When it comes to entrepreneurial success, there isn’t a one-size-fits-all method. The truth is, there is no cut-and-dry path to start-up success. Life as a business owner is volatile and hard, but this company made it work.
They had no previous experience, no technological know-how, and no money. They initially advertised by handing out flyers on the streets. By all measures and means, they weren’t supposed to make it. But, armed only with dedication and elbow grease, the creators of MyClean revolutionized the big city cleaning industry forever.
Two Busy New York Bankers
It’s fair to say Mike Russell and Mike Scharf did not expect to become owners of a wildly-successful cleaning company when they started their careers.
Russell and Scharf both began as bankers—Russell for Citibank, Scharf for Bank of America—–but both wanted something more. So when Scharf heard Russell’s idea for a start-up, he was all in.
“I’m naturally a tidy person,” Scharf said in an interview. “But while working in investment banking, I found it difficult to clean the apartment consistently because of my schedule.”
Armed with an idea and the drive to make it happen, Russell and Scharf opened MyClean in 2009.
Into The Digital Deep End
The transition from banking to owning a company was, put simply, rough. With no technological or entrepreneurial experience, Russell and Scharf were up the creek without a paddle.
There was no blueprint for their method of marketing. Cleaning companies typically got business through word of mouth or direct mail advertisements, not through websites. And, considering Russell and Scharf’s lack of experience in web design, maintaining their own website proved to be a major hassle.
The two went through a laundry list of web developers. According to Scharf, they hired “one developer, then another, then another,” all in the hopes of finding the “right fit.” They were inexperienced, but they had something that would drive them to succeed: a vision.
Called On A Few Family Favors
Russell and Scharf had a vision, but it was an expensive one. The two raised a whopping $267,000 to bootstrap MyClean by relying primarily on finances from their friends and family. They did this to avoid the restrictive control of VC funding.
While this sounds like a good chunk of change, in terms of start-ups, it’s modest at best. According to Scharf, the company had “[zero] full-time employees” when they started. It was just them “and a phone.”
“The odds were hardly in our favor,” Scharf admitted later on. However, they had an idea that would carve themselves a place in the world. Or so they hoped.
Began As The “Uber” Of Cleaners…
Russell and Scharf’s core idea was structured off one of the biggest growing businesses in early 2010: Uber. Originally meant to be a platform for freelance cleaners, MyClean followed what Scharf referred to as the “Uber-model.” The company would outsource cleaners to clients for a fee.
In theory, this idea was very appealing to Russell and Scharf. They saw it as a way of the future. By essentially controlling the distribution of an untapped market (New York cleaning services), MyClean couldn’t fail in their eyes. But in practice, there were more than a few hiccups along the way.
…But That Ship Sank
Modeling MyClean after Uber ended up being a complete disaster. Where Uber offers a product that is difficult to screw up, cleaning services require far more skill than simply driving a client from point A to point B. This meant that outsourcing untrustworthy, random cleaners was not viable in the slightest.
During this brief stint, MyClean frequently received one-star ratings on Yelp. Their clientele complained that the outsourced cleaners would shirk on their duties and were overpriced. If MyClean continued with this Uber-model, they would lose all of their clients. With their original idea for MyClean dead in the water, Russell and Scharf had to re-evaluate everything if they wanted their business to stay afloat.
Away With Outsourcing
Russell and Scharf heard their clients loud and clear: outsourcing cleaners was a bad idea. It delivered a sub-par service for an unreasonable price and MyClean was desperate to change that. They needed to re-establish trust with their clients by delivering a quality product.
“We needed to pivot, and quickly,” Scharf said of the incident. They scrapped outsourcing cleaners entirely and started hiring trusted, full-time employees instead. With outsourced employees, Russell and Scharf had no idea how qualified they were as cleaners. However, with trained, full-time employees, MyClean knew they could deliver a quality product.
Created The 50-Point MyClean Method
Now that they had a trusted group of qualified employees, Russell and Scharf needed something to ensure each MyClean cleaning was a similar level of quality. They needed to hold their employees accountable for their work. That’s where the MyClean 50-Point Method came into play.
