that allowed you to book cleaners. And I wouldn’t have thought that business could be big except I talked to him before the interview and he said, “Look, Andrew, it’s generating lots of revenue and we’re pretty much bootstrapped and we’re still growing.” And at the time, the business was doing $4 million.

Well, it’s been a few years. He shot me an email to say that things have changed and he’s been growing his business and I invited him here to talk about where they are now, what the revenue is, how he grew from where he was then to where he is now and to just catch up on the cleaning business in general.

I wondered at the time why it was getting so much heat. Now I’m wondering why so many players actually shut down when it seems to make sense–go on a website, order cleaning service, send, boom. Somebody comes and cleans up. Why didn’t that take off when all these VCs were finding those kinds of businesses? We’ll talk to him about that.

His name is Michael Scharf. He is the founder of MyClean. MyClean is a full-service cleaning and janitorial company. By the way, if you guys are hearing me, do something. Michael, I can’t stop playing with the Air Pod clips. I just keep snapping it. I’ve got to put it away in the interview. Those Air Pods make me look ridiculous. But I love the sound of them and I guess I like playing with them.

All right. One more thing before we start and that is I should acknowledge my two sponsors. The first will help you hire your next great incredible developer. It’s called Toptal. The second is a service that I used to book today’s interview. It’s called Acuity Scheduling, but I’ll tell you guys more about them later.

First, Michael, I’m going to go right to the main question. You were $4 million roughly when we talked back in 2013. What’s the revenue today, 2017?

Michael: Sure. How are you doing, Andrew?

Andrew: Good to see you.

Michael: Thanks for having me.

Andrew: Oh, right. Wait, hello, let’s be human.

Michael: Right to business. I like it.

Andrew: Now get to the numbers, yes.

Michael: Exactly. Well, I’m sure a lot of people would like to know. So we’ve more than doubled since then. We’re run-rating right around $9 million now, a little over $8.5 million last year.

Andrew: 2016, $8.5 million?

Michael: 2016, $8.5 million, closer to $9 million.

Andrew: Are you guys profitable on that?

Michael: Sorry?

Andrew: Closer to $9 million. Are you guys profitable on $8.5 million to $9 million a year, 2016?

Michael: Yeah.

Andrew: You are?

Michael: Thankfully. We’ve been profitable. New York as a unit has been profitable for going on two years.

Andrew: Going on how many years?

Michael: For two years now.

Andrew: Two years, and Chicago?

Michael: We’ve been making money cash flow positive in the New York business for two years, and Chicago is on the brink of profitability right now. Sometimes we’ll make a few grand, other months we’ll lose a few grand, but right there.

Andrew: And New York, are we talking about over $1 million in profits?

Michael: A little less than that.

Andrew: Just a little less than that?

Michael: Less than that. Yeah.

Andrew: Interesting. All right. It’s not fully bootstrapped. From what I remember in 2013, you had a little bit of outside money. It was like friends and family or something, right?

Michael: We raised back in 2013 $270,000 in friends and family money.

Andrew: Okay. Do you they get dividends at this point since it’s basically a bunch of friends that have been with you for a long time?

Michael: Yeah. Last year we paid out a substantial dividend. I’d rather not say that amount, but we paid out a nice dividend.

Andrew: Would they have gotten all their money back at this point?

Michael: We’ve paid out more than $270,000 in dividends. But the round was done at a $4 million valuation. So no, they still haven’t gotten all of that out.

Andrew: Okay. I went to your site and I want to know how you grew big, but I’m also curious about why you’re not here in San Francisco. I wanted to book a service to have somebody clean my place just to experiment and it’s not here. Why not?

Michael: What we’ve done is we’ve had our New York business. The New York business was successful. We had a hunch that we could expand it into other markets. But we also know and everyone knows New York is an animal unto its own. It’s a dense geographic area. There are a lot of high rise buildings. There are a ton of professionals with disposable income. There are just a lot of unique factors to the New York market. We wanted to prove that we could be successful in other markets first.

So the next market we’d been to was Chicago, which we felt was most similar to New York in that it was an only hour time zone difference. It was closer than San Francisco. It still had an urban, downtown area with a lot of professionals. Now we’ve been what I like to term proving out that model, proving that at what I guess I’ll call a unit economic basis we can be successful in a different market than New York City. I think we’ve made nice progress two years in. Still have a little ways to go, but we’ve made really good progress.

Andrew: I think that’s what the VCs are looking for. They’re looking for a lot faster growth than you’re putting up, right? You’re profitable. You’re solid. You’ll continue to grow. Does it feel like maybe you’d like to grow at VC levels, where you actually aim for a billion-dollar business or crash the way that I guess Exec kind of did aim for that billion?

