Sunday, March 8, 2009

I Want to Invest in Your Idea--Mine Sucks


If you have money in the stock market, then most likely you're thinking about other places to invest. If you have any cash, you may be keeping one ear open to innovative ideas in green energy, web technology, or education.

To a twenty-nine year old like myself the idea of launching a start-up glimmers with infinite possibility. I think about those prodigies Larry Page and Sergey Brin who founded Google while they were only in college. An original idea, if properly implemented, could lift me out of these merciless economic times.

I actually have some capital to put toward my idea. My mother died about five years ago and I have money from the inheritance. But that money is disappearing fast; on average $20,000 a month. "It will go back up," my friends reassure me, but I'm getting squirmy and I'm also not entirely convinced by their rosy projections.

If I can find the perfect investment idea, I will do it. If you, dear reader, have any smart investment ideas, please let me know.

I work as a freelance SEO consultant. I serve law firms in my community and also companies and individuals over the Internet. To those comfortable enough using the Internet to find work, there are numerous contract bid sites out there. Whether you're laid off or not making enough money at your job and want an additional stream of income, the following sites can help boost your monthly income:

Odesk.com, Guru.com, Limeexchange.com, Workstir.com, HotGigs.com, FreelanceWritingGigs.com, Elance.com

And that doesn't include all of the specialized job boards out there such as:

Mashable, Craigslist, ProBlogger, SimplyHired, CodeGuru . . .

Based on my success from using these sites, specifically Elance.com, I started to think that my best investment would be a similar venture. Elance.com makes 6-7% on every transaction through their site. If there are 10,000 online users per year with the average job costing $1000, at a 6% transaction fee, the site's revenue equals $600,000. Now these are rough figures, but you get the point. There is money to be made in a contract bid site, especially during a recession.

Early on, however, there were some errors in my judgment. First of all, Elance.com has been around since the early nineties. And the other bid contract sites have glutted the market since then. Just to have a contract bid site does not guarantee revenue. It was recently explained to me that building a website is like putting up a gas station in the middle of the desert. The difficulty is not putting it up; the difficulty is building the six-lane highway to get people there.

So how much would this cost me? If the website cost me $15,000 to build, I would have to spend about 3 times as much on marketing. Furthermore, simply creating a contract bid site would not be enough. As I've already pointed out, there are plenty of these types of sites. My site would have to be unique--a purple cow amid the herd--and it would have to offer something new. So I went back to the drawing board and brainstormed what features might draw unique traffic to my site.


Contract Bid Site start-up idea: “Create a Dream Team for Web Development”

I want to harness the power of social technology on a contract bid site geared toward web developers. I would like to create a site based on three skill sets:

Content
(Web Content, SEO press release, bloggers, writers, editors, etc.)

Design (Web designers, illustrators, graphic designers, etc.)

Promotion (SEO, SEM, Internet advertising)

Users opt for a single freelancer in any category or to build a team. The community would also offer advice on bid projects.

The site would sell the idea: Build your own web team. It would create a social environment for outsourcing and idea generation.

Core objective: Team-building advantage and cross fertilization of ideas:

A) building a team to do a project and B) managing that team


The site is less focused on the individual and more focused on the team.

I want the site to be a cross between a social network and an online workplace. Right now Elance.com has a system where buyers can hook up with providers and there are plenty of applications for them to use together. I would like to expand the online workplace to include and facilitate:

Buyer to buyer conversation
Provider to provider conversation
Conversation between teams and individuals

I would like to mimic the actual workplace using a) incentives for outstanding work b) competition between teams and individuals c) collaboration between teams and individuals while at the same time serving as a legitimate site for buyers to contract providers.

Think in terms of tools: I would need a mash-up of tools from two different types of sites, a contract bid site and a project management site. Some examples of project management sites include Microsoft Office Live, BaseCampHQ, Wiggio, Google Docs.

I am merging the tools of a bidding site and a collaborative project management site. The team aspect is emphasized. What are the most cost-effective, highly useful tools to people in three skill sets: Web Content, Web Design, and Web Promotion? What collaborative tools can you offer for building a team and managing a team?

Secondary objective: Knowledge community advantage


The site is a way for users to differentiate themselves from others. They could show that they know more than other bidders, that they are a better match for an investor's project, or that they understand an investor's vision. For example, the site could be an initial "free resource" which hooks first time visitors. If the provider has the knowledge/ideas an investor is looking for, then the buyer would be more likely to go with them.

Before a project begins, there could be group-brainstorming through forums or a private message board. Potential providers brainstorm with the buyer for his or her project. The provider who shows the most initiative and the most insight wins the prize.

