At SXSW, one of the more hotly debated panels was “Is Spec Work Evil?” with Jeffrey Kalmikoff from Threadless facing off (“…in this corner”) against Mike Samson of CrowdSpring (“..weighing in at…”).

The room was pretty full, probably 600-800 people, and there was clearly a line drawn between those for CrowdSpring and those for Threadless.

“Lets lay out some ground rules for this highly emotional debate…” Jeff Howe of Wired began.

The Companies

Threadless is an interesting company. Its truly a retail/ecommerce site driven by a community of designers (about 900,000 members).

The members of the Threadless community seem to break into three groups: The Designers, the Interactors, and Purchasers. Sometimes, a member will be part of multiple groups, but there are many that purchase without ever submitting or critiquing a design (like me) or vice versa, some that never buy, but interact consistently within the community.

Truthfully, it makes sense. Jake, Jacob and Jeffrey are all designers. They started and built the company as designers. I would almost be willing to guess that if those three werent as intelligent and saavy as they are, the business would have never gone far, because for designers, design always trumps business.

If you were to order the three parts of Threadless (the business, the community and the designers), I would bet that internally, its viewed as: The community –> the designers –> the business.

CrowdSpring is not a company. It is a marketplace, and marketplaces have a distinct operational makeup.

Competition reigns. Price points are driven by buyer demand and competitive sellers. The success of the marketplace rests on having the right number of buyers and sellers to ensure that the equilibrium pricing structure is exactly right to grow the marketplace (attract sellers and buyers) and provide enough in fees to the “marketplace manager” (in this case, CrowdSpring).

Does community matter for a marketplace? In its most basic form (such as a forum), yes. Low levels of collaboration create a false sense of traditional community and have the potential for increasing the value of the seller’s product. Which, helps drive up price points (and increases fees collected). Additionally, in order to have a thriving marketplace, sellers must either not directly compete or be driven by competition.(Basically, the best type of designer for CrowdSpring is a competitive one.)

Think of a farmers market. Or a busy street market. Vendors tend to either be different enough to exist side-by-side effectively, or they understand the importance of healthy competition to survive. In some cases, where the competiting vendors are selling a widely available product (like design work–yes, not GOOD design), competition can effectively drive one (or both) vendor(s) out of business.

A real fear in a marketplace is the concept of price colusion. While CrowdSpring clearly wants to attract a specific type of designer–one who is definately competitive by nature, and probably in need of work–it cannot have a community that agrees in private on what to charge for different types of products. This can drive artifical price inflation and drive off buyers. In order for CrowdSpring’s community to truly be effective for CrowdSpring, it has to be controlled (perhaps just monitored) to ensure that price collusion doesnt exist and that it fosters competition.

Finally, Ross Kimbarovsky and Mike Samson are business guys, not designers. They saw an inefficiency in the market, and decided to build a business around it. They are not community people (Ross is a former IP Lawyer and Mike is a former film producer), nor are they designers. If I were to bet how they view Crowdspring, I would guess its business –> buyers/sellers –> community.

The Argument

Here is the basic argument (at least how I see it):

  1. CrowdSpring’s business model is spec work (defined as: “Short for “speculation.” Work done “on spec” is done for no guaranteed remuneration, in hope of winning the job, campaign or account in question.”
  2. Spec Work is Evil
  3. Therefore, CrowdSpring is Evil.

How does that make you feel?

Designers hate spec work. There are a million posts out there about how spec work is destroying the graphic and web design industry.

Spec work exists in all service-type industries: public relations, marketing, acting and others have some type of spec involved in the attraction and landing of a job.

Because spec work creates such an emotional response amougst the design community, the argument has shifted from the efficiacy of having a marketplace for designers and companies to the moral argument around spec work.

Ross and Mike have artfully made the argument an emotional one not an intellectual one.

What are designers arguing? The merits of spec work not the effect of a efficent marketplace on the design profession.

Sure CrowdSpring is associated with spec work, and therefore some of the negative feelings around spec work land on them, but the reality is that the emotions surrounding spec work DO NOT MATERIALLY EFFECT THEIR MARKETPLACE.

They could be a marketplace for scrap metal. It doesnt matter. The buyers are looking for low cost design, and the sellers (designers) are willing to do it, REGARDLESS OF WHAT ITS CALLED. All that matters to CrowdSpring is that there is deal flow in their marketplace to drive the exchange of money so that they can collect fees. Thats the business.

(During the panel, Mike said that CrowdSpring has “paid out” close to $1,000,000 to their sellers. The truth is, they arent “paying out.” CrowdSpring places the buyers money in escrow (basically in a bank account), and then provides the buyer’s money to the designer selected for the job (less 15%). Threadless, on the other hand, writes a check from the company to the designer who’s design is selected for printing. Its an important distinction, and a further example of the futile effort of debating a company vs. a marketplace.)

The Winner

In this case, its clearly CrowdSpring.

1) They have obsficated the debate of the effect of an efficent marketplace on the design profession by getting designers to debate the merits of spec work (which in the greater scheme is a useless argument driven entirely by emotion).

2) They have been able to attach themselves to Threadless’ brand, and in many cases be spoken about equally.

Its no surprise that Ross, a former IP lawyer has skillfully driven the conversation away from where the discussion should be (that marketplaces often drive down prices and quality), and allows it to build around a emotional issue (guess who sponsored the Is Spec Work Evil panel? Not David Carson.)

For Threadless, or other designer driven communities, as long as the debate is focused on spec work, you’ve lost before you’ve started. Clearly, Threadless benefits designers. Clearly, CrowdSpring has shown that there was a hole in the market.

Its like debating Sam Flores vs. frozen fish.

** If you dont know who Sam Flores is, I am very, very sad.

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