If you aren’t yet subscribed to FullStack HR - consider subscribing!
Hello, friends 👋!
Today, we’ll jump into the deep end and talk about what I consider to be one of the most compelling use cases of Web 3.0 and Blockchain - Braintrust.
I briefly mentioned Braintrust in Web 3.0 and HR, but it's worth its own article, as you know by now.
Let us jump!
(I am in no way affiliated with Braintrust, I don’t get paid for writing the article and this is not investment advice in their token.)
In the article Bye, bye Gig Economy I tried to problematize, twist, and turn the gig economy.
And as stated in the article, I had a conflicted view of the gig economy.
On the one hand, I understand why people have migrated to the gig economy, but on the other hand, I think its impact has been exaggerated compared to the impact on the economy as a whole.
Estimates vary, but as a recent McKinsey study shows, between 20-30% of the workforce in the US are gig workers in some form. But that includes EVERY kind of gig worker, not just knowledge workers. The same study also points out that 62% of gig workers would rather have a regular full-time job than be gig workers. Hence my somewhat pessimistic view of the gig economy as a whole.
Maybe I was too pessimistic, but nonetheless, the gig economy is still expanding.
According to a survey by DaVinci Payments, the sector will grow 33% in 2020. Mastercard highlights in its Gig Economy whitepaper that the industry will grow from an estimated $204 billion in 2019 to $455 billion in 2023. The change is being driven by technology. In my last article, I mentioned a few platforms focusing on knowledge workers. They are all centralized platforms that take a chunk of money to match supply and demand. UpWork takes a 20% cut, so does Fiverr, and Toptal wants to keep 40%.
I do not think fees are the only reason people choose not to work full time and work as gig workers, but they are certainly part of the equation.
There are no statistics to back up this assumption, but I think it's fair to say that people are platform-agnostic on these platforms.
If you find them on one platform, you will find them on another. The platform does not highlight this or reveal any statistics about it. You do not win the hearts and minds of investors by pointing out that most people on their platform can also be found on other platforms.
Another point that hurts the traditional platforms mentioned is that service providers want to pull the customer off the platform once a relationship is established.
This is understandable, considering the share that platforms take. It's not ideal for the platforms.
And while there are ranking systems and sometimes review plans, as a buyer, you are more or less hoping for good results when you buy services on these platforms. Certainly, Toptal offers a thorough vetting process. However, they also make most of their money from freelancers. Others use the good old "rate the work." As an avid buyer on Fiverr, it has happened to me more than once that the seller has prepared HARD for five stars, no matter what. It's an indicator but not a valid one. Nor is it ideal.
In Bye, bye, Gig Economy, I tried to be open-minded about space. Still, I think we can all agree that it was a poorly disguised bear article for the industry. Since then, I have changed my mind to some extent.
Braintrust is the main reason for this change.
Like Upwork, Toptal, and Fiverr, Braintrust brings together talent and deals. But the other platforms are centralized platforms with centralized owners. Braintrust is decentralized and works with smart contracts on the blockchain.
That's a lot of buzzwords in one sentence. And my colleague, Fredrik, will point to that and say that's why I am so excited about this shiny new thing. To a certain extent, he's right, but there are interesting premises behind this enthusiasm.
Braintrust founders Adam Jackson and Gabriel Luna-Osasteski explain Braintrust and how it works in their whitepaper.
Braintrust is a decentralized talent network that replaces our outdated, fragmented labor market with a liquid, algorithmically controlled marketplace governed by network participants.
The network runs on the Ethereum blockchain with a native token called BTRST, which users earn by introducing and onboarding clients (demand) and talent (supply) to the network. In addition, clients use BTRST to enhance their job postings, and talent use BTRST to enhance their proposals or take courses to level up their skills.
Lastly, by forking the Compound governance protocol, we’ve enabled a one-token, one-vote system that gives token holders proportional control over how the network is governed. These native token uses provide strong incentives to clients and talent to use the network and participate in the governance of the network. We refer to this incentive alignment as the ownership economy.
Are you really curious about Braintrust and what the future of organizations could look like? Then I highly recommend you read the whitepaper.
What they are saying is that Braintrust is community-owned and community-managed. It is an example of a DAO, a decentralized autonomous organization. If you are an avid reader of FullStack HR, you have heard me talk about DAOs before. (If this is your first time hearing about DAOs, be sure to read this post before proceeding).
DAOs fascinate me, and Braintrust is no exception. Typically, sellers on traditional gig platforms are just commodities sold on the platform. When the platform changes something, you as a seller have to adapt.
Transparency was, and is, at best a blog post informing you of the upcoming changes. At Braintrust, sellers are an essential part of running the platform.
The discussion about how the platform should evolve takes place on Discord. People discuss, then suggest, and finally, you vote. Using tokens, they vote on how the platform should develop. All changes must go through an open and transparent voting process to be implemented.
So, what's a token? See it as your ticket to be part of the voting process. The more tokens you have, the more influence your vote makes.
You earn tokens in different ways. Either by recruiting clients, helping to vet new advisors on the platform, or inviting new advisors. You can also buy tokens on open exchanges like Coinbase.
It's a perfect flywheel. The incentives align: you want to vet new advisors thoroughly and make sure you have qualified advisors for your clients, otherwise other clients will go elsewhere.
Higher standards mean a greater likelihood of attracting high-paying and high-profile clients like NASA, Nike, and Porsche. The ability to attract high-paying and high-profile clients attract qualified candidates into the network.
And on top of that, Braintrust lets the seller keep 100% of the order value. If you, as a seller, charge $110 per hour, you get $110 per hour. And you set the price. On top of that, the client has to pay 10% of the total bill as a fee to Braintrust.
Why is this brilliant?
Aside from the obvious example of the seller getting back the total value of a job and the fact that it's a user-driven community? And the flywheel effect?
Braintrust is a prime example of what I think Web 3.0 will look like in the coming years. It's a combination of old, traditional ways of working and new, innovative features of Web 3.0. And by old and traditional, I mean you can make money and earn a living with Braintrust. It's not about getting your salary in some arbitrary cryptocurrency; it's about getting hard, cold, old-fashioned cash for the work you do. And I think that's the key to success. Even if you believe that blockchain, crypto, or whatever is the future, we are not quite there yet. People still have to pay their bills in dollars or some other currency.
It's two worlds combined, making it easier for people to get into the Web 3.0 world. Like ConstitutionDAO, it helps people find a way into a somewhat chaotic environment.
Is everything excellent and dandy then? For now, it seems so. But, as with all new things, there might be challenging events on the horizon. What happens if a large token holder decides to derail efforts? And will the democratic approach be sustainable long-term? Only time will tell, but if this is the future of the gig economy, then I have gone from a bear to a bull.