Braintrust CEO Adam Jackson: traditional online marketplaces are bad for users – Business Insider – Business Insider - Freelance Rack

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Wednesday, June 24, 2020

Braintrust CEO Adam Jackson: traditional online marketplaces are bad for users – Business Insider – Business Insider

  • Adam Jackson has more than a decade’s worth of experience building and running online marketplaces.
  • He thinks traditional marketplaces that are owned by for-profit companies have two big, related problems — they charge outrageous fees to users and they concentrate wealth by transferring most of the value of the marketplace to the companies’ owners.
  • Jackson’s got an idea of how to solve such problems — a marketplace that’s owned by its users via a cryptocurrency token and run by a non-profit foundation.
  • That marketplace, dubbed Braintrust, launched on Wednesday.
  • Visit Business Insider’s homepage for more stories.

Adam Jackson knows a thing or two about online marketplaces — and what’s wrong with many of them.

He’s been working on marketplaces off an on for the last 16 years. During that time, he’s founded four of them — in areas ranging from telemedicine to automobile parts and repair — and sold two to bigger companies. He’s seen what works well and what doesn’t.

“Having been a marketplace builder my whole life, I kind of had a front-row seat to two of the big problems that happen when you build big marketplaces,” Jackson, a serial entrepreneur, told Business Insider in an interview this week.

Traditional marketplaces are operated by for-profit companies that are owned by their founders and investors. That structure tends to create a disconnect between the interests of those owners and the interest of those who actually use the marketplaces to buy and sell goods and services, Jackson said.

The first big problem that arises from that structure is that the marketplace operators tend to charge high and sometimes outrageous fees to their users, he said. Essentially that allows them to skim off much of the value generated by the market. Jackson pointed to Amazon, which charges fees to sellers in its marketplaces that can add up to 50% or more of listing prices, as an “egregious example.”

“The fees end up creating misaligned incentives,” Jackson said.

Traditional marketplaces concentrate wealth

The second big problem with the traditional ownership structure is that it tends to concentrate wealth, he said. For Uber drivers, most of the value of the app comes from all of the riders that use it. Likewise, consumers use Uber because they know they can generally find a driver quickly and easily through it.

But when Uber went public, much of the value it realized from that event went to a handful of founders and investors in the company, Jackson said. Meanwhile, many Uber drivers are earning poverty wages and some have to sleep in their cars, because they’re homeless, he said.

Investor-owned marketplaces engender “this crazy wealth concentration,” Jackson said. “This is not a socialistic argument. I just think this stuff is bad for business.”

Jackson has an answer to those problems. Instead of an investor owned marketplace, he’s now created one that will be owned by its users via a cryptocurrency token and operated by a non-profit foundation. The new marketplace, a kind of job board for freelance tech workers dubbed Braintrust, officially launched out of stealth mode on Wednesday. He’s hoping it will be just the first of many more to come.

Read more about Braintrust and why Jackson thinks it will demonstrate a way of fixing the shortcomings of traditional marketplaces here.

Got a tip about tech? Contact Troy Wolverton via email at twolverton@businessinsider.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.



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