global economy

Beerud Sheth on Freelancing Platforms, The Global Gig Economy, And The Future Of Work

TWS 7 | Gig Economy

 

The internet has ushered in a world of connectivity not only in our daily and personal interactions but also in our professional space. For many entrepreneurs, this means having to reach people across the globe to work towards a common goal. Having previously founded and led Elance, now known as Upwork, Beerud Sheth has undeniably opened up a big market for people in any part of the world to connect and work together online. Now, Beerud is the co-founder and Chief Executive Officer of Gupshup, the world’s leading platform for cloud messaging and conversational experiences. Working in that same space of work connectivity, Beerud goes in depth into this gig economy, what the future holds for work in the business, and how the global freelancing platforms are impacting countries.

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Beerud Sheth on Freelancing Platforms, The Global Gig Economy, And The Future Of Work

My guest is none other than the Founder of Elance. His name is Beerud Sheth. I interviewed a good friend of mine, Josh Lannon. He is the co-author with his wife, Lisa of The Social Capitalist. It’s a great interview and an incredible idea. It’s awesome to come across companies that really fit this bill. I believe that what has become Upwork, Elance which was founded by my guest Beerud Sheth, combined with oDesk and they formed Upwork. Upwork has tens of millions of users, thousands of skills, multiple categories as far as values, and services are concerned. It’s a platform that has transformed society, starting with the initial user which is the business owner, the entrepreneur. Those that can’t necessary afford a graphic designer, a virtual assistant, some of the help from a marketing perspective or from graphic design, logos, fonts and icons. Pretty much anything you need is on Upwork.com.

It enables so much from the standpoint of an entrepreneur who has an idea that wants that to become a reality. It also transformed the lives of a lot of individuals, starting with stay-at-home moms, which we’re going to talk about, as well as third world countries. Beerud was honored by the Philippines and acknowledging him for Elance and the idea of this platform and how it has created an additional $250 million GDP to the Philippines. It’s doing so in other countries that are emerging and becoming present in this connected world that we’re in. You’re going to love this because Beerud is clearly an intelligent individual. He’s passionate about disruption, he’s passionate about technology that’s going to make a difference. From a social capitalism standpoint, he totally fits the bill so thus the company of Upwork. I can’t wait for you guys to experience this.

Beerud, it’s awesome to have you on. When I first heard of Elance, it’s probably been years. I was working out at my gym and there was a married couple that came in. They are from the United States and they were talking about how they’ve lived around the world. They lived in Australia, they lived in Paris, and they were in Salt Lake to go skiing for the winter, then they were going to take off to the country of Georgia to work. This was years ago. I was like, “What do you do?” They said one was a marketer and the other was a technical writer. They work on Elance. I had never heard of Elance before then. Since then, I’ve used it. It’s made a huge difference in my business and I look at the impact it’s made on other businesses as well. It’s fascinating to see something like the business that you helped create makes such a difference in the world. Would you mind talking to us about your experience creating Elance, the genesis of it, and the overall experience I’ve seen it take off and impact the world?

I’m impressed, gratified and excited about how far a little idea in my head and in my cofounders’ heads grew, became a business and impacting millions of lives. This was in the late ‘90s where the internet was coming about in the mid-‘90s and where the commercialization of the internet began. You started seeing eBay and Amazon taking off. Around that time, I was working on Wall Street. I just finished my Computer Science grad school at MIT and then I was working there. My personal life experiences melded into three different and distinct influences. One was the fact that I’m originally from India, so coming from India, there are a lot of smart and talented people all over the world. That was one element. The second element was as a computer science student and as an early adopter of the internet, you knew the power of connecting people and making distance irrelevant. That was the second key influence. The third thing was having worked on Wall Street, I realized that you could create these marketplaces even for seemingly illiquid securities.

When you take those three things, we ended up with this construct of an online freelance marketplace. In the beginning, it was hard. What kind of services? How do you build trust? How do you minimize fraud, and having reputation and profiles? How do you even compete? Services are very illiquid. They’re very unique and customized. How do you compare and contrast different things? There was a lot of trial and error, iteration, and as they call it, product market fit, that we had to explore and figure out. We persevered through a lot of things and then there’s the whole business angle of it, fundraising, recruiting, competing, PR and marketing, customer acquisition, and so on and so forth. There are lots of stories to share. We started on a good track, and another big thing was surviving the financial crisis of 2001 and then 2008.

