If I were an investor in Upwork, I would LOVE It. Allegedly they made over $1 Billion last year. Illion with a B! I mean, the employee side of my personality even wants to move to Mountain View tomorrow and get a job there as I think it would be a great opportunity and the founder has a fundamentally decent mission. As a business owner, Upwork has been good to me and allowed me to connect with new people. As a freelancer, Upwork has allowed me to connect with new clients.
However, as a business owner and freelancer, Upwork is taking too much, as evidenced by their recent fee schedule change. Like any young company, Upwork has much to learn and I doubt this will be their first iteration. More precisely, Upwork needs to work on the following: to those who much is given, much is required. Upwork must embrace corporate responsibility for creating an environment to serve and not to alienate the very community they created.
First and foremost, freelancers should not pay a fee for using a platform. They are there to work, and taking this a step further, good freelancers should be rewarded, not penalized! Similar to the freelancers, business owners should be rewarded for providing work to others. However, the freemium model doesn’t always work in the real world. There is no free lunch – Upwork or any similar platform must make enough money to cover their costs and make a profit so that they can continue to provide a service or that service will cease to exist. But service is an unusual term here – because Upwork provides a platform, not necessarily a service. Or at least a “service” in the old-fashioned sense of the word. Although they are starting to migrate beyond this, Upwork is primarily a DIY platform and always has been.
Simply put, a flat 20% tax for smaller projects is much too high. In fact, taxation normally works the opposite way, the more you make the more you pay. However, neither method works in this scenario. Charging a 20% placement fee might work in the high touch recruiting world but it doesn’t work for an online platform, especially with other platform options coming down the pike. On Upwork, you select your own talent and take a risk on someone you don’t know for what may be a make or break project for your business. As a freelancer, you stake your reputational rating on the goodwill and sometimes mercy of the person who hires you. Upwork does incur a cost, and probably a significant one, to act as an escrow agent and transfer money to countries all over the world, but I wager that something similar could be achieved while charging a smaller transaction fee. As new players come to the market to challenge Upwork, I think we will see what that transaction fee looks like and who will ending up footing the bill.
On a separate but related note, and a topic that very skilled developers and designers are talking about privately, is that Upwork is starting to experience the freelancer.com and fivrr syndrome, where the market is becoming dilutive as to skills. Where everyone is a full-stack developer and where a certain few drive down the price for work on jobs they simply cannot handle. Additionally, too many startups, individuals and companies are coming in and creating “fake” jobs and projects that they have no intention of filling.
My answer to this problem: There has to be a better way to connect skilled workers with the businesses who need them. At Skilled Shift, I want to connect very talented people. I want to provide access to premium clients. I want to create long-term working relationships all over the globe that promote the #futureofwork. We all do better and learn more when we work together. We can create the future. This may be a lofty or utopian way of thinking about the #futureofwork, but it is within our reach and that has to be our goal for creating any new company. Skilled Shift aims create a global niche that makes the world feel smaller. I have experienced both sides of this equation personally: as a freelancer and as a business owner and I want to provide a platform and a service that is responsibly profitable and that provides security for the community that helped build it. I would love feedback from the very population that we aim to serve. Let’s create the next great platform.
In the famous words of Jerry Maguire: Who’s coming with me? Now I need to go find my Dorothy Boyd.