Care.com

Care.com is a corporation that helps families find caregivers to provide childcare, senior care, special needs care, tutoring, pet care, and housekeeping through membership in a two-sided marketplace. The site has 32.9 million members across 20 countries,[3] and attracts 6.4 million unique visitors a month, with a new job posted every 30 seconds.[4] Care.com is also offered as an employee benefit by 150 companies and organizations,[5] such as Google and Facebook.[6] The company raised $111 million in venture funding[7] before going public on January 24, 2014.[8] In February 2020, Care.com was acquired by IAC and is no longer publicly traded.[9] The company is headquartered in Austin, Texas, and has additional offices in Berlin, Germany.[10][11]

Care.com, Inc.
Type of businessSubsidiary
Headquarters
Waltham, MA
,
United States
Area servedUnited States, Canada, United Kingdom, Western Europe
Founder(s)Sheila Lirio Marcelo
Key people
  • Tim Allen
    (CEO)
  • Megan Poonolly
    (Head of Safety)
Industry
Services
  • Child Care
  • Senior Care
  • Tutoring
  • Housekeeping
  • Pet Care
Employees515[1]
ParentIAC
URLwww.care.com
LaunchedMay 2007 (2007-05)[2]

History

Sheila Lirio Marcelo helped start the college savings site Upromise and was vice-president and general manager of TheLadders.com. Marcelo came up with the idea for Care.com when she had trouble finding someone to help care for her first child.[12] Then her father had a heart attack while he was caring for her second child, and she had difficulty finding care for him in addition to child care.[13]

When Care.com launched in 2007, it helped customers find babysitters, tutors, pet care and senior care.[14] The site also offers other services, such as housekeeping[15] and care for special needs children and adults.[16] Users can search, post jobs and look at some caregiver profiles for free as basic members or enroll as premium members and pay a monthly, quarterly, or yearly subscription fee for full access to the platform and all caregivers.[1] The site also helps people find job opportunities in their area by posting a profile and applying to openings for a monthly fee.[17][18] The company offers a babysitting rate calculator that helps parents calculate what to pay their sitter.[19]

Between October 2006 and the end of 2012, Care.com received $111 million in funding from investors including Matrix Partners, Reid Hoffman (co-founder of LinkedIn),[20][21] Trinity Ventures,[22][23] New Enterprise Associates,[24] USAA,[25] Institutional Venture Partners (IVP).[26]

It expanded its online marketplace into the United Kingdom in April 2012,[27] followed after by Canada.[28] The company debuted Karoo, a private mobile social network that connects families and caregivers, which was later shut down, in September 2012.[29]

In December 2012, Care.com launched Care.com Recruiting Solutions to help care-related businesses hire caregivers and fill staff openings through the site.[30]

In June 2013, Care.com and Knowledge Universe, a company that runs child care centers throughout the country, announced a partnership, where Care.com corporate clients will have access to KU's facilities for backup care.[31]

In November 2013, Care.com filed for an initial public offering with Morgan Stanley, BofA, Merrill Lynch and J.P. Morgan as the joint book-running managers, and Allen & Company LLC and Stifel as senior co-managers.[1] In December 2013 details of the IPO were first revealed,[4] with January 2014 reports saying that the company planned to raise $85.6 million[1] by offering 5.35 million shares, at $14 to $16 each,[32] on the New York Stock Exchange under the symbol "CRCM". On January 23, 2014, 5.35 million shares were priced at $17.[33] Care.com went public on January 24, 2014, with shares climbing to $22.55, up about 30 percent from its initial pricing.[34] It was the first Boston venture-funded technology company to go public in almost two years.[1]

In March 2019 the WSJ reported on alleged lapses in the safety precautions taken during vetting of caregivers.[35] In the same month, Care.com acted to remove unverified daycare listings from the site and to strengthen vetting procedures for members.[36][37] The daycare listings removed had been generated automatically but never claimed by the facility owner.[38]

In December 2019 IAC announced it was buying Care.com for $15 per share, a 13.2% premium over Care.com's most recent closing price of $13.25, in a deal valued at almost $500 million. As part of the deal, IAC executive Tim Allen became CEO of Care.com[39] when the acquisition was completed in February 2020, at which point Care.com ceased trading on the NYSE.[40] As of June 2020, none of the founding team of Care.com is still with the company.

