Outsourcing: Ian Ippolito, Founder and CEO of vWorker (Part 2)

Sramana Mitra: I think I’ve heard of Rent-A-Coder.

Ian Ippolito: OK. That’s the way it started, and it was just programmers back then. The first month it probably made only $50 or $60, but it grew. Over the next couple of years, it started going faster and faster. We got some good publicity. We were in The Wall Street Journal, which was a big thing. At the time, the idea of hiring someone over the Internet was a new idea. The [journalist] wrote a whole article just on using the site. After that, things really took off.

SM: Which business model do you use? Is it the Elance kind of business model or the oDesk business model?

II: It’s similar to the oDesk model. Obviously, we have differences, but it’s similar to what they do. We connect people who need remote work done with those who will do the remote work. We put in guarantees to make it safe.

SM: Talk to me more about the specifics of your company. We’ve had a variety of companies like yours profiled in the Outsourcing series, so we’ve been very much on top of this trend. Elance, oDesk, Freelancer.com, crowdSPRING, NineSigma, all sorts of companies that follow roughly that business model, so tell me more about the specifics of your business model.

II: Sure. If you’re already familiar with some of the others like oDesk and Elance, we’re similar to them, but we’re also different. All of those are big venture-backed firms. They act very differently from the way we do. Their business models and strategies are different because of that. We are not venture funded. Lots of venture capitalists have offered to fund us, but we’ve grown organically. Because we’re so much smaller than an Elance or oDesk, we have to do things differently. For example, we have to offer better guarantees. Our business model is we have a 100% money-back guarantee. If someone goes to Elance, for example, and there’s a dispute, he has to pay a certain amount of money if he has to go into arbitration, from $99 to $199. With us, it’s all free. And we’re cheaper than oDesk, about 10% to 35% cheaper. The strength of oDesk is that they have that desktop software, [but] we have that. We have same strength as crowdSPRING, offering crowdsourcing, and oDesk and Elance don’t do that. We combine a lot of these things that are the best things from these different sites to create something that, we hope, people can use over and over again.

SM: People can choose what they want to do? They can hire people to do a job or they can crowdsource a project, is that what you’re saying?

II: Exactly. We even have something where we recommend that the best way to hire someone. If you’re not technical, or let’s say I’m trying to hire a designer. I can look at profiles and ratings, and I still don’t know if that person’s going to do a good job for me. First of all, people fake stuff. They fake their profiles, unfortunately. They’ll fake their portfolios. But the other thing is, even if it’s not fake, just because someone else liked what the designer created doesn’t mean I’m going to like it. One of our best practices is combining crowdsourcing and outsourcing. We recommend that when they want to hire someone, they put out a crowdsourcing competition. We call it on-the-job trial. Try to find who is best. Just give a little piece of the job and find out who’s the best at that. Then once you have the person you like, you outsource, which is much cheaper. What that does is it eliminates the interview process, which is the most difficult part of outsourcing for most people.

SM: That works for design jobs. Is that your specialization? Your specialization is coding, isn’t it?

II: It works in coding, too. It just has to be done in a different way. For example, let’s say I’m hiring a programmer to program my website. I will post an on-the-job trial and say, “I want to create the next Facebook.” But I’m not going to put that as the trial. The trial is just, “I want you create the wall,” for example. I want to create the wall, and the person who creates the best wall is the person I’m going to hire for the rest of this project, and this is going to be a year-long project. And I’m going to give a prize to the person who does the best. Not only do they audition, but I’m going to give a prize to the winner, and the winner will also win the rest of this contract.

This segment is part 2 in the series : Outsourcing: Ian Ippolito, Founder and CEO of vWorker
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