The attack of the killer online clones: how to keep ahead

The availability of online services exchanges has been changing the nature of the online development business for a couple of years. Over two years ago in a blog post titled The rise of online services exchanges I described how sites such as elance.com, guru.com, rentacoder.com, and getafreelancer.com were globalizing services and tech development, and rapidly commoditizing fees to get work done.
Today Techcrunch has written about someone in Turkey who is asking on getafreelancer.com for a clone of Tangler.com, and is willing to pay $1500 for it. In an interesting coincidence, I caught up with Martin Wells, CEO of Tangler, at an event at Stanford University on Thursday evening, and we were talking about the online service exchanges, though more with a bent to getting work done.
Daniel on DRM finds other people looking for clones of Digg, eBay, Twitter and other leading online sites. I’m surprised that this is seen as noteworthy. None of this is new. Well over a year ago I saw over a dozen requests for Digg clones on Rentacoder. Has this resulted in the demise of Digg? Hardly. There are a few factors at play here.
The first is what the commentators today have focused on: the bidders are rather unlikely to create a worthwhile clone of these online sites for what they are getting paid. It shouldn’t be too hard to emulate a fairly simple site like Digg, though the rich functionality of Tangler is a bit more of a handful. Certainly you can’t expect robust, quality code at this kind of price.

However it is possible to get coders to do good work at very low prices. It’s worth noting that Guy Kawasaki paid just $4,500 to get his hit site Truemors developed. I don’t doubt that if he had the right coders in Pakistan or Egypt doing the job, it could have been done for well under $1,000. Just because someone is based in exotic locations and is willing to work for low fees doesn’t mean they aren’t extremely competent. A usual hourly rate is $8, though for larger projects you can certainly expect effective rates of under $5. Of course you do have to be careful in selecting your provider – not all bidders are good.
Certainly, it is a complete reality that it is possible to duplicate the functionality of online sites at a low cost. Innovation and design are the most important factors in a sites’ success, and like it or not, even quality coding is becoming commoditized for other than leading edge applications. Which means that marketing, positioning, branding, relationships, and network effects are even more important than before. That is where success lies. Expecting to win through coding quality is a very tough call. Continuous innovation is essential in a world in which anything can be copied quickly and inexpensively.
My next book will cover, among other issues, using online service exchanges effectively. More on this soon.