Philip Kroon

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In an attempt to stay relevant the BIM’s course recent subject matter, I have decided to talk about the former digital auctioneering platform: TaskRabbit. In this blog post I will briefly shed light on the company’s history, its former auctioneering system, the backlash of its cancellation and my thoughts on its current state.
TaskRabbit was founded by Leah Busque in 2008, due to her desire for a service that would enable her to pay someone within her community to buy and deliver dog food to her house. Thus, the concept of connecting service seeking neighbors with neighbors that were able to professionally provide said services was born. Originally the system operated by enabling the consumer to post a vacancy for whatever it was he or she needed, which to this day focuses on labor oriented services such as gardening, home improvement and similar fields (TaskRabbit, 2017). The consumer would indicate their maximum spending amount for the service, which leads us to this platform’s reverse auction (one buyer, multiple sellers). The platform enables local professionals to underbid one another to provide the service required, creating a positive cross-side effect resulting in the lowest possible price for the consumer while providing desirable work for local professionals. Although the company’s concept is solid, its transactions costs are still subject to operational risks, which needed to be addressed. The main operational risk presented itself in the fact that the winning service provider might misrepresent himself by appearing more qualified than he actually is, resulting in a job that is subpar which in turn reflects poorly on TaskRabbit’s platform. TaskRabbit solved this by creating the “TaskRabbit Elite”: Service providers who had received good review in previous jobs, who in doing so had established the quality of their service (Brustein, 2016).

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In the eyes of many TaskRabbit had lived up to its potential by 2014, making their dramatic change in business model quite the surprising endeavor. The team behind TaskRabbit decided to let go of its established bidding system to make room for an on-demand service that is still in place today (Weber, 2014). Before launching this new version (TaskRabbit 3.0), the company appeared very confident and indicated that in this version they had improved upon virtually all of the application’s aspects. However, when the launch went live it was met with heavy protest from both sides. Having fixed rates meant that consumers could no longer get great deals on the services they needed, and for providers it meant that the luxury of choosing their own work was heavily restricted. Many service providers stated that their loyalty to the platform originated from their desire to pick their own jobs, giving their job a sense of diversity that they had grown accustomed to. (Perez, 2014)

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Although TaskRabbit was originally confident that their platform would adapt these changes, the company’s popularity has suffered a heavy decline since its implementation. As of September 28th 2017, TaskRabbit has been acquired by world’s largest furniture retailer, IKEA (Taylor, 2017). IKEA aims to use the platform’s service providers to help its customer with the installation of its products.

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Personally, I would have loved to see if TaskRabbit would have avoided its current fate if it had stayed with its original bidding system. I think things would have done very differently, do you?

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References:
Brustein, J. (2016). TaskRabbit’s Stalled Revolution. Retrieved October 15, 2017, from https://www.bloomberg.com/news/articles/2016-12-22/taskrabbit-s-stalled-revolution
Perez, S. (2014). Following A Drop In Completed Jobs, Errands Marketplace TaskRabbit Shakes Up Its Business Model. Retrieved October 15, 2017, from https://techcrunch.com/2014/06/17/following-a-drop-in-completed-jobs-errands-marketplace-taskrabbit-shakes-up-its-business-model/
TaskRabbit, I. (2017). Revolutionizing Everyday Work. Retrieved October 15, 2017, from https://www.taskrabbit.com/about
Taylor, K. (2017). Ikea has acquired TaskRabbit – and it could fix the most annoying thing about the furniture giant. Retrieved October 15, 2017, from https://www.businessinsider.nl/report-ikea-acquires-taskrabbit-2017-9/?international=true&r=US
Weber, H. (2014). TaskRabbit users revolt as the company shuts down its bidding system. Retrieved October 15, 2017, from https://venturebeat.com/2014/07/10/taskrabbit-users-revolt-as-the-company-shuts-down-its-bidding-system/

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Although advertisement on Snap Inc.’s Snapchat application is not a new concept in any way, it has come to my attention that their prioritization has shifted more towards acquiring advertisement revenue rather than customer satisfaction recently. In this blog post I will discuss Snapchat’s functionality, its increased trend towards advertisement revenue and its current state in the market.

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Originally called Pictaboo, the concept behind Snapchat originated in the summer of 2011 by three students that attended Stanford University. Reggie Brown, one of said three students, told his friends that he wished that the pictures that he was sending a current fling would disappear after she had viewed them and thus Snapchat’s key feature was introduced. Due issues between the three, Reggie Brown was removed from the company by the other two students, Evan Spiegel and Bobby Murphy (current CEO and CTO respectively). By fall 2011 Spiegel and Murphy changed the name from Pictaboo to Snapchat, after which point the app started to take off. By early 2017, Snap Inc. valued its Snapchat application around $25 billion (Crook, 2015).

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Until January 2015, Snapchat mainly focused on building and expanding its userbase as much as possible so that future endeavors could reap the benefits of network effects. Snapchat barely had a business model that generated profits for its shareholders, but after in January 2015 they introduced the “discovery” feature. For $100 for every 1000 views generated, companies were enabled to publish their own snap story, which users could choose to watch if they wanted too by opening the discovery feature (Richmond, 2016). The emphasis here lies on the choice to watch advertisement, which was taken away throughout the year 2016 in which snapchat started to incorporate many other means for advertisers to use their platform. By embracing advertisers, Snapchat was finally able to profit from their acquired network effects by becoming a full blown digital platform that had advertisers on the money side and consumers on the subsidy side. It was during this time that SNAP Inc. started showing a major boost in revenue and profits.

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However, over the course of 2017 Snapchat’s worth has dropped on the New York Stock Exchange (NYSE) from $27 billion to approximately $15 billion during September 2017. This immense $12 billion drop in worth is due to their consumers’ pursuit of positive same-side network effects that were being acquired at competing firms such as Google’s Instagram and Facebook. Snapchat has seen its userbase flock back to these platforms, because in addition to their existing features these two platforms have incorporated most of Snapchats features into their platform (Frier, 2017). It turns out that Snapchat’s users had little loyalty towards Snap Inc.’s brand, as it showed that they easily opted for competitors that offered more content. In reaction to this development, Snap Inc. has attempt to regain its popularity through new filters, “Snap Spectacles” and new story features. Will this be enough to reestablish itself as the market leader, or are Google and Facebook simply too strong to have as competitors?

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Personally, I think the latter.

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References:
Crook, J., & Escher, A. (2015). A brief history of Snapchat. Retrieved October 10, 2017, from https://techcrunch.com/gallery/a-brief-history-of-snapchat/
Frier, S. (2017). Snap Misses Growth Estimates as Facebook Copying Takes Toll. Retrieved October 10, 2017, from https://www.bloomberg.com/news/articles/2017-08-10/snap-misses-user-growth- estimate-as-facebook-copying-takes-toll
Richmond, S. (2016). How Snapchat Makes Money (FB, TWTR). Retrieved October 10, 2017, from http://www.investopedia.com/articles/investing/061915/how-snapchat-makes-money.asp

TaskRabbit’s Fall from Auctioneering Grace

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Snapchat’s Platform Decline(?)

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