How I Started a Blockchain
Based On-Demand Employment Portal
Hi! Who are you and what business did you start?
I’m Sergei Sergienko, a Russian entrepreneur living in Sydney. I’ve started several businesses and have been involved in HR and recruitment for many years, but the one I want to talk about today is LaborX.
LaborX is a blockchain-based on-demand employment portal. It makes it incredibly easy for employers to post jobs and for freelancers to connect directly with them, organise work, arrange payment, and essentially manage every step of what can otherwise be an unnecessarily difficult process.
By using the Ethereum blockchain, cryptocurrency payments and digital work agreements based on smart contracts, LaborX cuts out third parties and middlemen, reduces fees, makes the whole process faster and more streamlined, and ensures that the different parties can interact safely and securely. It also allows anyone to trade their current and future work time just as you would trade shares.
What is your personal story and how did you come up with the idea?
I’ve worked in the recruitment sector for a long time and seen how technology is starting to change things. But it’s still difficult for people to access employment opportunities. The internet has revolutionised some things. In other cases, we still have a long way to go.
Streaming services mean you can watch a box set on-demand – but even with the rise of the gig economy, it’s still difficult to find work on-demand. You can video chat with someone on the other side of the world – but it’s still slow and expensive to make a financial transfer across borders.
I’ve followed Bitcoin and blockchain from an early point, and it was clear that these technologies offered an opportunity to do things differently. I realised we could create an on-demand employment service, hosted on the blockchain, that would cut out the middlemen and their arbitrary barriers and costs.
At a time when more people than ever are looking for employment and forced to work remotely, it’s time we had a service that made accessing work opportunities as easy as streaming a movie or connecting with a friend on social media.
What challenges did you face when creating your product/service?
We announced the project at the end of 2016, just as interest in blockchain and cryptocurrency was ramping up, and we were able to secure sufficient funding for marketing and development. But there were several challenges involved in bringing LaborX to fruition.
One was regulatory. Technology moves faster than the regulators, who always end up playing catch-up. So we started building our platform in what was effectively a regulatory vacuum. As the situation became clearer, we needed to fine-tune our approach to take account of new laws and guidelines.
Another, more significant challenge was that no one had ever done anything like this before. Ethereum, the first and still the largest smart contracts platform was less than two years old when we started. There weren’t many skilled Ethereum developers in the world. Fortunately, we were able to recruit some very talented people – and Sydney has become a hub for talent and the Ethereum community. Additionally, as the technology and regulation evolved, we refined the service and business model and were able to come up with something better than we’d ever imagined at the start.
Who is your target market?
We have two main target markets: global freelancers and global SMEs, at the start Crypto based. Obviously, LaborX needs both to be a success.
Small businesses often struggle to fill short-term posts or to find contractors for specific tasks. With LaborX, they can search a global pool of talent – with reputation scores based on feedback to ensure they’re getting someone reliable and competent. Because this uses transaction records and is saved on the blockchain, it’s very hard to fake a good reputation score (a common problem with traditional centralised freelancer portals).
Freelancers can similarly search for jobs, without restricting themselves to their local area. They can complete work remotely and get paid automatically, without worrying that the employer is going to withhold funds and they will have to go through an expensive (and often unsatisfactory) resolution process – again, as is often the case on regular freelancer platforms.
How do you market your business and which approaches have been the most successful?
We’ve had some success with conventional ads, using popular crypto sites to attract new users. Obviously, the coronavirus pandemic has brought the idea of remote working front and centre, and a lot of people are looking for part-time employment and gig work right now.
But one of the great things about the blockchain sector is that it enables you to think outside of the box and try totally new ideas. Blockchain as a technology is all about aligning economic incentives to encourage people to work together to a common goal, and we’ve been able to leverage that very successfully in our marketing too.
By holding competitions and grassroots referral campaigns, and paying participants per registration they bring to the platform in blockchain tokens, we’ve bootstrapped our user base in a way that would otherwise have proven extremely costly by conventional methods.
Telegram groups and societies have proved to be one of the best converting traffic sources. Unfortunately, Telegram is only present in a few regions of the world currently.
Since you launched, what has worked in not only attracting but retaining customers?
Again, we’re still at a very early stage post-launch. But the same type of campaigns we’ve used to attract our first users are also helping to keep them engaged as we add new customers and freelancers. We’re also looking at different promotions to encourage customers not only to sign up but to post jobs and see work through to the completion of the contract. Relatively small incentives are enough to encourage users to take that next step.