Michael: It’s a really good point. I don’t think we’re that kind of business. If I was in a business I felt could scale really quickly, where there was a network effect or there was something true and proprietary about the business, then I would consider raising venture capital money. But for a professional service, which is what we are, someone who hires, trains, manages a subjective-oriented service and does through and allows a booking engine through technology and mobile technology, I just don’t see–

Andrew: I don’t see that either. I’m curious about what you did to double your business, and we’ll get to that in a moment, but to just analyze the space, it feels to me like if this was the model that you guys tried and then cast aside in the beginning, the Uber model where anyone can be a cleaner. They log in to the app, they get the jobs when they were available. They are weeded out by bad ratings and promoted to get more jobs by good ratings, if that was the model that worked then this business could be a billion-dollar business in a rapid amount of time.

But because it doesn’t work that way, it can’t get to that. You have to hire your people to get real quality. You have to grow at the rate of hiring. You have to manage a lot of people, which becomes tougher and tougher the more people you have, right? Or you go to the franchise model. Am I right about that?

Michael: You’re 100% right. I think what happened was the venture community got very decided about what we’ll term as “Uber for x” models.

Andrew: Right.

Michael: But they failed to recognize that what is Uber? Uber at the core is a logistics business. It’s an incredible logistics business, where a driver picks someone up at Point A and takes them to Point B, and as long as they’re able to do that, it’s a relatively successful transaction. Sending someone into someone’s home, allowing the person to come into a home to provide a subjective service where a number of things can go wrong–they can do a bad job with the service, they can damage something, they can break something, they can steal something, all these different things–involves a number of layers of complexity that the Uber service model does not.

Andrew: Is theft a big issue?

Michael: Within the cleaning space, 100%.

Andrew: I see.

Michael: That’s why background checking, managing, employing, having processes in place that deal with theft, all of those things are so important.

Andrew: I see. I guess I kind of thought it’s not that big of an issue for Airbnb and people are in your house with Airbnb. I guess the difference is Airbnb, I’m leaving my house out for like a week for somebody to come into the place, so if it’s going to be a week and I’m going to make money on it, then I’ll take all my stuff and put it in a separate closet, etc. I’ve never rented my house on Airbnb, but I’ve used people’s homes that way. They do always have that one closet which is off limits. I guess you can’t do that every week when a cleaner comes in.

Michael: You could.

Andrew: So let’s talk a little bit more about these services.

Michael: It may very well be an issue on Airbnb too. I don’t know how we define what is an issue and isn’t an issue. Airbnb certainly has proven they’re a scalable business.

Andrew: I think if theft was issue there, we’d hear more about it because people are pretty big about yapping about their Airbnb experience.

Michael: 100%. If you look at the cleaning space and the venture money that’s gone to the cleaning space, it’s like you said, you had Exec, which had a really brilliant founder in Justin Kan, a gentleman who had been very successful in Silicon Valley before but ultimately decided to leave the space. You had Homejoy, which was founded by the Cheung brother and sister, Adora Cheung, very well respected programmer within Silicon Valley. I think they raised over $40 million and they eventually shut their business model down.

Andrew: Why? Let’s talk about why you think that didn’t work out for them. There’s so much speculation. They will not do an interview with me. We have mutual friends. They keep saying they’re not ready. Open invitation, I’d love for them to come on here.
Michael: I guess there’s no reason for them to because they’re not promoting anything anymore. There are two obvious factors that happened. The first is they were pressured to grow at a rapid rate. To do that, what they did is they offered huge discounts to all their clients. So they, like Handy Technologies, which is another service that’s still existing, were offering cleanings at $19, $29, $39 and all of these massive discounts and they were showing high metrics of all these cleanings they’re doing, etc. But they weren’t doing it at sound unit economics.

Andrew: Okay. What else?

Michael: That was the first thing. They had to grow really, really quickly, but they didn’t do it at good unit economics. I can tell you one thing I know for certain–if the unit economics don’t work, neither does the business. The second is that there was nothing that they did from a technology standpoint or from a proprietary standpoint that made them any different than anyone else out there. They didn’t have processes for–I guess they say they prescreened, but they couldn’t train because they’re a 1099 company. They couldn’t have specific standards and procedures in place.

Andrew: You can’t train if you’re a 1099 company, you can’t train the people who work with you?

Michael: You can’t train the people who work, no. They’re independent contractors. They’re supposed to be treated as independent professionals. They’re not W-2 employees of a company.

Andrew: You can’t offer some kind of certification and say, “I’m only hiring people who have my certification,” and find a way around it.

Michael: I don’t believe so.

Andrew: I had no idea.

Michael: I don’t believe so. I believe part of the way you could get away with calling people 1099 contractors is that they’re independent professionals. You can provide them with supplies, which obviously we provide our cleaners with cleaning supplies and solutions, etc. You cannot provide them with specific training, except I think you can provide them training on how to use their technology, but not training on how to clean because they’re supposed to be professional cleaners.

