So the gist is laws were upheld protecting homecare givers - minimum wage and overtime pay - and new mandated increased minimum wage, ultimately led to their decision to abandon their supposedly successful model. Their own internal "surveys", if we should even consider that, supposedly indicate these laws are not good for homecare.

Maybe their business model just depended on exploiting cheap labor?

Or maybe they went the way of Homejoy and are saving face, as many speculated, former employees coming forward, etc. with Homejoy that their customer retention was just really bad.

On Oct 15th 2015, the entire home care industry got rocked. The Department of Labor upheld a federal ruling stating that over 2 million home care workers would qualify for the Fair Labor Standards Act —essentially requiring all home care workers to be treated as W-2 employees and receive overtime benefits.

I took a few minutes to read Home Care v. Weil and I don't think this is at all an accurate summary.

What the DC circuit found (and SCOTUS, in denying cert, allowed to stand) is that third party employers of home-health workers are required to provide overtime and minimum wage protections for home health workers.

I think he misses the point entirely.

His business only worked if the country continued to insist that the vulnerable (elderly) can subsists off the backs of the disenfranchised and disadvantaged (home health care workers). Even if he won, the world would be a significantly worse place for it.

The problem is that people are entering their later years without an appropriate safety net. Demanding that a subset of Americans work in poor conditions or at a discounted rate to cover the gap isn't OK.

If your company was only viable if you could get away with not paying people overtime rates when they work overtime hours, then your company was never viable.

I think the biggest problem here, above anything else, is my first reaction: "Who the hell is Homehero, and why should I care?"

Also: LOL at "The 1099 independent contractor model, below, is very attractive as it removes excess cost and restrictions for employers." Yes, it is very awesome when you get people to perform full-time labor for you without having to worry about giving them insurance or benefits or anything like that!

I feel like the way they told their story (being vague about the challenge until halfway down the page) implies that they realize the reason they failed is because they were exploiting contract workers just like Uber does. Good riddance to another "disruptive" company full of "geniuses" making money by throwing some javascript on top of an exploitative labor model.

I was part of a team that was attempting to compete with HomeHero, but based out of Texas. I'm curious why they didn't attempt a geographic pivot if California regulations were truly their main barrier to success in the home healthcare market.

> We launched with a workforce of vetted independent contractor (1099) caregivers, who we endearingly referred to as “Heroes”.

How often are pompous titles like that just cheap window-dressing meant to hide some kind of underlying smelly ugliness? I'm getting really skeptical whenever I come across them.

What are some other examples? I know I've seen stuff like this before, but the only other ones I can think of are title/job descriptions like "guru" or "ninja," which are similar but don't quite cover the same space.

Important to note that we're only getting one side of the story here. It would be nice to get a second opinion, ideally from an actual carer, on the DoL ruling that killed HomeHero's business model. For example, if this ruling (which forced a transition to a W-2 employee model away from 1099) actually ended up getting health insurance to a lot more employees, that could be considered a good thing to some. Of course, that ignores the fact that the regulation did probably end up putting a lot of home carers out of over-the-table work, as Kyle noted.

After the mandated increase in pay and W2 obligation, a lot of people just shuttered their home care businesses. Now the employer is no longer in business, and the employees are left jobless.

Would there be similar results if the minimum wage increased for low-skill jobs? McDonalds employees want $X, but McDonalds can just build those autonomous cashiers which are already all over the place here in Miami. Suddenly no more jobs for people.

I followed homehero and some of its competitors movements for a bit. Home care is not an easy business, and there are many local vendors in any given community. There's always this argument as to whether going "full stack" (providing the workers, technology - the full solution) is a better option in healthcare than just providing a software product for clients to start using. The argument Kyle makes, that is worth noting, is that existing homecare agencies started deploying software more readily than homehero may have anticipated.

Thay being said, some of the messaging and marketing may have been off as well. I found it odd when they started advertising their workers as W2 heros, or something to that effect.

Can anyone name one of these "gig-economy" startups that treats their contract workers fairly?

So, they have a problem paying $15/hour while claiming to pay better than average and talking about how harmful this was to live-in caregivers. I am reminded of the recent story on HN about a family that had a slave.

https://news.ycombinator.com/item?id=14350059

These guys are too busy trying to figure out how to get rich to take care of their grandmother themselves. Instead, they want to pay people a pittance to do it for them and then whine about how hard it is to find good care givers.

As I said in the discussion about "My Family's Slave," it tends to not work well to pay people to care. That tends to result in paying people to pretend to care.

But, the other side to that is that expecting people to care while you don't care enough about their welfare to make sure they get paid adequately and get adequate time off, etc. is just incredibly broken. It is a horrible form of hypocrisy that has little hope of failing to become abusive.

This is often a gendered issue. Women often do "caring" work and then no one wants to pay them.

On the one hand, I would like to see more marketplaces with 1099 employees that actually work well. On the other hand, I have trouble feeling like this was not an exploitative and ugly model. Why didn't you just go take care of your grandmother yourself instead of creating an entire business to avoid having to do the caring work she required?

Caring about money above all else makes for a poor boss. Or relative.

