Web Startup Tactics: Fighting Fraud, Fakes And Freeloaders

Even if you have the technical skills to create a site, creating a business online is a challenging task. Three successful web business builders share their thoughts on avoiding online fraud, copycat sites, lazy workers and other roadblocks.

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A panel event last week in Sydney featured three web business development leaders discussing tactics for building and expanding a web-based business. David Rohrsheim, the Sydney general manager for car-sharing service Uber; Angela D’Alton, Australian community manager for online selling community Etsy; and Gary Swart, CEO for online workplace oDesk, shared their thoughts. Here are some of the highlights.

Ensure the quality of your contributors Etsy, oDesk and Uber all rely on third-parties, so vetting those contributors is vital. Uber interviews all drivers for its cars individually. “If there’s a problem, it’s our name that gets damaged,” said Rohrsheim. On oDesk, workers can’t erase any bad feedback. “With three million contractors, we can afford to be strict,” said Swart. “Our business is about repeat engagement.”

Make your charges realistic. Etsy charges 20 cents per listing plus a 3.5 per cent levy on the final fee. Uber plans to continue its practice of increasing prices at key events, but remains competitive with existing hire care services.

Be alert for copycats. While the three companies at the forum all enjoy leadership positions in their spaces, they are very aware of the potential for competitors, even if their public stance suggests it’s not an issue. “Most work isn’t getting done online,” said Swart. “There’s enough pie for everyone. What we tend to do is focus on our customer and not the competition. It helps because we’re large and fast growing and have good liquidity.”

“We’ve got a bit more of a fight on our hands,” said Uber’s Rohrsheim. “Because it is a truly local marketplace that can’t be delivered from overseas, someone else could do well. That local scale matters, and we respond to that in two ways. One is that we’re launching everywhere so no-one gets ahead of us. The other is to build the infrastructure. In our business its easy to underestimate how much there is beyond the app, which some people have tried to clone.”

Make sure fraud isn’t an issue. “With oDesk, we had to build a global banking platform to receive and pay money and that is pretty complex,” Swart said. “In addition to fraud there are regulatory issues. That becomes IP for us. When you have money coming in and going out, you have to worry about fraud and you have to stay half a step ahead.”

“Our margins are pretty small,” added Rohrsheim. “If anything goes wrong, Uber pays the driver anyway.” That said, a service based on physical delivery does have some advantages: “To commit a fraud in an Uber, you have to actually get in a car.”