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It’s been a little over two years since I stopped working on Late Labs and eventually, quietly, shut it down. The business model didn’t end up working and the changes we made to the company brought the community’s activity down to a trickle. It felt alright to send out a brief email and put up a new landing page that said we aren’t opperating any more.

But, even years later, I’m regularly getting the question “What happened to Late Labs?”. So I thought it might be time to put some words to ‘paper’ and share my experience, along with some things I learned, in hopes that it might help other people interested in working on similar concepts.

Here are some of the most common questions I get >>

1. So why did you decide to close it down? Did it have to do with getting the startup off the ground?

I don’t think it had to do with getting the startup off the ground. We did everything we could to keep the community very developer focused, free from spam and recruiters, and turned away anyone that looked like they just wanted some free labor. The focus was to connect engineers, that wanted to work on a side project, with startups that were making a concerted full time effort for success. Mutual respect and delivery on promises from both sides was a must, that’s really it.

We made good strides toward that vision with quite a bit of traction in the developer community, via signups and engagement, and plenty of startups (from idea phase all the way up to A round funded) pitching us projects. The problem was that the business model didn’t make short term revenues and, due to securities laws in the US, we couldn’t convince any VCs to invest. The short version for why they wouldn’t invest was because we had to have a very weird corporate structure to avoid double taxation upon any liquidation event, and because we had that structure it forced the double taxation on the VCs. We grinded out pitches all over the valley and were being advised pro bono by an awesome startup lawyer, Yokum Taku from WSGR, on how to try and navigate the complexity. In the end we weren’t able to figure out a model that made sense for VC investment.

2. What kind of developers did you guys attract? Was their involvement sustainable?

We had around 8000 developers signup and their skill levels ran the full gambit of Jr to Sr across all industries and all over the world. There was reasonable engagement when we announced new projects and new signups continued to come in at a steady flow. Also, we weren’t lacking companies that wanted access to our pool of developers.

I think their involvement would have been sustainable if we hadn’t changed the business model. In the end I was broke as a joke (not looking for sympathy or anything, it’s part of the risk and I willingly took it), and when it became apparent that we weren’t going to be able to raise VC funds we had to make short term revenue. We tested out a bunch of different ideas but in the end we didn’t think of any business models that resonated with the community.

3. Did you try a blend of short term and long term incentives? For example: Equity + Low Rate + a portion payable in 4 months?

We played around with a bunch of different ideas, but they never got very good feedback from the community. I think the equity play (‘code for equity’) is what really resonated with people… and I think there may still be something there given the right team and timeline. That said, securities are very complex and once you cross country borders things get even more difficult. There were far too many things I didn’t know I didn’t know when I got started, but I learned a ton.

Hope this is helpful. Feel free to leave comments and hit me up to chat over a beer.