The 50-Point Method is essentially a 50-point checklist each MyClean cleaner must complete before they finish a job. Not only did this take the unpredictable variance out of cleaning, but it created a uniform MyClean brand of cleaning. Clients who now use MyClean know what they are paying for and can trust it.
Introduced Employee Benefits
Having a trusting relationship with your client base is important, but having one with your employees is important too. Russell and Scharf centered MyClean around this philosophy from the very start.
“Our cleaners…receive an array of afforded benefits, like health insurance, paid sick leave, workers comp, and 401(k) options,” Scharf said in a Reddit post. “By treating our employees well, we’re ultimately servicing our customers too—even if this means that our prices are 10% – 20% higher than our competitors who contract their cleaners.”
By focusing on employee satisfaction, MyClean ultimately boosts the quality of their product. After all, an employee who loves their job is much more motivated than one who doesn’t.
A Risky Expansion
After the failure of their Uber-model of business, you would think MyClean would be more conservative in its next steps. This was far from the case. While the owners’ original vision saw MyClean as the “Uber of cleaning,” this restructured version of the company is far from that pitch. In fact, Scharf has said in multiple interviews that MyClean now follows the “anti-Uber” model.
Instead of essentially controlling the distribution of cleaning service like they had planned, Russell and Scharf made the bold move of expanding to take over all aspects of the cleaning market. From distribution to hiring workers to manage site orders, MyClean has its hand in every part of the business.
MyClean’s Business Boomed
Going from a quarter-million dollar flop to a nine-million dollar success in just a few years is no small task. However, Russell and Scharf did it—and their stats are staggering.
Starting with zero full-time workers that operated “out of a tiny apartment,” MyClean now employs over 200 cleaners and 20 office staff employees. Since launching, the company has completed 375,000 home cleanings at an impressive rate of 2,000 homes per week. MyClean was successful enough to expand nationwide. Instead of focusing their business only in New York, the company now does business in New Jersey and Chicago. We’ve mapped out the path MyClean took to become this successful, but how did they do it exactly?
While Russell and Scharf remodeled their entire business to eliminate outsourced cleaners, they are strong advocates of outsourcing in particular cases. “Outsourcing your website to a developer a country away…may not be the blueprint that most modern startups are looking to follow,” Scharf says in a Reddit post. “However, it’s worked out quite well for us at MyClean.”
Scharf makes a key distinction in outsourcing: is the outsourcing for a personal service or for a commodity? If it’s a personal service, outsourcing won’t deliver a high-quality product and will only damage your reputation (as MyClean learned the hard way). However, if you’re outsourcing for a commodity (like being driven from point A to point B or designing a website), then Scharf recommends it. It’s a cheap, but efficient way to propel a start-up.
Capitalize On Word Of Mouth
When MyClean came along, cleaning services relied solely upon word of mouth to market themselves. While Russell and Scharf still used word of mouth to promote MyClean, they capitalized on it in a unique way.
Instead of hoping clients would want to use MyClean again, the owners implemented a subscription-based service to guarantee their clients will return. According to several sources, approximately 80 percent of people who use MyClean sign up for their subscription service. This method is great because it takes the risk out of the “word of mouth” marketing strategy by making it predictable. With subscriptions, MyClean is, in a sense, asking their clients to put their money where their mouth is.
MyClean was not made to be simply a moneymaker—–it was made to be a solution to a common problem where there were no other solutions. This distinction is incredibly important when making a start-up. There must be a want for something that only your company can give.
“Pick a market where you know demand exists,” Scharf writes in a blog post. “Prior to launching MyClean, there were members on our team who’d had the same cleaning lady stop by once a week for six years. We knew there had to be a better, more efficient way.” That’s where MyClean came in. It found its market by answering a common problem.
No VC Funding
From the get-go, Scharf avoided Venture Capital funding like the plague. Seeing a trend for start-ups advertising “Uber for X,” Scharf claims he received VC offers almost every day from private investors. He turned down every single one.
