Community-Owned Talent Network

VeradiVerdict - Issue #107

What is Braintrust?

Braintrust is a global talent marketplace that connects technical and design freelancers with U.S. Fortune 1000 organizations. As the first user-owned talent network, Braintrust aims to replace traditional hiring middlemen (fee-heavy third parties such as Indeed and ZipRecruiter) with blockchain-based matchmaking software. Unlike traditional marketplaces, Braintrust’s unique business model allows talent to retain 100% of their market rate, while enabling organizations to cost-effectively access flexible teams of highly-skilled freelancers, no matter where they’re located.

  • The foundation of Braintrust’s ownership and network model is the Braintrust blockchain token, BTRUST, which serves as a governance and incentive mechanism for building the decentralized network. Based on Ethereum’s ERC-20 token, Braintrust’s model is a variant of decentralized finance (DeFi) protocol Compound’s basic governance token and framework. 

  • Braintrust launched out of stealth mode in June 2020, and most recently raised $18 million of strategic growth venture funding in a deal co-led by ACME Capital and Blockchange Ventures on October 1, 2020. HashKey Digital Asset Group, Omidyar Technology Ventures, Multicoin Capital, Variant Fund, and Pantera Capital also participated in the round. 

  • With freelancers expected to represent more than 50% of the U.S. population within the next decade, Braintrust’s blockchain-enabled model based on quality, transparency, and aligned incentives has the potential to change the remote gig economy for the better. 

The Problem with Two-Sided Marketplaces

Top companies have traditionally struggled with in-house hiring and retention of technical designers, managers, and engineers. Existing marketplaces are costly to operate, and often lack trust and connection among their customers. Braintrust aims to address three pressing issues in the market: 

  • Quality talent: Enterprises need a platform and vetting system that matches them with curated, experienced talent able to quickly step in, run projects from beginning to end, and create value.

  • Cost-effectiveness: Existing marketplaces like Toptal, Upwork, and Gigster charge high fees of 30-60% that detract large projects and highly skilled talent.

  • Misaligned invectives: Marketplaces are traditionally operated by for-profit companies owned by their investors and founders, and rely on high user fees to offset capital-intensive marketplace operations. This concentrated ownership structure creates a disconnect between the interest of network owners and actual users.

The Braintrust Solution 

Braintrust has a new, user-controlled business model that aims to invert traditional dynamics between network operators and users through blockchain. Ownership in the Braintrust network is represented by the BTRUST token rather than traditional equity, and is given away in exchange for users themselves building out the marketplace. This significantly reduces costs for employers and users, and attracts top tier Silicon Valley talent while distributing value more equally across the network.

  • With Braintrust, technical and design freelancers can keep 100% of the rates they bill, and can earn tokens by inviting other talent or organizations to the network, or helping with peer-to-peer vetting. 

  • Clients can keep the 50% margin that other agencies charge, and access curated and quality talent operating in 2-week agile sprints. 

Tokenized Governance 

  • Fully vetted Braintrust users are placed directly in a pool with employers and completely control the network through BTRUST. BTRUST will be an ERC-20 token issued on the Ethereum blockchain network by the Braintrust Technology Foundation, a nonprofit that charges clients a 10% fee per transaction. Fees are used to cover costs of operating the network and purchase BTRUST tokens on the open market.  

  • BTRUST can be used for platform transactions, voting on product features, and as a “stake” to help freelancers’ projects or proposals stand out to clients. The more tokens that users “stake” on bids for new projects, the more they can showcase their commitment to clients and capability to do the job well. Tokens can also be redeemed for rewards such as free software licenses, access to conferences, and special opportunities to pitch clients. 

  • This new way of organizing people through tokenized networks is a business model breakthrough for cost-effective value creation, transparency, and self-sufficiency. 

The Braintrust Team 

Braintrust was founded in 2018 by serial entrepreneurs Adam Jackson and Gabriel Luna-Ostaseski, who operate as CEO and CRO respectively. The co-founders have collectively built upward of 15 companies and invested in over 100 marketplaces. Braintrust’s core team of eight is also supported by senior advisors across business, technology and academia.

  • Prior to founding Braintrust, Gabriel Luna-Ostaseski co-founded the home improvement marketplace Calfinder. He has consulted, advised, and invested in 30+ Silicon Valley startups including Thumbtack, Uber, Surfair and Lendinghome. The first five companies he advised raised over $300M in follow on funding.

  • Adam Jackson is a marketplace entrepreneur and investor, and has started 4 VC backed-companies and a blockchain asset management company over the last 16 years. In 2012, he co-founded and served as CEO of Doctor On Demand, a healthcare service that provides video visits with board-certified physicians and psychologists. Doctor On Demand has raised $235M in VC.

Traction 

  • Braintrust currently has 600+ talent members in its global network, with thousands more on the waitlist. 

  • Approved freelancers are matched with industry-leading clients including Nestle, Pacific Life, Deloitte, Porsche, Blue Cross Blue Shield, TaskRabbit, Coursera, and NASA.

  • Braintrust attained profitability on its Seed Round in September 2018, and has doubled its financial projections from early 2020, with 45-70% month-over-month growth since its public launch.

Final Thoughts: Why the Braintrust Solution Matters 

Today, all companies must innovate at the speed of tech companies to remain competitive. With technological forces like machine learning, AI, and 5G on the rise, what is already a rapid iteration cycle will only grow in speed. Companies increasingly rely on the essential freelance economy for in-demand ecommerce development, web and mobile design, and customer service operations. Since the onset of Covid-19 and growth in remote work, 36% of the total U.S. workforce is now freelancing, and more professionals new to remote work are now considering freelancing in the future. 

With freelance work on the rise and much of the U.S. population already working on a project basis, existing talent marketplaces are no match for the strong tailwinds propelling the $1.5T national freelancer market. Unlike traditional agencies with poor incentive models, high fees, and no transparency into who is actually doing the work, Braintrust offers a low fee, highly transparent and aligned incentive model for souring top-notch tech talent. Leveraging blockchain technology, Braintrust fills a gap in the market for a network that benefits both sides of the marketplace, and demonstrates how tokenized governance will better shape the future of work.

- Paul V

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ABOUT ME

Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. The firm invests in equity, pre-auction ICOs, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.