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by erikpukinskis 3190 days ago
Your instincts are correct, you're describing the future. But there's a problem preventing it from working today.

Your idea only really works if you can get a large number of these artisans on board, across many disciplines, and keep their "dance card" stocked.

The issue is that solving any problem in software costs about $1000. And typically if you want to solve one problem you need to solve 2-20 others first.

Your mention of open source is key here. Every pizza place in the world probably has a dozen information problems that would be worth solving, but most of them aren't going to be willing to spend $100,000 to do it, even in 10 installations.

But of those 10 problems, 9 or 10 of them are not core IP for them. So something like 95% of the budget could be split across like 1000 pizza places, driving that cost to $1-20 which is a much more manageable cost.

So you need some sort of bond to finance these projects across 1000 clients.

And second, when you split the design work across 1000 clients all paying in a different moment, you end up with 990 little gigs and 10 big ones and the 990 are too small to be worth the overhead for your artisan. To make those worthwhile you need some infrastructure for turning those contracts into 5 minute non interactive (no customer support) deliveries, and packing them into a stocked queue that can pay the artisan'a rent. I.e. If there's one new pizza joint on a Tuesday afternoon, there are 50 other 5 minute tasks that they can also do so they aren't waiting around for pizza joints and getting nothing done.

And when a pizza joint needs analytics while that artisan is on vacation, you need another artisan who can step in.

So that's a two sided market, which is a notoriously hard startup problem.

And lastly, these information problems are not all code problems. There is design and stats and customer service and other stuff mixed in there. So you need a stable of design artisans, customer service artisans, etc. which means we're talking about an n-sided market.

Which the startup world has, as far as I'm aware, no known examples of.

It'll happen. It's just messy.

1 comments

There are plenty of small companies doing exactly those kinds of projects for SMBs; I worked for one for five years (it's still doing fine, I just moved on).

Rather than a bond, which would be unwieldy to implement, we'd take a risk: we develop it for the first few customers for a percentage of the cost, but keeping all rights to the code so we can then reuse it. Some projects pay their bills and some more, others not so much.

As for the n-sided market, we used the typical solution: having employees.

In our case, we used an open source platform (Odoo) which comes with the generic business modules - CRM, Accounting, Invoicing, ERP, etc - and which allowed us to build integrated functionality for the specific industry. We had clients of all sorts, from one-man dental offices to international clothing manufacturers.

(Disclaimer: I still work with Odoo, but I was never an Odoo SA employee)

A risk is a bond you sell yourself.

I would argue the issuance of the bond and the separate market for holding risk is key.

Developing a market is key to being able to fund smaller and smaller client segments. This is what I talked about above... with a single origin of corporate ownership there is an upper bound on the number of managers. You need to separate into two markets to meet the entire demand. It's just a matter of graph traversal distances. N corporate boards cannot manage N^2 managers.

But N^2/10 agents can manage N^2 managers. And they take 25%.