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Original title: "Braintrust: Fighting Capitalism with Capitalism》

Original compilation: Siqi, an overseas unicorn

The rise of DAO made people realize the ownership economy for the first time: that is, users own, operate, maintain, and expand the network they are using. More and more project parties have begun to bring this concept to upper-level applications such as finance, social networking, consumption, and society.

Braintrust defines it in its white paper as aDecentralized talent network: A talent network led by and owned by individual users, with the ultimate goal of replacing traditional recruitment platforms. But as a recruitment platform for the "gig economy", on the surface, Braintrust is no different from other job search platforms. To use the current popular language: it is a Web2 product.

By introducing the concept of DAO and the governance token scheme, Braintrust tries to gain a competitive advantage in the market and challenge the unfairness of companies in the Web2 field to users through extremely low platform commissions. Braintrust goes a step further to integrate the concept of Web3 into the use cases of people's daily life. At the same time, he also takes the "free ride" of the open network and the era of encrypted currency to develop rapidly.

So far, more than 34,000 freelancers have joined the Braintrust ecosystem, and global companies including Twitter, Porsche, Goldman Sachs and Nike have provided 1,500 jobs on the platform. 85% of the platform's users have their own digital wallets. In December 2021, Coatue and Tiger invested $100 million in Braintrust in the form of token purchases.

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01.Braintrust: Web3 into Web2 business practice

The most exciting thing about Web3 is that it brings new business models and new value chains after the removal of "intermediaries".

Braintrust defines it in its white paper as aDecentralized talent network: A talent network led by and owned by individual users, with the ultimate goal of replacing traditional recruitment platforms.

But as a recruitment platform that mainly serves the "gig economy", on the surface, Braintrust is no different from other job search platforms. To use the current popular language: it is a Web2 product.

At present, nearly 40% of workers in the United States are freelancers, and their market size is about 1.5 trillion US dollars. The online and remote collaboration accelerated by the impact of the epidemic has made the trend of "freelance" more long-term, fixed, and universal, and the number and economic scale of freelancers have grown exponentially.

When there is a sufficient and diverse supply of freelancers in the market, more and more companies begin to choose to outsource some functions, so as to focus more on building core business capabilities. This mode of work has created millions of job opportunities and driven the growth of the freelance economy, bringing changes to the traditional employment relationship.

Freelancers and the gig economy have huge market potential: The listed gig job recruitment platform Upwork (with a market value of nearly $3 billion) achieved a transaction volume of $904 million in Q4 of 2021, and Fiverr, the leading company in this sector in Israel, had a transaction volume of $2.6 billion, with a market capitalization of $2.7 billion.

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Braintrust Homepage

What sets Braintrust apart from other platforms like Upwork is that it doesn't want to be an "intermediary". By introducing the concept of "decentralization" and the token system, Braintrust tries to use the power of Web3 to keep its commission rate low, so as to gain an advantage in the market competition.

Braintrust was launched in 2018, and the platform was officially launched in June 2020. Its early investors include Variant, Multicoin, ACME, Hashkey, Pantera, etc. Among them, Multicoin Capital also invested in many similar companies such as Helium, Arweave, and Livepeer. Use the means of Web 3 to solve the real problems brought about by centralization in a full-stack manner.

In September 2021, Braintrust crowdfunded $11 million through Coinlist, issued the governance token $BTRST, and began governance in the form of DAO. Its early investors own 22% of Braintrust’s tokens, another 5% is allocated to crowdfunding participants, and the rest is reserved for early contributors and the community.

In December 2021, Coatue and Tiger invested $100 million in Braintrust in the form of token purchases. The current fully diluted market cap of Braintrust's tokens is $896 million.

Braintrust focuses on three types of talents: engineers, designers, and developers, and connects technology knowledge practitioners with top companies. Because it focuses on the concept of Web3 and decentralization, Braintrust can more easily attract the attention of these people , 85% of users on the platform have their own digital wallets.

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Braintrust Network Dashboard

Even with its own token, Braintrust has always followed a philosophy:A good token economy can amplify the value of a platform, but it cannot completely replace it.

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Braintrust

At the same time, based on the DAO's operating philosophy, Braintrust users holding platform tokens can also participate in a series of decision-making votes for platform operations. For freelancers, when their income is strongly bound to the platform,Braintrust provides a set of mechanisms to ensure that the trust between users and the platform will not be damaged by some external factors.

