Hello Alfred, and Goodbye Silicon Valley

Hello Alfred — the concierge services company that’s perhaps best known for providing services like laundry, home cleaning, and pet care to luxury buildings in NYC — is getting into the grocery delivery game. Following news of long delivery wait times for some of the biggest grocery chains and delivery services including Amazon Fresh, Whole Foods, and Instacart, the service dubbed Alfred Delivers is now looking to pitch itself as an alternative.

For $25 per week, Hello Alfred workers will pick up groceries and other items from stores across the city and drop them off to customers on the same day each week. It’s not just limited to food; customers can also have items like wine, medication, cleaning supplies, and games picked up. Hello Alfred’s coverage area includes all of Manhattan, parts of the outer boroughs, New Jersey, and Connecticut.

The reason behind the move is two-fold. In the crisis, recurring revenue is key. The hardest part about owning a service or product-based business is the unpredictability of incoming revenue. Especially during volatile times, many similar startups with one-off fees are oscillating between feast and famine. Subscription billing takes the guesswork out of the equation for business owners since incoming revenue becomes much more predictable, thus increasing valuation and chances for survival. 

Secondly, convenience builds habit and customer lifetime value. Subscription-based companies offer their customers the convenience unmatched by the more traditional approach to selling: they provide customers what they need before they even need it. A small recurring fee for the consistency and convenience adds value to the consumer, which in turn creates higher customer lifetime value for the brand.
 

Silicon Valley has to some degree, been a victim of its own success. Social issues such as homelessness, housing shortages, and high prices have led many to doubt the future of the area. Then the virus hit. Tech giants, who have more lenient WFH policies, are now contemplating a permanent remote setup. This week, Twitter has announced that 100% of its workforce can work remotely if it chooses.

Given this new reality, workers are now weighing whether to leave Silicon Valley. Some are considering cheaper zip codes, while others picture a nomadic life offering beaches part of the year and ski mountains the other. Indeed, in the metro New York area, the traditional second-home locations have seen a boom in real estate transactions.

However, some are wondering if employees who move out of Silicon Valley will be paid the same, and whether they will be on the same promotion track as employees who work in the office. 

Luckily, we already have some initial results on the WFH experiment. The NASDAQ-listed Chinese travel company Ctrip has randomized a WFH trial it initiated when it ran out of space in its Shanghai office and needed people to WFH. Because of its randomized nature, the experiment drew academic attention. Stanford Business School published its research paper based on Ctrip’s data and concluded that WFH led to a 13% performance increase. Remote workers report improved work satisfaction and less turnover, but their promotion rate based on performance fell. Despite being more productive, they are 50% less likely to be promoted.