I love to create jobs for people!
What is your background and what was your motivation to come up with the business model for Upwork?
First of all, just to clarify, I am not the founder of the company. In the beginning, there were two companies that were founded by two guys from Greece. One of them lived in Greece and the other in Silicon Valley. They were both engineers and they both wanted to work together. Yet every time they both applied to a company, the guy who was based in Greece would not get the job whereas the guy based in Silicon Valley was accepted. So they came up with the idea to create a software program that helps companies work with a distributed model. In early 2014, they merged the two companies and strived to achieve precisely that goal.
With regards to me, I have been in tech all my life. After graduating from Stanford I got my first job in 1998. Later on, I joined PayPal Europe to launch PayPal and friends. After that I moved back to the US and ran one of the product teams there. PayPal used to have only a few hundred people when I joined. When I left, it had around 20.000 people. I decided to leave because I simply wanted to go back to something smaller. So I joined an early stage mobile payments company which we were able to grow very well and ended up in selling it to PayPal. I rejoined PayPal for a few months to coordinate the post-merger integration. During that time, I heard about a company which is today called Upwork. At the time, it was in fact a very big customer of PayPal . So I joined them in 2012. Not as the CEO but as the head of product and engineering. When it came to merging the two companies, both CEOs stepped down and asked me to become the new CEO of the merged companies. So in a nutshell, that’s what I’ve been up to during the past 15 years. (laughing)
What was your motivation to join Upwork? What was it about the company that you found so fascinating?
Well, I think it is a company which has a real social purpose. You have a lot of companies in Silicon Valley that either have a specific skillset or a social purpose, yet there are very few that have both. Upwork’s mission is to create jobs for people, or in other words: to help people to find jobs that they would normally most likely not be able to apply for because they don’t live in the right location. More and more meaningful and high-paying jobs are located in Berlin, London, New York, San Francisco or Paris, but not everybody lives there. And there are thousands of qualified people who either can’t move to the city or simply don’t want to move to one of these cities. These are the kinds of people we are helping – people who might be based in the middle of the country to find jobs in the bigger cities that are more interesting and better paying, while, at the same time, allowing them to stay in their local community. That means these people are able to take care of their elderly parents, raise their children or be closer to their spouse. Providing such an opportunity to a large group of people was very inspiring for me. In addition to that, I met the Upwork’s team of people and was instantly amazed by how skillful and successful they are.
What would you say is so special about the Silicon Valley?
Mostly, it is the large concentration of people who have lots of experience. It is a network of people who could be your potential mentor, your employees, your boss, your management team or your customers. And in my opinion this is the thing which is still very hard to find anywhere else on the planet. Today, European tech industries are probably where Silicon Valley was 30 years ago. That means there are a lot of young talented people in Europe who are now making the same mistakes that I made 20 years ago because they don’t have the sort of mentor that you would find in the Silicon Valley. For example, today you can basically start a business from anywhere - all the tools, methods and guidelines about how things work in Silicon Valley are available. But what you do not have when you are outside of Silicon Valley is the easy access to all those inspiring and experienced people by just calling them up to getting some free advice. And by the way, people here are more than happy to give advice as long as you aren’t overbearing and don’t get on their nerves.
When we visited Upwork with a group of Deutsche Telekom managers we encountered a distinct culture of innovation. There seems to be a big difference when compared to German tech corporations. What would you say is the biggest difference?
That’s basically true, but you are comparing tech companies from Silicon Valley to traditional companies in Europe. There are also very large traditional companies in California or elsewhere in the US. So there might not be as much of a difference when comparing these companies with each other. As I already said, nowadays all the tools and the knowledge is fully available outside of Silicon Valley. But again, to me the biggest difference is the network that is only available here. Sitting down for a face-to-face meeting with other successful entrepreneurs and having a chat or a coffee to network and learn from one another is something which makes this place so special and unique.
Let’s deep-dive into some questions regarding your experience with future work and platform economy. Nowadays we see plenty of tech trends, and everybody is talking about today’s effects of robotics and AI on the way we work together. What is your view on this development, and in particular on how Upwork contributes to it?
