Code For Cash
Company url, if any:
If you have a demo, what’s the url? For non-software, demo can be a video.
(Please don’t password protect it; just use an obscure url.)
Describe your company in 50 characters or less.
Code For Cash matches freelance devs with jobs.
What is your company going to make?
We have software that matches freelance programmers with jobs. We’re bootstrapping the marketplace by scraping all freelance and remote/contract programming jobs that we find on the Internet. Our pattern-matching software applies metadata to gigs (on-site vs remote, full-time, part-time, project-based, etc.), and it falls back to our human data team in cases where the information can’t be inferred. We have one machine learning model (SVMs using uni-,2-,3-grams) but will have more to fully automate this once we have a bigger, well-labeled, structurally sound dataset. (I’m not a machine learning expert, so we leverage a SaaS for our machine learning, but I did take lots of college level math and also know the relevant essentials, such as Garbage In, Garbage Out).
Which category best applies to your company?
Is this application in response to a YC RFS?
Where do you live now, and where would the company be based after YC?
(List as City A, Country A / City B, Country B.)
New York, USA / New York, USA
Email address of the founder who is filling out this application:
+1 (917) 754-7298
Please enter the url of a 1 minute unlisted (not private) YouTube video introducing the founders. (Follow the Video Guidelines.)
Please tell us about an interesting project, preferably outside of class or work, that two or more of you created together. Include urls if possible.
I’m a solo founder with over 20 years of programming experience who has also worked in sales, marketing and operations.
How long have the founders known one another and how did you meet? Have any of the founders not met in person?
I’m a solo founder with over 20 years of programming experience who has also worked in sales, marketing and operations. NOTE: Throughout this application, I interchangeably refer to Code For Cash as “I” and “We”. Although I am the sole founder, I also benefit from a team of contractors whom I’ve assembled, and so saying “we” is appropriate!
How far along are you?
I have a bit over $3000 MRR. I also generate revenue from consulting and facilitating billing of projects through our system – highest in a month is about $66,000. For example, instead of writing code for my consulting clients, I find Code For Cash subscribers to do it for them, charge a 5%-10% markup, invoice my clients and then pay the developers. In that way I’m “dogfooding” the app (as a hiring manager). This, however, is not the long-term plan, since I’m essentially subcontracting. But everything I do to facilitate these transactions could definitely be automated by smart enough software and processes, which I am in the process of building. In that way, with good enough software, we could eventually wipe out agencies and recruiters – perhaps even managers! – just through process-driven software.
How long have each of you been working on this? Have you been part-time or full-time? Please explain.
I’ve been working on this part-time since December 2016, supplementing my income with freelance programming jobs (dogfooding the system).
Which of the following best describes your progress?
How many active users or customers do you have? If you have some particularly valuable customers, who are they?
62 subscribers and 14 currently in trial. 59 of the customers are developers, two are hiring managers, and one is a coding bootcamp. The developers pay for the software because it helps them find jobs; the hiring managers pay for a license to the software as long as they are working with a contractor sourced through Code For Cash (if they hire additional developers, they pay for additional “seats” to the software); the coding bootcamp pays a flat fee to provide developer-level membership for all its students.
Do you have revenue?
What was your revenue in the last full calendar month?
(Please use USD. If none, enter ‘0’)
Your revenue 2 months ago?
Your revenue 3 months ago?
Your revenue 4 months ago?
Your revenue 5 months ago?
Your revenue 6 months ago?
Anything else you would like us to know regarding your revenue or growth rate?
I showed you our MRR from Recurly subscriptions, but a few of our early customers subscribed with SendOwl, so our actual MRR is about $500 higher (~$3300).
I’m also leveraging the Code For Cash product itself to do consulting work in order to fund development of the platform – for example, instead of writing code for my consulting clients, I find Code For Cash subscribers to do it for them, charge a 5%-10% markup, invoice my clients and then pay the developers. In that way I’m “dogfooding” the app (as a hiring manager).
There are also the book sales: The Software Engineer’s Guide to Freelance Consulting and 30 Days To Your First Freelance Programming Client are both published on Amazon and available for $2.99, selling ~13 copies a day (in the Top 10 – Kindle Paid – Software Development category).
