Dear Student Source Supporters,
In response to questions regarding the current status of Student Source, I wanted to provide an explanation about why the service is no longer available.
To any startup that is considering to start a similar business, please use this information when making your decision on how to best move forward. At the end of this post I included references to similar startups that ran into similar problems.
Student Source was online freelancing for college students. We operated similarly to ODesk.com or ELance.com in that we enabled companies to outsource work projects to freelancers. Our differentiator was that our network was made up entirely of college students. Projects varied widely and include technical, business, and design-based tasks that range in value from $50 - $5,000. After students completed projects, they received payment for their work after Student Source withheld a small commission. At our peak, Student Source had spread to 174 campuses around the United States, including prestigous universities such as Yale and Stanford.
The Decision to Close
During the final months of Student Source, we made several key discoveries about our business model that lead to our decision. First, we discovered that employers often required students to execute work on-site and not virtually. This was opposite to our original goal, which intended for SMBs to hire students remotely and work virtually. When SMBs hired local students, they were viewed by the IRS as W2 employees instead of 1099 independent contractors. Classifying each student as an employee would have radically increased Student Source's operating costs, and provided incentive for employers to pay students directly – bypassing our commission and eliminating our only revenue stream.
Second, Student Source tested a pay-up-front model - similar to a job board. We then discovered that employers are only willing to pay for recruiting services for hard-to-find employees (mid-level and above; not entry-level).
Last and most importantly, we discovered that employers favored Student Source to be a full-service recruiting company, instead of a self-service software tool. It is our belief that employers are too often used to working with high-touch recruiting agencies, and therefore expected a personal contact when using the platform. At that point, Student Source would no longer be providing a software tool, and would instead become a localized small business.
While operating Student Source, our team came across several examples of similar startups. To anyone wanting more information about the key industry players, similar startup companies, or even examples of failed startups; please see the list below:
- TechStars Boston 2009, personally mentored by Brad Feld. TempMine.com saught to replace traditional in-person staffing companies by automating the service and moving it online. They eventually closed for similar reasons to Student Source.
- Launched as an enterprise software tool to replace University recruiting software, their pricepoint ranged from $8,000-$12,000 annually per university. By doing this, they were competing directly with current industry leaders such as Experience.com and NACElink.com. Despite having a superior product, Jobzle closed due to the extremely long sales cycle and difficulty of selling to universities. After closing the company, Jobzle's founders started another company, TeeSpring.com, which as of August 2013, is experiencing extreme success after raising $675,000 in venture funding.
- Raised $12.2M in venture funding, still operating as of August 2013. Offers companies alternative to participating in traditional campus recruiting and job boards. Focused ONLY on engineering and technical students.
- Intern Match
- Intern Match has created a job board specifically for internships. Their current model is to charge employers for job postings - similar to standard job board websites. As of August 2013 they have raised $7.65M in venture funding.
While I encourage any entrepreneur to enter this industry, I also caution you.Please use this post to increase your chance of success. And as always, feel free to reach out to me.