It’s the long story short but now the core thesis is still valid. The fact that people who want to get work done can put their request up there somewhere and anyone anywhere in the world can say, “I’ll do it for a good rate.” They connect, do the transaction, and do it successfully for the most part. Not just that, when we were starting in the late ‘90s, the only thing you could do was remote work. It was only after the rise of the smartphone that you could capture location, which means now you could even do local freelancing. You could argue that even Uber, DoorDash, and Instacart and a lot of these services are direct descendants of the same idea, but applied in a different technology environment. The gig economy has gone on to be much more than what Elance or Upwork does now. It’s much broader than that.

Ideas are worthless without execution. Click To Tweet

As you look back, what would you consider the milestone that took place where you were like, “This is going to be big. This is going to connect the world.” Most entrepreneurs look back in the idea and seeing that come to fruition. It’s cool to think back and experience on the in between. Most entrepreneurs would want to go back and relive some of those moments, especially two financial crises. When you look back, what was that moment where you or your partners were like, “This is big?”

Maybe a couple of incremental moments. We did a lot of research. We have a lot of ideas. We put it all on PowerPoint, but it’s not real until you have the first customer experience. Before we even officially launched the site, we created an internal prototype and we said, “Let’s test it. Let’s try it with some people.” We asked and maybe begged a few friends to put some projects in there saying, “Do you have some work that you need to get done?” For it to be a realistic test, you don’t want to influence it too much. We didn’t want to tell them what it is. We wanted it to be as authentic as possible. We were in New York at this time. We asked a few friends to put some requests in the marketplace.

On the supply side, I come from IIT, which is another top engineering institute in India. We asked a few students. It was the summer, so they were doing their summer internships. We said, “Can you sign up as service providers? You’re going to see some projects and you pick on what you want to work on. You do it, you deliver it and you’ll get paid for it.” That was it. You want to leave it there and have it take off by itself. We had maybe ten or twenty projects put up there and we had maybe a dozen students. Two to four weeks later, we heard back from some of the students or even the professors saying, “What are you guys doing? All these guys are giving up their internships to work on these projects because they’re excited. They love it. They’re making money.” Similarly on the buyer’s side, if you will, you had people saying, “This is great work.” It was hard to find talent in New York and here, these guys are getting it done in a week or two for a lot lower cost and it’s good quality work.

You know it’s real because it wasn’t staged manage. It’s not like we told these people to do it but there is a natural need. When you uncover that, you know this goes deep. You know that there are thousands or maybe millions more people like that. That was the big a-ha. Once we got funding, we scaled it up. After that, there were a series of milestones, maybe the first quarter where we did $1 million worth of spend going through the site. That was a big one. Thereafter, it’s been steady growth. It’s accumulative compounded growth over twenty years that lead to big numbers. It does about $2 billion plus in service transactions on Upwork.

TWS 7 | Gig Economy

Gig Economy: With these big technology changes, we tend to overestimate the short term and underestimate the long term.

 

I was looking at some stats and there are sixteen million active users. Having 5,000 skills is one of the other statistics that made me think back on an experience I had at Dreamforce where you’re out in San Francisco and talking to somebody and having no idea what they were talking about. Even though they were speaking English, I had no idea what their business was because it was completely foreign to me. That was my experience going and looking at some of the skills that are associated with some of the freelance jobs and requests on Upwork.

It goes to show you that having 5,000 skills is an incredible way for a business, for a startup, or for an idea that somebody has to flush it out in an inexpensive way to test them. You went through the prototype stage. People have ideas and it’s the cliché of ideas are worthless without execution. This is a way in which you can make it very easy to test and prototype something to see if there are legs underneath it. It’s profound, it continues as technology grows and evolves so do the need for different types of skills and positions.

The thing that surprises me is that there should be a few more skills. Some other categories did not work out as well as we expected. Let’s say business consulting, even legal or accounting. These tend to be little more businesses where people are concerned about security and privacy of data and who they are sharing it with. A lot of these are sole problems technically, but it’s this mental block around sharing this in the cloud. There are still a lot more categories that can expand to. On the technical side, the design side, and a lot of the creative skills, that process has been nailed. The fact that you have portfolios, profiles, feedback and reputation makes it a lot easier to be able to do these services. At this point, you have to be crazy not to use this because anything else would be far more complex and far more complicated.