Acquisitions

In August 2012, Care.com acquired Breedlove & Associates, a provider of household payroll, tax and compliance services for caregivers and families.[41] Based in Texas, Breedlove is the nation's largest nanny payroll firm, processing more than $20 million in payroll per month for over 10,000 clients.[42]

In July 2012, the company acquired Besser Betreut GmbH, a Berlin-based online care destination with customers in more than 15 countries, to increase international presence.[43]

In December 2012, Care.com purchased Parents in a Pinch, a company that provides backup child and adult care services, such as when a nanny calls in sick.[44]

In July 2014, Care.com purchased Citrus Lane, a company that offers subscription-based toy packages for families.[45] In October 2015 the company announced that Citrus Lane would be shut down. [46]

In January 2018, Care.com purchased Bay Area in-home referral agency, Town + Country Resources - an acquisition that is acknowledged on neither company's web site, only in SEC filings.[47]

Accounts and fees

Although it is free to make a caregiver account on the site, there are limitations in not having a paid membership. For example, after one sends out an application for a job, one will be prompted, thereafter, to "triple [one's] chances" of being hired, by sending the potential employer a personal message. If one does not have a paid membership, one will be immediately redirected to the "purchase membership" page, upon clicking. If one chooses to go back in one's browser, the application page will still say "You sent a message to [employer name] on [present date]." Additionally, if one is redirected here through, as an example, Indeed and clicks the "apply" prompt beside the job posting, one will be redirected to the "create an account" page (with an account this prompt reads, instead, as "I'm interested." Regardless, the prompt below it will read "I'm not interested").

This first page asks one for one's full name, one's postal code, one's gender, one's date of birth, and one's caregiving-of-interest (animals, children, elderly, etc.). Upon completing this page, one will be requested to supply an email. Following this, one can choose to submit a photograph. This step is optional. Then, as before, one will be sent to the "purchase membership" page, in this case a fourth option is present: "limited". Hereafter, however, this final option is gone. After the membership page, one will be prompted to create a user profile for the specified caregiving-of-interest.

One can choose to apply for a premium membership at any point upon completion of account creation. Prices are as follows:

  • 1 month for $39
  • 3 months for $78 (effectively paying $26 per month)
  • 12 months for $156 (effectively paying only $13 per month)

The fine print reads that all payments are automatically renewed unless one's subscription is cancelled, but all prices also include GST/HST. Additionally, there are discount coupons for membership payments.

Controversies

Founding

Immediately prior to founding Care.com Marcelo was an Entrepreneur in residence at Matrix Partners. While there, she and Matrix partner Nick Beim met with the founders of Sittercity.com and Sitters.com, two existing websites for finding caregivers which had been founded years earlier. The purpose of the meetings were to discuss a potential investment and bringing Marcelo in as CEO.[48] Matrix Partners did not invest in either firm and, months later, Marcelo would found Care.com and receive $3.5 million in Series A funding from Matrix Partners, with Reid Hoffman, co-founder of LinkedIn also participating in that round.[20]

The situation has been cited as a noted example of VCs misleading entrepreneurs they meet with and using the information for their own benefit against the entrepreneurs. Mike Cravens, founder of Sitters.com, is quoted as saying that the meetings Marcelo and Beim had with him "were more than just a couple of meetings... the reality is that they did a deep dive into my company and then used that information to jump-start Care.com". Cravens furnished the Boston Globe with emails from Marcelo in which she tells Craven that she would not entertain starting her own business which would compete with Sitters.com.[48]

Anne Raimondi, a spokesperson for Matrix, responded that: “We can appreciate that the companies in question do not like competition, but we do not believe that their claims of unfair treatment are at all merited because both Sheila and we said from the earliest discussions with these companies that we were considering competitive options and not to share any information with us that they were not comfortable sharing.”[49]

