Andrew: Hey there freedom fighters. My name is Andrew Warner. I am the founder of mixergy.com, home of the ambitious up start, and a place where entrepreneurs come to talk about how they built their businesses.
In 2005 two friends wanted to work together even though one of them was in the U.S., and the other was in Greece. They created oDesk to allow them to do it. Today the site is a marketplace that allows anyone to find, hire, and, collaborate with remote workers.
We here at Mixergy have used oDesk to hire researchers to help us with our interviews, to help us with new development projects, and, other work. Today’s guest is Gary Swart. He’s been the CEO of oDesk since the year it was founded, and, he agreed to step in as an adviser after the company finishes its merger with Elance, later this year. Gary, welcome.
Gary: Thanks for having me, Andrew, and, that was a great description. I couldn’t have done it better myself. Thank you.
Andrew: You bet. I always felt like you were more of a founder. You started months after the company started. The business wasn’t what it is today until you made it what it is. Why aren’t you considered founding CEO or founder?
Gary: Well, I guess it’s really a state of mind. I wasn’t really the founder. As you mentioned, our two Greek co-founders, Stratis and Odysseas, were working on this while they were both employed at other companies, and, they really came up with the idea and the concept, and they built the company on their credit cards. I actually came in with the money.
So I came in armed of funding to help really the idea to mature and matriculate if you will. So I think that I don’t consider myself a founder. I consider those guys are the ones that came up with the brilliant idea. I’ve never had a good idea in my life.
Andrew: [laugh]
Gary: So, other than the idea . . . [??] . . .
Andrew: I think we’re going to discover that that’s an understatement. When you started, what did the company do? What was there?
Gary: Yeah. So I’m really glad you asked that because when you start a marketplace business, you really have to figure out your business model, and, who you’re serving. In the very beginning we were a staffing firm. We were helping companies to find and to hire and to manage and to pay remote talent, but we were doing it in a very hands-on way.
We would screen all of the clients. We would screen all of the talent, and, we would put the two together, but, we didn’t have a publicly facing website to do that. It was all what I call, hamster wear. So essentially we were a staffing firm helping you to find, hire, manage, and pay talent, but, we were doing it in a high touch way.
Andrew: What do you mean, hamster wear? Meaning that behind the scenes it was all humans. In the front it was all computers.
Gary: That’s exactly right. It looks one way, but behind the scenes you have hamsters on wheels running to keep it powered, and those hamsters on wheels were actually people who would hand match a developer, in the early days, with a client who needed develop work done. All of the matching, and everything on the back end was handled by humans.
Andrew: I read a quote from you, and I wish I could give to where I read it. Maybe it will come to me. Maybe I’ll find it in the research, but it was, “I left IBM for an ill-fated startup by the name of Intellibank, which was a great lesson in focus,” and then you left Intellibank for oDesk. Why did you learn to focus at Intellibank? What happened that helped you learn that?
Gary: Oh, my Gosh. Well, we had this really brilliant idea, and the team was fantastic. I’m sure a lot of people look back favorably on companies they’ve been at, and you said, “Gee, I don’t understand why we didn’t make it,” but this one is crystal clear. We had a great team. We had great technology.
Our problem was that it was a little bit broad. Let me explain what we were doing. Intellibank was an intelligent bank of knowledge that you could share with colleagues via the web. So think of it as a web dab in your face on your desk top where you could drag and drop documents and share them with people and collaborate. Does that sound familiar?
Andrew: Yes. I’m thinking of a few different products, including the one I’m using right now.
Gary: So that’s a lot like Drop Box?
Andrew: Yes.
Gary: So we had Drop Box, but the problem was we had Drop Box with word flow and provisioning, security down to the object layer. We had relationship management on top of it. We had task management on top of that, and, we had more functionality than Drop Box has today eight years ago.
The problem is that we had more functionality than today. So the lesson of focus was we were trying to be all things to all people. We were, I like to say, dessert topping, and floor wax, right.
Andrew: [laugh]
Gary: It just makes it a really hard problem to figure out who you’re selling to, how are you selling, and what we could have done was narrowed the scope of the product to one of those used cases. Nail that, and then expand from there. And so, that was my lesson in focus. Trying to do to many things at once.
Andrew: So, you came in you said, with the funding. Why would the people who have the money say, “I’m going to take this guy whose company just failed, and, bring them in to run this business, oDesk. Instead of saying, let’s give him some time to turn something else around first or to get his bearings?
Gary: Well, you know, this was a bunch of years ago. I don’t know that the company would do that today but an interesting quote. I met with the VC once, and they were interviewing me for a job at one of their companies. They were backing this company. The firm was NEA.
The partner had just invested and lost about $15,000,000 in this guy’s previous company. Here they are backing that CEO for his next venture. I was interviewing to join that team.
I asked the VC. I said, “Why would you back this guy that just lost $15,000,000 of your money.” He said, “Are you kidding? I have $15,000,000 in that guy’s [Inaudible 0:00:44].”
Andrew: Yes.
Gary: So the fact of the matter is, I was a great candidate because I had that education. I don’t believe that I would have been a candidate for the job had I not had that experience. So, it was valuable…
Andrew: I’m looking at the website from 2005, a screenshot. It says, “Looking for offshore technology professionals? With oDesk it’s as easy as one, two, three. One, hire. Two, manage, Three, pay.” Then, underneath I see skills inventory.