What kind of culture exists in your company, and how did you establish it?
As you might expect from a company that operates in both the blockchain and remote working space, we’re very dispersed. We’re based in Sydney and have employees in Australia. Our marketing and development teams also include people all around the world, in different cities and time zones. There’s no issue with working from home – that’s the norm for us! Using cryptocurrency makes paying contractors very secure and easy.
To get everyone working to the same beat was a challenge and is a continuous challenge. The problem we are trying to solve here is global and it is bigger than all of us. It is a serious challenge and serious challenges tend to unite people. That’s what we found has worked best for us.
Regular holidays, meet ups and, most recently, company wide video calls.
What software, services or tools do you use within your business?
In terms of payroll, we have specific needs. We pay a lot of our contractors around the world using cryptocurrency because it’s fast and efficient. But it doesn’t integrate well with conventional accounting and payroll systems – so we designed our own solution, PaymentX.io.
This allows contractors to raise invoices denominated in dollars, which are automatically calculated and settled in cryptocurrency. It saves a huge amount of time, increases security, and has worked so well we decided to release it as a standalone public product.
As far as CRM is concerned, we are using our internal developed one , created on the back end of the platform.
What are the most important lessons have you learned on your business journey?
We have learned a huge amount as we’ve gone along – not least because new technology and new regulation has arisen, and that has been game-changing. Naturally, we’ve made lots of mistakes too. Ideas we developed but that were prevented by new regulation, or tech we created but found there was no real market for, or that we could do a better way.
Our products have evolved as we understand the needs of the market better, and how we can use the tech to meet those within the current regulatory framework.
It’s hard to say what we might have done differently because I think we’ve always made the best decisions we can with the information available at the time.
Blockchain is a sector that is so new that you’re essentially creating it as you go. Uncertainty was inherent when we began, and it still is now, though not to the same extent. While it would have been great to have more certainty, that was also what enabled us to grasp an opportunity nobody else was taking at the time.
What is your favourite aspect of being an entrepreneur?
Being a pioneer is fun. We’re not just building new software and services. This is a whole new paradigm for finance and recruitment. We’re creating something outside of the status quo and the mainstream institutions and systems. It’s iconoclastic, and in building something useful we’re also challenging assumptions about the way these services should work in the first place. This is a movement that isn’t going to go away – and we get to be at the forefront of it.
What is your LEAST favourite aspect of being an entrepreneur?
Start-ups can be fragile at the best of times, and the blockchain space is an unforgiving environment. While it’s exciting, that also has real consequences for your employees and their families. We’ve dealt with that by being pretty conservative and careful with the funds we raised. As a result, we’ve managed to navigate the first three years successfully, so hopefully, we’re here to stay now.
Constant morale upkeep and crazy number of tasks on the plate at ones takes its toll. It’s pretty difficult to always be in a state of “limbo” between success and failure.
What books, podcasts or other resources have inspired and influenced your business journey?
Bitcoin Whitepaper is an obvious choice here as well as white papers of all the noteworthy projects, especially pre-2016. TED talks are always great to inspire yourself and keep going. As far as the books are concerned, the following ones I thought were great.
Anything by Michael Lewis, “Flash Boys” in particular. Shows that even though it seems that everything has already been done and created, there is always room for innovation and improvement, even if it’s a nano-second. Time has never been more valuable in a literal sense of the word.
The Man Who Solved The Market by Gregory Zuckerman. Shows that anything is possible at any age and pretty much in any field.
Some extracts from Wage-Labour Capital by Karl Marx. Shows the leap of human imagination, where Marx was proposing hypotheses that were totally revolutionary to the contemporary’s methods and thoughts. Our emphasis on the value of human labor and work hours in LaborX somewhat parallels Karl Marx’s ideas.
Where do you see your business 2-3 years from now?
It’s probably a little too much to expect LaborX to be the Amazon of employment or the Google of the ‘Gig Economy’, but that’s the road we want to be on. There comes a point when a business moves beyond the bootstrap phase and starts to gain critical mass. Of course, that means more employees, higher revenues, and so on. But ultimately, for a service like ours, it comes down to Network Effect.
That’s what we’re targeting for two years’ time. Do we have the network effect – the user base, the interactions, the momentum – to consolidate our advantage as early adopters and snowball our user base? If we get that right, everything else will follow, just as it did for Facebook or Twitter.