Zerocracy, Inc.

Freelance vs. Outsourcing www.zerocracy.com Gallup recently found out that the number of American employees working remotely rose to 43 percent in 2016 from 39 percent in 2012. However, as noted by Rustam Singh in Entrepreneur, “freelancers are exactly second in line (right after interns), to be regarded as the most under-appreciated working population on the planet currently.” What Are the Key Freelance Pitfalls?

Lack of Control IPR Issues Good Ones Are Expensive Qubit Labs, a Ukrainian outsourcer, in their While full-time employees are binded by Even though the recent study of PayPal blog post of disappointment explains: “You multi-page NDAs and contracts, freelancers, revealed that over 50% of freelancers are not do not know exactly how freelancer works. even when they “work for hire” are less being paid regularly, in order to hire a decent No matter how much you convince yourself, responsible legally; moreover, they are engineer one has to pay double, since, as Jay you have no power over freelancers. They mostly overseas. Soriano explained, “the good freelancers can deliver the project on time, or not.” become insulted with the low pricing, and High Turnover the ‘good enough’ freelancers stay but don’t Low Quality As Riia O’Donnell from RecruiterBox says, feel that they have to provide quality because It is often assumed that programmers “They may be great when they’re accessible, the price is so low.” working remotely without close daily but be prepared with a Plan B if they’re not.” supervision produce code with lower quality Cultural Differences than their full-time colleagues. Absence of Talents Anne Loehr claims in her blog post that As Yishan Wong, former CEO of , “freelance employees don’t fit in with the Communication Issues described his freelance experience, “it was organizational culture” and it’s a Reddit and Yahoo banned remote work and extremely difficult to find decent engineers “management challenge.” Reddit CEO said that “there were too many who could do the things he needed, deliver times when we just needed to be able to walk reliably, and iterate according to ongoing Moody Attitude over and tap someone on the shoulder and testing/customer feedback.” As Sara Horowitz, founder of Freelancers discuss a complex issue in-depth, right Union, once said: “You work with away,” which is difficult to do with remotely Lack of Commitment freelancers and you learn about depression.” distributed freelancers. “If client site is down, a client can’t call a Anya Kamenetz elaborated further in freelancer to work on it right at this moment FastCompany, and confirmed that Fake Portfolios but it’s different for an employee,” says self-employed are indeed “least likely to Relja Damnjanovic from Toptal describes his Shabbir Bhimani, a software blogger. report themselves as thriving.” personal experience of being a victim of identity theft and says that, “Unethical No Accountability Mixed Priorities people create profiles on open freelance “A lot of freelancers have no drive and According to DAXX, an outsourcer networks, pretending to be someone with determination, it is self-motivated job and if headquartered in The Netherlands, you much more experience and expertise than they are having a bad day then it is so easy should “be prepared to missed deadlines due themselves. They use the stolen profile to to see why they may not produce high to weddings, birthdays, funerals, relatives poach jobs, and set higher prices than standard work,” says Creative Beacon. getting sick unexpectedly, and all kinds of they’re worth.” similar excuses.” “Freelancing is a state of mind. It is a statement: A statement of ... freedom.A freelancer is a rare blend of lone wolf and PR man.” —Gustavo Ferrari Ferrari Guide to Freelancing, 2012. What’s Wrong With Them?

Disloyal Self-Disciplined Brave Borja Moya in his article The Freelancer As Peter Johnston, the CEO of Kalo, a Megan Anderson explains that “freelancers Mindset platform for freelancers, says in his article know how crucial self-discipline is for claims that “freelancers develop for Forbes, “talent [freelance] marketplaces getting any work done, and part of this their own voice” and adds that “they have do not breed loyalty,” and elaborates that comes from having a solid routine.” no trouble to speak up,” which is not what since “the [work] arrangement becomes full-timers usually can afford to do. As Rikke transactional” it is “unlikely to breed loyalty Greedy Dam explained, “an employee does as he’s from either the employer or the employee.” told, while a valued [freelance] partner can Geoffrey James noted that “one of the challenge her client when she thinks their biggest obstacles to being successful at ideas aren’t going to add the best value.” Independent freelancing is worrying whether you can Amy Rosenberg in her article for Psychology make enough money to survive,” which very Travelers Today claims that “we work best when we’re often leads to what is perceived as Freelancers usually are frequent movers. free from interference, office politics, and greediness. Myrna Minkoff confirms that “Why?” asks Koty Neelis and answers: dependence on colleagues; we have the solo “any successful freelancer is charging 2x or “Because they can.” According to her own artist’s spirit,” and adds that “some people more the hourly rate an employee would get freelance experience, freelancers “have a are simply not cut out for the freelance life.” for the same job.” thirst for culture and adventure that can’t be Hustlers fulfilled elsewhere.” She adds that “as a Risk Tolerant freelancer, you can make a home anywhere Gina Trapani, in her article for Harvard Jeanne Yocum in her article for Fiverr says in the world as long as you have good wifi.” Business Review, says that “freelancers are that “freelancing is hardly risk-free” and constantly networking, marketing, and “almost by its very nature will involve some Self-Motivated staying on top of the latest and greatest tools stress and perhaps sleepless nights.” According to Kirsty Stuart, “you have to have and news in their field to make themselves the self-motivation of an angry mule to be a the go-to person for a certain kind of service Passionate successful freelancer.” or expertise,” and adds that “good Koty Neelis explains her attitude in her blog freelancers live on their toes.” post about freelancing: “I’d much rather have flexibility in my career while doing something I absolutely love than take a different job just to please the people around me who would feel better themselves if I did the standard 9-5.” Zerocracy has invented how to mitigate all these pitfalls and painlessly work with freelancers. Not only sell them, like Upwork is doing, but actually manage. How Zerocracy Does That?

