How New York City startups are overhauling traditional service industries

by Taylor Majewski
January 3, 2017

A startup’s odds of achieving success are very low. In fact, ninety percent of startups fail.

Typically, successful startups remain competitive in the technology sector by capitalizing on untapped markets and innovating through unprecedented ideas. A number of Silicon Alley’s rising tech companies are iterating on and solving pain points in one of the city’s most dominant sectors — the service industry. In fact, in New York City, service industry jobs are growing in congruence with the local tech boom, with a number of startup leaders are paving the way.

One of the most prominent companies in this space is Managed by Q, an office management company that provides companies with on-demand maintenance services such as cleaning, maintenance, I.T. support, security, and supplies. The company employs a fleet of cleaners assistants, helpers and handymen, and in truly novel fashion, gives all of these workers W2 jobs.

In fact, a large part of Managed by Q’s success as a service industry innovator stems from the sizable benefits the company gives its service workers. These perks include above market wages, paid parental leave and benefits like healthcare, 401k, bonuses, paid time off, career development programs and flexible scheduling. Back in March, the company also launched a first-of-its-kind program that provides stock options for all of its employees, at any level within the company. In November, the company announced a deal with Staples to provides Staples customers with all of the startups' office services. 

 

Handy co-founders Oisin Hanrahan and Umang Dua

Another company successfully operating in the service industry is Handy, an on-demand home service provider. The company launched in 2012, has raised over $100 million in venture funding from investors and has seen three billion bookings to date.

Handy offers a full suite of home services to its users, including plumbing, cleaning, electrical maintenance, interior painting, furniture assembling and moving help, to name a few. Technically speaking, the company utilizes an online booking process that is seamless and time-efficient, allowing users to find and secure a home service professional in as little as 60 seconds.

“Home services is a $400 billion market, and we have always aimed for Handy to revolutionize both sides of the equation – for people who receive these services and for the workers who provide them,” said Handy CEO and co-founder Oisin Hanrahan. “We’ve completely changed how people in this area of the economy access work. For the most part, this work was previously done in the grey market, or cash economy. Now, workers are able to build their businesses, have a platform to ensure they are paid correctly and in full for services delivered, and a support infrastructure behind them.”
 
 
Electric CEO and founder Ryan Denehy 

While it may seem counterintuitive, the technology industry is actually lagging when it comes to IT support. This is largely due to the fact that an existing process —where companies either manage an in-house IT team or outsource one — has long stood in place to help non-digital companies solve their technology problems.

Electric, an automated IT support service, launched in New York City earlier this month with a mission to solve this problem. The company uses a chat interface on the front-end and an AI-powered system on the back end to solve companies’ IT problems in real-time, offering a lower cost than traditional IT service providers.

“As a founder, tackling 'unsexy’ service industry problems is exciting because we don't have to explain to anyone why our company exists, or what pain we're solving, or why we should get paid to solve it,” said Electric CEO and cofounder Ryan Denehy.

Denehy, who previously founded startups in Los Angeles and San Francisco, realized that New York City was a natural fit for building a next-generation service company, from both the customer and investment side.

“First, it's customers,” said Denehy, “The density of businesses here in New York tops any other city in the US.  In a single day you can run around Manhattan and talk to a massive cross-section of potential customers — regardless of the industry. In startups time is zero-sum, so running customer-facing cycles in days rather than weeks is a huge advantage. From an investment standpoint there's a sensibility here in NYC that you don't have anywhere else. Maybe it's a byproduct of the traditional investment banking culture and focus on 'fundamentals', maybe it's the ‘no BS’ attitude of New Yorkers in general. Capital partners here understand and respect real business models, and sensible approaches to problem-solving. That doesn't mean that every discussion turns into a term sheet, but certainly a higher percentage that you're likely to see in the Valley with these types of companies.”

 

New York’s service industry renaissance also extends to at-home care, with senior caregiving startup Hometeam at the forefront. The company was founded in 2013 as a service that helps families locate and hire qualified caregivers for their elderly family members.

While finding an at-home caregiver usually involved going through an agency, the company has streamlined and digitized the process with an all-in-one interactive experience. With the service, families can use iPad technology to remain updated on what’s happening in their older family members’ lives, as well as send notes to the caregiver through a mobile device in real-time.

While Hometeam is upending the existing at-home care model with a more personalized experience, the company has also been backed with over $45 million to date.

In conclusion 

While New York City has created a hub for technology companies looking to upend traditional service industries, this has also given rise to the flexible worker.

Next-generation service companies are fueling the flexible economy, providing workers with the appropriate benefits and opportunities they need in service jobs. While these consumer-facing companies are more easily providing users with at-home, at-work and on-demand services, these startups are also revolutionizing the employee experience for the thousands of service industry workers that have long existed in New York City.

Know of a company that deserves coverage? Let us know or tweet us @builtinnewyork.

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