Where could you have taken it? Or where was the temptation to take it and make it into bloatware?
Gary: Well, you know, really it’s back to what I said when you said where were we in the beginning. Well, where we were in the beginning is we were a staffing firm.
If you think about where do staffing firms make money, well, they make money by having a relationship with a big client who needs lots of bodies staffed. That’s an enterprise sale. It’s high touch. You get on the approved vendor list and then you’re in.
The company had a tendency to move in that direction. We also had this platform for managing remote work. There could also be a tendency to try and sell that platform as a SaaS offering. [??] two distractions.
Right now you can go where the money is, big enterprise client relationships with lots of bodies staffed at big companies. Or, you can go after the mass market with the self-serve marketplace model.
The company was really not sure which way to go. Even when I came in it took us a month to figure out hey, you know what, we need to go this way. When I came in we had a dozen or so employees. Half the team wanted to go one way, and the other half wanted to go the other. Half the team wanted to be a staffing firm, and the other half wanted to be a marketplace.
We had a real tension to be in because you can imagine how hard it is to build a culture and a company when you have two teams pulling in different directions.
Andrew: So those are two legitimate directions for a business to take. I could see many entrepreneurs, many CEO’s being just stymied by that. Two great options, which one do you take? Trying to figure out which way to go would stall them, or they’d go in both directions at the same time.
How did you figure out which direction to take? What was the process that allowed you to go in the direction that made you into a marketplace?
Gary: You know, somebody told me a good framework once. I think it’s called OODA. It stands for observe, orient, decide, and act. Apparently, it’s something they use in the military. You need to make decisions, because if you’re stymied or if you don’t pick, you can’t go in two directions…
Andrew: …[??]…
Gary: You have to pick one. You have to pick a major. So many companies fail because they try and do too much, i.e. [??].
So we observed, we oriented, we decided, and we acted. The way we did that is we took in a lot of data and we said what’s the multiple on the staffing firm and what’s your route to market with a staffing firm.
You just look at criteria like that and you say the multiple on a staffing firm is not that big. And, the routes to market are direct sales. Very expensive, high touch, and you have to raise a lot of money to go compete in that enterprise space. Well, meanwhile the marketplace business for staffing was a new, innovative, disruptive model, and the route to market is not sales. It’s marketing.
So we very quickly made a decision. We looked at the multiples on marketplace businesses – eBay, StubHub. You know, look at all the great marketplaces out there. We made a conscious decision to go in that direction.
Here’s my guidance on it. It really doesn’t matter which way you pick as long as you pick one and you start down that path. If you pick the wrong one you can always change direction.
So in the context of OODA – observe, orient, decide, and act – if the decision is reversible well then you should make it quickly and just go. If it’s irreversible you want to put a little more time and energy into it, but you still want to make quick decisions. We looked at it as reversible. We could pick one. If it didn’t work out we could pivot in six months.
Andrew: You told… In an interview with thefetch.com you said that companies have three phases: the jungle, the dirt road, the highway. What was the jungle like for you guys once you picked marketplace as the direction.
Gary: Well, you know, it’s exactly what the metaphor, at least, what I perceive in my mind. I mean there’s lots of vines. It’s very thick. You need machetes. You’re on the ground. It’s buggy. It’s muggy. It’s wet. There’s a lot that you have to figure out. One, because you’re blazing a trail. I mean we were creating a business that really hadn’t been created before.
Yes, there were other marketplaces out there, but nobody was doing it with our business model which was time-based work. And time-based work is the way that most of us work in the offline world.
So you really are blazing a trail, and you need people that can think on their feet, that are good with machetes, hand-to-hand combat. And it’s very sort of execution oriented. It’s a lot of build the path and then figure out if it’s the right path. Right.
Andrew: Give an example of a vine of a path that you had to blaze because, frankly, looking at the company as an outsider, and then later on as a customer, it always seemed to me like oDesk had it together. They had money. They had customers. They had a model that just made sense.
I say they, but it’s you. What didn’t I see from the outside that on the inside might have scared other CEOs and entrepreneurs?
Gary: Oh, my gosh. It’s funny because I’m sure most entrepreneurs probably have this grass is greener mentality.
Andrew: Yes.
Gary: Oh, my gosh. Lock-box has it so easy. And Airbnb.
Andrew: Yes.
Gary: Why didn’t I think of that business? But they all have their challenges. For oDesk, from the beginning, we just had so many decisions that had to be made. We decided to open up the marketplace, and enable any freElancer to join, and any client to join without really being screened.
And then we had to hope that they had a good connection and a good result. And whether or not they were successful, customers would hold us accountable even though we couldn’t control the outcome.
Andrew: I see. So if a client hired a freElancer and the freElancer screwed up the project, it’s oDesk’s fault. oDesk is the reason why it didn’t work out in their minds.
Gary: In their minds, yes. It’s very eBay like. If you got an iPod in the early days on eBay and it didn’t show up, you were mad at the seller. But you were more mad at eBay because they were the ones who enabled you to get ripped off. And so a lot of people want to hold us accountable.