Pay By Result Rating System Mentorship Unlike Upwork and similar systems, our Each activity completed or failed by a Each new freelancer in the platform has to freelancers are being paid only for the programmer has certain consequences in have a mentor among those who already results they deliver, not the time they spend reputation points, which are accumulated in know how the system works, which ensures in the office or remotely. programmer’s profile and affect their pay easily adopting of new members to our rates. community and our quality expectations. Microtasking High Rates The XDSD methodology we invented Sandbox encourages programmers to break down We pay over the market, in order to be able All newcomers are being tested in so called their scope of work into small increments to demand the highest quality; e.g., a Java “sandbox” projects, which are sponsored by and make sure they are delivered only when programmer from Poland may earn $60-80 Zerocracy, where freelancers while being the quality is acceptable. per hour (pro-rated by the results delivered). fully paid, experiment with the management model and get ready for real projects. Communication Discipline Strict Policy Double Peer Reviews All project communications happen inside The management methodology is explained Each software code increment, also known ticket tracking systems, like Jira, Trello, or in the Policy document (over 50 paragraphs), as pull request, has to be reviewed by at least GitHub; no informal chats or meetings are which explicitly regulates everything two other programmers, which makes sure allowed. freelancers are doing in a project. the quality is not compromised easliy. Senior Developers Only Zerocrat Chatbot Quality Assurance There are only highly-skilled and The project management role is played by a professional developers in the platform, chatbot, which “talks” to programmers via A mandatory quality assurance role in each because everybody else simply can’t survive Telegram, Slack, and GitHub, gives them project validates that all rules of work are under the pressure of our quality instructions and collects their results. enforced and the quality is not compromised. expectations. An effective utilization of a growing army of freelancers, which only Zerocracy is capable of doing at the moment, will greatly benefit any smart software company. What About Security And IPR?

NDAs KYC Microtasking Just like in any other work relationship, Each freelancer passes a mandatory online The transition of IPR happens in Zerocracy freelancers sign Non-Disclosure Agreements, identification procedure, via one of our in a very incremental and iterative mode, via which limit their ability to disclose the sub-contractors, for example Yoti (based in micro tasks. Thus, the risk of losing any information they obtain while working in a UK); full document identification is required viable intellectual product is no bigger than project. Moverover, customer may require in order to start working in a real project. the size of a micro task. This is not the case them to sign additional non-disclosure in a full-time employment, where a documents, since Zerocracy doesn’t block “Work For Hire” programmer may hold a lot of the source any direct contacts between customers and According to the U.S. Copyright Act of 1976 code in his or her personal posession for programmers. everything that a freelancer produces, while rather long. working via Zerocracy, belongs to the paying Work Contracts customer. Thus, the customer rests assured Just like in any type of employment or the all intellectual property rights are contractual work, Zerocracy (Delaware protected from the first day of the project. corporation) freelancers are binded by the contract they accept and sign when they create their accounts; the contracts are available for clients in PDF form. Where Do We Find Freelancers?

Conferences YouTube Videos Books We regularly speak at software conferences We promote the concept via our YouTube Yegor Bugayenko, our CEO, is a famous tech and present our novel ideas about channel and the channel of our CEO. We are writer, an author of Elegant Objects, a book management; thanks to the attractiveness of planning to do more interactive webinars series on object-oriented programming, and the concept we are getting a few “join” and online interviews. a rather famous tech blogger. His most requests per day from freelancers. We are recent book Code Ahead promotes the ideas of planning to attend more conferences in the Open Source freelancing and our platform. We are future and organize our own, about freelance Our entire software platform is open source, planning to publish more books about our and management. all our sandbox projects are open source. concepts and our solution. Moreover, our CEO organizes a regular Blogs annual Quality Award for open source Telegram Chat We write about our system and its developers. This is how we attract a large We have a dedicated Telegram chat for our management principles in our blog and in community of the most active programmers early adopters, followers, freelancers, and the blog of our CEO. We are planning to and share our ideas with them. We are even customers. In the chat we discuss how motivate our programmers and customers to planning to sponsor more open source the platform works, resolves issues, and write more actively for our blog. initiatives in the future. provide help to newcomers. How Much Does It Cost?