As somebody with an interest in the space I appreciated the honest breakdown of the challenges and failures, 100% agree that this is a tough market.

But this part stood out:

"We were charging clients 30–40% less than industry average, and we were paying caregivers 25% higher than industry average. Both sides were winning."

Both sides were winning at the expense of Homehero's investors and the viability of the business model.

It is damn easy to grab market share in nearly any price-sensitive marketplace by underpricing service or over-pricing HR but it will ALWAYS ALWAYS catch you.

And while the W2 math / wage wouldn't be completely solve by bringing pricing to parity, it certainly would have had a huge impact and maybe provided enough runway to drive the scale efficiency.

So basically they shut down because the law was forcing their 'employees' or whatever to get paid properly and they could no longer extract surplus value. Sounds like a good thing :)

Maybe if they really wanted to fix things they'd do it as a non-profit.

What added benefit did homehero add to justify their costs? Either way the majority of people who work in this industry do not get paid a lot for what they do. It is hard to argue that they should get paid less to support the middle men

I am intrigued by all the messages pointing out that the business was predicate on unfairly low payments to workers, and when that problem was rectified, their business model stopped working.

What intrigues me is that the common, tired narrative I see on this topic (from nerd friend on FB, typically) is more of a Libertarian/Ayn Rand oriented "the government shut down people who had had the freedom to work below a living wage, as should be their choice."

As it happens I disagree with that libertarian view, but even if I didn't, I'm glad to see a more complex understanding of business models and sympathy for the staff.

I know this is supposed be about unnecessary regulation killing a company that was bringing wins to both homeowners and providers, but... am I reading this right:

"By the Summer of 2015, we had onboarded over 1,200 Heroes, provided care to a few hundred clients ... In June 2015, we raised a $20 million Series A, bringing total funding to $23 million."

So two years and $3 million dollars after they launched, they had only "provided care to few hundred clients". And using those metrics they somehow raised another $20 million dollars?

It seems like they had other problems then a change in the regulatory landscape.

The supply of skilled, vetted labor exists at the higher regulated prices in most locations. The demand for the service exists in most locations at today's lower prices. Even squeezing out inefficiencies to lower costs and improve convenience/quality/flexibility/coverage, the only way this works is if wages are subsidized. Few people can afford a full time employee, let alone the 3+ needed for 24 in-home hour care.

In case anyone is wondering what they're up to now:

https://news.ycombinator.com/item?id=14501081 https://blog.goharvey.com/homehero-rebrands-as-an-integrativ...

Is there something new here? This is the same post that was posted here 3 months ago.

I'm going to try and address each of the "negative" impacts this person states of the DOL ruling

1.In a survey we conducted internally, the cost for live-in/24-hour care doubled from $250 to $550 per day average in Los Angeles, pushing the price above a skilled nursing facility on a per day basis.

At the rate he mentions of $250 per day, hourly wages would be $10.4 for 24/7 live in care giver. So he was paying less than minimum wage in California. Let's revise that number to meet the minimum wage. It comes to $360. That number of $550 is inaccurate. The correct number is $480 (8 hours of regular pay at $15 per hour if you are in California and 16 hours of $22.5 per hour) So in California the cost went up from 360 to 480. That's a 33% increase not the over 100% increase he states.

2.Families were forced to reduce caregiver hours or fire their agency completely (and go under the table).

This seems to suggest that families were ok with exploiting the care givers even if they had to go "under the table". What kind of care givers will take less than mandated by law? Ones that can be exploited because of their immigration status?

3. Hundreds of thousands of caregivers who were unable or unwilling to be employed as W-2 workers were either removed from their families or let go by their domestic referral agency.

????what?? unable to be employed as W-2? why? Is it because they are not legally allowed to work in the country without a permit? Not willing to work as W-2?? I don't understand why someone would not want to work as a full time W-2. Are they trying to avoid paying taxes? Either ways this is a choice that the caregiver has to make. They would rather make $10.41 and hour than go to $15 or $22.5? Something doesn't smell right.

4. Seniors struggled with “continuity of care” issues as agencies started rotating multiple caregivers in and out of houses throughout the day to avoid overtime costs. This had an especially negative impact on Alzheimer’s and dementia patients.

I get this. I do. My grandmother was bedridden for 12 years and we had a live in caregiver and I know my grandmother would sometimes get confused and scared if we got a replacement when the caregiver was on vacation.

5.The additional rotations in shifts increased gas, parking and transportation costs and added a layer of complexity to scheduling.

This is a problem for the agency. This is where you can have your USP. Don't cry about it. Figure out a kick ass algorithm to reduce scheduling complexity.

6.Caregivers saw their working hours and income reduced, seniors weren’t able to get the 24/7 care they needed, and home care agencies saw a significant a decline in revenue from live-ins.

Caregivers only saw a reduction in working hours and income because agencies didn't want to pay overtime and pass the cost down to the family.

How it is different than Gitlab? They also hire almost contractors only.

It's happening more and more that there are shutdown posts about startups that had minimal exposure on HN. I have never heard of this service and the post does a bad job of explaining it to people who are lacking that context.