Braintrust is not a brand-new product or business model. By integrating with the Web3 concept, it makes more pioneering improvements to the business model of the trading platform.

But from the perspective of business practice, it still has to face such a real question: Can a decentralized, user-owned and dominated trading platform be more efficient than a Web2 (investor-owned) trading platform?

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02. The "original sin" of the Web2 trading platform

"Your margin is my opportunity (your profit is my opportunity)." Braintrust founder Adam Jackson borrowed Amazon's founder Bezos' viewpoint to describe Braintrust's starting point and long-term competitive advantage.

As a serial entrepreneur and investor, Adam Jackson has extensive experience in platform product entrepreneurship, and has participated in the establishment of 4 venture capital companies and 1 asset management company in the past 16 years.

In 2012, he co-founded Doctor On Demand, a medical services provider, which raised $165 million. In 2017, he co-founded Cambrian Asset Management, a blockchain asset management company. Adam is also an angel investor in 100+ companies/projects including: Eco, Collective, Ethereum, Bolt, Placer, Aktana, Skale Labs, Protocol Labs, JCTurbo, Apero Health, Rappive, MyTime, Automatic, Womply, Superhuman, Zenefits …

Gabriel Luna-Ostaseski, co-founder of Braintrust, founded Upshift Partners, a consulting firm for start-ups, to provide consulting services for technology companies in Silicon Valley on development and customer growth. His clients include humbtack, Uber, Lending Home, Metromile, Massdrop etc.

Behind Adam Jackson and Gabriel Luna-Ostaseski's founding of Braintrust is their deep insight into venture capital in the Web2 space.

In the past 10 years, a series of innovative companies that have affected people's lives have been born in the Web2 field. People's daily life basically revolves around these platforms. A typical life scene is:

A New York resident ordered dinner on DoorDash last night, took an Uber home the night before, and booked a room in advance on Airbnb because of a trip next week.

Even with the recent plunge in U.S. stocks, their combined value is still in the hundreds of billions of dollars:

But the business models of these trading platforms also have challenges:

• In order to form their own network effects, these platforms need to pay a lot of costs in the early stages of their growth to complete the continuous cycle of "customer acquisition, growth, and retention". In this process, the intensification of market competition not only raises this part of the cost, but also may make the huge cost already paid "waste", a typical example is the battle between Uber and Lyft.

• When the supply of the platform cannot fully meet the demand, the platform mayQuality Standards Sacrifice, and for users on the platform, they have no other choice except to leave the platform. For example, Amazon has changed from being fully self-operated to introducing third-party sellers.

• In terms of revenue model,Successful marketplaces (marketplaces) inevitably end up in the advertising business, advertising is a business that is validated and adopted by almost all companies, but it seriously affects the customer experience.

• More importantly, almost all trading platforms willIncrease the commission rate of the platform to increase profits。

The above scenarios will happen in the development process of almost every trading platform.

From the two perspectives of user fairness and sustainable development of the platform, Adam does not think that the high commission rate income model of the Web2 platform is sustainable.

A large part of the innovation of Web2 trading platform companies (products) is that they mobilize social supply and introduce new supply and demand relationships to the original market, and the market size has also been raised to a new level due to the addition of new supply and demand relationships: Airbnb passed The supply of non-hotel types of accommodation has expanded the market size of vacation rentals, and the size of the travel market is not limited to taxis because of Uber's "shared car" concept.

In Adam's view, most of the innovations of the Web2 platform are the monetization of personal resources, but the monetization dividends are "occupied" by the platform, and individual users who help the platform grow do not get the benefits they deserve.

Let’s look at the rising rake rate again.

Although the user experience is poor, from the perspective of the company's management, increasing the commission rate is not a bad thing. Successfully increasing the platform's commission rate is an extremely important positive business signal. For example, Fiverr highlighted in its recent shareholder letter that its rake rate increased by 140% compared to the previous year.