Invoice #555, Week #35 of 2018

Paid to: Zerocracy Inc. 555 Bryant Str, Ste 470 Palo Alto, CA 94301 Zerocracy charges a No. Description Total fixed commission --- per each microtask All microtasks are 1 Container.java fixed 17.50 $ successfully closed transparently 2 Broken ecryption reported 18.40 $ by freelancers (aka visible in the final 3 Page title fixed and tested 12.00 $ “management fee”). weekly invoice; the 4 Image compression works 30.88 $ At the moment the customer’s funds 5 Memory leak in Save.rb fixed 23.30 $ fee is $8.00 per are sent directly to 6 Lucene indexing prototyped 77.00 $ microtask. The freelancers without 7 Integration test added 98.70 $ management fee any markup. ... usually equals to 278 SVG reformatted and tested 54.90 $ 25% of what is paid 279 Broken build fixed 24.60 $ to freelancers. --- Total: ($32,768) Management fee: ($8,918) Deposit: $18,900 Balance: ($22,786) Why Evolutionary Transition Is Hard?

Bureaucracy Centralization Envy Freelancers are running away from corporate Freelancers don’t want to be attached to one Full-timers often see freelancers as someone structures, offices, bosses, management company—this is the corner stone of their who does nothing, sit at the beach with a layers, status meetings, and, of course, philosophy. They want to change companies, laptop, and makes two times more. Even bureaucracy. They are looking for projects projects, and countries regularly. They want though this popular misconception is hardly and teams with new rules of life, where they to have the freedom of chosing who to work ever true, full-time employees may get can contribute with a new level of for. If there is only one employer, they turn jealous when they have to work in the same satisfaction. They are not enthusiastic about from freelancers into remote workers on project with freelancers. This creates hybrid models, where freelancers work payroll, which is a completely different unnecessary tension between them, which together with full-time employees and the game. Freelancers enjoy being part of a often leads to quality and performance issues former are treated as second-class citizens. decentralized economy, where projects are of the entire project. It is better to fully Instead, they want to have their own temporary and well-paid. isolate freelance projects from in-house territory, where the freedom of freelance is full-time ones. truly celebrated. The future of software development will certainly depend on freelancers working remotely. The question is who will be able to find a way to manage them effectively. Zerocracy is doing it already. The Evolution of Software Development:

2016 Zerocracy

2010 XDSD 2010 Toptal

2003 RUP 2001 Agile 2001 Crossover 1999 XP 1999 Elance/oDesk/Upwork 1995 Scrum 1993 MSF 1993 EPAM Systems 1991 RAD 1989 PRINCE2 1989 Accenture 1987 PMBOK

1982 CASE 1980 V-Model

1975 Wipro

1970 Waterfall 1970 Capgemini

eXtremely Distributed Software Development (XDSD) methodology was invented by Yegor Bugayenko in 2010. Six years later he founded Zerocracy in order to apply XDSD to the growing market of freelancers. What Are the Next Steps?

Train Hire Integrate The existing in-house team has to be trained Even though there are many freelancers Most likely the existing software team has in order to understand how to work in a already registered in Zerocracy, each new some tools (like Jira), which are used for micro-tasking mode and effectively manage project requires its specific expertise and its project management, metrics collecting, freelancers; even if the team is mature own set of skills; the team of freelancers has human resource management, and so on; it enough, this may take from a few weeks up to be assembled, which may take from a few will be required to integrate Zerocracy web to a few months, since the methodology is days to a few weeks, depending on the software with them; the entire platform is very different from what full-time rareness of the required skills. open source and actively supported both by programmers are used to. the core team of Zerocracy and the Deploy community of volunteering contributors, Scope The quality bar in properly managed which guarantees that the integration will go Small sub-modules are the perfect freelance projects is much higher than what smoothly in most cases. candidates for initial projects to outsource to co-located and full-time teams usually have; the teams of freelancers; they have to be continuous delivery, strict static analysis, Benchmark identified, isolated, specified and budgeted; unit and integration testing, automated Cost, quality, and performance metrics of a each project will have to have a dedicated stress and load testing, mandatory peer team of freelancers are very different from “product owner” with strong enough reviews, and so on; all of that has to be what traditional full-time teams are technical expertise to understand the deployed and configured. prepared to observe; that’s why it will take outcome of the software team. time to get used to new results and adopt existing KPIs and management indicators. Twitter Blog

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555 Bryant Str, Ste 470 Palo Alto, CA 94301 408.692.4742 [email protected]

0.18.0 September 16, 2020