Ikea Acquires TaskRabbit App, Helping Customers Connect with Furniture Assemblers

Tens of thousands of Americans have tasks that they don't want to do themselves. Either the jobs are physically impossible, or require skills that they don't have, or are simply not worth their time. In an effort to address that common problem, in 2008 Leah Busque founded a company called RunMyErrand, which later evolved into the app known as TaskRabbit. People around the country can use the app to hire "Taskers" to run errands or do odd jobs, and TaskRabbit keeps a percentage for connecting users to workers. According to Tracey Lien and Samantha Masunaga's L.A. Times article, Ikea recently acquired TaskRabbit in order to pair up furniture-building Taskers with Ikea's customers.

TaskRabbit was one of the very first on-demand apps, where users could pay a fee or an hourly rate to get a job done. Since then, many other companies have come in to fill the market, from Uber to Postmates and everything in between. The acquisition of TaskRabbit was a logical one for Ikea because their customers generally already outsourced the job of putting together their furniture anyway. Many customers can't figure out how to assemble Ikea furniture, so it is often simpler for them to hire someone to do it instead. By acquiring TaskRabbit, Ikea is able to get the business on both ends.

From another perspective, Ikea acquired TaskRabbit as an investment, given that the app has been pretty successful over the years since its conception. The company provides a smartphone app that allows Taskers to connect with users looking to hire help. In exchange for providing the service and convenience of their app, TaskRabbit receives 30% of the hourly payment being given to the Tasker completing the job, which is a pretty large chunk of money when movers and furniture assemblers can be making anywhere between $30 and $80 per hour. Neither company has released a public statement about how much the company sold for, but it can probably be assumed that Ikea made a sound investment.

Other on-demand service companies like Uber and Lyft or Sprig and Homejoy have either had to rely on millions of dollars in venture capital and debt financing or have failed to raise enough money and have had to go bankrupt before ever obtaining success. TaskRabbit is different in that it's been profitable for quite a while. The company's acquisition by Ikea is probably a good thing for its future growth. Now that they are connected to the largest furniture company in the US, they have the resources to expand more rapidly and reach a larger, international base of customers.

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FreedomPop Cell Phone Service Focuses on Providing Customers with Lowest Prices

In the United States, from the wealthiest entrepreneur to the poorest student, from teenagers to retirees, almost everyone has a cell phone. While cell phones were once a conveniently mobile alternative to landlines, to allow people to make calls outside of their homes, from almost anywhere in the world, they have now become much more than just phones. With the advent of text messaging and smartphones, many users now rarely use their phone for calling, opting instead to text or surf the internet using their mobile data or surrounding Wi-Fi signals. Most cell phone providers, especially the "Big Four" carriers, charge upwards of $40 per month for a cell phone plan. According to Paresh Dave's L.A. Times article, there's a smaller company, called FreedomPop, that is able to provide users with cell phone plans for less than $5 per month.

FreedomPop isn;t the ideal cell service provider for everyone. In fact, they only have about 2 million customers, compared to the hundreds of millions of subscribers at companies like Verizon or AT&T. About half of their users have service for "free," although they do have to pay a monthly fee of $7.99. The "free" portion of their service has limits on data usage, calls, and texts, and their customer service hasn't been rated very highly, but for many people, their low prices make the switch a no-brainer. Some of their most all-inclusive plans include unlimited talk, text, and data for around $20-30 per month, which is significantly less than their larger competitors. Users mainly have to have a credit card attached to their account, and they get charged extra fees for going over their allotted usage, but users seem to feel that the low prices make it worthwhile overall.

The company is able to keep prices so low by going against common industry practice. At its inception, the main focus of FreedomPop was to provide everyone with access to the internet. To do that, they chose to accept lower profit margins, which means they can charge less for their service. Even though the company's user base is small, it has had enough of an impact on the industry that large competitors like Verizon and T-Mobile are lowering their prices in response. The goal of FreedomPop is to gain as many customers as possible, around the world, both to achieve their vision statement and to maximize revenue. The more revenue they take in, the more room they have to cover their fixed costs and provide service at a low price. Besides the lower profit margins, FreedomPop cuts costs by minimizing the amount they spend on marketing and by doing careful research on exactly which potential customers they choose to target.

FreedomPop has received over $100 million in venture capital investment to keep doing what they're doing. They are also looking at an acquisition offer, but investors don't seem interested in selling the company. FreedomPop is different from other cell service providers. They handle customer service efficiently by providing refunds when they receive complaints (modeled similarly to larger companies like Google Express) because they have found that giving a $5 reimbursement immediately makes a customer more likely to stay with the company and provide good reviews. However, as would be expected with a company that provides service at an average of $15 per month, customer service and quality sometimes have to suffer to some extent. It's really a choice that each customer has to make. Do you pay more for service through a "Big Four" company (Verizon, AT&T, Sprint, or T-Mobile), or do you pay less for a up-and-coming company like FreedomPop?

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