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Outsourcing: Ian Ippolito, Founder and CEO of vWorker (Part 1)

Posted on Wednesday, Mar 7th 2012

Outsourcing websites abound on the Internet, and each one has its own unique spin on the process. And vWorker, once known as Rent-A-Coder, does, too. A global outsourcing company, vWorker or “virtual worker” has nearly 175,000 employers hiring and managing close to 360,000 virtual workers every day.

Sramana Mitra: Hi Ian. Let’s start with some background on how you started this company. What do you do in vWorker? Give us some context, and then we’ll dig into how you’ve done what you’ve done.

Ian Ippolito: OK. How far back to you want me to go? Actually, vWorker was started on the back of another company. Do you want me to talk a little about that?

SM: Yes, sure.

II: OK. I was computer consultant, like, a programmer. As a programmer, I was always looking for opportunities to start my own business. I always wanted to be an entrepreneur and have my own company. Working in the computer industry, I saw lots of opportunities. One of them – this was back in the late ‘90s when the Internet was just coming out. I saw the Internet was just coming out and thought, this is probably going to be very big, but there’s no place out there right now where programmers can share source code, which is the building blocks of programs. There’s no place for them to share it. So, I created a site called Planet Source Code, and that’s what it did. It was the first site that allowed programmers to do this. What it would do is programmers could then go and instead of starting from scratch, all of a sudden, they had all these source code building blocks, and they could create their programs much faster.

That was the business I created before vWorker. It was a very good business. Back in those days, people would pay you big bucks to advertise on your site. So, Planet Source Code was getting over a million people a month, and it was showing ads.

SM: How did you sell the ads? Did you have to go and sell the ads to people?

II: I sold some myself, and I also had a company, a third-party representative, who would go out and try and find advertisers. So, I did both. It was mostly that company, though. It brought in the big ones. At that time, people were paying a lot of money just to have ads on sites. They didn’t really understand how the Internet worked. They just knew that they had to be out there.

SM: That has completely changed now.

II: Yes, it has. People have gotten a lot smarter. Back then, they would pay 40 CPM (cost per thousand), which means $40 to show an ad, and it was a really small ad — it was like a 468 x 60 ad – 1,000 times.

SM: To get $40 CPM on ad pricing is incredibly difficult. To get $4 CPM is difficult already.

II: Oh, yes. If you do $4 today, you’re doing really good. And the companies were fighting for the spaces to advertise. There was Microsoft and Oracle … there were big companies, and there were small companies.

SM: How much money did you make when you had this one million visitors a month kind of site?

II: It was a lot. I can’t remember the exact numbers. It was just me, and I had one employee. So, it was the two of us who ran this whole site. We did have some big expenses. Back then, you didn’t have broadband Internet, so we had to purchase these T1 lines. I had these leases.

SM: T1 is very expensive.

II: Yes, very expensive. Each T1 was about $1,500 a month. I think I had about $6,000 a month just in those. But it was probably bringing probably $10,000 to $11,000 a month, something like that.

SM: It plenty covered your costs and left lots of profits.

II: Yes, exactly. So, it did well.

SM: How long did this go on?

II: At its peak, it went on for about two and a half years. It ended right around 2001, which was the dot com crash. The dot com crash occurred, and then all of a sudden, these people who had bought all these expensive ads were putting off paying their bills. So, they were like, oh, can we pay you next month? And be like, oh, OK, I guess. And then they’d keep putting it off and putting it off. Eventually, I realized that a bunch of these companies didn’t have any money. They’d spent money they didn’t really have, a bunch of borrowed money. And they weren’t making any money. When the crash came, a whole bunch of people folded. I lost almost all of the advertisers. A whole bunch of them had not paid me. It was a pretty bad situation. I had those monthly bills, paying $5,000 to $6,000 a month and no revenues coming in. It was a pretty scary situation.

So, I was like, well, I need to do something else here, or in a few months, there’s going to be big trouble. That’s when I was like, I have this resource. I have a million people a month coming to this site. They’re valuable in some way. Even if people aren’t going to pay for it, they’re valuable. Maybe I can take advantage of that in some way. The thing that came right to mind was the fact that 99% of the time, so many times, I had to turn down these programmers when they would tell me, “Hey, Ian, you’re the owner of Planet Source Code, could you create this program for me? Could you write this for me? Could you tweak this, or could you change this?” There were too many of them, and I couldn’t do them. I had to turn them down. After receiving all those emails and turning down all those people, I realized there’s definitely a need for people to have work done quickly and easily remotely. I thought, if I could just do it in a way that was safe, where you wouldn’t mind hiring someone who you don’t know, then I thought that it would have a really good chance of being successful. That’s kind of vWorker was started. Back then it was called Rent-A-Coder because it was just programmers.

This segment is part 1 in the series : Outsourcing: Ian Ippolito, Founder and CEO of vWorker
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