Last month I drastically reduced our advertising spend in order to focus on product improvements but revenue still increased.
How much money do you spend per month?
How much money does your company have in the bank now?
How long is your runway?
(e.g. 5 months)
If you’ve applied previously with the same idea, how much progress have you made since the last time you applied? Anything change?
Monthly Recurring Revenue has gone from zero to over $3300.
We’ve found five unique customer acquisition channels.
We learned that freelance developers really hate paying referral fees, even if they wouldn’t have found the work otherwise, and would rather pay a flat rate.
We learned that hiring managers vary in their price sensitivity according to how tech-savvy they are: for example, a nontechnical founder is willing to pay a $200/month/developer recruitment fee, but a technical founder would pay one-time flat fee <$200, if that.
We learned that there are more w2 developers in USA than freelance developers due to tax reform legislation that was passed in 1986.
We’ve grown our customer base from fewer than 5 subscribers to over 60 active accounts, and increased our prospect list (e.g. purchasers of our books and mailing list signups) to over 2,000.
We’ve identified the size of the market using top-down as well as bottom-up estimates and identified some key players (in the freelance programming platform market: Upwork, Guru, Freelancer; ancillary competitors: IT staffing firms like Randstad; development agencies like YC-funded Gigster).
We have improved the product from barely a crontab, some ruby scripts, and a mysql database into a webapp with 6 major functional areas, (Preferences, CRM, Portfolio webpage, Training Materials, Share An Opportunity, Search [this is really just Algolia]).
We search 40+ markets for jobs instead of just 10+.
We filed for incorporation and started preparing essential legal documents, started to open a business bank account, and hired a bookkeeper to label all of our transactions in our accounting software.
We’ve grown to understand the importance of culture fit (communication) during the freelancer hiring process, as well as the importance of having a specification/scope of work for freelance projects in order to ensure both parties are successful (we haven’t implemented this, structurally, into the webapp yet, but we will).
We learned that freelance developers immensely care about time commitment when searching for work, and like to search based on a fulltime, part-time, or project-based commitment.
I learned that developers respond very well to transparency, as do hiring managers.
Despite relying on it as a livelihood, freelance developers dislike sales, so creating a “pull” approach to placement (that results in getting matched to a paycheck very quickly) rather than a “push” approach will be adopted very quickly.
The main hurdles for a software development project not getting started are: manager doesn’t trust developer; developer doesn’t trust manager; project doesn’t have a specification yet; manager doesn’t know what a fair price is; developer doesn’t know how to bid the project. (Most of such problems are solvable through the right software).
Developers are willing to take a chance on new platforms and see if they quickly get matched with a project that’s a good fit. So a smarter-matching engine is essential, as is a high volume of projects.
The list goes on…
If you have already participated or committed to participate in an incubator, “accelerator” or “pre-accelerator” program, please tell us about it.
Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you’re making?
I’ve been a freelance programmer for over 10 years (since my Facebook app went viral and was acquired), so I am scratching my own itch (and the itches of my peers). But I have more knowledge than simply anecdata:
I’ve talked to dozens of freelance programmers during this process. This includes email conversations, Slack conversations, phone conversations, and in person conversations. In fact, everyone who signs up for the app gets invited into Slack, and I also man our support chat-widget.
I am in the process of putting together full, formal “Buyers Matrix” (persona) documents for 20 freelance developers and 20 hiring managers and have conducted nine formal interviews already. If I need to talk to a completely fresh (uncontacted) customer, either hiring manager or developer, I can find one who will really talk with me within a day.
I’ve researched the competition in depth, and can tell you how much revenue the top competitors are generating (freelancer itself generates ~$20M annually from software gigs; Upwork, ~$12M from software gigs; Randstad, ~€1.25B).
What’s new about what you’re making? What substitutes do people resort to because it doesn’t exist yet (or they don’t know about it)?
90% of freelance programming jobs travel by word of mouth, so the substitutes are LinkedIn posts, emails to friends, company mailing lists, etc.
Who are your competitors, and who might become competitors? Who do you fear most?
