Posts Tagged ‘code4cheap’

Why Code4Cheap is destined for failure

May 31, 2011 6 comments
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.