Millions of dollars are being invested in a new platform that pairs children of working parents with stay-at-home parents and provides quick, dependable daycare service at the push of a button.
After being forced by the epidemic to close her college-focused business and join the thousands of other women who lost their careers, some of whom became stay-at-home mums because for many, it was their only alternative, San Francisco mother Helen Mayer, 26, came up with the concept.
Mayer was more upset by the scarcity of inexpensive and high-quality daycare choices while she looked for a new career. Due to the lack of childcare benefits, she even had to decline employment offers.
She wasn’t alone either. In September 2020 alone, more than 130,000 women have lost their employment. And a lot of them ended up becoming stay-at-home mothers. A one of them was Mayer.
The New York Times quoted Mayer as saying, “It destroyed the anchoring that I had as a woman going through college and assuming that I would have a fair playing field if I ever wanted to establish a family.”
The thought struck Mayer as the epidemic dragged on: “What if stay-at-home parents watched the children of parents who had to work?” Mayer started to think of a community-based solution that assisted parents in finding childcare as the pandemic dragged on.
Child exchanges via Facebook parent groups gave birth to the concept, which ultimately developed into Otter, a childcare-focused version of Uber.
According to Jess Lee, a partner at Sequoia Capital, one of the platform’s investors, “When I interviewed my nanny, I didn’t know what to ask.”
“What if I could do that and promptly obtain child care with someone I trust in my area using the way we can call an Uber?”
According to Lee, one objective of the platform is to “reduce the burden on caregivers to understand the laws of their states and on parents to locate, vet, interview, and arrange their own assistance.”
By the end of 2020, Mayer’s child care platform Otter—named after her mother’s favourite animal—had connected 400 families with stay-at-home parents who could offer daycare.
Potential customers and investors were hesitant, according to Mayer, who spoke to The Times.
When they first learn about it, a lot of people will wonder, “Wait, hasn’t this been done before?” Mayer made this statement in reference to the time-tested idea of leaving the kids with neighbours. “To me, it’s a sign of excitement — like, it’s so evident that it’s thrilling.”
Additionally, Mayer brought out how the service varies by state. The same training standards and caregiver-to-child ratios that apply to day care facilities do not apply to one- or two-child child care providers in New York.
However, a parent in Massachusetts would need permission in order to get compensated for caring for even one kid at home.
With Otto, which generates revenue from 15 percent service fees, a caregiver is a contractor with the authority to set their own hourly rates.
Mayer said that her business also provided safeguards for the caregiver in the event that a parent cancelled, such as compensating the caregiver and providing other resources to allow caregivers to be compensated in a predictable fashion.
The New York Times quoted Harvard labour economist Claudia Goldin as saying that part of Otter’s “genius” was that it was “waking” a new group of employees, stay-at-home parents, to the “worth of the unpaid and devalued care job they undertake.”
OTTER’S RECOMMENDATIONS FOR SECURITY
Parents who want to use Otter’s service must:
Establish a profile. The timetable, parenting philosophy, and details about your kids will all be included in this profile.
pass a background investigation. Otter employs other sources to do safety inspections of homes and conduct background checks.
Discover matches. Once the providers pass a background check, working parents may connect with them on the portal.
Request care. Otter allows parents to plan appointments, payments, drop-offs, and pick-ups.
The startup was founded with $300,000 from a small group of investors. Andreessen Horowitz, a venture capital firm best known for supporting Internet behemoths like Facebook and Airbnb, then invested more than $4 million.
In July 2021, Sequoia Capital funded an additional $23 million, and this year, the business expanded into two more locations.
None of the parents involved in the exchanges were getting paid when the business was originally established. The amount of time working parents left their kids with stay-at-home parents increased once compensation was included in, she told The Times.
According to the website, stay-at-home parents who volunteer to look after the children of working parents earn an average of more than $600 a week.
By word of mouth, the number of families taking part in the exchanges increased. Mayer had 1,000 matches when she relocated from Boston to New York in January 2021.
After a short break in the summer of 2021, the business reopened in May in Santa Clarita and San Francisco, where Mayer and her family currently reside. The business employs 15 people and has received around $27 million in venture money.
Since the service’s May debut, around 250 parents have joined up for it, and 12,000 individuals have requested to be alerted when Otter will be available in their area.
On their website, it just takes a few clicks to discover care or sign up to be a caregiver. Users are asked to complete a survey on parenting methods, questions about the medical history of their children, and a government-issued ID scan to confirm their identity.
An algorithm then chooses potential pairings, but humans still make all final matches, according to Mayer. All the families’ backgrounds are checked by a third-party business.
According to Alexandrea Ravenelle, a sociology professor at the University of North Carolina, Chapel Hill, and the author of “Hustle and Gig: Struggling and Surviving in the Sharing Economy,” the service has been compared to Uber for child care because “Uber for X” is now a common pitch for start-ups, which is music to investors’ ears in Silicon Valley.
Because Uber was once a unicorn, investors now hear “Uber for blank” and see dollar signs, according to Ravenelle.
I grew up at a time when there was a stay-at-home mother in the neighbourhood, and in the summer, it was where all the kids congregated because there were baked cookies and entertaining activities, Ravenelle recalled.
But there is a significant distinction between parents who exchange child care and those who are effectively one another’s employers.