Mac 512k tanks. Deja vu all over again

Freelancer listed with a promise to make investors rich from the gig economy Their shares initially soared, briefly valuing the business at $1 billion. In September they slipped below their 50¢ IPO price. Last week the stock closed at 46¢, equaling its lowest level since listing.

This reminded me of a previous attempt to build a business model by undercutting design fees.

The desktop publishing revolution

In 1985 the desktop revolution threatened to drive designers out of business. At that time we had bought our first 512k Mac and dot matrix printer ($5,000 worth- $11,500 in today’s dollars). We bought a copy of Aldus Pagemaker and we were set.

We were renting a small two person office in a building on Swanson St, Melbourne. Over the hall from us was a secretarial service. This was actually a one woman typing service – let’s call her Joan. She took in dictated documents and typed them up.

Joan had asked us to quote some design work for one of her clients. When we tendered our estimate she confidently told us we were far too expensive and no one would pay that.

Joan then decided she would go into desktop publishing. She bought a PC and a copy of Ventura, a DTP program. She announced she would drive us out of business by charging lower rates.

Within 12 months she had moved back to working from her spare bedroom; we moved to a larger office because we had employed two designers.

It’s all about the ideas

We didn’t succumb to the threat of DTP because it was just an attempt to commoditise one small part of what we did. Even in those days we charged substantial concept fees that formed the basis of our financial success.

Freelancer has declined because they tried to commoditise design. The reported reason for their decline is the reduction in completed jobs; read dissatisfied clients.

I know many people who use the gig economy placement services. They proudly state that they had 4 or 5 hours work done for $50. However they cry fowl when their children are only paid $15 per hour at Macca’s.

The take way

The likes of Freelancer will pack up and move back to their spare bedroom eventually. Their business model is as flawed as was all the DTP bureaus that were going to put designers out of business.

Greg Branson

Contact Greg Branson if you would like to learn more about the many programs the DBC offers.

Greg’s passion is the research and development of methods that improve design management and the role of design in business.

Greg has developed The Design Business School to help owners manage their business better along with showing designers how to get more involved in the studio and develop their career path. Contact Greg.

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