There are online marketplaces like Upwork, Guru.com, Freelancer.com, but they don’t focus on freelance programmers. Toptal has focus on freelance programmers, but they only concentrate on the top 3% of the market. C2C (corporate staffing firms, like Robert Half) do (roughly) ~$6B in annual revenue in this area. My biggest fear is Upwork launching a product that caters to the idiosyncrasies of the freelance programming market.
What do you understand about your business that other companies in it just don’t get?
Freelance programming in USA is limited because of a 1986 tax reform act that targeted developers. Companies were penalized for hiring developers as 1099 workers and are at risk of being taxed as if their hires were w2.
However, in spite of this, the “gig economy” is here and expanding. Some estimates peg the eventual TAM of the Gig Economy at $1.5T, attributing half of that to IT projects, including software.
The software workforce is growing. Although most freelance developers are not Americans (due to the limitations in American law), with the advent of travel visas (such as Thailand introducing a Digital Nomad visa) and the general growth of the gig economy, freelance software development will grow in size in spite of the legislative roadblocks.
Hiring a freelance software developer is currently like finding a taxi: you call up the cab company and hope that they show up on time or if you live in an area with a high enough volume of cabs, you go outside and hope one shows up near you in time. But with the right dispatch system (quickly matching developers to projects that are a good fit, not only technically but also culturally) and the right structural systems in place to make sure the software projects succeed (enforcing best practices for software development), we could become the Uber for Software.
People understand that hiring is broken. Developers hate recruiters, and companies admit that up to 50% of their software hires are wrong. It’s clear that matching needs fixing.
Freelance software projects are a chance for us to get this right, because freelance projects are small and more frequent than job postings, there is a higher volume of turnover – we get more passes through the funnel in order to get matching right. By the time we have developed a system for consistently outputting high quality software projects (with a lower failure rate), we will have a moat on competitors. Analogy: think about the YC application and its idiosyncrasies that give YC a competitive advantage in fundraising…
How do or will you make money? How much could you make?
(We realize you can’t know precisely, but give your best estimate.)
We collect subscription fees from developers and hiring managers. We charge developers $45/month (with a discount for early adopters or multiple licenses, such as in the case of a bootcamp). We charge hiring managers anywhere from $0 to $200/month/developer for the duration of their contract.
We estimate the freelance programming market to be anywhere from $500M to $3B in annual volume currently, depending on whether you include IT staffing in the definition of “freelance programmers”. Intermediary services get away with charging anywhere from 5% to 50%, so our annual revenue could be anywhere from $25M to $1.5B if we own the market. That’s immediately. Freelancing as a market is growing, though… with some estimates of the TAM maturing to $1.5T annually.
Even immediately, however, there are opportunities for us to pivot our matching software into adjacent markets. Prospects have asked me if I could service other freelance markets: video post production, web design, marketing gigs… for now, we are focusing on conquering the software development market before expanding adjacently.
How will you get users? If your idea is the type that faces a chicken-and-egg problem in the sense that it won’t be attractive to users till it has a lot of users (e.g. a marketplace, a dating site, an ad network), how will you overcome that?
We currently have five customer acquisition channels that are effective for sourcing freelance software developers: Reddit ads; Indie Hackers community participation; Instagram (organic– suggests that paid Instagram could work as well); Social media articles; the books, 30 Days To Your First Freelance Programming Client and Software Engineer’s Guide to Freelance Consulting – I estimate 1 in every 200 readers becomes a customer. Using Amazon Marketing Services, I estimate that we can move books at scale for about -$2 net per copy.
The main point to get across is that I’m confident we could scale paid acquisition of freelance developers, although LTV is approximately == CAC, and through product improvements (reducing churn) and normal growth hacking, we are on a mission to move LTV == 3X CAC.
It has occurred to me that some of our users come from referrals from fellow users. So we technically have six customer acquisition channels, including referrals.
However, we don’t yet have scalable systems for acquiring hiring manager customers (aside from networking and referrals– not *scalable*). Although our social media articles (designed to attract developers) are also accidentally finding us hiring managers, (including developers who are, internally, responsible for hiring), we don’t have a system where we can spend $X and ensure $Y hiring manager signups. In fact, we don’t yet have a software product for hiring managers to manage the hiring process… everything is done manually, with me often not charging the hiring managers and working closely with them to recruit a developer to their project, simply in order to facilitate customer learning.