For me, AI and robots don’t make a big difference today and in the short term. In the long run, somewhere between 25 and 250 years from now, it is clear that machines will be better at just about everything that humans are capable of doing today. At Upwork, we do a lot of AI ourselves in two ways: For starters, Upwork itself is a huge AI machine. We match freelancers with jobs and we replace the human recruiter with an automated process. What’s more, we help other companies build their AI by providing people who do basic AI tasks such as tagging.
Regarding platform economy, Upwork is kind of continuing what eBay did in the late 1990s – that is, making the world much more efficient. In the time before eBay, if you wanted to sell something, you had to find a dedicated buyer for your product, which was very time consuming. Upwork now does the same thing for work. Freelancers get their business mostly by networking or through time-consuming business development, and usually with local clients. By linking clients with freelancers and vice versa, we are making things easier and more efficient for both sides.
As CEO of Upwork, the largest website for freelancers, and co-chair of the World Economic Forum Council on the future of education, gender and work, Stéphane is in a unique position to share with us his view of future trends, from the global forces affecting the labour market and the rise of the freelance economy to the way companies are changing the composition of their teams and the direction education should take. An expert in innovation in staffing and remote work, Stéphane led a global team of engineers in his role as Senior Vice President of Engineering at Upwork before being promoted to CEO. In his book Hire Fast & Build Things he shows in detail how freelancers should be used to increase the performance of companies. Stéphane holds an MBA from INSEA, a Master's degree in Computer Science from Stanford University and a BS degree from Ecole Polytechnique, France.
Just to further clarify your business model, one more question: If I wanted to hire a whole team for a specific task, for example to develop a sales software program, would Upwork help me with recruiting and building the entire team? Does your platform also include social components such as different skillsets or diversity in a team? Does your software already have the AI to form high-performing and highly efficient teams?
The short answer: we don’t do it as well as we need to. In the real world, there are three different ways in which Upwork is used today:
- Our clients are looking for an experienced specialist who can deal with a certain task. In this case, they would hire an experienced project manager via Upwork who gets the work done.
- In case of very complex tasks, such as building a mobile app from scratch, you might hire a whole agency/consulting company via Upwork which then gets the job done with their own internal project teams.
- Last but not least, we’ve got an internal team within Upwork called talent services. They offer human-based recruiting functions to assist our clients in finding the right people for a certain task. They also have access to some internal tools which are not offered to the public. With these tools, they can identify networks between various listed freelancers who, for example, have already worked together on a project. In this way, they can form teams who have already worked together and thus can get the job done faster.
Does your business model and the way it has development have any influence on the consulting business? Do we really need consulting firms anymore, especially when it comes to project management?
Do we need consulting anymore? Absolutely! Maybe more than ever before. The world is changing fast. All companies have to figure out what the future looks like and how they can adapt to it. As a result, there will be a higher need for consultancies in the future than there has been in the past. In my view, the real question is this: since we will need consultants in the future, will we still need companies? The consultant gets billed at maybe 200$ per hour and the consulting firm is taking a lot of that value. So back to my eBay analogy: isn’t it much more efficient to hire the consultant directly instead of paying a high fee to McKinsey or BCG? This applies not only for strategic consulting firms but also for law, marketing and finance/accounting consulting firms. A lot of these companies are struggling right now because their clients realize that they can get the same work done by working with freelancers. The only thing that will make big consulting companies legitimate in the future is the seal of approval. By involving big consulting firms, you can tell your boss that the decision was “blessed” by McKinsey or BCG (laughing).
What is your vision of the future for work and organizations?
Take a look at the transformation of the movie industry. Before WWII, most of the jobs in Hollywood were standardized, such as doing costumes, makeup or special effects. There were only a handful of specialized jobs. If you fast forward to today, there are, apart from a few administrative workers, mostly freelancers employed in the movie industry because it is much more cost efficient. In my view, we will see more and more freelancers in organizations and less internal staff. Having more freelancers will also make you more agile, which is always a plus for your investors. More and more organizations are questioning how they can leverage freelancers to be more successful in fast changing markets. Also, hierarchies will change from only distributing information up and down to distributing it much more horizontally. This horizontal, or project-based, information flow will be the enabler for using a lot more freelancers in the future.
