Decentralized Talent Networks
Over the last two decades, when companies launched new online marketplaces, they had to raise significant amounts of venture capital dollars to bring in the early supply and demand. Usually this means spending big bucks on ads to bring in customers for a new way of doing business. This is what Airbnb had to do to bring in travelers that wanted to rent the available properties. Uber had to start by paying drivers big bonuses to bring in supply, then spent heavily to subsidize the cost of trips to incentivize riders. This is referred to as the “cold start” problem. It is hard to get the flywheel spinning on a new network at the beginning.
When looking at talent networks, the same story repeated. Freelancer marketplaces like Fiverr and Upwork have built huge valuations. They bring together companies that need workers for projects with the individuals that can do the jobs. The supply is fairly available as these freelancers are often looking for more work. Fiverr and Upwork spend big on ads to bring the companies, both big and small, that need the services of these freelancers. These centralized networks need to charge a high fee or “take rate” to cover their high costs of acquiring supply and demand. Freelancing is a big business. Tens of millions of people in the U.S. are doing some type of freelance work today, and the numbers here are growing fast.
One of the big innovations of web3 that I am watching closely is decentralized talent networks. My favorite example of this is Braintrust. The company is building their talent network in a truly new and unique way. This is not a skeuomorphic extension of Fiverr. Their network brings together freelance tech developers and the companies that want to hire them for projects. They have over 700,000 freelancers on the platform already, and they have done work for leading companies including NASA, Nike, Porsche, and many more.
The big innovation is that Braintrust uses their $BTRST token to incentivize supply and demand into the network, instead of chasing corporate customers or freelancers with big ad dollars. Talent signs up for the network and receives a reward in tokens. When a freelancer sets up their profile, they earn more tokens. When they complete their first job, more tokens again. They also reward the people that bring in the corporate customers who do the hiring with tokens. There are also ways for these companies to earn tokens as well. It’s an amazing system.
The Braintrust token is a governance token as well. The holders of the token are mostly the individuals and companies doing work within the Braintrust network. These holders can vote on how the network operates, how much they charge in fees, and many other items. This creates accountability to their stakeholders and not to the VC investors that backed earlier web2 marketplaces. The hope is this will lead to networks that are more fairly priced and behave better. It’s unlikely DoorDash drivers would have voted to allow the company to keep their tips. The Braintrust network will hopefully be better for everyone. Braintrust has also used this new structure to keep the take rate at 10%, way below what Fiverr and Upwork charge.
Braintrust allows the people that earn tokens to use them in some exciting ways. Freelancers can use tokens to back their bid for jobs that they are applying for. The token staking allows companies to see who is seriously interested in their open positions. Braintrust says they are going to launch online courses for their developers to upscale that they will be able to pay for with tokens. The tokens can also be sold on Crypto exchanges. They’ve had a pretty volatile ride and currently have a $288MM market cap. They have done private token sales to fund growth in the network, and the most recent one was $100MM led by growth VC Coatue.
I think this concept of decentralized talent networks can be applied in lots of exciting ways. Known Unknown is someone I met here in Atlanta that is doing something like Braintrust with creative designers. I’ve heard there are people working to try a decentralized version of Uber or DoorDash for mobility or delivery drivers.
I have also been ideating on a concept of a decentralized talent network for influencers. I’ve seen a ton of pitch decks of companies building marketplaces in traditional web3 ways for corporations to hire social media creators, athletes, and others to promote their products. Maybe there is a way to get over the cold start problem of getting supply and demand onto a marketplace like this using a new token. I think a token could get influencers to sign up even when the demand side is still small. With enough supply, the token can then be used to keep the take rate low and help corporate demand onboard. If you think this is a good idea and have thoughts on how to make this go, please reach out and we can discuss.
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