Now, there are a lot of areas where the law gets very dicey too. One of the keys to being an independent contractor is they’re allowed to log in and log out whenever they want. They can work whenever they want, which the companies comply by, but I think you’re not allowed to tell them how long to be at a particular job, which I think is an area that gets very dicey because I know a lot of the companies do. They say, “All right, it’s a three-hour job or it’s a four-hour job.” There’s a lot of ambiguity and the law is definitely being stretched, expected within the cleaning space.

Andrew: I see. Okay. All right. That explains what was going on in the market. Was it a little scary, by the way, when all those guys came in with so much money?

Michael: Extremely scary.

Andrew: I bet. What did you do to protect yourself?

Michael: We just kept on doing what we did. To be perfectly honest with you, I didn’t pivot. I didn’t change our model. Some of the people who had given us friends and family were like, “Wow, you should take these meetings and go meet with the VCs.”

Andrew: You didn’t do it?

Michael: No. I knew it wasn’t a venture-backed business. I understand the venture model. They want to get a 10x return over a period of time, right? I just knew that there is a scalability limitation on this business over a short period of time.

Andrew: What if you were wrong? How many people said, “I just know that you can’t have some stranger in a car because he could just kidnap you or the regulations won’t change to allow it?” And then Uber ended up showing that it was possible. What if you were wrong? You didn’t say, “I’m going to take some money, put it aside in case I’m wrong?”

Michael: I had been operating for long enough and had run into enough challenging situations to know I wasn’t wrong.

Andrew: Okay. All right.

Michael: Also, one thing that–so, notice all of the major VC-backed companies all did one thing. They 1099’d their cleaners and that was something I could not get comfortable with based on–

Andrew: You’re not going back to 1099.

Michael: My understanding of the law and legal advice I had received from three different law firms with cleaners. We had to W-2 them.

Andrew: Plus you told me the first time, “I tried this 1099 system. I tried being the Uber for cleaning. If you look on Yelp and see all the one-star reviews, it’s from those times when we had no–when we didn’t have full control.” It’s not that you had no control. You didn’t have full control of the experience. From what I know about you, you were kind of obsessive about the checklist. I don’t know how many times in my notes I’ve got written something about your checklist. You know what I’m talking about? What is it, this 40-point checklist that’s on your website?

Michael: Yeah. We have a 50-point–

Andrew: 50 points.

Michael: Let me just correct one thing. I’m obsessive about details, so let me just add one thing. We tried a 1099 model, never 1099’ing individual cleaners, but 1099’ing to companies who were employing their cleaners.

Andrew: I see. Okay.

Michael: That’s a little bit different, because, at the end of the day, the people who were cleaning still had the protections of the law as a W-2 employee. We always did that. That was the first thing. The second thing is yeah, we have a meticulous attention to detail here at MyClean. We really are focused on doing our best–granted, it’s a subjective service–but in creating what a standard clean looks like every single time.

Andrew: Wait. So if the end cleaners were still getting paid as full-time employees of the companies that you guys hired and you just happened to 1099 those companies, doesn’t that give you control? That doesn’t give you quality?

Michael: It was a failing business model. Ultimately we had to go through a manager who worked for the company who really had no incentive to do a great job for us.

Andrew: I see. I asked you–you get to $4 million. $4 million is tough. We spent a lot of time talking about how you got to $4 million. The tough thing is taking something big and then doubling it and more than doubling and continuing to grow. I asked you what you did to do that. The first response you gave me was more of the same, which I think is interesting.

It seems like you had the model at first and you were just growing it at that point. All the anxiety and difficult of figuring things out we hashed out in the first interview. But you also told me, “We spent more time on recurring revenue, on subscriptions.” When I went to your site to try to book a cleaning for myself, that’s what I was pushed into–not pushed into, but that’s what was pre-checked, essentially. That was the default. Talk about how you figured out that that was the approach, to subscription service your work.

Michael: Sure. So we look at everything on a unit economics basis. We focus on a very simple formula. We look at cost of customer acquisition relative to lifetime value of a client. What we’ve found is that our subscription clients had a lifetime value that was 4x clients who just used us whenever they want or on a sporadic basis.

So that was really where the focus is. What we want to do is we want to be the cleaning provider for customers who are looking for the same cleaner each time for an extended period of time on an ongoing basis. It’s very difficult to make money on a one-off basis in this business.

Andrew: Why? If you’re doing unit economics, it because it costs so much to get somebody to try it that one time that if they don’t come back, you haven’t recouped your costs.

Michael: Exactly. Let’s take a simple model. Let’s say you get a $100 clean and our gross margin on that is roughly 30%, so $30. It’s very difficult to acquire customers for less than $30, nearly impossible.

