In 2019, home-services marketplace UrbanClap changed its name to Urban Company (UC) after a realisation that ‘clap’ is slang for gonorrhoea, a sexually transmitted disease, in many countries. The rebranding was part of the eight-year-old startup’s move to enter Australia and then Singapore, Saudi Arabia, and the US.
Australia was UC’s second international market after it launched services in the United Arab Emirates (UAE) in 2018. But on 31 October, UC brought the curtain down on its Australia operations, which had 25-30 employees.
UC entered the country in November 2019, shortly after raising its Series E round of $75 million, led by investment firm Tiger Global Management. It appointed Ritesh Garg as country head. As vice president of business development for three-and-a-half years, Garg was influential in UC’s early success. But he quit in 2018 and moved to Australia.
The foray served as an important pilot for UC’s expansion into the US, says a former employee, noting that Australia, like the US, is a major economy. But, the latter has a much larger total addressable market (TAM). The company launched in the US in November 2021.
UC’s operations in the five international markets contributed 10-11% to its revenue in the year ended March 2022, with the UAE alone accounting for more than half of that. Its Australia operations made losses of Rs 29 crore ($3.5 million) on revenue of Rs 6 crore ($0.7 million) in the period, according to company filings. Its overall revenue for the year stood at Rs 438 crore ($54 million).
“But more importantly, it was nowhere close to finding a precise product-market fit product-market fit Product-market fit, is the degree to which a product satisfies a strong market demand. Product/market fit has been identified as a first step to building a successful venture in which the company meets early adopters, gathers feedback, and gauges interest in its product. (PMF) in Australia,” says another former employee. The former and current employees The Ken spoke to didn’t want to comment on the company publicly.
UC’s underperformance in the country could be attributed primarily to the limited availability of service partners. “In Australia, labour is either temporary and amateur, like college students, or a few skilled professionals who end up dictating the market. This is very different from other markets where it’s easier to find inexpensive talent, train, and deploy them for the long term,” says the second former employee. This affected UC’s margins.
UC is also reconsidering its strategy in the US, where it’s struggling to find the right PMF, despite making huge investments and moving some of its best talent. Both former employees call the market a long-term cash-burn game to success—something UC can’t afford at the moment.