And trying to be accountable for work that we’re not responsible for. I don’t even know the spec. I didn’t see the spec. I wasn’t involved in the transaction. I merely was the platform. That was a huge challenge for us, facilitating a good result without being in the middle.
Andrew: So you now have a very clear problem which is your customers aren’t getting what they want from their freElancers. And it’s one of many problems. You can’t just fix it the one time that it comes up. You have to fix the process that gives your customers a happy ending. It gives your customers a happy path in the future. What do you do with that to go back to the process and fix it, to improve the way that your customers and freElancers interact?
Gary: One thing you can do is you can appropriately set expectations. You can make sure that people understand that, hey, we’re just a platform.
Andrew: Okay.
Gary: And you may not get a good result. So here’s things that you can do to be successful. But if I do too much of that, I always call it the stickers on the ladder.
Andrew: Mm-hmm.
Gary: It’s like walk into Home Depot and you see stickers . . .
Andrew: Yes.
Gary: . . . all over the ladder. Because the ladder manufacturers have been sued so many times that the lawyers say, okay, now you need this sticker. And if there’s so many on the ladder, at some point you walk into Home Depot and you say, forget it. Why would I ever stand on that thing? I’ll just hire somebody to wash my . . .
Andrew: I mean you buy the ladder and you don’t read any of them because now you’ve got homework to do and you’re just going to walk up a ladder.
Gary: It’s overwhelming.
Andrew: Yes.
Gary: So you’ve got to have the appropriate number of warning labels or expectation or context setting so people take responsibility for themselves. And then the other thing you can use is you can use your data. Your feedback, your reputation.
What do you know about the freElancer and the client in order to create a great match? And if you can create a great match, or, at least, what you think is a great match, probably similar to the dating sites, You’re going to have more marriages.
Andrew: Do you have an example of one thing, one change that you made to the process that gave you an outsize result in as far as the happiness that both the client and the freElancer have.
Gary: Well, one obvious one, and it should be clear. I don’t even know it’s a valuable answer. We can think of a second. But the most obvious was feedback. By taking the feedback after every assignment based on your skills, quality, deadlines, communication and cooperation, and making that public.
And we had double blind meaning the freElancer could rate the client, and the client could rate the freElancer without retaliation. So it’s not like the freElancer could see the client’s feedback and then retaliate. We made it double blind. Within two weeks, it would just show up. And that became a really good indicator as to you know past performance is the best indicator of future.
I remember our marketplace before we had it. And we had to build that functionality. Then we had to decide. Like, OK, how is it going to be and what’s going to be the most fair? Enabling that feedback on the site was huge for ensuring future results.
Andrew: How did you get… Actually if that’s one that’s more obvious. Is there one that is less obvious that is still very effective that maybe took a little time to come up with?
Gary: Yeah. So, along those same lines, what happens with public feedback over time is that… Let me give you a story. A friend of mine had a website, built on to a disk. And, he spent $1500 and I saw. I went in and looked at his assignment because I wanted to make sure he had a good result.
He gave his contractor five stars and great feedback. Then I spoke to him. I said, “Hey looks like your assignment went well.” He said, “Yeah it was pretty good.” I said, “Pretty good? You gave the guy five stars and glowing comments.” He goes, “You know, I didn’t want to ruin the guy’s life. He was good. He wasn’t great. It was only $1500. It would have cost me $10,000 locally, and the guy begged me for good feedback.
I just didn’t want to screw his future on ODesk. That was a light bulb for me. I was like, oh my God. I wonder if we have grade inflation? So one of the things that worked really well was private feedback. So this is the public feedback. But why don’t you tell me behind the scenes, what did you really think? Would you hire this guy again? Is there any coaching you would give him?
Then, that data will never show to clients. But we can use that data to figure out who’s really good. So we can use that in our algorithm to showcase people. One other piece that was really valuable is we were showing people with incredibly positive feedback. But the problem is that clients weren’t happy because they could never hire them.
They were never available. Why? Because their feedback was so good, that they were getting all the jobs. So in addition to feedback, we had to take into consideration availability and also recency. You may look like you are available because you don’t have any clients right now. Your feedback is exceptional. But you took a permanent job three months ago, and you’re not really active in the marketplace.
So we’ve got to take all of these elements into consideration. Your feedback, your reputation, your test scores, your verifiable work history, your recency, your citizenship, your karma, your eagerness, your availability, and put them all together to really make an effective match between the best client and the best freElancer every time.
Andrew: What about getting both freElancers and clients into the marketplace at the same time. I talked to so many entrepreneurs here and asked them for their failure stories. Their failure stories are, I tried a marketplace. I’m never doing it again. How did you get them both to show up?
Gary: Fantastic question and I love talking about this. Chickens and the eggs, right? It’s hard to get the chickens if you don’t have the eggs. It’s hard to get the eggs… So, for us, clients are the limiting reagent. What I mean by that is, we paid to acquire clients. Then with clients, we get an awful lot of freElancers. At this point, we get more than 5000 per day on the Otis platform organically. So, they’re coming. Why? Because we have the most jobs.
Andrew: So it’s finding which one is easiest to get, and focusing on that one
Gary: Focusing on that one. But you have to have value for both sides. We always said the best acquisition for us is always going to be a happy client. Deliver a great result for a client. Give them a reason to tell a friend. Then await a tele-friend. More than 50% of our clients come from friends.