How do you ensure high quality of your freelancers at Upwork?
First of all, you can think of Upwork on the freelancer’s side as a huge funnel of admissions, just like as if you were applying to a university. Every day, there are something like 15.000 people who sign up on our website as freelancers. But only two percent of them get a job. So the first thing is that we select the first two percent among the 15.000. About 10 percent of those initial 2 percent become what we call top rated. These are the people who do most of the projects and deliver the best quality. In addition to that, there is a rating system which enables both freelancer and client to rate each other when the job is done.
How is Upwork organized? Do you employ only freelancers, or do you also have an external workforce ?
There are about 1000 people working at Upwork. 250 of them are internal employees and 750 are external freelancers. We have freelancers in 400 different cities. So literally people from all over the world. People who build our websites, do the analytics in terms of what is working or not working, customer support or handling compliance and laws in terms of payments. As you can see, we have a very distributed team. And by the way, 80-90% of our freelancers work from home.
How do you ensure that you remain attractive for talented internal workforce and external applicants?
Well, we always only act in one way. And that is, we want to hire the best people we can find, irrespectively of where they live. If they happen to live in Silicon Valley – great, we hire them as internal employees. But if they happen to live, for example, in Texas or Shanghai, that is also fine with us and we hire them as external freelancers. This strategy allows us as a company to be attractive to all talent all over the world instead of just competing for talented people who live close by. In general, you could say that talent is much more distributed than jobs - and companies have to adapt to this. In addition, it might be easier to hire talented people from the middle of nowhere because there, you are not competing against Google, Facebook or other companies. People you find there are also often more motivated and happy to get a job which is much more meaningful for them than working for a small local company.
What role does HR play at Upwork, and what are its main tasks?
Well, I would say our HR department does what a traditional HR team does - plus a little more. Here are the things that I would add:
- Our HR department consults our managers regarding who they should hire, where these talents are located and, based on that, figure out what the best contract model is to employ them.
- Since we are a HR company, our HR department is also deeply involved in product strategy and thought leadership. They speak at a lot of events, talking about the future of human resources.
How would you describe the Upwork culture in terms of a HR perspective?
We are mostly driven by the mission of our business. A lot of people are getting hired based on their interest for our mission. That means we do not want to hire people who are only looking for a better paying job; we want to hire people who truly believe in what we do and want to have a positive impact. In addition, we have four company core values. And during the application process we test candidates on these values to make sure that they are going to be successful here. Last but not least, there is the Silicon Valley based culture. People here are expected to come up with their own ideas and be self-motivated. If you really want to keep people engaged, you have to make sure that you hire people who are interested in the business and not only money.
What is Upwork’s strategy with regards to the German and European market? How are you dealing with regulatory issues in other countries?
I would say we love complex regulations because it presents a certain challenge. We automate the compliance workflow. We also work closely together with employment councils in a lot of countries in order to reduce the general onboarding time. But the reason why we don’t spend as much time and invest as much money there as we probably should is the language. Traditionally, we are an English language website and US-based businesses are not really interested in hiring somebody in Greece, Russia, the Philippines or South Africa because everybody speaks English. The challenge with your business in France or Germany and finding people who speak French and German brings you back to being limited to the local job market. That does not mean that it is impossible – we do business in Europe, yet the opportunities there are much smaller. For example, the German-to-German market is not profitable enough for us to refinance the high investment and costs that a platform like Upwork requires.
When you look back on the history of Upwork, what was your biggest success within the company?
My biggest success happens every day – I create jobs for people. I could name hundreds of different things regarding our profitability or growth. But creating jobs for a lot of people out there is certainly my biggest success.
Great! Thank you so much for sharing these insights!