Andrew: I see.

Michael: But if we make–so that’s a $100 clean. But let’s say we mark that clean down by 20%. It’s an $80 clean and our costs are still the same. So instead of making $30, we make $10 on a clean but we do 45 cleans for a person. Well, that person has a lifetime value of $450.

Andrew: Right. What did you do to calculate how many times people kept coming back? Sorry, I interrupted. What did you do to calculate how long someone was coming back?

Michael: We just looked at the numbers. We looked at the numbers and ran a bunch of different models and that’s what we did.

Andrew: I’m looking at early versions of your site. The design just keeps improving. Who did the first version of your site, the very first one?

Michael: The first version, we worked with a firm out in Canada who did that. Then we ultimately switched version two, a guy by the name of [inaudible 00:17:36], a very talented designer who did that. We partnered up with a development firm here in the States. That’s the firm that we still work with. So we still outsource our development on a flat basis and then I have a gentleman in house who oversees our product.

Andrew: Okay. All right. So subscription, understand that was helpful was a big part of the model. The other thing was–

Michael: You’ll notice our new–I’m sorry to interrupt you, but you’ll notice our new site, everything is going to be geared towards driving people towards a subscription and getting the cheapest possible alternative. The idea is we want to reward clients who are flexible with their scheduling, are willing to book early cleans and so on and so forth with cheaper alternatives. This way we can do a better job at rounding out our cleaner schedules.

Andrew: I see. So the first version of the site, I’m looking at it here. This is like from Internet Archive. It says, “Welcome to MyClean.com, a revolutionary click to clean cleaning, housekeeping and maid service servicing New York, Manhattan, Brooklyn and the Bronx.” You didn’t even uppercase the New York, Manhattan and Brooklyn, but it was functional. The second version of the site–the first version let me book a cleaning service.

The second version is the one I’m talking about where you’re basically showing me it makes so much more sense to book multiple cleanings, to have people come in more often. The third version, you’re saying, is realizing that in the mornings, not enough people book, so you might as well offer a discount for someone willing to book at that point, right? That kind of airport or airline pricing is what you’re looking for.

Michael: Exactly.

Andrew: You’re smiling as I’m talking about–

Michael: Usually in the afternoons or with flexible scheduling.

Andrew: I see.

Michael: What we want to do is we want to say that professional who, especially in New York, has a doorman and is gone from 9:00 to 5:00 every day, if they let us know that and they say you can come in after 9:00 and finish before 5:00 and I’m good, we’re going to reward them for that. Why do we want to do that? Because one of our goals and one of the things we offer is full-time work for our cleaners and a commitment to our cleaning team members to provide them with enough hours.

The more scheduling flexibility, the greater we’re able to do that. We view ourselves as a two-prong mission. We want to do a great experience for our customers’ homes, but also we want to create a nice working experience and potentially career for our cleaners. We’re really trying to marry together those two missions.

Andrew: All right. Let’s get into more specifics in a moment. I want to talk about where you specifically are buying ads, how you’re converting people, etc.

First, I’ve got tell people about Acuity Scheduling. You know, Michael, before you and I met up, I was actually running with friend of mine, Noah Kagan. We had such a good run and such a good time, we just kept wanting to extend it and extend it and I said, “No, I’ve got to go talk to Michael.” In the back of my head I said, “What if I’m really now telling Noah we can’t hang out, I come back here to talk to you and you don’t show up?”

I realized that’s never going to happen. It’s not just because you’re a responsible person that you know to stick with a schedule, it’s that no one doesn’t show up to do an interview, no one. Everyone always show up. The reason that everyone shows up and doesn’t waste my time is because I use Acuity Scheduling. The only way you’re able to book an interview with me is you go to my calendar, which is built on Acuity Scheduling. You pick the time that works for you.

So that actually helps you show up. Then I send you an email with a calendar link, so you add it to your calendar and your calendar will keep you up to date. I send you a reminder the day before. I think you might have even gotten a reminder before that. That is how I don’t waste my time and make it easy for people to book interviews and meetings with me.

Now, I recently started selling a bot course. I wanted to talk to people who were signing up to make sure they were a good fit. I gave them a link to a different calendar I set up where I had 15-minute time slots available and they book with me. I noticed something really cool. Michael, I always think that everyone in my audience is in the U.S. It turns out a large number of people are outside the U.S.

What I discovered was when I look at my calendar to see who’s showing up, I actually see the time in their time zone, which is so helpful to know that I’m calling somebody at 11:00 p.m. so I can calibrate my conversation differently than if I’m calling someone at 6:00 a.m. their time, so I actually am aware you woke up early. You got on camera if we’re doing a Skype call or on a phone call. That helps me so much.

