Running a startup in a low margin business is one of those things that seems like a bad idea till it's not. In this case the definitive counterexample happened 19 years ago: Amazon.

The main difference to me is that Amazon has a massive moat (in the Buffet sense) to prevent other competition from building an identical service. What's to stop someone from building a HomeJoy clone and undercutting them even further?

As a retailer they do, but they don't as AWS, so a moat may not be necessary. It would still be nice of course. I can think of some possible ideas, but I should save that convo to have with Adora.

If your margins are low, and you can still grow, aren't you still in a substantially better place than many revenue free companies that have received huge amounts of VC (based on the OP's criteria for VC investment). Hell, Twitter's margins are negative right now (as long as I am not mangling the use of "margin") and that hasn't stopped investors.

Pulling out the survivorship bias argument may be convenient for online discussion and debate, but it's rarely very compelling.

I could point out all of the fundamental operational and financial differences between a low margin service business like Homejoy and a low margin online retailer like Amazon, but you already know them.

The article hints at Homejoy's plans to apply their underlying technology to services beyond cleaning.

It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate.

> The article hints at Homejoy's plans to apply their underlying technology to services beyond cleaning.

That's easier said than done. More often than not, when young, fast-growing companies try to enter new markets quickly in this fashion, it doesn't have the intended outcome.

> It's easy to look at what Homejoy is currently doing, extrapolate to the point where they dominate that specific market, and say, well, this would be worth $X. But I imagine the vision that HJ has sold investors on is one well beyond the relatively narrow market in which they currently operate.

It's even easier to look at what markets Homejoy could apply its technology to, extrapolate to the point where they dominate most if not all of those markets, and say, well, this would be worth $x. Even though this is not at all likely.

Typically the expansion markets have worse economics or other operational problems. That's why they wer not the 'model' or tier 1 market to begin with. It does seem a stretch to put a huge valuation on a business with so much value 'on the come'. The exception (that perhaps proves the rule) seems to be Amazon.