Executive Summary:
TaskRabbit is an online marketplace that facilitates service transactions of any kind (including cleaning, home repair, or data entry) by connecting local service providers with customers.
TaskRabbit makes money via service fees, trust & support fees, and registration fees. The company operates under a marketplace business model.
Founded in 2008, TaskRabbit became one of the first service-based online marketplaces of its kind. The company was successfully acquired by Ikea Group in 2017.
What Is TaskRabbit?
TaskRabbit is an online marketplace that connects local service providers (named Tasker) with people in need of those services.
Users can choose from a variety of professions and services in fields like home repair, delivery, gardening, cleaning, and plenty more.
TaskRabbit is extremely easy to use. First, users either visit the firm’s website or download its mobile apps (available on Android and iOS devices).
Afterward, you add the type of job they want to have fulfilled, how long it will take to fulfill, as well as their ZIP code.
TaskRabbit will then surface a list of available Taskers who can complete the job request alongside their hourly rates. Users can filter by a variety of other factors such as selecting Elite Taskers.
A star rating system, as well as textual customer reviews, are provided on top to ease a customer’s decision-making process.
Once a date and time are selected, the user simply pays for the service. One can also chat and call the Tasker from within the TaskRabbit app to coordinate further.
TaskRabbit conducts extensive background checks to ensure that its service partners do not possess any criminal history.
TaskRabbit Company History
TaskRabbit was founded in 2008 by husband-and-wife duo Leah and Kevin Busque as well as Brian Leonard.
The Busque’s met each other when they were in high school and got married right after graduating college.
Post-graduation, both Leah and Kevin went on to work in technical roles at IBM (Kevin was a sysadmin while Leah worked as a software engineer).
Leah had a lightbulb moment in 2008 when she and her husband were stuck inside on cold days. They needed to buy dog food but it was too difficult for them at the time because they lacked transportation or somebody who could carry the bag of dog food.
Leah immediately wondered if there were any services that let people outsource errands easily, which led her to create TaskRabbit.
The couple spent the next few months coding up the initial version of the platform. TaskRabbit initially launched as RunMyErrand in late 2008. Prior to the launch, the couple moved from Boston to San Francisco to partake in Facebook’s fbFund incubator program.
RunMyErrand was launched at a time when millions of people lost their jobs due to the Great Recession. As such, many of them faced an economic need to make some extra cash. The service itself was initially launched in Boston where it was tested intensively.
The team was able to raise its first round of funding in October 2009, netting them $1 million in seed funding. In April 2010, they finally it rebranded to TaskRabbit and simultaneously launched in San Francisco.
In its early days, TaskRabbit became synonymous with the on-demand economy. The company was the first service of its kind in the mobile era, even launching before the likes of Airbnb and Uber.
In May 2011, it raised its first multi-million-dollar round of funding of $5 million. Two months later, TaskRabbit unveiled its iPhone app. Later that year, in October 2011, the company announced a very surprising move.
Leah Busque stepped down from her role as CEO and moved on to become the startup’s Chief Product Officer. Former Hotwire CEO Eric Gross took over for her. A month later, TaskRabbit raised another $17.8 million in Series B funding. At the time, TaskRabbit was operating in five cities across the United States.
2012 was certainly not less exciting. In May 2012, TaskRabbit began preparing for London, its first international market, which eventually launched in November 2013.
Then, one month later, Leah Busque reassumed her role as CEO. She personally felt that the move was necessary due to the rising number of competing services like Postmates and Thumbtack (TaskRabbit launched a delivery service in June 2012).
That same year, the company also made its first two acquisitions. It bought competitor SkillSlate as well as One Jackson, an e-commerce platform for kids’ clothing.
The acquisition of One Jackson was an acqui-hire as its former CEO Anne Raimondi became TaskRabbit’s Chief Revenue Officer. The team of female executives was completed with the hire of Stacy Brown-Philpot who came from Google to join as COO.
Later in the year, TaskRabbit launched a B2B product that allowed other businesses to hire Taskers (who were initially called Rabbits) for jobs. Over 16,000 Taskers signed up for the service within weeks.
The company’s first crack on its otherwise clean slate came in July 2013. It laid off 20 percent of its 65 employees due to strategic restructuring efforts. Interestingly enough, TaskRabbit launched its Android app only in June 2014, almost three years after its iOS launch.
That same month, the company took on its biggest challenge to that date. It announced that it would change its business model, away from an eBay-like auctioning system (where Taskers would bid on jobs) towards a direct booking model. Customers were now able to immediately hire workers for a fixed rate as opposed to waiting hours or days until the auction was completed.
The change in its business model was inspired by its London launch where the company had started with a booking model from the get-go. The London model compared to the US-based auctioning system was performing better by every metric the company deemed relevant (such as gross bookings or booking completion time).
Unfortunately, not everyone was fond of those changes. Dozens of US Taskers issued complaints, stating that the new system would seriously affect their earnings potential. Despite those setbacks, the change seemed to have paid off by increasing the firm’s revenue run rate (at least according to Busque’s statements).