Andrew: What’s the way that you created that works for getting them to tell a friend?
Gary: Our VP of marketing likes to call them embedded accelerators. So make it easy for you to tell somebody that you just got a great result or… I found myself doing this personally. My wife had a house cleaner who she really liked. The woman said, “Listen, I need more work. If I can’t find more work, I might have to leave you if I get a full time job somewhere else.”
And that fear of impending loss caused my wife to call a couple of friends and say, “I have this great person. I don’t want to lose her. Could you use her?” The next thing you know, she’s sharing among four friends and it’s a great relationship. As long as somebody doesn’t steal the nanny. So things like that socially. I just took this test, and here’s how I did. Andrew had a great result with Gary. Do you need an excel expert? You should hire Gary, that kind of thing.
So give people a reason to tell a friend and then a way to tell a friend. But back to your question about the marketplace. Bob Kagle, who was a board member over at eBay told me this. He said the beauty of eBay was if you have a marketplace where you have to recruit for both sides, you’re in trouble because you’re going to have to pay for both sides to come in.
Now you might have to do a little bit of heavy lifting to get the flywheel started, but once the flywheel is started, you would love for one or both sides to come organically.
And the beauty of eBay was that once buyers came and started listing stuff, that brought the sellers. And then once the sellers came, what they realized is sellers could be buyers and buyers could be sellers. And so you had this cross-pollenization where everybody could be every role in the marketplace and that was the beauty of eBay.
Buyers became sellers. Sellers became buyers. Buyers would tell other buyers. Sellers would tell other sellers. So it was very viral.
Andrew: Still again, I asked my researchers to pull up. I wonder if we got this off of oDesk or maybe someone internally did this. What I do is I have this list of questions that I want to know about guests, and one of them is can you give me a screen shot of what the site looked like over the years.
And that’s an easy thing to ask someone on oDesk to put together. That kind of question we send out a lot. Anyway, I see your 2005, it’s actually, it’s not easy for me to figure out who you’re aiming after. 2006, the page has a button for buyers and providers.
And after that, it seems like the focus is just on clients, on buyers. And so it seems like it took a while to get to that place where you knew, if we just focus on buyers, the freElancers would come. Is that right?
Gary: That is exactly right. And I would argue that we’re still doing it today. And the challenge is not only getting clients, but it’s getting them to stick. Right. Because if you just get a client and it’s one and done, meaning they do one project and they move on, then you constantly have to get new clients.
So it’s back to that getting them in, delivering a great result and having them buy again. And we got to the point where 87% of our clients said they would continue to work this way on oDesk. And that’s where the virality comes in. They tell other clients. They also bring their workers.
Yet in the early days, we really had to market to both sides to get that flywheel started. And even today, Andrew, for marketplace businesses, they’re really hard because, you know, you have to insure the quality. And you get a lot of people that come in that are quite interested. They’re really motivated to work or to get work done.
And some of them are actually qualified to work and to get work done. But a lot of them are not. And if you match one with the other, meaning a client that comes in and he wants a website built and he can’t spell PHP, well, it’s really hard to insure the quality.
Or if you have a worker that comes in that would love to work, but they can’t spell IOS, you can’t showcase them to a client and expect a good result. So it’s really incumbent upon us to make sure that we get people in the right bucket. Those that are highly motivated to work and qualified to work versus those that are neither. And figuring out who goes into what bucket.
Andrew: Like a dating site.
Gary: Exactly. Exactly.
Andrew: So where did you get your early customers? I remember seeing your early ads. They featured, I think it was, was the emphasis on accountability back in the beginning?
Gary: Yes, it was. We advertised on TechCrunch in the early days. I remember making a decision to spend a lot of money to have a little ad show up in TechCrunch that said, work in your underwear. And we showed different underwear types for different coding types. It was very, very funny.
You had Java. You had Mambo. You can imagine the little bikini underwear. Very out there and forward thinking. And we got a tremendous number of clicks on these ads that would bring clients into the site. And then we would match them with developers.
And once we got them, we kept them for a long time. So it was paid search. It was SEO. It was PR. It was hand to hand combat. It was pending events and anything we could do to really get the word out.
Andrew: What about partnerships? I’m looking to see where traffic is coming from to get a sense of it. I see a hacker you sent over a lot recently. And I remember the discussion about hackers. People are so afraid that the oDesk experience was going to go after the merger. Will the oDesk experience go away? Will they merge into one, or will they be two standalones by the way.
Gary: Well, you know, the idea behind the merger is pretty simple. We’re the largest company in the space. Elance was a solid number two and very, very competitive. We used to be growing a lot faster, but Elance was able to match our growth.
And when you have two companies in the space that are growing rapidly, and you realize that we’re going to battle it out to be a billion dollar company when there’s a $500 billion opportunity, and there’s just these tremendous synergies. I mean you need one fraud trust and safety platform, one payments platform, one enterprise solution, one…
You know, when I look at the functionality that we have and that they have, we really realized that, you know what? We could be a dominant number one in a small fraction of what is a much bigger market. So, it was about scale, and it was about synergy, and it was really about just one and one equaling three. And in order to get that, then, it does seem like more of the features, more of the product needs to merge into one cohesive unit.