From the perspective of the development stage of the platform, the increase in the commission rate often occurs earlier than the business really takes a firm foothold, because platform operators need to prove to shareholders earlier that they can make profits. At the same time, in the fierce market competition, the platform has to sacrifice part of the revenue to provide a lower (but not continuous) rake level, so the time to increase the rake level is brought forward again.

a16z's Chris Dixon atWhy decentralization mattersAs mentioned in the article, what will definitely happen on a centralized trading platform is:

Once the platform has established its own network effect, and they are sure that all participants on the platform: users, service providers, and even developers begin to rely on the platform, then the platform will choose to start from"Attract this group of people" to "absorb the value of this group of people"。

A positive explanation for the increased rake rate is:Increasing the rake rate can prove that "the value of the trading platform is increasing".

If a platform can be withoutany frictionbut

but"Without any friction"is a very critical prerequisite, once the platformRaising the rake rate beyond what platform users consider fair will sow the seeds for the decline of the platform.

Bill Gurley, partner of Benchmark, expounded a very classic point of view in the article "Best Platform Pricing Strategy": the short-sightedness of the platform when setting the commission rate is very dangerous.A high rake rate can get positive feedback for profit growth, but if you want your platform to maintain an advantage in the long run, then this behavior is strategically suboptimal, because increasing the commission rate may cause both the supply and demand parties to leave the platform to find alternatives.

Gurley’s suggestion is that instead of continually increasing the fees you charge users, platforms should find ways to earn more money from those who are trying to get more users from you, such as advertising.

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03. How Braintrust works

For corporate or individual users of the Braintrust platform, whether they understand the blockchain or not does not affect their use. Anyone can participate in Braintrust, whether it is job posting, talent recommendation, investment, or voting governance. Overall, Braintrust aims to solve 3 main problems in traditional recruiting platforms:

• Fairer Fee Structure:Recruitment platforms such as Toptal, Upwork, and Gigster charge high fees of 30-60%. The high commission ratio increases the recruitment cost of enterprises and reduces the actual income of freelancers, which is not fair.

• Better talent supply:Braintrust focuses on high-level knowledge talents. All users have gone through point-to-point review and KYC process. For enterprise customers, Braintrust will pre-stage the back-tracking link, providing them with a reviewed and high-quality "talent pool". And blockchain technology can obviously also provide a systematic reputation storage and tracking tool to improve the quality of recruitment, which we will expand later.

• Misalignment of interests:secondary title

Talent, Employer and Connector

In addition to the two groups of people (Talent) and Employer (Employer), Braintrust also introduces the role of "Connector", and Braintrust is composed of these three specific stakeholders. Every user who wants to register needs to pass the KYC (user identity review) of the platform first, and can become a member of the platform only after KYC is passed.

From the perspective of the recruitment business chain, a Connector can be regarded as a third-party headhunter on the platform, which can be an individual or an organization. In theory, a talent or an employer can also play the role of a Connector at the same time.

In addition to being displayed in the information flow of potential talents (Talent), the job information released by employers will also be seen by Connectors. When Connectors achieve successful job matching through targeted recommendations, Braintrust will use the contract amount as a benchmark. A certain amount of platform token $BTRST will be rewarded to the connecters.

The introduction of "connector" roles maintains the dynamic flow and growth of the Braintrust platform: they continually invite new clients and knowledge workers to join Braintrust, assist in recruiting and matching efforts. "Connector" can also be seen as a Go-To-Market strategy of Braintrust. The "cash for growth" used by other platforms has become a token scheme here at Braintrust, which is Braintrust's long-term maintenance of 10% low An important reason for the commission ratio.

The connection between employers and talents follows the Bid-Ask process. "Ask" is the employer of the enterprise. The enterprise proposes the talent standards they need, such as skills, experience, location, salary, etc. The contract automatically matches these conditions with the "Bid" of the freelancer on the platform, and the entire matching process is automatically executed by the agreement.

Braintrust also allows employers and talents to score each other after completing the project. After getting a 5-star score, you can get a token reward. In addition to being a benefit, it can also be regarded as a kind of reputation certification stored on the chain.

Next, Brainturst will also systematically build its own on-chain reputation system. In the context of Web2, personal work history and career-related data cannot be interoperable between platforms. For example, Toptal’s information cannot be queried in Fiverr. The closure of systems prevents freelancers from having a complete reputation certification, but these can be passed Blockchain technology is solved.