In addition, the site would organize people by specialty, helping to connect people with similar skills. For example, programmers who know Asp.net or Joomla. We would organize their profiles with tags.


My next step was finding a web development company to translate my idea into a reality. In the spirit of the project, I decided to post my job description on Elance and Odesk for between $10,000 and $25,000.

I received a flood of responses. In the next two days, I frantically reviewed the pre-bids and locked myself in a conference room at a university library where I spoke to web developers from around the world.

While the prospects of creating a start-up company were exciting, I started to wonder whether this was a quixotic dream. I was talking to sales reps in India who were telling me they had to discuss my requirements with their team of developers before they could write up a proposal for me. What were my requirements? I told them everything I knew. The whole project was so vague that the bidders themselves didn't want to commit to a price. I had the idea, the impetus, the motivation, but I didn't have the architecture. I didn't know exactly what I wanted--other than to create a revenue-generating website.

Without a clear objective, my site would be doomed to failure. Without documentation of user flows, technographic profiles, and specific technology requirements, this idea was a pie in the sky. And talking to the off-shore web development teams, I started to sense my own anxiety toward going forward with the project. They wanted to write detailed proposals, but could I really expect a team in India to reproduce an idea in my head?

And then, in the eleventh hour, I got a call from a gentleman who called himself a "project manager and not a sales guy." I was relieved to hear that his company was located in the US. I shared with him some of my concerns about the project, that it was too large and too expensive. I was giving up, I said.

But he told me that his company was different. They had already created the technology that I needed built. They developed a piece of software for project management. First he gave me a perfect litany of qualifications. His company was one of the top providers on Elance, earning over $200,000. He talked about the scale of projects his company took on and their successes in generating traffic.

We talked for two hours. Not only did he think he could do my project for under $30,000, but he also thought the site was a brilliant idea and was excited to begin work right away. My heart fluttered. I couldn't believe I'd actually found someone to launch my start-up. It would save me hundreds of thousands of dollars. We ended the conversation with him agreeing to write a proposal for the board of trustees. We would communicate again on Monday. It was Friday night.

I was so happy that I closed my computer and curled up in bed with my head on the pillow. I yearned for rest. The last week of interviewing bidders and reading proposals had exhausted me. I was just so glad to have found the right team for the job.

But I couldn't fall asleep for some reason. I lay in bed thinking about the gentleman who practically seduced me with his high-tech wizardry-talk. I jumped out of my bed and turned on my laptop. I looked up his company's profile on Elance. It was true what he said about the high earnings, but written feedback was largely missing. I would think that if someone paid his company to do a job for over $10,000, they would take the time to write some feedback.

Then I tried to go to his company website, but nothing came up. I typed in the name of the company in Google and found this on Rip-Off Report, a website that announces scams to the public.

This floating cyber-fragment shocked me into reality. Immediately, I went to the private message board on Elance and asked the man to account for what I'd found.

He denied the charge, saying that "The Rip-Off Report" was a scam.

But it didn't matter anymore. Whether this guy was a reliable web developer or the Talented Mr. Ripely, I wasn't going to hand over 30 grand to him for a bid project. The whole delirious experience deflated my enthusiasm. After all, if I couldn't trust the providers on Elance, did I really want to create a contract bid site of my own?

After this ordeal, I'm thinking I would still like to create a site. I want to invest in a good idea. I'm just not sure if my idea qualifies as good anymore. Tell me what you think. And if you have an investor idea yourself, let's hear it.

ARTWORK BY CODY HOYT
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8 comments:

Vezquex said...

That is an interesting idea to try to bring people together to make web sites, but I'm not sure you can expect people to pay for such a service.

I totally understand your reluctance to spend money with a firm you don't know. Maybe you could donate to some open source projects and see if you can get the ball rolling on your dream with some pre-existing software, such as a CMS or message board. Just hire someone somewhat technical to manage and moderate it for you. Then you can try to find a local developer you can trust to make modifications to your system or write a new backend from scratch.

As for me, I need to focus on my studies (final week of the quarter), and my start-up idea is so ingenious that it doesn't require any money.

Good luck!

Yurii Rashkovskii said...

The thing is that there is no "perfect investment idea", unfortunately — at least in startup space. Money is the blood, but hard work is still necessary.

I would say that contract bidding market itself is pretty fulfilled (at least it _seems_ to be so). There are few spots left, I suppose, like "free contract bidding solution" — like what craigslist and plentyoffish brought to classifieds and dating, respectively. It is a little bit unclear how to earn money on such a site — but I guess it is not impossible.