Gary: Yeah, but with that said, I think there’s things that Elance does exceptionally well, better than us. I’ll give you an example. Their fixed price with escrow and milestones is really solid. It’s well formed. That’s where their business started. Our time based with hour tracking and our payment platform is much more advanced than theirs.
Really, what I think we want to do is we want to take the best of both platforms and merge it together to get that one and one equaling three. Whether or not they’re separate sites or we direct content, I mean these are all the… What’s the name? Is it one brand? Is it two brands? Is it VRBO and HomeAway? Or, is it one brand?
There’s a lot of smart people here who are great at figuring that stuff out. But, at the end of the day we both… Fabio, who’s the CEO of Elance, and I have the same vision. We have the same strategy. We have the same… We both have great teams. It really just gives us the strength to build a customer centric company with a lot more scale and synergy going forward, taking the best of everything and creating one customer centric company.
Andrew: What portion of oDesk did you own at the sale?
Gary: That information isn’t public yet. There is a disclosure statement coming out.
This is truly a merger. It’s not an acquisition. We really endeavor to keep both teams. This wasn’t about cost savings. This is about scale. Between the two companies we’ll have 40 open reqs on day one. So, we’re looking…
Andrew: You have 40 open what?
Gary: 40 open reqs.
Andrew: What does that mean?
Gary: Job requisitions. We’re trying…
Andrew: Oh, got you. Okay, 40 open, so you’re growing and adding more even as you’re merging.
Gary: We’re growing even more. What we realize is we’re competing for the same talent pool as well in a very competitive environment. I think that was part of, you know, the plan.
This is about scale. It’s not about cost savings. Really, it truly is a merger. Some of the executives from both teams are staying. It’s an equal board. Really, the goal is the synergy and the scale of one and one equaling three.
Andrew: What about partnerships as a way of helping you get new freElancers or new clients? Were there any earlier on in the mid-2000s that helped you get going?
Gary: There were a couple, but here’s the interesting thing. We did a deal very early on with Network Solutions, domain hosting provider, SMB focused, lots and lots of customers. They loved what we were doing. They had a lot of clients that would sign up, but then they needed work done. They wanted somebody to do it for them.
I thought, oh my gosh, this is going to be amazing. We spent a couple of months with the integration and signing contracts. We turned the lights on. Quite frankly, it just never drove a lot of traffic. I think business development, it always looks better on paper I think. With that said, we have 50, 60, 70 partnerships that are quite solid.
We did one with eBay, and that was a natural. eBay has lots of merchants. They’re mom and pop shops in the garage that are selling a lot of stuff on eBay. They would love to customize their site or integrate PayPal, but they don’t know how.
Who do they turn to? Well, they can’t turn to a system integrator who charges $150 an hour to get out of bed in the morning because they’re a small business. So, we’re a natural fit for that. We can provide eBay, and PayPal, and Magento certified talent to eBay customers. Those relationships have been great.
Andrew: Early days it seemed to be focused on developers. At what point did you know that it was time to go beyond the .NET, ASP, and so on, the web design? How’d you know it was time to expand?
Gary: I would say any day now we’ll figure that out. The funny thing there is in 2007 35 categories accounted for 90 percent of the work. In 2013 that was more like 40 categories. So, we’re seeing category expansion despite our efforts.
We haven’t really verticalized to handle the customer experience much differently among verticals. We’ve done some things in some different categories. But, we haven’t rolled out any vertical approach like eBay did with eBay Motors, for example. So, I would say that we’re still figuring that out, but it was a matter of looking at the marketplace and saying where is the supply and demand? What jobs are there in excess demand or excess supply?
Andrew: Where can I look that up?
Gary: Well, we have all the data. I mean, we can look at the jobs that are posted by category. We can say, “Oh my gosh, look at this writing. It’s going like crazy.”
Andrew: And that’s one of the categories then that you start to feature and work on bringing new people on.
Gary: That’s exactly right. We saw massive growth in writing, in administrative, in tech writing and then that emerged into writing. We saw massive growth in localization and translation. I would argue that we have the largest pool of certified, rank rated, professional translators in the world.
And that was because we had a lot of clients that needed localization work done, some very very large clients who needed thousands of translators and the next thing you know you got this massive database.
It’s funny. I was at a dinner one night. I sat next to a guy that said, “What do you do”‘ “oDesk.” He said, “This sounds fascinating. I need an Arabic translator. Do you have them?” And I said, “Gee, I don’t know. Let’s look.” And I do a search with thousands of Arabic translators.
The first one is a woman living in Dubai, $13 $14 an hour. She happens to be an expat living there with her husband looking for something to do and the guy 3 months later sends me an email saying, “Hey, we met at dinner. I got your business card. I just want to let you know I hired that woman. She’s still working for us. This is genius.” And I didn’t even know we had Arabic translators.
So you see this long tail of skills that emerges just based on the fact that they got this solid platform. And I’d say we’re still learning today.
Andrew: I remember reading that about Starbucks, that they would see who was buying, what cities were buying their coffee through mail order and based on that they’d know where to come in with the store. And I see that that’s happening here, but I don’t think you have another.
You know, if I had an idea per se, let’s say these beads. I want someone to string them, I get them made or shipped from China, and I just need someone to string them, I don’t think I can just go in or maybe I can and type in I’m looking for someone who strings beads and then describe what I’m looking for or can I?