Compared with competitors, Braintrust is efficient enough in addition to lower commissions: According to the information disclosed on the platform, Braintrust's matching algorithm maintains a matching rate of 80%, and can match customers within the first 24 hours after job posting. (The company) connected to 4 to 7 freelancers, and the entire matching process took an average of 48 hours, compared to about 2 weeks for this employer on other platforms.

The service settlement between talents and enterprises is carried out in local legal currency, so as to avoid the price fluctuation of Token payment from affecting income.

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DAO-like governance of $BTRST and Braintrust

In addition to business ideas, Braintrust's own creation process also makes it more of a social experiment. In the real world, there is no corporate entity named Braintrust Inc. The construction of the entire Braintrust project is mainly completed by five nodes:

• Freelance Labs

• HexOcean

• SnowFork

• Accelerated Labs

• Muses

The above-mentioned organizations helped Braintrust complete the protocol, token model design, early marketing, payment processing, currency exchange and other functions, and also included everything needed to establish cooperation with companies such as Nike, NASA, and NASA. All preparation processes from BD to compliant material.As early contributors to Braintrust, these node organizations are entitled to 19% of the tokens.

Braintrust issued a total of 250 million $BTRST tokens, 54% of which were used as community incentives to keep the Braintrust DAO running. $BTRST is not used for payments, it is mainly used for Braintrust governance and rewards.

1. Governance

$BTRST is the governance token of Braintrust. Those who hold the token elaborate on the proposal on the Vote page. After community members vote on the snapshot, the voting results will be fed back to the chain. Community members can vote on Braintrust's roadmap, fee scheme, reputation and token mechanism, etc.

2. Resolution of disputes

The payment of labor remuneration on Braintrust is not completed on the blockchain, and the platform does not support any fund custody services for the time being. Therefore, for the risk of labor disputes, Braintrust cannot conduct dispute coordination from the perspective of freezing funds, but as a platform, between customers and talents It is also necessary to show the platform's position when conflicts arise.

Because Braintrust's dispute resolution process occurs off-chain (such as judicial arbitration, etc.), the $BTRST token governance mechanism indirectly resolves community-operated disputes. Participants in the decision jury either need to hold BTRST tokens, or need to be selected by BTRST holders as jury arbitrators.

3. Motivate Talent Network

$BTRST is also used to motivate stakeholders on the platform, and there are several main types of contributors who can receive community rewards:

• Connectors:A person who refers a talent or client to a network. Anyone can become a Connector and recommend talent. Rewards for connectors are the most important expenditure of Braintrust tokens at this stage.

• Inspector:Members responsible for platform KYC, they screen and review the platform talent pool, and ensure that applicants who submit certification meet Braintrust and corresponding company standards. If you want to become a reviewer, you must first complete the courses of Braintrust Academy and obtain tokens for this, and then complete Get $BTRST tokens after screening.

• Talent:From the beginning of registration, talents will receive platform token rewards at different nodes, such as supplementing complete personal information, participating in platform courses, successfully completing work, etc.

• Project Donation:first level title

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inflation risk

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Braintrust white paper

The position marked with the "$" symbol in the above figure corresponds to the interaction between enterprises and talents, just like they do on other trading platforms, exchanging work for cash. The place marked with the Braintrust token logo is the combination of Braintrust's token economy and platform rules:

• Connector rewards, as mentioned earlier,Brainstrust uses platform tokens to pay for its customer acquisition costs;

• Compared with other platforms, on the Brainturst platform, talents (Talent) not only do not need to pay intermediary fees, but also may obtain additional benefits in addition to labor remuneration: when they successfully apply for jobs and get five-star praise from employers after the job is over , you can get token rewards from the platform. In addition to serving as a certificate for their participation in community governance, the appreciation of $BTRST also brings them potential economic benefits.

There is a delicate balance here.

The rapid growth of freelancers and corporate customers on the platform has enhanced the network effect of Braintrust as a platform. However, when talents and positions on the platform increase and circulate in a short period of time, the amount of $BTRST circulating in the market will also increase. What follows naturally is the inflation of the $BTRST token:

• If they only hold $BTRST tokens as participants in platform activities (freelancers, employers), the dilution of the currency price by inflation will not have much impact on them;

• If you look at inflation from the perspective of financial investment and economic benefits, the impact of inflation on token holders is huge.

