More than a decade ago, before everything got crazy for Roger Dickey, before the billion-dollar game, before the angel investing, and before the startup that would be the darling of Silicon Valley, there was Curiosoft. In 2007, Facebook had released their application platform. Many companies were jumping on the opportunity to build something that would go viral. Microsoft, Amazon, Red Bull, The Washington Post, and the like all flocked to the platform in hopes of releasing the next big thing.
Roger had just left a conference that Facebook had hosted. He was talking with a friend who had built a zoo game using basic HTML that ran on the platform, and he was making around $1000 a day. Thinking about the potential opportunities there, he quit his job in Texas and with that friend, started his first company Curiosoft, a testing bed for all of his new ideas that he would build and release. It turned out that games and dating apps would eventually become the most popular uses of the platform, but at the time, it was a period of mass experimentation. Roger’s own process boiled down to two areas.
First, he had a personal promise to not copy any of his competitors and make something wholly original; it was against his ethical code to steal others’ work. With that philosophy, he had to do a lot more experimentation to see what would work.
Because of that, he started a process called rapid prototyping where he built and delivered a functional prototype/minimum viable product every three days to test out the market. Curiosoft ended up building nineteen apps over the course of three-and-a-half months.
One of the games they created, Mafia Wars, turned out to be a smashing success, bringing in one billion dollars in revenue and enjoying 100 million active users at its peak. It was so successful that Roger was able to sell it to Zynga for all equity and become an executive. While he worked there, he learned a lot of lessons that would prove useful later in his career as an entrepreneur once again. He observed that the people there “were very user-experience minded, and they understood user behavior very well.”
Even though Zynga had all these great things going for them, something about their business model rubbed him the wrong way: the games were free to play. The problem there was that 98% of the customers didn’t pay any money, and the model was only able to work because of the massive scale. If there had been less users, it would have been less sustainable. In contrast to that, Roger wanted to start a business where every customer paid for the service that he provided.
After around three years, Zynga’s stock had grown substantially and they went public. Roger used the equity that he had received when he sold his game and became an angel investor so he could learn about other industries outside of gaming. He made over eighty angel investments and learned a lot through the process; the way some founders ran their companies and the ideas that they were chasing gave him examples of what did and didn’t work. Crucially, he found out that many of the companies were having trouble getting great engineering talent, and by working with them, he got a feel for how his future customers would think.
Eventually, Roger started Liquid Labs LLC, parent company that was similar in structure to Curiosoft, where the aggregate of his past experiences and lessons would come together to help him build Gigster. Rapid prototyping came into use again, and this time the idea was to build and deliver products that would explore ways to use technology and disrupt lucrative industries like marketplaces and artificial intelligence.
His experience working with the small businesses that he had invested in came back again in the form of an opportunity. It was echoed by many others around him as well at the time. He observed, “everybody in Silicon Valley and outside of Silicon Valley talks about how hard it is to hire engineers. This is a pretty common refrain. There are supposedly around six job opening for engineers to every one engineer that exists. So the demand is six times the supply.” He pointed out that despite the ineffectiveness of existing “solutions” within the marketplace, they were all generating millions in revenue: another sign that there was incredible demand.
He also observed several key problems with those other services. First, they were open marketplaces, so it would be hard to distinguish between a good or bad engineer. What made that problem worse was that some companies like Odesk had reverse bidding, meaning that the user would have to decide who was best as freelancers aimed to undercut each other by lowering their prices. Some developers would even give customers discounts for a five-star rating, so it became impossible to trust the system.
Because there wasn’t a central oversight, all these hired engineers were independent actors, free to develop the software in their own ways. Sometimes a customer would hire what they thought was a great engineer, only to have that person give it to their B team or subcontract out the project. Other times, they might even hold the code hostage until the user paid more money for all the “extra time” they put into developing the software.
The market was ripe for change. All Roger needed to do was figure out how.
The team at Liquid Labs turned the problem over in their heads and came up with what they called at the time “a button that you could push to hire a great engineering team.” It would be incredibly simple to use. You drag the slider for how many people you need, submit your project, press the button, and get a quality hand-vetted team at the other end who would build and deliver your project like magic. They knew at that point that the idea was gold: anyone who had an idea worth chasing would want to use it. Now the goal was to make the button work.
They first fleshed out the idea so it would fix many of the aforementioned problems. They set the price to get rid of bidding, hand picked high-quality engineers to do the job in order to maintain quality, sat in the middle of transactions to oversee that the project was being done as specified, and guaranteed anonymity for some of the freelance engineers who might also be working at another company like Google or Microsoft.