Gary: You can. So the way it works on our platform is anytime we see a demand for skills where one does not a series make we [??] a scientist who pours through this data and we’re trying to see where is the demand going and if we see significant demand start to emerge we can create another category or a sub-category. I doubt there’s a category for bead stringer today but with that said I bet I can find it.
So our search is pretty robust and if we saw a lot of demand for bead stringers we would then create a category and say okay, what does bead stringer need and how’s our supply there, should we go get more supply, where are they located. So you look at supply and demand and you build from there.
Andrew: And if you’re seeing that there’s enough demand that drives the need for supply and that’s where you start going to fix the marketplace, to even it out.
Gary: To even it out. And I would argue that the supply is there. With more than five million freElancers just out of oDesk alone, not to mention what Elance has and more than a million customers, there’s a tremendous amount of data as to supply and demand. And, you know, if we see a large number of Java programmers and not enough Java jobs but a ton of IOS demands well can we steer some of those Java programmers to learning IOS.
And so there’s opportunity for real time vocation. Can we steer them towards [??] or [??] or go learn IOS because look at this, an IOS programmer makes $35 an hour, Java is $25. Not only can you make more money but there’s a tremendous amount of demand of jobs here. You should go learn that skill.
Andrew: I was actually starting to do a search for beads to see if that would come up and you know what, sure enough, something’s coming up here. I have to really dig in and refine my search. I see what you mean.
Gary: I don’t want to do it now because I don’t want to ruin my bandwidth.
Andrew: Yes, let’s not.
Gary: So tempted to go and find you 3 bead stringers. I bet they’re in there.
Andrew: Do you then partner with, of course [??] or who am I thinking? Treehouse to bring in new people and help the people who you’re working with
Gary: You know what, we just started working with some of these companies, but I don’t want to steal any potential thunder but we do think there’s a tremendous opportunity and it’s almost back to what I said earlier. You know, you have 5,000 people coming in a day and you have a lot of them who are highly motivated to work. They have great personal characteristics, they’re eager to work. They want to work. There’s no jobs in their local economy.
They may just not have the skills today. Wouldn’t it be great if we could steer those people toward skill and they’re smart enough to learn and they just haven’t had an opportunity or the need. They don’t know, you know, if you’re in the middle of Bangladesh, you don’t know that there’s demand in the United States for IOS programmers and what’s more you don’t know that you can actually get a job from the U.S. unless you move to the U.S.
Well, now the Internet is bringing down those barriers not only for jobs but first and foremost for education. And so we really think that the world is transforming because of technology and globalization of the economy and demographics where it’s just going to get flatter and companies are going to be able to access the best talent regardless of location.
Andrew: By the way, I just realized usually at the top of the interview I do a quick plug for Scott Edward Walker, the entrepreneur’s lawyer and that’s because I have my checklist for getting started and I always go through the checklist to make sure that the lights are on, that I record and so on. But today I just rushed because we’re recording at a special time and I forgot to say at the top sponsored by Scott Edward Walker of Walker Corporate Law. If you need a lawyer, talk to him.
Gary: [??] there soon, Scott.
Andrew: What do you mean?
Gary Well, why shouldn’t Scott be on oDesk?
Andrew: Lawyers are available on oDesk? Oh, yes, I know. Actually yes. That and you know what blew my mind? My brother hired a PR person. He said, “Well, I can’t really hire a full time PR person for our company. I just need someone who has experience to write, “I think it was, I forget really what it was. I don’t want to get it wrong, but he had them do PR for him. So yes, I didn’t realize lawyers, didn’t realize PR people until [??] told me.
Gary: You know what, Andrew? We see a lot of people using our platform for what I call leverage and best in [??]. You may have a PR person but is that PR person doing things that they shouldn’t really be doing? And what if you could offload the 20% of things that take 80% of their time and are not the best use of their talents and you could offload those to somebody who could get that work done?
So think of it as everybody’s assistant. And we see a tremendous amount of people getting leverage from the platform in that regard.
Andrew: Gary, I use a checklist because of past interviewees. They said really, put a checklist for the things that you need to do over and over and keep improving the checklist so that you can get better consistently.
Do you have any way of working that has helped you be more productive, that has helped you do more?
Gary: Yes. Well, I think, you know, first and foremost, I’m a firm believer in what I call clarity and it’s really making sure that the job of the CEO is to create an environment where everybody can do their best. And what that means is a culture where you’re getting the best and highest use of all of your employees.
And I think in order to do that you have to have clarity as to where the company’s going and how they’re going to get there. People need to know what they’re responsible for, they need to know how they’re going to be measured. I mean, it sounds like simple stuff but the amount of time that you spend defining that and then reinforcing and communicating it is a huge part of my job and so that’s sort of at the top of my checklist. It’s making sure.
Andrew: For vision, what’s a part of your vision that a few years ago you had to keep reinforcing so that it becomes embedded in the company culture?
Gary: Well, you know, it’s just constant. It’s making sure people know where the north star is. The lack of clarity and people think oh, we’re going this way. The most important thing is this versus that. It’s really hard to get people aligned.
Andrew: What’s a this or that? What’s a this? Can you give me a specific of something that you had to get everybody working towards?