The above two points will not affect job seekers and companies too much, because the economic benefits brought about by the appreciation of $BTRST are not the core purpose of their coming to Braintrust.But for connectors, the dilution of $BTRST will definitely affect their motivation to actively promote the operation and growth of Braintrust. In extreme cases, connectors (Connectors) will choose to leave Brainturst because they do not see much economic benefits.

The risk of $BTRST depreciation seems to be magnified considering the possible selling behavior of early investment institutions after the lock-up period ends. Even though Braintrust has set an upper limit of 250 million tokens for $BTRST to avoid inflation, it will test the mentality of financial investors in the short term.

Ideally, as a community governance token, this mechanism can ensure that most of $BTRST can be truly enjoyed by those who need the Braintrust platform. but consideringThe key reason Braintrust can maintain a 10% cash commission rate is that it uses tokens instead of cash to acquire customers, the growth of the platform is driven by the gain of $BTRST, so it is unrealistic not to consider the financial value that $BTRST brings to its holders.

Holders of $BTRST may expect these tokens to have direct financial value over time, but in the meantime, they have indirect financial value to network participants in three main ways:

1. community governance.On the Braintrust platform, governance participation can bring financial value, because it may mean that Braintrust can modify its own staking ratio, requiring companies to pay higher fees, and this part of the "profit" is shared by community members.

2. Apply for a pledge.Customers and talents can stand out in the matching process by staking $BTRST to prove their willingness to participate: for example, if an applicant stakes 2 $BTRST to get priority interviews for design positions at Nike, but if he does not participate interview, tokens will be confiscated. In a way, this is a Web3 replacement for the advertising model adopted by the Web2 platform.

3. career benefits.This content has not yet been implemented, but the Braintrust website has already hinted at the benefits that token holders can enjoy in the future: free vocational education content, software or job counseling.

To give a more intuitive simple example:

• For an investor who holds $BTRST purely for financial purposes, a $BTRST token is worth $4, so the actual value he gets is also $4;

• But for a job seeker on the Braintrust platform, if he can get a $72,000 job by staking 1 $BTRST, the possibility of getting a job of $72,000 will increase by 0.01%.So for him, the actual value of 1 $BTRST at this time is $4 + $7.20, or $11.20.

This doesn't take into account what happens if a job seeker doesn't get the job, it's just an example of the general logic.

In addition, if the token economy is well designed, it can also motivate people who hold tokens purely for financial investment purposes to actively participate in network construction.

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Value Accumulation and Protocol Upgrade

Braintrust's token incentive mechanism has undergone an upgrade due to the mixing of tokens and cash flow on the platform.

As mentioned earlier, Braintrust is built by several node teams. Braintrust didn’t release its own token until September last year, but before that, Braintrust had to pay for the work of these nodes, so at the beginning, 10% of the service fees paid by employers to Braintrust would go directly to these node organizations , as a fee for their services.

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No link between fees paid and tokens

In September, when Braintrust went public with its token offering, it decentralized and became a DAO, officially putting governance of the platform in the hands of token holders. In October, holders of $BTRST voted to approve a major change to the Braintrust token economic model.

Specifically, "All fees on the platform, including current customer success fees and any other fees that may be initiated in the future, must be paid in $BTRST and not in cash to nodes."

This does not mean that corporate users must hold $BTRST to complete the payment of 10% service fee.

In the actual process, 10% of the cash will first be given to the node (Fee Converter) responsible for accepting legal currency, which is responsible for converting this part of the cash into USDC, a stable currency, and sending them to the smart contract of the fee converter. This part will be used directly from the exchange to buy $BTRST tokens with this part of USDC, and finally send them to Braintrust DAO to maintain the circulation of tokens.

This protocol upgrade will not consume inventory continuously, but will complete the self-sustainment of the fund library every time a 10% commission is obtained. The nodes will still get paid from the 10% fee, but because they have already received sufficient cash returns for their early development of Braintrust, so next,They will fully commit to their future work as a contributor and will be rewarded in BTRST tokens like everyone else.

Following the protocol upgrade, the Braintrust community has purchased 145,000 $BTRST tokens on the open market.

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btrstinfo.xyz Fee Viewer

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05. How to win?

Braintrust's philosophy is actually quite simple:The two-sided trading platform with the least commission will definitely have an advantage in the competition, while the decentralized platform fully owned by users is more likely to take less commission.