The other thing I did was I said, “Here’s my calendar. Book your time. Tell me a little bit more about you.” And I had five questions. All those five questions were on my calendar–so freaking helpful. I get on my calendar. I see who’s next. I see what number I call. I see the time zone. I see the answers to my questions so I’m fully prepared for the call.

Listen to me, guys, if you’re out there listening to me and you are not getting on calls with enough clients or your sales people aren’t or your support people aren’t and you really want to up your call rate and not waste your time, make it easy for people to book with you. Go to AcuityScheduling.com. That’s AcuityScheduling.com.

The first thing they’re going to ask you to do is say when are you available. The second thing is they’ll ask you to attach it to your calendar so that when someone books with you, it goes on your calendar or when you book something else, Acuity won’t make that time available for people who try to book with you.

So great. Tons of integrations–I can integrate it with Pipedrive, integrate it with all my other services. If you are out there and you want people on the phone with you and you want to make sure they show up. You’ve got to check out Acuity Scheduling. And we have a special link where you can use this service for free. It’s AcuityScheduling.com/Mixergy.

What is Acuity? I know that word. I don’t know how to define it, acuity. Do you know what it is, Michael? How do you define acuity? Keenness of thought, vision or hearing, sharpness. That’s what he’s trying to go for.

Michael: Sharpness. Yeah.

Andrew: Acuity. I wonder if people are misspelling it and I’m losing business for it. I need everyone to go to Acuity Scheduling.com/Mixergy. Don’t misspell it, guys. You’ll love me for it. I want to be loved, Michael.

Michael: Don’t we all.

Andrew: Yes. I wonder if I–yeah, I do, I have more of a need, I think, than most people. Weird, huh? I think that’s why I’m on camera. Why are you doing this interview with me today, by the way? You don’t have the same need. Why do you need to be on camera with me today or why do you want to? What’s your goal with this interview?

Michael: For us, it’s really just sort of gaining exposure to the MyClean brand. Plus I know that a lot of people watch this. There are a lot of upcoming entrepreneurs. So if I could say anything helpful to them, I figure it’s a good thing.

Andrew: All right. Let’s get into the helpful stuff. Where do you guys buy your traffic? How do you get your customers?

Michael: So we get a lot from Yelp.

Andrew: Yelp.

Michael: Yelp is a really good referral source for us, yeah. We both get it organically on Yelp and then we also pay for ads on Yelp. We definitely do some SEM, so Google AdWords, although that’s gotten to be very expensive in recent years. SEO is still a pretty good source for us, although our site’s been penalized recently due to the fact that it wasn’t responsive design. The new site we think will update that and we’re hoping to rank better. Plus a lot of the links from the press we’ve received.

We have a referral program, refer a friend, get $50 off. So, referrals are certainly a big source for us. We’ve done some retargeting, retargeting through AdRoll, which has been a fairly effective channel for us. That’s really been most of the focus. Most of the focus has been digitally-based. I’ve tried running some offline things before. It’s very expensive and not very effective. Most of it really continues to be digital-focused.

Andrew: The Yelp ads, I see actually if I do a search for a cleaner in New York, on the right side is where I see the ads or if I click into an individual cleaner, right above them is where the ads are. Is that what you’re buying?

Michael: No. Type in like “cleaning service New York.” You see the top two ads, it says an ad next to it. We may even come up.

Andrew: I see. Yes. Okay. That’s what you guys are doing.

Michael: That’s what we’re buying. I believe the things that are showing up on the right. Sorry. I have a standing desk and I have [inaudible 00:25:52]. I worked out today and my calf is like tight, so I’m stretching it. I think the ones on the right are from another service, just any sort of an ad not related to Yelp.

Andrew: On the right is ads by Google, I see that now.

Michael: Ads by Google, exactly. You can tell I’ve been to Yelp a few times the fact that I had that memorized, right?

Andrew: I can tell, actually. It’s got to be a big portion of your business. I’m not seeing you as an advertiser here, but you did come up pretty high in the search result. I can request a quote right there and it says you guys respond in an hour.

Michael: Exactly.

Andrew: That’s an API connection to them?

Michael: Yeah. Then what happens is we get an email that updates and then we send them a response. I always look for these slight edge opportunities, little things you can do to differentiate yourself. Responding to clients quick or potential clients quickly is a very easy one, one we’ve implemented pretty successfully.

Andrew: Why did Handy service? Of all the venture-funded companies, Handy survived. Why? What do they do differently? You’re smiling. What do you see about them?

Michael: I don’t know. I guess it depends.

Andrew: Come on. Don’t hold back, Michael.

Michael: I’m not overly bullish on their. . .

Andrew: Future prospects. Why?