A year and a half after starting Liquid Labs, they launched the first version of Gigster and went live on Hacker News and Product Times. Within two days, they had three million dollars worth of business submitted to the website, so they dropped all the other prototypes and went into full scaling mode for Gigster.
One of the first things they had to do was learn to position the company and sell the idea to potential investors and customers. For investors, the opportunity was in taking control of a market with a tremendous amount of demand. Custom software created by outsourcing firms was a $132 billion market and the amount that companies spent on engineering talent was over two trillion dollars globally. If they could come in, aggregate a lot of supply, take demand from competitors, and eat up a portion of that market share, they would be an extremely profitable venture. The icing on top of the cake would be that as they managed more projects, they would be able to find commonalities between different areas of work and become more efficient.
For customers, it was easy to see the differences. They saw that a Silicon Valley-based firm was going to manage their project. Gigster would take full responsibility for the finished project. They were guaranteeing the price, the quality, the top tier talent, and a team of engineers, not just an individual. To top it all off, they were backed by sound investors.
The first step was scaling and getting engineers so that when the customer clicked the button to get their team, there would be people on the other end. Roger outlined the process,
We started with 100 people we knew well and expanded out from there through referrals and some nice supply-side PR. My co-founder was doing about 40 interviews a day to build the early supply network and controlling quality very carefully to make sure we had the right foundation of people to build on.
They had a successful launch, but then things slowed down a little bit, and revenue growth eventually stalled. Roger then turned to hire salespeople. He explained, “we came up with a structure where we wanted to have contract salespeople. We built this whole system where the contract salespeople could take chats with customers, they could close deals online, and there was a certain commission that we gave them for that.” It was interesting for Roger to finally learn about sales, and he and his cofounder gradually worked their way around to a model that worked.
By late 2015, they had figured it out and growth exploded. Over the course of the next year, Gigster went from $90,000 to $600,000 to one million and finally to 1.2 million dollars a month. Every month was at least double the previous month before slowly tapering off and growing at more regular speeds.
Although growth was fast, one problem area was that many of the early customers were small businesses, and that posed a challenge for the Gigster team. “We had a tendency to promise a lot because we really wanted to take care of our customers and not charge a lot,” Roger remarked, “and this was pretty bad for us because we lost money on most of our early projects.”
The issue was, by signing a services contract, they were making a commitment, and they were signing a lot of contracts. This overload became apparent when they were preparing for their presentation for Y Combinator demo day.
They had made a commitment to closing 100 projects in five weeks to make for a compelling presentation. That amounted to roughly four projects a day. Renting out a house in Sunnyvale, California, the whole company moved down there, and every day that they closed four projects, everyone would jump into the pool at the back of the house to celebrate. They ended up closing 120 projects in the five-week period, but the consequence to that was that now they had to deliver on all those contracts. Roger explained the situation, “my co-founder was flipping out because he was happy, but he was also scared. So he kind of went off into a cave and figured out how to deliver all those projects.” In the meantime, many of the small businesses came back and threatened to sue them if they didn’t deliver exactly what they promised, which was often more than they could have possibly done. From that experience, Roger decided to pivot towards enterprise where the customers were much more predictable and realistic with both the project and the pay.
As Gigster’s growth exploded through their enhanced sales strategy and pivot to enterprise, they quickly became one of the best spots for turning one’s dreams into software. Roger quickly learned a lesson though. He said, “We should have hired executives earlier. We scaled too fast and didn’t always have enough senior talent to help us maintain that growth rate at the delivery quality bar we needed to be at.”
Most importantly, as Gigster has grown, the company atmosphere has changed. In the early days, they were working with many entrepreneurial people, testing out their concepts, and moving fast. Once they became a mid-sized company, they had to start thinking about things like management, culture, values, hiring, and communicating the same vision and goals to everyone. At 100 employees, the focus turned to customers, growth, senior leadership, company financials, and investor relations.
These days, Gigster is rapidly expanding their client portfolio and distinguishing itself from the gig economy. A year ago, they helped finish a Christmas project for IBM to publicize Watson’s artificial intelligence tools. They’ve also set up a Gigster fund which is almost like a savings account for freelancers on Gigster.
At the end of the day, Roger is confident in the model that he has built. With a laser focus on software, they’re slowly changing the norms of hiring engineers.
If you want to learn more about Gigster, you can find their website here. To read our last article with Ring click this link. If you’re interested in the most recent business secrets, check out our Business Knowledge page.
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