Does's Business Model Work?

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Help yourself with the Fool's FREE and easy new watchlist service today. (NYSE: CRCM  ) is operates a dynamic website that acts as a portal for service providers --like pet sitters and babysitters-- to find customers. The company went public on Jan. 25, with shares rising nearly 43% in its first day of trading as a public company on the New York Stock Exchange.

The offering gives a market capitalization of $740 million at the moment of writing. However, this may be just the beginning for, which has bigger ambitions. The company's CEO and Founder, Sheila Marcelo, plans to use some of the new capital raised to invest in marketing and strategic acquisitions, aimed at broadening's audience. But what makes different from other online marketplaces, such as Yelp (NYSE: YELP  ) and Angie's List (NASDAQ: ANGI  ) ?

Source: Corporate Website

The Amazon of caregiving services is the world's largest online marketplace for finding family care, with more than 9.7 million members over 16 countries.

Since the marketplace went online in 2007, the company has patiently built a huge database of 4.5 million caregivers, becoming a trusted brand in the field. In recent years, the company has expanded its marketplace beyond caregivers, by introducing care-related businesses, such as nanny agencies, day care centers, and pet care services. In this way, the company aims in the long run to become the Amazon of all care-related services.

Note that the company has experienced rapid growth, both in terms of revenue and members. It increased its user base from 1.9 million in September 2010, to 9.1 million three years later. Likewise, revenue grew from $12.9 million in 2010, to $59 million in the nine months ending in September 2013.

Economic moat benefits from scale advantages and network effects due to its more than 9.7 million engaged members, who, on average, posted a new job every 30 seconds, and applied for a new job every two seconds in 2013. It also benefits from inexpensive worth-of-mouth marketing, as since the launch of the marketplace in 2008, over half a million families have found caregivers through

Notice that unlike Yelp, which generates the majority of its revenue from advertising, earns most of its revenue through subscription fees by care-seekers. In this way, the company avoids fierce competition in the market for digital ads.

More importantly, the company wants to go beyond "just matching," and it now provides online payroll and tax product for families that employ a household worker. also provides convenient payment products that enable families to make electronic payments to caregivers from a mobile device. In this way, tries to maintain long-term business relationships with its recurring users.

A great stock to own in an aging society
Perhaps the most attractive part of's story is the company's market opportunity. Unlike Angie's List or Yelp --which provide reviews of any local businesses, such as plumbers, painters, and dentists-- specializes only in the promising market for care, which is large and highly fragmented.

For example,'s addressable market in the U.S. comprises 42 million households. Moreover, $243 billion was spent in the U.S. on care in 2012, according to IBIS Research. This figure is set to continue increasing in the next decades, as the percentage of peoples ages 65 and over is expected to increase by roughly 30% between 2012 and 2020, according to Business Monitor International.

Final Foolish takeaway
With more than 9.7 million members over 16 countries, has successfully built an online matching platform in the promising market for care. After a successful IPO, the company is now trading at roughly 12 times annual sales, well below Yelp's 25.5 price-to-sales ratio, but above Angie's List. As continues expanding its user growth and adding new features to its marketplace, the company will likely experience steady top line improvement in the next years, which will be partially supported by demographic trends favorable to the company, such as aging.

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  • Report this Comment On May 07, 2015, at 8:04 AM, CARA wrote: is an unethical, fraudulent company. I would not invest in this company for that reason. Ceo's are making millions of dollars off of unsuspecting, overtired working parents that are being trapped in to an auto renew billing scam that is buried in light grey font that not many parents see. Why wouldn't parents trust a company that uses"Care" as it's catch phrase? None of the information provided about a caregiver is verified. Not CPR, references or background checks. References are provided by the caregiver. The Caregiver forwards the email address from the parents they previously worked for. Any email can be used then verified by the caregiver herself.

    References are also forwarded by the caregiver by email and most often any email is used and verified l by the caregiver emailing back as the parent. will send out one auto generated phone call to try and verify caregivers references, which most parents never answer.

    Background checks are provided by an company that clearly states they can not verify information and they are not responsible for any completeness or accuracy since no ID is seen by anyone. A caregiver punches in a DL# from her home computer and any borrowed or stolen DL# can be used to pass a background check. will terminate any parent or caregiver that reports, theft, abuse, neglect, of any kind. either by review on the site or phone call. This gets rid of all issues which is easier and less costly than having proper call center to take complaints. does have a call center. However if any member calls about any issues..The customer service agent will ring off the same response every time. "We are very sorry about your experience but we are not responsible for anything" The account is then terminated after that phone call and a auto generated response is sent out to the members email address with this boilerplate statement. " reserves the right as per our disclosure to terminate any member at anytime for any reason or no reason" members are starting to get wise to this and will not call customer service for any reason now which was ultimate goal.

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Adrian Campos

Worked as an engineer and IT consultant for 25 years. Internet entrepreneur since 1996. Webmaster of,,, among other sites and apps. Fool since 2013. In love with tech, innovation, startups, marketing, researching emerging markets, and taking a Foolish approach to business model analysis.

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8/27/2015 4:00 PM
ANGI $5.07 Up +0.25 +5.19%
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