I was working at its competitor Handy then and it was clear that the dealsite method of customer acquisition was non sustainable. At the time Groupon was super popular. It worked like this: a service provider eg Homejoy would sell a coupon through Groupon for $50 for a "regular" $100 service, $25 would go to Groupon and $25 to Homejoy, Homejoy would also pay $45 to $60 to the cleaner. This made sense for some business like a spa that after getting the customer in the door might upsell a $100 massage (and get 100% of that). It did not work with Homejoy because customers who got a deep discount on a cleaning did not retain and did not get upsold to. Since Homejoy had to pay the cleaner, they would loose $20+ on each such "acquired" customer. LTV was negative.
On top of this, Homejoy needed to raise funds and for that you need to show customer growth. If you spent $1000 to acquire 50 customers one month and none of them retained, you need to spend $1200 to acquire 60 customers the next month, or you won't have growth to show investors. Homejoy needed to spend more and more each month or it wouldn't get its next funding round; which it didn't. I don't know but I believe that Homejoy collapsed at its largest size with the peak number of monthly customers.
Other cited reasons for Homejoy's failure like worker classification lawsuits and worker retention are unlikely to have been the real reasons behind its collapse. Handy would have had the same issues and yet they are still going 7 years later as part of Angie's List with little noise.
[0] https://www.forbes.com/sites/ellenhuet/2015/07/23/what-reall...