You have an extremely unique perspective on work. You had mentioned one of the buzzwords out there, the gig economy. How do you view the future of the economy and the future of work? Even though Upwork is known by many, it’s still an unknown platform. The whole idea behind freelancing, contracting continues to evolve and to be more familiar to businesses as an outlet, as opposed to the typical traditional hiring someone to perform a job. How do you look at the future of the economy and the future of work in the business?

As technology grows and evolves, so do the need for different types of skills and positions. Click To Tweet

We barely scratched the surface long as we have come over the last several years. As they say with these big technology changes, we tend to overestimate the short-term and underestimate the long-term. There’s no question about that this is happening slowly. It’s percolating through the economy until one fine day you hit an inflection point then suddenly everyone is doing it this way. For example, in the earlier days, we started with smaller businesses that were more desperate and that were more resource crunch. They had tight budgets. They were the earliest adopters of the platform and then they loved it in scale and would use it repeatedly.

More recently, you started seeing large enterprises, big brands and consumer goods companies. They are in maybe 100 countries and they need to design packaging, brochures, collateral, copywriting or even technical stuff, creating websites in different languages and different countries. You’re starting to see more and more enterprises. The platforms are also evolving. For example, large companies want to have a pre-approved group of freelancers. They don’t want just anyone using it. They had been pre-approved, pre-certified, pre-verified, whatever it is. You’re creating these private marketplaces that enable these interactions. As these things happen on the employer’s side, there’s this greater need to have a flexible workforce.

Think about what AWS and cloud computing did to our computing and IT spend, which is why have dedicated servers on-premise, when you can get them as needed when needed, and you can increase and decrease on the fly. You apply the same idea to do human resources, not just your computing resources. It leads to an Upwork-like model. Just like cloud computing is barely about 3% to 4% of the global IT spend. You see the same thing here. The Upwork model is a very small fraction of the overall spend on the workforce. As people move to these models where the platforms are good enough to support enterprise requirements, businesses are ready for that flexibility.

TWS 7 | Gig Economy

The Social Capitalist: Passion and Profits – An Entrepreneurial Journey (Rich Dad’s Advisors)

It’s not just on the business side, it’s even people. We talk about work-life balance and we talk about flexibility. People value that. We’re going to get into a world where you can live anywhere, work anywhere and work any time. We’ll have tools doing the match for us, perhaps even in real time saying, “I have family visiting so I’m going to take it easy for the next few hours or the next couple of days, but then, I want to catch up on my work.” There is so much potential to enable more productive lives for everyone and a better economic life, but even a more personal balanced life as well.

It’s interesting, this is going not necessarily in the United States, but outside the United States. I was at a private dinner a number of years ago with a member of the Cato Institute. They had been instrumental in consulting with one of the Eastern European countries that were part of the former Soviet Union. You talked about how you can create prosperity in a country and in an economy using free market capitalistic principles and certain monetary constraints. I look at that and there’s so much work involved and so much of a mindset shift of people to accelerate prosperity in that type of country. You look at what Upwork has done in the ecosystem that exists. It’s based on similar principles. The proof is that you personally were thanked by the Philippines’ Minister of Science and Technology for increasing GDP by about $250 million.

You look at the platform where you have an incentive that someone can get paid, but you also have an incentive to do good work because of ratings. You have the incentive to increase your skill set and increase your certifications. It’s like you built this ecosystem/economy that has enabled countries that may not have the wherewithal from a paradigm standpoint to set up their monetary system and set up their laws. They’re structured in a way that’s going to create more prosperity for people but in essence, you’ve done that with Elance. When you first talked to the Minister of Science and Technology in the Philippines, what was that experience like for you?

It’s more than the stuff you mentioned, in that Elance or Upwork is solving problems that are not possible through any other means. If you’re familiar with the geography of the Philippines, it’s a few thousand islands splintered all over. It’s just not practical to set up roads, infrastructure, factories, and all of the high employment producing activities that the traditional industrial economy has done. On the other hand, what they discovered, a lot of it was bottoms up. What they said was people with some basic skills in certain areas and then with WiFi infrastructure, which is a lot easier to set up, could then plug into this global economy, work from home, work from wherever they are. Suddenly, you can provide employment to thousands and millions of people around the country.

It’s perfectly well suited for this economic, geographic situation. It doesn’t take a lot but the return on investment in terms of the employment and what it does for the communities was impressive. The fact that people can stay where they are and have those communities was impressive. I bumped into the Minister and once she found out that I’d founded Elance, she was super excited saying it’s a complete game changer. The official poverty alleviation schemes include training people, skilling them in certain areas, connecting them to the web, and then putting them on to work on Elance and Upwork. It impacted millions of lives and the economic value for the country is great too. Even if there are other ways of getting GDP growth, there’s no other way of employing people in far-flung areas. What do you need for Upwork? All you need is an internet connection and the skill that you have, nothing else. From an infrastructure standpoint, it is impressive.