“We knew that the ‘Uber for X”‘ model did not work in the cleaning space due to the quality control issues we experienced early on,” he explained. “We also knew that VC’s who are looking for a 10x return on their investment in five to seven years had a different vision of what “scale” meant than we did. We, therefore, have never and will likely never take on venture capital.”
Hustle, Heart, And Vision
When talking about how MyClean became successful despite its initial setbacks, Scharf pointed to three things: hustle, heart, and vision.
To Russell and Scharf, it did not matter that they were not web designers when they launched their website. Nor did it matter that they had no business experience and were trying to be entrepreneurs. They had an idea and the drive to make it happen.
“You have to be willing to do everything yourself and follow through,” Scharf said about his experience starting MyClean. “There were three areas where MyClean wasn’t lacking— – heart, hustle, and vision— – and that made all the difference.”
Remember Your Vision, But Don’t Let It Blind You
Yet, while “vision” is a key tool to hone, Scharf advises against sticking to it too rigidly. There’s a point where sticking to an idea transforms from visionary to stubborn. After being panned for the initial vision of “Uber for cleaning,” MyClean adapted.
Scharf knew they need to need to change but still maintain their core values. “Operating under one of our core values of ensuring the highest level of customer and employee satisfaction, MyClean made the switch to convert our cleaners from outsourced, 1099 contract workers to W-2, full-time employees,” Sharf said.
If MyClean had stuck to its “Uber” model of business it surely would have failed. However, because it took a step back to reassess its goal, MyClean is thriving to this day.
Never Stop Innovating
Start-ups are like sharks—if they stop moving, they’re dead. Even after their numerous innovations and immense success, MyClean follows that philosophy to this day. It began with an idea to revolutionize city cleaning forever and it did not stop there. From a new app to a subscription service to a nationwide expansion, MyClean is always growing.
Russell and Scharf have seen a crowd of “cleaning services (some with tens of millions in funding) come and go” over their eight years in business, and they have had to work hard stay one step ahead of the competition. If they had not, MyClean would not be the company it is today. So keep swimming.
The “Anti-Uber” Model
Despite their initial investment in the Uber pricing model, Russell and Scharf have done a complete 180. Instead of adopting Uber’s method of surge pricing (i.e. raising prices at certain times of day when demand is high), MyClean created its own “anti-surge” pricing—a system designed to save its customers’ money.
“We are…the first (and currently only) cleaning company that uses dynamic pricing,” Scharf said in a recent interview. “During off-peak times, we offer discounts so that customers can choose the appointment time that best fits their schedule and pricing needs. If you really need that Friday 10 a.m. clean, it’s available for you. However, if you can have the clean Wednesday afternoon, you can save some money.”
Slow And Steady
A common myth circling over the heads of every aspiring business owner is this: speed is everything. If it can’t be done right now, it is something not worth being done. Time is money, after all, so why run the clock? MyClean took the exact opposite approach and still managed to win the race.
“MyClean has never been more proud of our past,” Scharf writes.”We’re excited for our future and confident in the phrase—slow and steady wins the race!”
This relates to the company’s view of VC funding. It’s high-risk, high-reward with VC funding. Where other start-ups have risen fast by getting multi-million dollar funds from private investors, those same companies are the ones to crash and burn later. After all, MyClean crashed when it first started. But their low-risk method allowed them the time to regroup, reassess their situation, and grow into the incredibly profitable start-up it is today.
Put People First
And the biggest key to creating a successful start-up? The people.
“Put people first,” Scharf says. “It sounds simple, but so many business leaders miss this point in their quest for global domination. By treating our employees well, we’re ultimately servicing our customers too—even if this means that our prices are 10% – 20% higher than our competitors who contract their cleaners.”
Establishing trustworthy relationships with clients and employees alike is absolutely essential in building a successful start-up. They lay the foundation for a successful business to grow. Without them, even the best start-ups are doomed to fail.