This is the post I shared after closing down BuildStream, which had grown into a blue-collar temp labor marketplace in the UK (after many pivots and experiments)
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We'd tried a dozen angles on recruitment in construction and energy - including white-collar, permanent, contract, SaaS, and more.
Placing blue-collar temp workers with SMBs resulted in the fastest growth we’d ever seen.
We provided financing through a complicated but necessary arrangement with a third party.
Our vision was that the platform and scale would unlock the model becoming more profitable in the long term.
Enter the Barons
A Baron is a reliable guy paid a bit more to organize the workers. They’ll work “on the tools” themselves for part of the day and take responsibility for the day to day hassle on the ground.
A typical worker cannot trick a Baron.
The Baron has likely seen, participated in, or even originated all the possible ways that workers might try to take advantage, so if you work through a baron, the model is “a fair days’ work for a fair days’ pay”
We loved this and quickly productized it. We built software for Barons to manage their gangs. We raised prices on clients who cared about quality. They paid, because the quality was measurably better, but we shed some clients too.
Scaling it was a problem and fraud emerged.
Barons couldn’t maintain quality beyond 6-8 workers.
There wasn’t enough Barons around to turn this into a real business, and we could not find a way to create more barons reliably and quickly.
The demand side was rotten
Clients were more likely to become problematic on payment because they had a weak network or reputation and couldn’t attract the best workers organically.
Workers required weekly pay, and our customers paid NET-30+, so we were effectively financing their payroll.
When rates went up in 2022, clients stopped paying on time.
Clients were mostly subcontractors who had committed to deliver projects to their end client. This prohibited them from walking off site, so while the market was in a downturn, they still had to complete the work.
Large contractors started bankrupting small suppliers by delaying payment.
We ended up holding the bag more than once.
The supply side was worse
Workers would leave for fifty cents an hour more to someone else up the road and vanish. "Vetted pools" didn't hold, and good workers could randomly become unreliable overnight.
The temp pool in construction is built on people who work through peaks and troughs. Everyone, whether white-collar or blue-collar, experiences these challenges, but the effects showed up clearly and quickly in our world.
If the guy with the supervision cert didn’t turn up, the whole crew had to stand down.
The crew still expected to be paid, and I agree to an extent.
More than one guy called my personal cell and said he was coming to the office with a machete because payroll was late. It wasn’t late, he’d just misunderstood.
Financing was the trap we walked into with our eyes open
When we looked for financing options we were faced with factoring, which is opaque and closed to startups.
B2B financing platforms like Defacto and Aria capped out around $30k for tier-one clients - about a month of labor for five workers. We had 500/m at peak, so it didn’t work.
The moment you use financing as a sales tool, you attract the clients who can't get credit anywhere else. Which is how we ended up holding the bag.
If we did this again I would be more measured, but the world has moved on so much since then, and it’s a space I’m returning my attention to.
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