Michael: Based on what I’ve seen. They just seem to make a lot of changes. So most recently they made a change where they’re locking clients in to three, six-month and potentially one-year subscriptions. There’s a $150 cancellation fee if you decide to cancel with them. I just don’t see why that is, why they did that.

Andrew: Are they the ones that Reply All did a piece on? I think so. Reply All did a piece on all the cleaning services that you just couldn’t cancel the subscriptions–it was.

Michael: Yeah. For a while, they didn’t let you cancel on their site.

Andrew: You couldn’t cancel their service. You had to call up and you couldn’t find their phone number. I think that’s them. Yeah. Here we go. Reply All episode 33, @ISIS, I don’t know what the connection is. In this installment, Alex tries to figure out why it’s so fucking hard to cancel a Handy subscription. I see. So that works for you. SEO–what are you SEO’ing on? You guys don’t have much content, do you?

Michael: No, but we’ve gotten some write-ups about us. I’m coming out with a piece, an op-ed about how we went from $4 million in sales to $9 million in sales without taking on any venture money. So we come out with some of that type of content. We do write some cleaning tips and things like that, which a lot of people in the cleaning industry don’t do. We have a fairly decent SEO presence.

Andrew: Do you ever like when people are talking–I remember in New York, it’s so competitive what you do for a living. Do you ever feel like, “I’m running a cleaning service,” and a little bit embarrassed to talk about that?

Michael: Not really. To me, I run it as a business. So I never–I was never one of those guys that needed to go–I was in investment banking before this, which is a posh career.

Andrew: In Manhattan, for sure, the women who would want to marry you just for doing that.

Michael: Maybe not anymore, it’s changed. For me, it really was more about lifestyle, making a good living. Ultimately I found out I really like being a job creator. That’s one thing I’ve learned about myself and have really enjoyed doing through MyClean, contributing to the local economy. There’s nothing to be embarrassed about. It’s not the sexiest career out there.

Andrew: It’s hard in New York. It’s very competitive. I would have wanted to marry an investment banker, kind of like the woman in “Jerry Maguire” who he didn’t end up dating, that shark. That’s the one I want to be with when I was in New York, for sure. That’s one of the reasons I had to leave New York because it’s such good pressure to keep you going, but also pressure to go their way. If investment banking is the thing that’s hot, you’ve got to be an investment banker. There was a period there after 9/11 being a firefighter was the hot thing. You’ve got to be a firefighter or pretend you’re one.

Michael: One thing I’ll say, New York is very competitive, it’s also gotten very expensive. So, like just to survive, you have to make a lot of money. There’s no question I feel a certain amount of pressure running a business in New York. But with that being said, we also have the clientele in New York. There’s a lot of professionals who have disposable income who are going to hire someone else to clean for them.

Andrew: Who can’t afford to do it themselves.

Michael: That’s an advantage.

Andrew: They just can’t.

Michael: Yeah. If you’re an investment banker making $1 million a year working 75 hours a week, you’re going to pay to have someone come clean your place. You’re not going to spend your time cleaning your place. That’s a lot of our target demographic.

Andrew: Anything else working for bringing people in or is it grinding it out on Yelp, SEM and SEO?

Michael: One challenge that we’ve run into is we’ve kind of hit this saturation point, where we consistently acquire a certain number of customers each month, but we haven’t been able to scale that. That’s one of the business challenges I’m trying to figure out right now.

Andrew: How do you find more than the ones who are organically coming to you? That’s a challenge.

Michael: Exactly. That’s been a big challenge and that’s been part of the reason honestly our New York City business hasn’t grown in a year and a half. That’s been a major reason why. We’ve tried a number of different things, but we haven’t been able to figure out any marketing strategies to get us to the next level.

Andrew: I see. I get that challenge.

Michael: I think we may able to do that through technology.

Andrew: You said you iterated on the product. That’s what you told me before you started. What kind of iteration did you do over the last few years? I don’t see it as an outsider?

Michael: So the new site you’re going to see a major iteration in that it’s going to have this discount offering for scheduling.

Andrew: Did you do anything up until now?

Michael: Optimized scheduling. Yeah. We made a number of different small iterations which you would see as a user of the site on a regular basis?

Andrew: Like what?

Michael: Easier ways to give us information, easier ways to communicate, request a cleaner field, certain scheduling things allowing you to book with specific cleaners. We’ve offered discounts to book for returning customers. But the new site, customer booking flow is going to be designed entirely to allow people to have an optimized booking experience, which means they’re going to be sort of directed towards the cheapest possible clean and then they’re going to pay more if they need something very specific.

Like you said, the airline is the exact example that we use. You go to Kayak and you search for a flight from New York to Miami and it’s going to start with the cheapest and get it to the highest. That’s exactly what we’re going to do with the MyClean booking flow.

Andrew: You told me that the mobile site you weren’t enthused about the way that it’s been up until now. How much of your business comes from mobile versus desktop?

