The name is misleading. On the block usually suggests something for sale but here’s Jack on Block, a startup that’s actually been very quick off the blocks to make a mark in the social entrepreneurship space. The facilities management company aims to plug the gap in small but everyday services usually provided by a local handyman, especially for homes and small offices, offering on-call services such as plumbing, carpentry, electrical repair, housekeeping etc. But that’s not why it stands apart from other companies operating in the same space. Jack on Block offers workers from the bottom of the pyramid an opportunity to be part of an organised workforce, bringing them into the formal sector with training and skills upgradation. “By providing handymen a steady salary and employment, I wanted to root out incentives for crime and restore the lost faith of customers in handymen,” says Sharath Vatsa, the 30-year-old founder of the Bengaluru-based firm.
The beginnings were prosaic enough. Vatsa had less than satisfactory experiences at his home with plumbers, carpenters, electricians and the other usual helpers. We’ve all been there. They turn up a day late, with the wrong tools, and often do a shoddy job, after which follows the usual haggle over rates. Safety is an issue and it can be hard to trace them another time. This was an opportunity waiting to be tapped, Vatsa realised. “Organised handyman services is a two-decade-old proven model in developed countries. I thought, why not replicate it here? With time and luck it could prove the norm rather than the exception, like the telecom and auto revolution here,” he recalls.
The initial reaction, though, was anything but positive. Vatsa was startled by the prejudices people held about the working poor — disorganised, unruly, undisciplined were the most common charges. As it turned out, that only made him more determined to go ahead with the project and prove everyone wrong.
On its website, early stage seed fund Unitus, which has invested in Jack on Block, sums up the company well: “On one side, about 93% of India’s workforce is in the informal sector. Too many of these people work in pitiable conditions, lacking predictable income and basic labour standards like a job contract, paid leave and access to basic insurance. On the other side, urban India is facing a severe shortage of reliable plumbers, electricians, housekeepers and other handyman service providers. We like Jack on Block because it has developed a business model that tackles both these issues effectively and profitably.” Here’s how it did that.
With ₹20 lakh raised from an angel investor, in May 2012, Vatsa set up an office and roped in Manohar Arasan, who had over 10 years’ experience working with facilities management companies, as the head of operations. The first few employees were gleaned by word of mouth references, and through Arasan’s contacts. By August, when operations began, the firm had 25 employees, most of them with underprivileged backgrounds.
Recruitment is mainly from slums and low-income areas of Bengaluru and covers a range of qualifications and age groups. Where housekeeping staff are mostly school dropouts, Vatsa has electrical and plumbing supervisors who have ITI degrees. Nearly half of Jack on Block’s 95 employees, though, have been consciously hired from the bottom of the pyramid. Once on board, they are groomed in basic hygiene and receive relevant technical skills training for five hours a month; there are also taught conversational English and soft skills such as dealing with customers. V Gabriel approached Jack on Block for a job last year after seeing a billboard advertising the firm. The 50-year-old electrical supervisor was dissatisfied with his job with a similar facilities management company: salaries were low and often delayed; and pay would be deducted for even a single day of leave. At Jack on Block, he was hired at a 25% hike on his earlier pay of ₹12,000 a month, given 25 hours of training and even got an advance for his children’s school fees. “I have two sets of uniforms and the pay is on time,” Gabriel says.
Vatsa prefers to pay higher than market wages, both as a retention tool as well as to ensure a better standard of living for his employees. So, where Karnataka state regulations stipulate a minimum monthly wage of ₹6,500 for trained technical staff, Jack on Block offers ₹8,000 to a trainee. Technical staff such as plumbers and electricians are entitled to casual, sick and paternity leave, ESI benefits, provident fund and medical camps. A small fleet of vehicles — two vans and six two-wheelers — ferries employees to and from customer sites. On average, housekeeping staff complete two assignments in a day and technical staff complete four assignments.
Where is business coming from? Currently, the consumer segment brings in 60% of revenues. Technical services — carpentry, electrical and plumbing services — and housekeeping services each account for 40% of revenues now, while the rest comes from painting services. In the past year, Jack on Block has already serviced over 3,000 clients, including one-time customers. Around 70% of revenues come from contract services, with roughly 300 households having subscribed to its annual packages. The firm also has 20 corporate clients for its housekeeping services. Monthly packages for corporate clients range from ₹3,000 to ₹1 lakh, while for homeowners, the company has annual packages varying from ₹5,000-25,000, depending on the size of the house.
The firm’s services are currently advertised online through SEO and search engine marketing and through below-the-line advertising. Gaurav Jain, founder and CEO of Mast Kalandar, a chain of quick-service restaurants, decided to try out Jack on Block’s services after a meeting with Vatsa at a seminar some months earlier. He’s quite happy with the result. “The chief differentiator is the wide range of services it offers. Some players offer annual maintenance contracts for computers or pest control. But I don’t think many other players, if at all, offer everything under one banner. Secondly, in the services we have signed up for, they have been prompt and efficient at solving problems,” Jain says.
The numbers are looking good: Jack on Block clocked revenues of ₹1.2 crore in FY13, and Vatsa expects to grow this to ₹4 crore in FY14, and break even this year. In the next year, 80% of revenues are expected to come from the consumer segment or homes. And Vatsa estimates that apartment service contracts could bring in as much as 40% of business in the next three years.
Going forward, Jack on Block will operate on a hub-and-spoke model, where a city will have a central office and four or five subsidiary offices within a 10 km radius, covering the entire city. An in-house CRM software is also being developed so that customers can book its services online. Funding was a challenge in the early months — Vatsa says he often reached out to friends and family for support, especially since banks refuse to buy into the business model — but now, Jack on Block has tapped into venture capital. While Vatsa has invested ₹1 crore in the company, in April 2013, Unitus Seed Fund and Mumbai Angels jointly invested ₹1.5 crore. Vatsa plans to raise another ₹1 crore through both equity dilution and debt.
Srikrishna Ramamoorthy, partner at Unitus, explains the investment rationale: “While such startups are typically high risk, the sheer size and potential for growth due to the size of the market and its ever expanding base was simply too compelling to ignore.” He may have a point here. A 2012 Frost & Sullivan report says that at least 5,000 urban Indian homes require carpentry, plumbing and electrical services every day, and at least 18 Indian cities qualify for this requirement. Putting a conservative estimate of ₹500 charged per home, it amounts to a ₹25 lakh daily opportunity per city, excluding the remaining services that Jack on Block offers.
Over the next three years, Vatsa plans to set up facilities management training institutes in tier 2 and 3 cities. “There are no vocational training courses that make electricians and plumbers job-ready in India. There is too much emphasis on theory in ITIs and diploma courses. Secondly, as we scale up we need standardised staff who will suit our requirements. Therefore, to plug the supply-side gap we are opening these centres.” These will provide three months of theoretical training and three months of on-the-job training, and will be in partnership with the National Skills Development Corporation, which will provide funding and technical assistance. Right now, Jack on Block’s employee attrition has been stable at 5%. Ramamoorthy of Unitus, however, says retaining talent will be difficult as it scales up, and this will be key to the firm’s future growth and expansion. Vatsa needn’t worry about that now — he’s got plenty of ground to cover.