Hire vetted web3 talent across the globe and streamline payroll
By Mark Curchin
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The purpose of this document is to define a minimum viable product and business model of crypto headhunting & payroll-related services. The product is inspired by the vision of a more inclusive and trustless world where organizations and people can seamlessly engage in work relationships harnessing the power of smart contracts, and cutting the cost of intermediation, compliance, and legal services.
Web3 companies constantly face the challenge of hiring and maintaining relationships with a workforce that is more and more global and operates mostly remotely. The COVID-19 pandemic accelerated the already ongoing process of remote working across different jurisdictions and time zones. Organizations continuously fight to get ahead of the competition and find the best talent, tapping into a global pool. This is particularly true for IT staff and developers given the natively digital nature of their job.
As a result of this process, the costs and the complexity of hiring employees for organizations have increased. At least two critical cost factors can be identified:
- Legal & compliance costs, due to the new multi-jurisdictional complexity
- Transaction costs, due to fees & financial intermediaries when it comes to paying salaries and obligations in different currencies to the employees
On top of that, it is possible to observe an additional obstacle, deriving from the distance between the organization and workforce. A potential lack of trust between the two parties, which possibly have never met each other in person but established their relationship completely on the internet. The employees or freelancers might have some reservations regarding the capability of the organization to pay or settle their salary, while the organization might doubt the good faith and motivation of a counterparty that is not present at the office. Furthermore, in case of any disagreement, it is tough to find a jurisdiction where any dispute can be settled considering the nature of the arrangement between the parties.
Overall, these problems pose heavy practical challenges to organizations, preventing them from being able to effectively hire and retain employees due to the open market competition with other more progressive companies with globally distributed workforce.
The use of smart contracts and payment tokens (i.e.: $USDT , $USDC ) can solve or heavily reduce the impact of the identified problems. The decentralized and trustless nature of the blockchain makes it an effective tool to reduce the need for intermediaries, reducing unnecessary costs and increasing confidence in both counterparties.
Smart contracts can be employed as effective tools of payroll management by organizations and DAOs.
The architecture is very simple. The organization can create commercial contracts (dedicated smart contracts) to stream payment tokens to each employee. The tokens are locked in the smart contract and are released to the employee’s address at regular times, agreed upon in advance.
There are various advantages in this radically new way of handling payroll:
- Trustless - the funds, release schedule and the transactions can be verified on-chain (transparency)
- Cheaper & Faster - compared to traditional ways of moving funds and ensuring trust between counterparties, using smart contracts are much more cost-effective (the only fees are going to be the network fees)
- Flexible - if the relationship between the parties cease to exist, either party can cancel the agreement based on pre-agreed terms
The ultimate value proposition is to match Web3 businesses in need of developers with vetted talent across the globe. Holdex removes the payroll barriers and the unnecessary intermediaries traditionally handled by legacy HR recruitment agencies, and powers it all with self-operated smart contracts on the blockchain.
There is a clear gap in the market between the demand of crypto-native organizations and what traditional HR recruitment agencies can offer.
Legacy agencies traditionally have a limited understanding of how crypto works and operates. This is because the developments in this industry happened only throughout the last decade. Technological developments are usually too fast for the other actors in the ecosystem to keep up with. For this reason, an increasingly higher number of demands in the HR space have become not only unmet but also misunderstood.
A crypto-native way of handling HR recruitment and payroll is needed in the market in order to make the talent-matching process more efficient and less resource-intensive.
The major costs of running the business derive from the below major cost categories:
- Development costs for Smart Contracts and Dapps,
- Smart Contract Audit and maintenance costs
- Operational costs
The vast majority of the costs will be incurred during the initial smart contract and Dapp development phase. Due to the trustless nature of the smart contracts, once deployed, the costs on the organization side will be significantly lower. Some miscellaneous maintenance costs stemming from bug-fixing, enhancements, and new features implementation will be calculated as well. It is of the utmost importance to reserve a sizable budget for smart contract audits, given that they represent the foundation of the product itself.
