Urban Company to the rescue - A case study

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Introduction

Do either of these names ring a bell?

Well, If you are an Indian citizen living in a metropolitan city, I am sure it does. You either would have heard about it, would have booked a home service through this company, or would have thought about using this service at least once in your lifetime. That’s Urban Company for you!

For those who do not know, Urban Company(UC) is a Indian service provider that operates as an online marketplace that connects customers with local professionals across various categories including beauty, wellness, home repairs, and other professional services.

And in this issue, we dig into how three visionary founders turned the highly unorganized service sector into a multi-billion dollar company which continuous to grow till date. So let’s dive in!

The story of origin

The early days of UC are rooted in the experiences and aspirations of its three founder: Abhiraj Bahl, Varun Khaitan and Raghav Chandra. Their journey began in November 2014 when they identified a significant gap in the local services market in India, characterized by chaos and unreliability in finding trustworthy service providers.

Before founding UC, the trio had diverse entrepreneurial experiences. Abhiraj and Varun had previously worked on a startup called Cinemabox, an on-demand movie streaming service aimed at long-distance buses. Meanwhile, Raghav was involved with Buggi, an auto ride-sharing app. However, both ventures faced challenges and did not achieve the desired success, prompting the founders to pivot their focus towards a more pressing market need.

The Idea Takes shape

The founders’ motivation stemmed from the their personal experience with the local service providers. They recognized that customers often struggled to find reliable professionals for basic services such as beauty treatments, home repairs, and cleaning. This realization led them to conceptualize a platform that would streamline the process of connecting customers with verified providers.

In the beginning, UC operated as a lead-generation model, where the founders would manually match service providers with the customers. During this time, founders worked tirelessly to onboard service professionals, ensuring they met the quality standards through rigorous verification processes. But soon enough they realized that it is not scalable and hence turned their heads towards technology.

They apparently launched their minimum viable product (MVP) just a day before meeting with their potential investors.

And the growth starts…

Founder’s passion to fill this huge gap in the market quickly gained traction and attracted early investments. By 2015, UC had raised over $1 million from various investors, including SAIF partners and Accel partners. This funding enabled them to expand their operation beyond Delhi NCR into other major Indian cities. The company’s growth trajectory continued with several funding rounds after that:

• Series A (June 2015): $10 million

• Series B (November 2015): $25 million

• Series C (July 2017): $21 million

• Series D (November 2018): $50 million

• Series E (August 2019): $75 million

• Series F (Apr-June 2021): $255 million

  Details of the funding rounds here.

These investments helped UC scale its operations, enhance its technology platform, and onboard more service professionals.

Initial Business model and transition to a full-stack model

As previously mentioned, UC’s initial business model was centered around a lead-generation model. This included:

• Concept and Identification of need: Identifying the gaps in service sector.

• Manual meetings: Manually onboarding service partners and matching them with customers

• Service categories: Focus on various home services such as home repairs, cleaning etc.

•  Commission: Commission from service providers for each transaction facilitated.

This was until they realized that customers preferred a service model where the company took complete ownership of the service experience, quality and timely delivery. Hence they shifted to…

Full-Stack Model

The full stack model aimed to empower service pr

ofessionals as micro-entrepreneurs by equipping them with necessary skills and resources. This would not only improve service quality but also build customer trust and loyalty. It involved providing more comprehensive support to service partners. It included offering training, financial assistance, access to branded tools and a structured approach to quality control.

With the growth of the platform, UC began leveraging technology to automate processes and enhance user experience. This included developing a mobile app that allowed for easier booking and scheduling of services.

Their initial model laid the foundation for it’s growth and transition into a full-stack model allowed the company to thrive in an unorganized market.

UrbanClap becomes Urban Company

As the company solidified its foothold in the Indian market, the founders began eyeing international expansion. They had ambitions to serve global markets like Australia, Singapore, and the UAE. However, “UrbanClap“ as a brand was too specific to the Indian market and potentially limited the international audiences. They needed a brand that would resonate universally.

The decision to rebrand stemmed from the need for a broader identity. The new name better reflected their aim for being a horizontal gig marketplace offering a range of services that would appeal to a global audience. So in 2020, UrbanClap became Urban Company. The founders explained that they were creating an “umbrella brand” to target global customers who needed diverse services.

The company retained a commitment to train and upskill its service professionals, ensuring that UC could maintain high-quality services as it expanded. The founder aimed to train 1 million service professionals over the next five years to meet growing demands in both domestic and international markets.

However, rebranding came with its inherent opportunities and risks. On the one hand, it allowed UC to build a brand that could transcend geographical boundaries, on the other hand, it could potentially confuse existing customers, diluting the brand identity, or failing to resonate with new markets. Not to forget the high cost of rebranding. This move highlights a classic business dilemma: whether rebranding is necessary when expanding to new markets. While some brands have succeeded with this strategy, others have faced challenges.

Current Status: The result

Well, looking at the current state of company, it looks like the bold move of rebranding the company panned out quite well. Today, UC operates in multiple countries including India, Australia, Singapore and UAE, establishing itself as a leading platform in the home services sector. And here’s how the numbers look like:

• Valuation: As of July 2024, UC was valued at approximately $2.8 billion after securing $50 million in funding from Dharana Capital.

• Funding: The company has raised a total of about $440 million across multiple funding rounds.

• Revenue & Losses: For the fiscal year 2023-24, UC reported a revenue of approximately $112 million but also a loss of approximately $11 million.

• Service network: As of Nov 2023, the platform operates in 63 cities across four countries, employing 55,000 service partners and having served more than 10 million customers globally

These figures reflect UC's robust growth trajectory and its significant presence in the home services market.

To conclude, UC continues to innovate and adapt in the competitive landscape of home services while striving to enhance customer experience and support its network of service professionals

The Business lessons

This was the story of UC. While the company is still running full speed ahead, how far it can go will be a sight to behold. But for now, there are some very important business lessons that we as entrepreneurs can learn from its journey so far. Some of those lessons are:

• Stick to fundamentals: In its entire journey of roughly 10 years, UC never compromised with their vision of serving their customers. Customers has always been the company’s first priority. It is visibly clear in the quality of services they offer.

• Risk can make or break, depends on how you execute it: Growth is impossible until you come out of the comfort zone. Despite being in a pretty good shape, founders of the company decided to take a risk of rebranding the company to expand in other markets. It could have broken the brand but it so well executed that the outcomes turned out to be positive.

Well, that’s it for this issue. I hope I was able to provide some value to your knowledge base by bringing this case study to you. If I did, share this within your network, and I will give you a special shout out with your message in my next issue. Don’t miss this chance to appear in front of an audience of 1600+ subscribers.

I will get back to you with more stories like these. In the meantime, take a look at these other stories:

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Revolutionizing the stock-broking market - A ZERODHA case study

Rising from the dead - Snapdeal 2.0

Keep tuned for more such case studies.

Until then,

Keep thinking!