Michael: As far as traffic is concerned?

Andrew: Yeah.

Michael: So, to give you a sense, back in 2013, it was 93% of our traffic came via desktop, 7% of our traffic came via mobile. To show you where the world has gone even in the cleaning service like MyClean, now we only get 60% on desktop and 40% on mobile.

Andrew: I get it.

Michael: That’s as far as traffic is concerned. What makes it more complicated is our conversion rate on desktop is 10 times our conversion rate on mobile. So, our new site is responsive designed. It’s designed as a mobile first site.

Andrew: I can’t even imagine booking cleaning on my desktop. I think desktop is for work and everything else I just do on my phone and I’d rather do it on the train home or maybe in bed before–never in bed, but maybe on the couch when I have a minute.

Michael: Are you married?

Andrew: I am. Yeah.

Michael: If your wife tells you to book a cleaning service, you may do it right before bed.

Andrew: I might, actually. Thankfully in our family, it’s on a recurring service like you talk about. I can’t imagine wanting to do it one-off. Maybe you do that if you have friends coming over and you need to clean up. For me, if she didn’t have a set it and forget it, I go nuts. I don’t care to–I don’t want to know about it. It’s so set it and forget it that we have a nanny who’s full-time at our house. We know the time she goes out to the kids to the library.

At that moment is when the cleaning people have to show up and by the time she comes back, they have to be out and clean so the baby doesn’t have to deal with it and she doesn’t have to deal with 50 people in the house. I could not take advantage of the lower prices with you. I would be the person who would have to pay the highest price because it’s got to be in by this time, out by that time.

Michael: Do you work with a service or independent person?

Andrew: There are no great services in San Francisco. We ended up with an independent person.

Michael: Handy is there.

Andrew: Sorry?

Michael: Handy.

Andrew: I think when we first signed up, Handy was not there at the time and there were no services. Thumbtack was. I actually could not find–I knew the founder of Thumbtack because I went to dinner at his house and I liked his service. I couldn’t find anything that worked for me in San Francisco and Handy.

I couldn’t find a gardener on there and I couldn’t find a cleaning person on there. It was just really tough. The only thing that ended up working was asking friends and then once we found the right people, we locked them down week after week. I want no headaches with any of that, just like in the office. Somehow magically it gets clean every morning.

Michael: That’s the goal.

Andrew: Yeah, right?

Michael: [Inaudible 00:35:37] provides that for you both, your office and your home.

Andrew: Yeah. All right. Let me talk about my second sponsor and then come back in. It’s interesting you told me that even though you guys are a tech company and–it seems like you’re tech first even though you’re very people-heavy–what separates you is the technology. What separates you is that you are online, fair to say?

Michael: Yeah. I would say that’s one of the major differentiating factors.

Andrew: And still, the software is outsourced. There’s another company that does it. Well, if anyone out there is listening to me and they want to bring in great developers, not full-time like in the office, but maybe full-time external developers, maybe part-time people who you get to work with or maybe even project by project basis. What you want is the best of the best. You don’t necessarily need to have them be part of the company and get the paid like W-2. You might just want to go to Toptal, get the best of the best people, tell them exactly what you need.

The first thing you’re going to experience with Toptal is they’re going to want to get on the phone with you to understand what you guys are like, understand what your company is like. If you like them, after they understand what you’re looking for, they can connect you with someone and then if you like them, you can hire that person full-time. Look at you just rising up there. What is that? Is that the seat just climbing up?

Michael: It went the opposite way. I put it down. I was standing. I stand pretty much the entire day.

Andrew: What did you do, lower the table or raise the seat?

Michael: I lowered it.

Andrew: Lower the table, I see.

Michael: I don’t really sit at work. I mostly stand. But like I said, I had this calf.

Andrew: Interesting. I’ve been saying I can’t do a standing desk because of the lights, but I bet I could elevate it to here when I’m not in an interview and then lower it. Maybe.

Michael: How much do you sit per day?

Andrew: Too much lately. I would say now it’s a good eight hours of sitting, where for a long time–I’m a big mover–for a long time, I would take my phone and go work outside the office a lot. Now I haven’t been able to do that.

Michael: I read a lot about health and they say sitting is the new smoking.

Andrew: I get it.

Michael: There are a number of negative ramifications of sitting all day.

Andrew: Plus I get too antsy sitting down. It’s a real problem for me. All right. If you need to hire a developer, you want the best of the best, go to Toptal.com, top as in top of the mountain, tal as in talent. I’ve hired them. So many people who I’ve interviewed have hired them. You can ask around and get tons of–frankly, forget asking around. Email me and I’ll introduce you to someone who’s hired them so you can find out directly from a client what they’re like to work with.