Allegations of insufficient background checks

In 2015 The Boston Globe reported on the case of a local couple who found that the woman they had hired through Care.com as a nanny had stolen almost $300,000 over the year she worked for them by forging checks on the couple's personal accounts. The couple had paid $79 for a "preferred plus" background check that came back clean, despite the woman's lengthy history of fraud and theft arrests around the Boston area, a record the newspaper had been able to find using resources available to the public. While background checks in Massachusetts are more difficult to run than those in other states since court records are not available online, the Globe found other instances elsewhere in the U.S. where families were suing Care.com alleging negligence in properly conducting background checks, including two where the sitter hired was facing criminal charges over the death of the child they were hired to watch.[50]

Three years later a Medium writer, Edwin Dorsey, found three additional cases where sitters hired through Care.com, with prior criminal records, had faced charges and lawsuits in the deaths of children under their care, as well as other cases of abuse. He tested the site by setting up a profile himself as Harvey Weinstein, a movie producer then facing many allegations of sexual assault and rape; not only was it approved but he was offered the chance to sign up for CareForce, meaning the listing would turn up in search engine results from off the site. His claim to be certified in CPR and first aid were also accepted without any requests for verification.[47] In March 2019 The Wall Street Journal reported that claims by many day care providers listed on the site as licensed in their state were, in fact, not; at one in Tennessee a woman's twins had drowned, and other children had been abused, physically and sexually.[51]

Overbilling claims and scams onsite

Dorsey found from public records request filed with various states' attorneys general (AG) that complaints alleging overbilling were widespread. Both families seeking caregivers and those offering such services told the AGs that they had found that their accounts, initially free, had been set to renew automatically every month. Some were unable to cancel their accounts through Care.com's website, and even those that did, through it or contacts with the company's customer service department, reported that their credit cards continued to be billed even after they had disputed the charge with their credit card companies. Some users reported that they found the charges were continued on cards they, or family members, had never used on the site.[47] There are hundreds of these claims that can be found on the company's social media sites, with some reporting that they had been incorrectly billed up to $10,000.

Other Care.com users claimed they had been taken by scammers exploiting the site. A common scheme was for someone to say they were moving to the mark's area and send them a bad check with instructions to deposit it into their account and send a check on their account to a third party; the intent is for the scammers to receive a good check and cash it before the mark's bank finds the first check is no good. Some victims reported receiving death threats from the scammers if they did not comply; Care.com was, complainants said, indifferent to their complaints.[47]

Customer Service

On the review site trustpilot.com the company has a 1 star rating for their customer service. Several consumers have complained that they were unable to log in after paying, getting charged more than once, customer service ignoring their emails, etc. [52]

Awards

In 2013, the Care.com app Karoo received a Webby Award under the social (handheld devices) category.[53] The app was later withdrawn. [54]

References
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  2. Om Malik, "Reid Hoffman invests in Care.com," Gigaom, July 30, 2007.
  3. Care.com, "Company Overview," Care.com, February 4, 2017.
  4. Rebecca Grant, “Care.com raising $80M IPO to capture early (and massive) care market,” Venture Beat, December 12, 2013.
  5. Michael B. Farrell, "Care.com, a site for caregivers, aims at Wall Street," The Boston Globe, November 26, 2013.
  6. Serena Saitto & Lee Spears, “Care.com Said to Pick Morgan Stanley as Lead Bank for IPO”, Bloomberg.com, August 7, 2013.
  7. Brian Womack, "Care.com Raises $50 Million in Fifth Round of VC Funding Archived January 5, 2014, at the Wayback Machine," Bloomberg Businessweek, August 7, 2012.
  8. Jordan Graham, "Experts: Care.com IPO shows Boston’s Web savvy," Boston Herald, January 24, 2014.
  9. SEC. "Care.com Inc 2020 Notice of termination of registration of a class of securities under Section 12(b) 15-12B". SEC.report. Retrieved 2020-12-18.
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  11. www.bizjournals.com https://www.bizjournals.com/boston/news/2019/12/20/care-com-acquired-for-500m-new-ceo-appointed.html. Retrieved 2020-12-21. Missing or empty |title= (help)
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  13. Susan Chaityn Lebovits, "Tapping Web of caregivers," Boston Globe, December 9, 2007.
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  52. Trust Pilot "https://www.trustpilot.com/review/care.com" Care.com Reviews. 'trustpilot.com'
  53. The 17th Annual Webby Awards Archived 2013-12-17 at the Wayback Machine. The Webby Awards Homepage.
  54. "Karoo home page," Care.com web site
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