[jalopy]

How can you build a platform that doesn't race to the bottom but allows it to extract the value added (and hence profits) from collecting and vetting great talent?

I always imagine the interaction with supply (quality freelance developer) and demand (company needing work done) to be like this:

Company: "I need great freelancers!" Dev: "I'm a great freelancer! My rate is $100/hr [or whatever]!"

[Company interviews Dev, sees prev results, feels happy w/Dev]

Company: "Great! We'll pay you that for the first few days on this platform, then engage you for long term projects off the platform. That way, we don't have to pay Matching Site the finder's fee."

[Mithaldu]

The end point you imagine there often does not happen because it is REALLY useful to have an escrow agent inbetween. I use odesk/upwork personally, and it provides me a lot of value.

It bills my work to my clients weekly, and automatically withdraws the money from their credit card. This means if a client is unhappy with a freelancer it's easy for them to start a dialogue and start it early; and at the same time the freelancer has protection with less-than-honest clients and can lose, at most, a week's worth of work.

Compare this to normal freelancer contracts where the cash is typically paid monthly, with a delay of 14+ days after receipt of invoice. If a client acts in bad faith in that case, the freelancer loses a lot more, and to get money back, would have to go through international courts, which often costs more than the money they lost.

[jalopy]

Very helpful insight, thanks. To summarize - the value added services of billing, monitoring and dispute resolution make it worthwhile for the contractor to use the service.

[mgkimsal]

The 'value' could be more modest - small subscription charges or one time fees. Being listed as a dev for, say, $10/year, with extra charges for being at the top of the list, extra pictures/listings, etc.

Some modest pay to list fee for a project, then extra tools unlocked for more $.

Even large placement agencies usually only try to get a cut of your salary for 6 months usually, then you 'go direct'. ("contract to hire" standards I've generally seen in my experience).

[joshmn]

Toptal arguably does this, but it's not an open freelance platform by any means.

I think that vetting both sides would be one way, albeit a bit difficult to really do once you're trying to scale.