For me, I told them a problem. I told them what software we were working on, what goal I was looking for. They found me someone who could beautifully solve the problem, take us to the next level and they did it within two phone calls and the second person they introduced us to was perfect. We got started with them within 48 hours, 24 hours. They built up our new search within a week, fantastic service.

I really urge you if you’re looking for a developer and these days a designer or an MBA, go to Toptal.com. They’ve got a special deal for us because it’s created by a Mixergy fan. Go to Toptal.com/Mixergy to see it.

What about hiring? I’ve really been thinking a lot about hiring and the structure at Mixergy. How do you structure your company?

Michael: Sure. So there’s myself, I’m the CEO and then I have a gentleman, Ken Schultz, he’s our COO, so he oversees an operation which right now is about 200 people in New York and about another 40 people in Chicago. Underneath him on the operations side is we have two in office operations managers and then a number of managers that are out in the field. It’s a combination of supervisors, trainers, all these different things.

We have a head of HR, Erin Eastern, who heads up the HR department. You can imagine a business like ours, there’s a lot of HR work. I have a CFO. I have a head of product who works with our outsource development team. We’re actually about to hire our first developer in house. That’s going to be our first full-time technology hire. Then we have another eight customer service people and then I have a gentleman who is head of Chicago as well.

Andrew: Who does growth for you guys? Do you guys have anyone who does that?

Michael: Right now it’s mostly me and Derrick is his name. He’s our head of product and growth. It’s the same person. So, he’s both overseeing technology and overseeing growth.

Andrew: So when it comes to the ads, when it comes to experiments, that’s him.

Michael: Yeah, and me. A lot of what I do is try to think of new growth initiatives and marketing focused, customer acquisition focused things.

Andrew: What’s one that you’ve come up with recently that you’re especially proud of?

Michael: A lot of this PR stuff we’re about that’s gotten in the press.

Andrew: Reaching out to me and other press and trying to get more coverage.

Michael: Exactly. We’ve come up with a bunch of different angles to really get the brand out there. Once that comes out, we’re going to retarget through Taboola and sites like that and we’re going–I think we’re going to produce some pretty interesting content. Our story, I feel like our story is the story that never gets told.

It’s like the bootstrapped business and the unsexy industry that doesn’t raise venture money but succeeds. There’s like a lot of people who could relate to that and there are a lot of people honestly who would enjoy making a good living being their own boss building a $9 million a year business that would be happier than working their corporate job and would make more money.

Andrew: I think we still need to find the sexy angle here, to be honest, the thing that would make you–other then revenue, something that would make it really different. I don’t know what it could be. The guy who left the corporate job–no. The guy who took on the VCs and won, maybe. That’s would be an interesting angle.

Michael: That’s what I was thinking, yeah.

Andrew: Because they all failed and here you are.

Michael: You’re just talking about how to frame the whole interview.

Andrew: Sorry?

Michael: You’re talking about how to frame the whole interview.

Andrew: Exactly, the whole positioning of you with the press, like all these guys went away.

Michael: That’s what I said, how to survive in an industry where hundreds of millions of dollars come in to your space in a short time.

Andrew: Right.

Michael: Something like that. That’s got to be the angle.

Andrew: That would have been a really good thing to do as soon as Homejoy failed to come out and say, “Here’s the way it actually works.” The field managers–they go out there, they train the people and then they watch them and make sure they get the job done?

Michael: Yes, exactly. They have to sign off on them.

Andrew: Okay. Do you guys have any process for hiring people?

Michael: Yeah.

Andrew: Except for the cleaners, what else do you do? I know the cleaners have a special role. When you’re hiring management, what’s that like?

Michael: We hire through Indeed.com. For example, when we replaced our head of product, which has been the biggest hire I’ve made in years, we lost our old head of product to Facebook, actually.

Andrew: You did?

Michael: We hired through AngelList.

Andrew: What’s your process? Do you have a special process for hiring people, something I could copy or want to copy?

Michael: Not really. There’s no like formulaic way to hire massive amounts of people because people aren’t robots, right. They’re unique. They’re individual people.

Andrew: Okay. All right. So, the new site is up. By the time people see this, they’ll be able to go to MyClean.com to check it out. You’re in New York. Do you any kind of events where people can meet you in person? You into that?

Michael: Not really.

Andrew: No, you just work.

Michael: it’s not that I’m not into that, but there’s nothing specific I do.

Andrew: Got it. Okay. Cool, man. Thank you so much for doing this interview.

Michael: All right. Thanks so much, Andrew.

Andrew: You bet. And the two sponsors are AcuityScheduling.com and Toptal.com. Actually, AcuitingScheduling.com/Mixergy or Toptal.com/Mixergy to get those deals. Thank you so much for being a part of it. Bye, everyone. Thank you, Michael.


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