TaskRabbit Has a Great Idea; Can It Work in This Economy?

It’s easy to appreciate the logic of the modern-day temp agency TaskRabbit. Through its Web platform, the three-year-old San Francisco-based company connects the unemployed or underemployed with busy people who can afford some extra help – to pick up dry cleaning, say, or assemble furniture.

In fact, TaskRabbit was able to raise a $5 million Series A in May round led by Shasta Ventures to move beyond San Francisco and Boston — its test markets — to Los Angeles and Orange County. The service launches in New York next, then Chicago, then Seattle.

Certainly, the company holds promise. For starters, it’s capable of scaling without simultaneously expanding its overhead. Indeed, TaskRabbit founder Leah Busque, formerly an IBM software engineer, say the company’s headcount shouldn’t grow substantially from its 28 current employees no matter how many cities it enters. “We might hire a couple more engineers at corporate, and we’re hiring founding city managers in each new market across the country. But beyond that we have a great team in San Francisco that can support the scale and growth of what we’re planning.”

And TaskRabbit has some clever ways to address obvious issues, like keeping its “TaskRabbits” working for the company, which takes a 15 percent cut from each transaction. To wit, the company encourages its customers to rate and reward them with points and praise, which helps build their reputations within the platform –which helps them to land more work. (The startup’s platform can also automate scheduled tasks, and do a bunch of other things, including around seamless payment processing.)

Like every startup, however, the company has plenty of hurdles to overcome. Barriers to entry are minimal, for example, and no matter what TaskRabbit does, some percentage of the people it connects will decide it’s not worth paying a surcharge to the company to work together. “We aren’t so naïve to say it will never happen,” says Busque.

Establishing repeat business would seem a challenge, too. Asked how much of its business is recurrent, Busque declines to disclose specific numbers, saying that the company instead focuses on how many tasks are posted in any 30-day period, and that those numbers are growing each month.

It’s also difficult to see how its current revenue model will work. According to TechCrunch, TaskRabbit currently posts 3,000 tasks each month, with an average spend of $30 dollars per task. If correct, that provides TaskRabbit with just $13,500 per month. Busque confirms that the tasks pay an average of $30 but declines to say how many tasks get posted. (A spokeswoman for the company tells me that since launching an iPhone app last week, TaskRabbit’s daily task count has increased by 75 percent.)

Like many Internet entrepreneurs, Busque isn’t focused on revenue so much in these early days as “building a platform where we’re ensuring a great user experience” with ample “trust, safety, and security” added into the mix.

It’s a smart place to focus attention, given the dangers inherent in physically bringing together people who meet online. Indeed, right now, TaskRabbit insists that anyone wanting to run errands on its behalf fill out an online application, conduct a video interview, submit to numerous background checks, and, finally, take a test that proves their knowledge and understanding about its business. Down the road, suggests Busque, the company may layer in insurance to protect the goods of those posting tasks.

Still, the biggest challenge for TaskRabbit may simply boil down to supply and demand. Busque tells me the company has learned much in the last couple of years about ensuring that its contractors are as happy and as the people hiring them to do errands. “You have to maintain a balance.” But the company says it already has more than 1,000 people on the waiting list to become a TaskRabbit in the various locations where it operates.

Busque says that owes to the vetting process. But in a country where unemployment levels remain staggering, one percent of people reap nearly a quarter of the nation’s income, and there’s no end in sight to our sharpening economic bifurcation, it’s easy to wonder whether the disappearing middle class isn’t a factor, too.