Everybody wants flexibility because our interests and our capabilities change. Click To Tweet

You’re hitting all those principles then there’s also the built-in accountability system where you have checks and balances to ensure that there’s good work. That a person maintains their reputation in order to get future work, that’s also built-in, which is a vital part of an economy.

You’re right because in many of these countries, sometimes the currencies are not that stable, for example, or the trust ecosystems are not unstable. What happens is the profile or the reputation they’ve built on Elance or Upwork is suddenly their recognition. It’s more important than a college degree from a college that may not be accredited or you don’t even know if the documents are true or not. The work that you’ve done on Upwork is validated from people. Similarly, the whole payment infrastructure that we set up allows people to plug into a global economy instantly, irrespective of the educational infrastructure, the physical infrastructure, or the economic and financial infrastructure in the country. You suddenly leapfrog all of these challenges where previously without Upwork, these would be prohibitive. It would completely preempt any way of getting out of this situation, but now you just connect up and you’re a part of the global economy.

The Philippines is one example. I look at the other emerging markets that have hundreds of millions of people that are plugging into the global network of things and trying to find opportunities. It’s fascinating. We can go on for hours on this but just the whole leapfrog effect. You’re right, a college degree has become more of a statement on a resume or a credibility factor. Where now, especially with Elance, I’m not sure college degree is as important as the quality of work and the ranking of that work. You look at others, whether it’s Africa, India, parts of China, the Philippines.

There are so many different emerging markets that are getting plugged into the infrastructure of the internet and then have a platform in which they can be incentivized to learn a skill, to do good work and to feed their family and evolve. Whereas in the United States, in a sense, it’s falling behind. People are not doing that. They’re preparing for retirement or they’re betting on their resume and their degree to continue to do the trick. It’s interesting to see how the global economy is evolving in a certain way, oftentimes faster than the US economy in a sense.

Maybe we are spoiled for choices in the US. The economic growth is strong, the employment is strong and has been for the last 50 to 70 years. People expect to get used to it. In the rest of the world, this is the only way out sometimes of their situation and so it has a far greater impact. Even within the US, you’re starting to see more and more of this. It may be regional. You may be in the Midwest but now you can work on East Coast to West Coast. Suddenly, it gives you that flexibility. You can stay in the community that you love and in the neighborhoods that you like and still be able to do high-quality work where the economic activity is.

Upwork has gone on to add features where you can find local freelancers, somebody in the neighborhood. Even if the work can be done remotely, you might want to meet them face-to-face, whatever would be the reason, some particular skill set, language capability or just the time zone. You might want them to be in the same time zone. You’re starting to see this local ecosystem emerging. The great thing about the US is it’s very dynamic. Even if not everybody is doing it, the ones who do or the early adopters will reap the benefits. You’re seeing a lot of people do that.

Another category for example that loved Elance and Upwork right from the earliest days were professional women when they choose to have the kids or when the kids are young, and they want to spend enough time with them. They are still exceptionally skilled and have the desire and the ability to do good work, but the traditional 9 to 5 job with the daily commute wasn’t amenable to those work-life choices. Upwork or Elance provided that option and they were the biggest fans from day one. You’d have these, in a way, extremely talented people that wanted a little bit of flexibility that’s not available in traditional work. It opens up a lot of possibilities and a lot of markets in the US and also worldwide.

I would love for you to share with the readers about what you’re working on, how they can follow you, and keep up with your work. I had a guest who’s become a great friend of mine. He wrote a book called The Social Capitalist. He talked about a lot of the social issues not just in the United States but also worldwide. I thought of Upwork as being very social, not that this is your intention. Whether it was your intention or not, it’s become that. It’s one of those ways in which it can socially benefit, the Philippines is one of them, by using capitalistic principles.

A person maintains their reputation in order to get future work. Click To Tweet

I find it fascinating the examples you’re using of women that have skill sets and have chosen a certain lifestyle that’s not conducive to a 9 to 5. You’re also finding retirees or the pre-retirees. Those that are on the verge of retirement are short. They’re short in assets, they’re short in Social Security, and they can’t maintain their lifestyle. This gives an option for them to maintain their lifestyle but continue to operate in their respective skill set. I looked at the social good and using a platform that includes economically-friendly principles and the difference that it’s made and will make.