Gary: Sure. So for us one huge initiative in 2013 was quality. Writing was all about quality. It was delivering a great match, a great freElancer to a great client every time. And if you know that’s a priority you can see how your decision making might shift, you know, and I remember somebody in engineering said, “Well, the most important thing for me right now is scalability. We’ve got to scale and if our platform can’t scale…”
And I was hold on, hold on. No, no, no. The most important thing is quality. Why are you working on that when this is most important?
And what we realized, I realized early on that I thought that I created a great culture and it really doesn’t matter what the entrepreneur thinks, it matters what the team thinks. And so we went out and surveyed our team. I actually blogged about this on LinkedIn.
And we surveyed our team and we asked them is our vision clear and inspiring? Scale of one to ten. And I was shocked to find that while we scored very well, there were a number of people in our population that did not think that we had a clear and inspiring vision.
And now I’ve got to find out, say, well is it not clear or is it not inspiring? But the only way I found out we had a problem was by talking to people, right, and so I think that you have to create a culture where you’re open to feedback, you’re open to communication.
It’s a customer-centered organization where the customers are the employees. And by opening up and showing that we want the feedback so we can do something about it and as I went around and spoke to people I found out that a lot of people were not clear as to what the vision was, despite the fact that in every email communication.
Now mind you, this was in 2013. This is not five years ago, so I think a lot of people probably take it for granted. They say, ‘Everybody knows where we are going.’ I don’t think it is necessarily so.
One other key highlight from that survey was, I asked a question: Are you clear as to what your responsibilities are, and do you have a metric to measure whether or not you’d be successful, and we were off the charts on that. Everybody knew what they were responsible for. The next question was: Do you know what everybody else is responsible for, and I was shocked at how low the scores were on that.
So people were clear on what they were supposed to be doing. They weren’t clear on what others were doing. That is an easy fix. We should just cross communicate what others are doing. Number one on my checklist, back to your original question, is clarity.
Making sure everybody knows where they are going, how the company is going to get there, what everybody’s responsible for, and how they will measure their success. It is constantly cascading that message throughout the company.
Andrew: What about when we hire as clients freElancers on oDesk. Here’s one thing that I’ve learned. I’m are very clear about what we are looking for, and if someone ever makes a mistake I correct it and come back to the instructions, the instruction doc, so that If I ever have to give it to that person again or the next person, they’re clear.
I’ll give you an example. I really need to know things like stats on a company. Here’s one stat, how many employees a company has. The way we do it is when someone got into trouble trying to figure it out, I wrote a little how-to guide on it. You go to LinkedIn. Ignore the section where LinkedIn tells you roughly how many people they have, and then use this section of LinkedIn to see how many employees currently report LinkedIn as their current job.
Now we have it solved. Is there anything else like that that I and other people can use to get better clarity with freElancers that we hire at oDesk, to get more out of the relationship that we have there?
Gary: That’s a great question. We are not to that level, but it sounds like there is a great opportunity to share these templates or these hacks if you will, with others. Now a lot of people don’t want to do that because they don’t want to reveal their secret sauce. They don’t want their competitors to benefit from their work.
I had a client once say to me that the only reason I’m successful on ODesk is because I’ve been unsuccessful on oDesk. Meaning, I’ve had to figure out all these things myself. Now that I have them, I’m killing it.
With that said, there are a lot of tips and tricks on how to ensure success. We’ve also started rolling out templates. What I mean by that is, you have a job. Again, not that specific, but more basic templates where you want to do something that’s been done a million times on oDesk. We’re going to steer you right toward somebody who already knows those hacks, so freElancers who’ve already figured out those things.
Andrew: So look at all the things you need to do. You need to give a template, or that’s a benefit. You need to match people up based on time and match them up based on skill, and so on. How do you prioritize when all these possibilities are coming at you? How do you figure out what we are going to focus on?
Gary: Oh my gosh, that’s a huge challenge, especially for somebody like me. My good friend Reed Hastings [SP] once said to me, “Ninety percent of CEOs under focus, and 10% over focus, and neither is good.” Guess which camp I’m in. I’m in the 90. He’s in the 10. It’s really hard. I think we just have a brilliant product leader who is good at figuring out what the customers want, and then doing that in the right priority order. I think that is a huge challenge.
You have so many things you can build and work on. You have to make sure that you are doing the right things first. For us, knowing that we are focused on quality and delight in 2013, that helped us to elevate our decision making capability on priorities because we knew we were optimizing for that over other things.
Andrew: I see so once you have that vision, we are maximizing for delight, you can set metrics around it. You can see if you are on track, and that makes it easier to decide when you have multiple options. You can say which of these is most likely to increase delight. The rest scale we can deal with later.
Gary: You want to set your organization up to make those decisions because as your business scales, the leader or even your VP can’t be involved in every decision. It is about empowering your team. The way you do that is making sure they all know what metric and what responsibility they have, and then allowing them to actually make the decisions.
Nowadays you can maybe test everything. You can run a test and see, did this increase that metric or not. You can roll it out to 10% of your traffic and see if you get any statistically significant change, and if not then you decide not to roll it out, or tweak it, or try something new.
Andrew: I come to these interviews to learn from you. Today especially, I want to learn from you. And the prepping helps me learn about you. Where do you go when you need to learn about how to be a better CEO? About how to steer the company in the right direction. What to ask your employees and your customers. Where do you go to learn?
