A short critique of the state of startups.


Crowdsourced employment offers huge disruptive opportunities due to the inefficiencies of traditional labor market, but we’re not too sure this company is on the right track. Due to relatively low margins in this space, we see three primary growth opportunities: scale, scope and skill. Growth can primarily be attained through larger scale (more revenue), more activities that are efficiently crowdsourced, and higher skilled activities (since these have higher margins). But this company is going down the “quality” path. A lack of quality can obviously hurt growth, but we don’t see quality as a significant driver of growth for crowdsourcing of mundane or rote tasks. In fact, too much attention on quality will invariably increase costs, which is most likely the most influential competitive factor.

Instead, we think this startup should focus on higher growth opportunities. Preferrtably, we would see this startup slowly moving up the margin ladder by tackling high value activities that can effectively outsourced. Otherwise we just don’t see too many opportunities with this business model (which is probably the same conclusion that amazon came to in deciding not to allocate more resources to its Mechanical Turk).

  • 24 August 2012