Again, this does not mean that trading platforms with the elements and ethos of Web3 will necessarily win the competition, they still need to deliver a great product and do the daunting task of running a marketplace.

In a podcast, Adam, the founder of Braintrust, mentioned that the reasonable commission rate charged by a trading platform is related to whether it provides unique value. Once a company fails to do this, it will be quickly dismissed. User abandoned. Adam cited the case of DoorDash. In his view, DoorDash's rising commission is essentially "stealing" the tips that delivery personnel deserve, so such companies will be the first to "leave".

However, this argument is debatable, because the complexity of the product and the average order value are not taken into account behind this sentence (DoorDash does not have a lot of money in absolute terms), which is why it is unlikely that there will be a decentralized Uber Or DoorDash.

On the other hand, Adam believes that Airbnb has really brought great value to both sides of the market, and its commission ratio as a platform is reasonable, so if it is an Airbnb in the Web3 field, then it will face very powerful competitors.

While part of Web 3 and Web 2, Braintrust is making the same choice as Airbnb: the network with the least rake can solidify the space they operate in and have value in the long run.Obviously, this concept does not necessarily mean that the participation of tokens is required, and it is more of the active choice of the founder.

So back to the original question: byCan the decentralized platform owned by users create and release more value?

According to Gurley and Bezos, a highly competitive trading platform must be able to maintain a low commission rate for as long as possible. Braintrust has already achieved a low congestion rate, and what it needs to do next is to maintain this advantage. As it becomes easier for freelancers to find quality, sustainable work through the Braintrust platform, there will be a positive cycle of growth for Braintrust.

$BTRST tokens provide ownership and economic utility.So for platform participants, they need to clarify what is the value of "ownership"? For now, we’re still talking about a platform that’s only been around for 18 months, currently has a total service volume of $37 million, and only serves freelancers in the engineers, designers, and developers niche .

An extreme imagination is: Is it possible for Braintrust to cover all the needs of talent acquisition? Integrate more economic activities?

According to data from Harvard Business Review,The US talent acquisition industry was worth $151 billion in 2019. Therefore, it is easy to predict that the size of the global recruitment industry is about $450 billion.The revenue of third-party knowledge service agencies worldwide is as follows: Deloitte's revenue in 2021 is US$50.1 billion, and TCS is US$22 billion. When simply summed up, we can roughly estimate the global knowledge worker wages to be around $600 billion.

Braintrust has a pump rate of 10%, so in theory, if Braintrust can build a machine that over time consolidates a global market for flexible talent, thenIt will have access to $60 billion/year fees. All in all, the above forecast is an extreme extrapolation, and in the most optimistic case, there is still a long way to go if it is realized, but in the next few months, it is foreseeable that the areas covered by Braintrust It will extend outward from the industries of developers, engineers, and designers.

Cutting into the high-end knowledge service market where giants such as Deloitte, PwC, and Accenture are located is an option. With the help of additional services to obtain a premium, these consulting companies can usually achieve a 70% commission rate. A recent IT consultancy turnout was working on a proposal to build a new node, essentially a new startup built on the Braintrust protocol, which would be funded by the grant program above if approved.

When the time is right, Braintrust's framework can also support it to fight against blue-collar odd job platforms such as Fiverr and Upwork. After all, for talents on platforms such as Fiverr and Upwork, the matter of "getting higher income" is also important. Strong attraction.

At a certain scale, there is value in providing the services and resources that the freelance talent pool needs, such as group health insurance or a retirement plan.

In either case, the new nodes will benefit from the infrastructure, community, and resources that the Braintrust Network has built over the past four years. They no longer need to raise funds separately to re-implement token model design, protocol design, smart contract auditing, etc., because these have already been done. They will leverage existing pools of connectors and validators, and will no longer need financing as they will be able to access initial funding directly from the DAO's treasury.

Before the real confrontation with the Web2 giants, more realistic challenges have emerged: Braintrust’s token peaked at more than $40 after the launch of Coinbase, but then fell rapidly, and the mechanism of watching the Braintrust Academy video to obtain $BTRST tokens was attacked. The robot army "sweeps the wool". As Braintrust grows, a larger and more decentralized community than today also poses challenges to DAO governance.