Hacking the market for engineering talent

Time : Quality : Cost — It’s the optimization problem at the heart of every software development project.

Under normal market conditions an effective manager can achieve two out of three, but pushing too hard on any one vector — lowering cost, making the product more awesome, shipping it sooner — inevitably leads to compromise on the others.

At the moment, the market for software developers is anything but normal.

Software products used to be built by technology companies for use by every other kind of company. Today every business — in every sector of the global economy — needs access to software engineering talent. Turns out the “tech sector” is now the whole fucking economy.

That screaming sound you hear is project managers, recruiters and HR leaders around the world with thousands of open engineering positions they can’t fill. 

Every unfilled position translates into products that don’t ship, revenues that aren’t earned and competitive opportunities missed — because the rest of the economy isn’t holding back to give tech laggards a chance to catch up.

This collision between urgency (on the part of industry) and scarcity (among skilled makers) is one of my favorite themes as an investor. We’re living in the “Maker Moment” — a unique window in time when super-empowered makers have a chance to both create and capture huge value as actors in the global economy.

The labor markets have been slow to adapt to this new reality.

Big companies have traditionally held the upper hand when it comes to hiring — most good jobs once existed as full-time salaried positions on the payroll of major corporations so talent had to come to them. Recruiters were used to fill high-level executive positions but most rank-and-file jobs enjoyed an applicant surplus that made hiring an inbound proposition.

But as open technical positions have multiplied, and average time-to-fill stretched out from weeks to months, alarm bells started going off among professional staffing managers — new solutions were needed to fill their increasingly strategic software design and development roles.

Unfortunately, the “innovations” produced for this market have so far focused on doing the same old things with better tools: retaining specialist recruiting firms that claim to be good at filling technical roles; or arming traditional recruiters with more “advanced” prospecting tools (i.e., so they can spam developers more efficiently than ever before).

The most promising employment innovation of the past decade is the talent marketplace — allowing buyers and sellers of work to match themselves online.

The recent explosion in vertical labor marketplaces — companies like TaskRabbit, Zaarly, and Contently — is the most exciting development in labor market efficiency of the past 10 years, allowing small firms and independent workers to benefit from the frictionless demand aggregation, discovery and transaction handling power of the Web.

Unfortunately for companies in need of software engineering talent, the labor marketplace idea has so far failed to address their needs. 

The leading entrants in this market — firms like eLance, Rentacoder and oDesk — have optimized their platforms for the wrong variables in the time-cost-quality equation: they’re excellent at delivering narrowly-defined software projects at low cost and within reasonable timeframes, but fail at delivering the kind of enterprise-grade software execution that modern companies so desperately need.

To date, labor markets for software development have been designed to facilitate cross-border arbitrage — hiring moderately skilled developers from third-world countries who are willing to work for cheap.

This works fine for dentists who need a static brochureware website and don’t want to pay top dollar. But for operating companies who need functional software for core business functions — software that requires creative business problem-solving, not just building to spec — labor cost arbitrage platforms are the wrong tool for the job.

Every modern company needs on-demand access to skilled developers with current-generation technical skills. Speed to quality is the focus, not cost.

For the past year I’ve been working with a gifted team of makers who come from the “sell side” of this marketplace. They know what it’s like to receive hundreds of spam emails a week from technical recruiters desperate to get their attention. They love to build functional software for companies with the brands and market power to make a dent in the universe, but they prefer to do it on their own terms, at market rates, with peers they know and trust.

This team has spent the past year proving the model for a technical labor marketplace that treats buyers and sellers as equal partners — a “talent agency” that matches skilled makers of software with high-impact creative work.

The company is called GroupTalent, and it’s the first labor marketplace that matches buyers and sellers based on quality and fit first, not just cost.

Here’s how they make that happen:

  • Businesses with unfilled technical roles submit their requirements and are presented with prospective matches within 48 hours
  • The designers and developers who participate as sellers are based here in the U.S., often in the same city or region as the buyer. 
  • Developer skills are calibrated based on actual GitHub check-ins and shipped code, not checkboxes on a form. 
  • They’re available for everything from short-term contract work up to full-time employment offers — based on their personal needs and goals.

GroupTalent makes it effortless for growing companies to staff up and down across roles and technical skillsets, allowing managers to step off the technical recruiting treadmill and focus on solving the business problem at hand.

The GroupTalent team has been quietly testing and scaling their platform for the past year, proving to employers that they can deliver skilled on-shore talent on demand, and proving to makers that they can hook them up with great-paying gigs with smart clients whenever they want them.
Today, GroupTalent announced a fresh $1MM seed round — adding Boris Wertz of Version One Ventures (a proven expert in online marketplaces) and Menlo Ventures’ seed fund, along with additional support from Founders Co-op — to go and rip the cover off this opportunity.
I believe that matching gifted makers with high-impact business problems is now the single most leveraged way to unlock potential and create value in the global economy. GroupTalent is creating a massive productivity multiplier for enterprise buyers and digital creatives alike, and I can’t wait to see just how big a dent they can make.