I would also like to mention another adjacent market — new generation of collaboration solutions (read: what you do with you customer after contract is won); it seems to be underdeveloped and growing (a little bit slow, but — growing); that's the market I am trying to get some share in with my venture, for example.

Anyhow, "FREE contract bidding solution" does seem interesting, if somebody will figure out how to make money of it. Or it might be not free, but, say FIXED FEE. I imagine if there was a site competitive to odesk and cheaper, that would be a deal breaker for lots of people.

Lethe said...

@Vezquez: thanks for the idea, that's a great idea about open-source solutions.

@Yurii: we should talk sometime I'd be interested to know what you're investing in specifically. About the "free contract bidding" I think limeexchange.com is doing that right now, but only as an early offer

Yurii Rashkovskii said...

Lethe,

from what I can see limeexchange's fee waiver is rather a limited time offer (read: desperate attempt to get more customers, huh? :)

would love to talk, you can email me to yrashk at cohedit dot com.

Tiberiu said...

You are saying: "I work as a freelance SEO consultant". How good are you at? Would you invest work and money in a project management software?

dpardoewilson said...

I think you are leaving yourself wide open here. My problem was the opposite, even in the dot-com bubble I had no luck attracting interest in what was really a good idea. For historical purposes,
http://www.SocialTechnology.ca/casa.html was a good idea in 2000 when it went up on the web and probably still is. But it got buried in the noise. So many good ideas on the web do drown in the noise. Though I expect more people will be twiddling their tuning dials and trying to pick up some distant signal with the sound of money.
-- dpw

kerry said...

my name is kerry and i have what you are looking for as far as the site. it will be the new site for the world. iam brave enough to put my # 713-514-7604. call me asap for investing i need your help and i got your idea thanks

International Wagyu said...

This was a very interesting read. I have been cruising around trying to find some ways to round up investors. Although, thanks to the internet I was able to read this article, but when it comes to something to invest in, then one tends to dream of various kinds of online business, but with no real way to come up with real figures and then the dream comes to a halt.
I too believe the internet is the greatest creation in the world, because I have relied on it for my main source of income for a long time. My main occupation as we speak is that of a patent translator. I translate patents and other documents from Japanese to English.
Long before the days of internet I came here to Miyako-Island (okinawa: southern Japan) while serving in the U.S. Military. and with no other means to support myself and family except with my low paying electricians job, I started raising cattle in my off time. These types of solid and easy to calculate investments seem so much more sound to me (and livestock can be insured: most investments are high-risk)than the internet stocks and funds hype/hoopla that you see scattered across the internet these days. I had always wondered why more people did not invest in such an excellent investment which is sure to bring 15-20% ROI, but then again cattle do not profit much in the United States or other countries, like they do here in Japan.
I'm opening my doors to outside investors with an investment plan to meet your needs and budget. I am opening my doors to serious investors who want to put their hard earned money somewhere where it can bring major returns and more specifically, I'm looking for individuals ready to invest in real Japanese Wagyu in Japan which is the most expensive beef in the world. The stock market has
crumbled along with the real estate market. Next the price of cattle will stumble as well as Japan plans to place more restrictions of second rate
Wagyu coming from places outside Japan. Even in the worst economy in 100 years you can still receive an average of 15 –20% on your cattle investment.
How can I do this? The number of beef producers in Japan is on decline due to an aging farmer population. I intends to capitalize on, and be successful in this industry by purchasing cattle from various livestock auctions around the Prefecture of Okinawa and other areas of southern Japan. The purchased cattle will be Artificially Inseminated and allow giving birth only once. Immediately following birth, the calves will be reared and sold through the local auction at 10 months of age to supply feeder calves, replacement heifers for the cattle industry. Meanwhile, the cow is placed on a high quantity of grain immediately after birth so as to be finished and sold separately to meat processing plants at approximately the same time as the calf (as a set). I expect to produce and sell 700 to 800 cattle a year in this manner. Total operational expenses and funds required are 500,000,000 yen with a 15 to 20% profit range expected. We are looking for a 50:50 split of the profits after the deduction of operational expenses. A full business plan can be obtained upon request.

Please view the information list on this site and contact me from there if you are interested in investing in cattle that can be sold at 7-10 times the
price of Wagyu in the United States or anywhere else in the world.

I hope I have sparked a little interest and hope you will take the opprotunity to come and invest with me.

I look forward to hearing from you!

Roger D. Johnson
Managing Director
International Wagyu
http://www.webspawner.com/users/rogerjohnson/