Another important cost category is the operational one. The operational costs stem from the draft of legal agreements that are compliant with the law and protect our entity in case of dispute. Furthermore, it is necessary to factor in negotiation, marketing and sales costs. In the initial phase, customer support will play also a big role while the processes are defined and automated, limited our entity’s interaction with the counterparties involved (developers and enterprises)
The revenue streams will be generated from different sources:
- One Off/Short-term
- Smart contracts set-up fee - for companies that are onboarded to the protocol for the first time
- Concierge service - for companies looking for ad-hoc services, such as Headhunting and talent matching
- Miscellaneous consulting services - helping companies define their crypto HR & retention strategy
- Transaction fees generated from the recurrent money transfers
The key partners that will help deliver our unique selling proposition are going to be:
- HR recruitment agencies (referral partners)
- Web3 Companies
An extensive developers’ network is going to help build confidence and reliability in Holdex from the Enterprise perspective. Being able to find and optimally match talented developers with targeted companies is what will ultimately differentiate Holdex from any other HR agency. In this sense, developers are our most valuable key partner.
HR recruitment agencies can at times help fill any gap in the developers’ supply that we might face in case of high demand. It will be very important to create a network of capable HR recruitment partners to fill any gaps and maintain a satisfactory level of service delivery.
Finally, Web3 companies are not only our target customers but also our partners inasmuch as they help fulfill and satisfy the developers' demands and keep a positive experience for the developers as well, which in turn will contribute to extend our network and recognition in the developers’ community.
The most important activity will be constituted by effective headhunting and talent-matching activities, with the ultimate goal of successfully creating a pool of skilled IT professionals ready to be deployed at convenience. The focus at the beginning will be mostly on Solidity, since it is quite hard to find capable developers in this particular language and the demand is always very high. On top of that, the professional experience and network of the founders in this particular programming language is extensive.
Smart contracts are used as a tool to make the entire process of handling payroll payments trustless, cheaper and more flexible. It will also be used as a charging mechanism for our fees. For this reason, smart contract development is definitely going to play a huge role in the success of the business.
Along the same lines, auditing the smart contracts will be extremely important. Potential smart contract hacks will undermine the credibility of the entire project itself. For this reason, it will be of the utmost importance to dedicate a budget to a thorough smart contract audit by an experienced third party (even though the smart contracts will be quite straightforward).
For the business to succeed, it is key to have a very good network in the Crypto and in related computer engineer space. In particular, since the focus of the company is going to be initially on Solidity, it will be important to have developers who are well versed in this particular programming language.
A good sales and customer service will help deliver our unique selling proposition effectively and they will help identify any problems on the clients’ side, giving the chance to act fast in order to fix them proactively.
The ideal customer relationship for this type of business is ‘non-existent’. Ideally, when the product is launched successfully it will be handled in the most trustless and decentralized manner possible. After onboarding the clients, the enterprises will simply have to interact with their dedicated smart contracts to settle the developers’ pay and Holdex’s fees. This process is totally automated and will not require the need for any intermediaries or other operational costs.
However, in the initial stages of product development, the operations will involve a certain degree of human interaction and the product will be more similar to a traditional recruitment agency/consulting and will only gradually evolve into a more trustless/DeFi protocol throughout the process.
For particular needs, a VIP concierge service will be available in order to address the most niche or premium demands coming from new or existing clients.
The website and a dedicated landing page will help cater the interest of both Web3 companies looking for talents and developers looking for opportunities. The website will be simple and captivating for both parties, inviting companies to sign up to receive more information and developers to start the vetting process.
Another potential lead-generating channel is going to be word of mouth based on the quality of the services received. Once Holdex’s HR services are established in Hong Kong and across APAC, we can forecast a reduction in the marketing and promotional expenses as a result of referral from existing clients.
The established network of the founders will help kickstart the project and get first customers on board, fuelling the growth of the operations.
The target customer segments are companies in Web3 that fall under the below categories:
- Growth Stage Companies
- Top 100 Crypto Companies
Given the variety and differences between the above categories, the sales and business development strategy will have to adapt according to the company size and specifics. Start-ups in Web3 are the easiest to target as the sales cycle is generally shorter and it is easier to talk to decision makers. However, their budget is limited and the deal size will probably be smaller (and have a lower mark-up compared to bigger companies).
Growth stage and Top 100 Crypto Companies (such as Binance, OKX, Coinbase, Compound, etc) will probably have a longer sales cycle and it will be harder to reach out to decision makers. However, a much deeper budget and a very high demand for developers can definitely help make the business sustainable and thriving.