Throughout the rest of 2014 and 2015, the company continued to grow its number of markets and Taskers. One major success came in March 2015 when TaskRabbit announced a partnership with Amazon to power its Local Services service.
Another quick side note became the departure of co-founders and TaskRabbit”s longstanding Head of Engineering Kevin Busque. He started Guideline Technologies, a service that aimed making 401(k) plans affordable for employees of small- and mid-sized companies.
Unfortunately, the tide eventually began to turn for the company. It began when, in April 2016, co-founder Leah Busque announced her (second) departure from the company. COO Stacy Brown-Philpot, after three years at the company, became her replacement.
Reports soon emerged, stating that the company was struggling financially and didn’t meet the lofty expectations of its investors. Competing services like Thumbtack were catching up rapidly. Meanwhile, its marketplace counterparts like Airbnb, Lyft, or Uber were becoming some of the biggest startup success stories the world had seen.
One major mistake the company made was that it expanded extremely slowly. By May 2017, TaskRabbit was ‘only’ available in 30 cities. As a result, rumors of a sale soon started emerging.
These rumors came to fruition in September 2017. Ikea announced that it would acquire TaskRabbit for an undisclosed sum. The platform would remain a standalone service, though.
Under Ikea’s supervision, TaskRabbit’s rate of expansion greatly increased. In 2018 alone, it launched in over 15 cities as well as Canada.
Given that the United States is the second-largest of its markets (after Germany), more and more resources were put toward TaskRabbit. One of the major synergies between the two was that Ikea could now specifically promote furniture assembly services on TaskRabbit.
One stain on the otherwise seemingly positive year became a data breach in April 2018. An undisclosed person gained access to customer-sensitive information.
Unfortunately, unlike many other tech startups, TaskRabbit did not benefit from the coronavirus pandemic. Many of its service offerings were put to a hold due to countrywide lockdowns and social distancing measures.
Furthermore, Brown-Philpot stepped down from her role as CEO in June 2020. Her replacement became Ania Smith, a former Airbnb, and UberEats leader.
The pandemic also had another very interesting effect on the company: in May 2022, it announced the closure of all of its offices. Even its headquarters in San Francisco were affected.
Today, it employs around 250 people across the globe
How Does TaskRabbit Make Money?
TaskRabbit makes money via service fees, trust & support fees, as well as registration fees.
Those fees are paid by both customers and Taskers. The bulk of the revenue comes from the service fee that is charged for every booking facilitated through the platform.
The service fee is equal to 15 percent and paid by the customer. Service fees are a percentage of the total price customers are charged, excluding any reimbursements made to the Tasker.
Interestingly, TaskRabbit cut that fee in half back in June 2018 (from 30 percent to 15 percent).
Additional taxes, such as VAT or sales taxes, may be applied, depending on where the customer is located. However, TaskRabbit does not get to book this as revenue and just help government entities to collect the necessary taxes upfront.
Customers also pay trust & support fees, which float around 7.5 percent. Those fees are used for a variety of purposes, namely:
- Operational and safety measures
- Investments into the firm’s customer support team
- Tools, team training, and channels to support customers with getting tasks completed
- Taskrabbit’s Happiness Pledge
The only fee that a Tasker pays is the $25 registration fee that they are charged when signing up for the platform.
Registration fees are paid to cover expenses with regards to authentication, background checks, and so forth.
The TaskRabbit Business Model Explained
The business model strategy that TaskRabbit has adopted is to operate a two-sided online marketplace in which it connects buyers with service professionals.
Key to making the model work is to ensure there’s liquidity in each of the locations TaskRabbit is available in.
Liquidity refers to the buyer’s ability to find a suitable offer at a reasonable price and timeline.
This is particularly important in the case of TaskRabbit since many of its customers likely use the platform for one-time tasks such as installations or moving.
There may, however, be some level of repeat business involved given that TaskRabbit is owned by IKEA. Customers may return to IKEA whenever shopping for new furniture.
Interestingly, TaskRabbit has adopted a slightly different strategy compared to competitors like Thumbtack or Airtasker. Instead of charging sellers, it is the buyers who pay the majority of fees.
The thinking behind that monetization strategy is that it becomes easier to attract service providers and retain them on the platform. Otherwise, they would be incentivized to get customers off the platform as fast as possible.
Additionally, by charging customers, TaskRabbit is likely attracting those that are willing to pay more for a given service to begin with. As a result, they would probably not bother with moving the transaction off of TaskRabbit.
TaskRabbit, apart from not imposing fees on taskers, also helps to promote the best performing ones via its Elite program. Taskers qualified as Elite can often earn more money from the same service.
TaskRabbit Funding, Revenue & Valuation
According to Crunchbase, TaskRabbit has raised a total of $37.7 million across 7 rounds of venture capital funding.
Notable investors include Founders Fund, IT Ventures, Allen & Company, 500 Startups, Baseline Ventures, Floodgate, and many more.
Neither the firm’s valuation nor its revenue is currently being disclosed by Ikea. The furniture giant may begin doing that during one of its earnings calls should its revenue rise to a meaningful number.
