Small businesses and startups often have a hard time finding qualified technical help to build out their grand ideas.
Founders can turn to freelance sites like Elance or oDesk, but it can be difficult to sort through the dozens of applicants to find the diamond in the rough.
On top of that, top-tier talent is expensive. Bootstrapped operations may find themselves compromising on quality just to meet budget.
But it doesn’t have to be that way.
What if you built out a platform to connect talented web designers, web developers and software developers with cash-poor but idea-rich entrepreneurs?
It could be a win-win for both parties. The companies could get the technical work done on the cheap or free, and the developers could get an ownership stake in the company or a share of potential future cash flows and growth.
The platform could be monetized in a similar way, by taking a small equity stake in each project. Over the long-term, that could be a very lucrative strategy if you end up facilitating some big hits, but might be complex to execute. Another option would just be to charge a flat listing fee for each project.
This unique set-up allows developers to essentially play venture capitalist, except with their time and skills instead of with their money. If they don’t need the income today, but have an eye for a great idea, the payoff could be much greater in the long-run than doing the job as a standard freelance gig.
In addition, there would be a greater incentive to build it right because they would have a legitimate ownership stake. Some skin in the game, as it were.
For business owners, your code for equity platform would solve the problem of finding and motivating engaged talent. And if your project lingers with no one jumping to help, perhaps that’s an early indication the idea isn’t that good.
Freelancers are freelancers and most of the time just want to get paid. They take on risk with each job and might not have the stomach for even riskier work — with the distinct possibility of never getting paid at all.
Even though the platform would allow them to pick and choose which projects they take on, I think it would still be a big hurdle to overcome. They can’t buy groceries today with startup equity and the promise of potential income tomorrow.
And in the reverse of the strength above, in the long-run the companies may end up dramatically overpaying for the initial development work if the project really takes off.
As far as I know, no one else is facilitating these kinds of freelance arrangements. (OK, I didn’t research it at all.) The concept could generate some buzz in the industry — positive and negative for sure.
But I believe there is a large market out there of entrepreneurs and wannabe entrepreneurs who have good ideas but don’t have the time or money or capacity to build them out. This platform would give them a low-risk alternative to go out and try and make something happen.
In terms of competitive threats, if this business idea takes off I imagine it would be pretty easy for Elance or oDesk to add “code for equity” checkbox and even provide some boilerplate legal contracts to set up the arrangement.
But if you can gain some traction I think there’s definitely room for this kind of unique niche in the freelance market.
I like this idea because it’s not just about building one business, but about building hundreds or thousands of new businesses. And it’s about sharing the value created from those new enterprises.
What do you think? Should we build this? Better yet, should we try and get it built on a code for equity model to test the idea?