I totally believe that. I’ve always felt that some of the best social good comes out from companies that may not be explicitly social but are viable or sustainable and have an inherent business model. They can keep doing that good without having to wait for charitable donations and things like that. Right from day one, that’s always been our focus. We were very conscious of the impact it can have to lives around the world by plugging them into this global economy. If you just did that without building a successful, viable, and self-sustaining model that can continue to grow and drive economic benefit even on the other side, then you’re always dependent on this constant flow of donations.

That’s the most exciting thing here. If you look at the impact that Elance and then Upwork has had, it’s probably more than lots and lots of other charities put together because it provided direct economic livelihoods to tens of millions of people over the years and we’ve only just begun. That’s the most gratifying thing. It’s funny, I’ve traveled a lot internationally and sometimes when people discovered I found Elance, they’ll be like, “I’ve been using Elance.” I hear these stories all the time in different parts of the world. We were one or two guys when we started out but because of Elance, we built a business and we employ 100 other people, and they’ve grown over the years.

It’s a very common thing. A journalist had mentioned that, “I was working on a job that I didn’t like. I wanted to try journalism and experiment with it.” Elance provided that opportunity to try it on part-time before he became full-time. Whether you want this work-life balance like the working moms I was talking about, whether you are geographically in far-flung areas and you want to plug into the global economy or you’re looking for a career change, everybody wants flexibility because our interests change and our capabilities change. A system like this provides that. It provides goodness in a lot of ways. Not just the economic aspect but even in some work and life satisfaction. Even in the US where you’d argue the economy’s strong, but oftentimes people are stressed or unhappy in other ways. This allows you to reorient or re-balance what you’re doing. The impact is far-reaching, and we are a long way from being done yet. It’s going to continue to have a greater impact over the years.

It’s an incredible platform and I totally agree, there will be a tipping point. It has seen multiple tipping points but from a big tipping point, it’s yet to happen. Why don’t you talk a little bit about what you’re working on and then maybe some ways in which our audience can follow you, learn about you and continue to learn from you?

After I left my operating role at Elance, I founded another company called Gupshup, which is where I’m still focused on. Gupshup is a Hindi word which means chit chat. It’s an appropriate name for a company that’s focused on messaging and chat. We are a platform that enables enterprises to send messages and have conversations. We have tens of thousands of enterprises. We send messages with some of the customers and these amount to billions of messages. We’re innovating and again, another one of these services that touch hundreds of millions of lives. We’re driving some innovation in terms of enabling IP messaging from traditional SMS messaging, also enabling chatbots and conversational agents. That’s a whole different conversation maybe for another call.

If there’s anything that is changing rapidly, it’s the methods of communication.

I’ve always been drawn to or excited by ideas that are far-reaching and can touch lots of people. My Twitter handle is @Beerud. A fringe benefit of an unusual name like mine is that it works in almost any namespace. You can find me on LinkedIn. Gupshup.io is my website. I would love to engage with anybody who wants to reach out.

Beerud, thank you so much for being on the show. This has been awesome. We’ll definitely have to do a conversation about Gupshup. That’s something that I’ve thought extensively about, which is people don’t answer the phone anymore. They have email, texts and messaging. Communication is evolving and probably hasn’t necessarily evolved to the point where there’s a centralized way in which people are communicating. I believe it’s going to whatever that point is. We’ll have to talk again.

I would love to do that.

Beerud, thank you for what you continue to do, to take your ideas and bring them to fruition. We’ll have you back on some time.

Thank you so much for having me. I enjoyed talking to you.

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About Beerud Sheth

TWS 7 | Gig EconomyBeerud Sheth is the co-founder and Chief Executive Officer of Gupshup, the world’s leading platform for cloud messaging and conversational experiences. It is used by over 30K+ developers and handles over 4.5 billion messages per month. He previously founded and led Elance (now Upwork, a publicly listed company), the pioneer of online freelancing and the gig economy.
Prior to founding Elance, he worked in the financial services industry – modeling, structuring, and trading fixed income securities and derivatives at Merrill Lynch and Citicorp Securities. His graduate research, at the MIT Media Lab, involved developing autonomous learning agents for personalized news filtering. Beerud earned an M.S. in Computer Science from MIT & a B.Tech. in Computer Science from IIT Bombay, where he was awarded the Institute Silver Medal.

 

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