We’re overcoming the chicken-and-egg problem this presents by writing scrapers to scour the Internet for freelance programming jobs, and we’ve written scrapers for about 50 different markets so far.
Currently, the bottleneck is scalable systems for signing up freelance hiring managers, but we haven’t even built software to manage the freelancer hiring process yet, though it will be shipped by the end of October, if not sooner. Now, after many conversations, we know what to build and what aspects are important, systematically addressing the bottlenecks within the hiring process, itself: pre-screening with rubric-based technical evaluations, having a spec, getting the description in front of developers who are well-suited to it in terms of ability and availability, signing developers to NDAs where appropriate, conducting reference checks, and transparently monitoring of the process, for both sides.
Have you incorporated, or formed any legal entity (like an LLC) yet?
What kind of entity and in what state or country was the entity formed?
(e.g. Delaware C Corp)
Delaware C Corp
Please describe the breakdown of the equity ownership in percentages among the founders, employees and any other stockholders.
Zachary Burt owns 100% – all employees to date have been independent contractors (paid in cash) and not awarded any equity. Once funded, I will hire FTEs with a generous option pool.
List any investments your company has received. Include the name of the investor, the amount invested, the premoney valuation / valuation cap, and the type of security sold (convertible notes, safes or stock).
I have invested about $50,000 into the company already. That’s a rough estimate, since our books are not 100% up-to-date yet, but it’s within the right order of magnitude.
Please provide any other relevant information about the structure or formation of the company.
I’ve been operating as a sole proprietor since December 2016. In August, I filed for a DBA (doing business as) license with New York County. At the end of September (a few days ago), I filed with Delaware to create a C-Corp. Once that is confirmed, I still have to “qualify to do business as a foreign corporation” (legal terms – means out-of-state corporation) by submitting some forms to the New York State authorities.
Are any of the founders covered by noncompetes or intellectual property agreements that overlap with your project? If so, please explain.
Who writes code, or does other technical work on your product? Was any of it done by a non-founder? Please explain.
I write code and have programmed for over 20 years. I hire freelance programmers (often through searching the Code For Cash database) and pay them as independent contractors. I’m capable of personally handling all the necessary tech; it’s simply a matter of scaling my time.
Is there anything else we should know about your company?
(Pending lawsuits, cofounders who have left, etc.)
A few of the freelancers who wrote job scrapers for us did so as independent contractors (you do this as a contractor, I will send you PayPal) but haven’t signed formal work-for-hire agreements. My lawyer says this shouldn’t be a huge issue, since it’s just auxiliary code (like scrapers for additional markets rather than core product code), but going forward, everyone is signing a formal agreement.
If you had any other ideas you considered applying with, please list them. One may be something we’ve been waiting for. Often when we fund people it’s to do something they list here and not in the main application.
I think there’s an opportunity for a service that hires product-inclined software developers to write specifications for software programs: from having facilitated many consulting projects via the platform, I can tell you that projects with well-defined data-input and data-ouput tend to end in success rather than tears. This would be beneficial for the FTE software market/ecosystem as well as the freelance developer market. These specifications could consist of simply wireframes/data flow descriptions, or even possibly automated testing systems (TDD, except the test writing is outsourced).
Please tell us something surprising or amusing that one of you has discovered.
(The answer need not be related to your project.)
Most programmers work as w2 rather than 1099 employees because of a 1986 tax reform act that threatens to (at the IRS’s whims) tax employers as if their 1099 programmers are w2 employees. Congress suspected that programmers were using their companies as tax havens, but studies show that programmers are actually more scrupulous than average when it comes to IRS reporting. The freelance programming economy is growing in spite of this (since software is eating the world), but many companies have an institutional memory from this 1986 law (which is still a threat) and prefer w2 or c2c arrangements.
What convinced you to apply to Y Combinator?
The apply for w18 email reminder.
How did you hear about Y Combinator?
Alex Rampell told me about you in 2006.