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Why Code4Cheap is destined for failure


There was a story on Hacker News recently about a user’s startup called Code4Cheap.  The site aims to connect programmers with those willing to pay for technical solutions. By allowing the buyers to set prices for their tasks directly rather than relying on a bidding process, it purports to have a simpler workflow than a full-fledged freelance site like Elance or VWorker.  The buyer sets the price and programmers are free to accept it or not.

I was intrigued by the premise, but I’ve come to the conclusion that it is destined for failure.  The first reason is that the title contains the word ‘Cheap’.  Cheap has very negative connotations, including “of shoddy quality”.  Even the literal definition, “purchasable below the going price or the real value” , presents real problems for the site.  Why?

The blog post Pay Enough or Don’t Pay at All by Panos Ipeirotis sums it up perfectly:

There are the social norms and the market norms. When no money is involved, the exchanges operate using social norms. Once you put a price on a task, it becomes part of a market norm. It can be measured and compared. … Instead of offering their priceless help, they were being valued as unskilled workers, like every other worker in the market. Money and altruism do not mix.

A central tenet of the seminal book about the open source movement, “The Cathedral and the Bazaar“, is that the hacker culture thrives as a “gift culture” as opposed to an “exchange culture”.  (This chapter of the book is available online if you’re interested in more).  Thus we see every day thousands of highly skilled people give away their time and programming effort, both in the open source community and in Q&A sites like StackOverflow.  In these instances, the currency consists of reputation and goodwill rather than money.
One must pay a reasonable rate for programming expertise if he is to pay at all, and the current questions on the site are laughably complex for the amount of money that the posters are offering.  On top of that, the site takes a 30% cut out of any bounty that a buyer offers for a solution, further disincentivizing prospective programmers (i.e. a $50 bounty actually becomes $35).
I applaud the creator for launching a product, but I’m afraid this one will not last, without some sweeping changes to the business model.

  1. May 31, 2011 at 12:49 pm

    I *completely* agree.

    The site 99designs has been doing the same thing in the design community. Here’s another excellent (and short) article about how this market trend is horrible for the community and its members: http://www.davidairey.com/design-iceberg/

    • i82much
      May 31, 2011 at 1:16 pm

      Didn’t realize there was such a parallel in design community. People need to start valuing their time more I think

  2. June 1, 2011 at 12:09 pm

    Good article & discussion. I think it’s especially interesting that code4cheap’s FAQ claims to fit questions that are “between StackOverflow and Rentacoder” (since rentacoder is now vworker). They claim to save you the ‘overhead’ of rentacoder, while charging the same price and not offering the payment guarantees or arbitration.

    • i82much
      June 1, 2011 at 1:28 pm

      Good point – I didn’t know that Rentacoder charged such a fee too.

    • June 2, 2011 at 1:39 am

      The “overhead” I was referring to was soliciting, responding to, selecting, and shepherding bids to completion. If you’ve ever used rent-a-coder, it’s not a fire-and-forget process at all.

  3. June 2, 2011 at 1:37 am

    I am the creator of code4cheap.com.

    Nice post.

    I’ve seen the same criticisms about the “cheap” brand and connotation of the word. If it seems like a blocker, I may change the name.

    After I read “Pay Enough or Don’t Pay At All”, I was wondering how long it would take someone to link it to code4cheap. Altruism and free gifts of knowledge are the backbone of StackOverflow, and a large part of what made it so successful. I saw a domain of questions that simply weren’t getting answered.

    Browse to StackOverflow and look at what questions have 100+ views and 0 answers. It’s a bunch of drudge work. My goal was to connect people who are willing to do a little work with people who are willing to spend a little money and see those questions get answered.

    I’m still trying to find the sweet spot for question difficulty versus price, I didn’t expect to get it right in the first 5 questions.

    I’m still experimenting with the cut too, I just copied Apple’s reasonable 30% for apps.

    I was going to ask what you thought about 99designs commoditizing design in the same way, but I see you just found out about it.

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