Gary: Well, I go to what I would call mentor network. You know, we have an executive chairman who is a seasoned executive. Thomas Layton. He was the CEO of opentable and citysearch and metaweb. So here’s a guy that’s done it a lot of times and we have different skill sets. So it’s good to surround yourself with people who have skills that you don’t have.
If you go to people who are just like you, I think what happens is you get happy ears and you end up co-signing each other. Like, you’re great. No, you’re great. I agree 100% with what you said. What you want is people who are going to challenge you and come at problems a different way.
So I like to label people in very general categories. Hill figure-outers and hill takers. Are you good at figuring out the hill or are you good at taking the hill? And along those lines, I’d put myself more in the hill taking category. So that means I need to surround myself with brilliant hill figure-outers. Not a word, but you know what I mean.
Andrew: I get it exactly. Yes, absolutely.
Gary: What should be prioritized? It’s that, okay, stand back while we go take that. And so, I like creating a network of resources around me with skills that I don’t have. And I encourage entrepreneurs nowadays. There’s so many, I think, opportunities that exist today that didn’t exist even five years ago.
And I have a ridiculous number of entrepreneurs who come to me and say, hey, can you help. And in a lot of instances, I’m thrilled to do it because they have interesting businesses. And I feel like I can have an impact. And I can even learn from them, and they can be in my network too. So I think it’s these networks of people that can help.
Andrew: You’re going to be an adviser. It sounds like that’s going to be the next step for you.
Gary: Yeah, I’m advising a bunch of companies now. I really love it. It’s the opportunity to sort of get in and experience some different things. I have a lot of opportunities to do more of that, to join a couple of boards. And not really to sit back and say, hey, what am I going to do next?
So I think I’ll the luxury to really… first priority is to get these two companies together. As you know, private to private mergers are not easy. And my first priority is to make sure that this is done exceptionally well. And I’ve had the luxury of going through M&A many times. Sometimes done well, and others not.
And so really take the best practices and I’m committed to get the deal done, and to stay on as the strategic adviser for oDesk. But really adding some other businesses to my portfolio and spending the balance of ’14 doing that.
Andrew: Your competitors, how many conversations did you have with other competitors as you were building? How many conversations would you have with the leadership of Elance, with the other companies?
Gary: You know, we’re competitors but we’re always friendly. We would constantly communicate with each other.
Andrew: You mean you pick up the phone, you just chat. Say, hey, I’m having this issue with fraud. What are you guys doing? That kind of thing?
Gary: Yeah. Yeah. Hey, we’re seeing this. We’ve seen a massive fraud ring. We’ve seen this. Could we help each other? So there was some “competition.” We were fiercely competitive, but there was a healthy respect for what each other were doing. And Fabio, the CEO of Elance, and I would get together for a meal. We’d walk through the dish. We’d communicate with each other constantly. I think we built a healthy friendship over the years.
Andrew: Finally, how about this? A book that you recommend other entrepreneurs, other business people, read?
Gary: Oh, my gosh. You know, I finished the Jobs’ book recently. I loved it. It’s an obvious one, but not because I wanted to be like Steve Jobs. Just because I thought it was so transparent, and just really made me appreciate the skills that he has that I don’t have. And made me realize that I’m never going to have those skills.
Andrew: Like what?
Gary: Like his design sense. His attention to detail. This maniacal focus on the edge, the corner, the thing. Like while I would love to have that, I don’t have it. I’ve never had it. I think back to college. I was the guy with the cinder block and two boards for the stereo. You know.
My wife reminds of that all the time, you know, like I’ll take of our house. You don’t have that design sense. But when I walk into a friend’s house where they do have this, it’s like, oh, my gosh, look at that.
Andrew: Yeah. Yeah.
Gary: It looks great. And so what it made me realize is that don’t try and be what you’re not. You know, like, recognize what you’re good at and ride that strength, and then go find somebody that’s got that great design sense.
Andrew: What is your strength? What’s the one thing that you’re exceptionally good at?
Gary: I’m probably pretty hard on myself, and I don’t think I’m exceptionally good at anything. People tell me that I’m a good communicator. They say I have a way of breaking things down and making them understandable. People tell me I’m a good leader. They say I’m inspiring, I have charisma, and I’m a good leader.
I was chatting with a friend recently about whether or not I should be a VC and he said, “I think that’s a waste of your talents. VCs think about what to do and they make a few decisions, but you’re more of an operator and it will be a waste of your leadership talents. You should be leading companies because you’re good at assembling teams and leading them in the right direction.”
And I thought it was a good observation because that’s what I enjoy doing as well, so I…
Andrew: [??] as a kid growing up you were the guy who was going to lead the baseball team, who was going to get a group of people together to go play stick ball or whatever?
Gary: That’s exactly right. I’ll often think about that, and I’ve thought about it in the context of an interview. Let’s say you’re going somewhere, there’s an organized trip, and everybody is going to get on a bus. There are 50 people sitting in the parking lot, and the bus doesn’t show up. What do you do?
I was the guy who said. “Okay. The bus isn’t here. Somebody is going to have to call the bus company. Somebody is going to have to let the place know that we’re going to be late. Somebody needs to be calling a different bus company. How many cars do we have? If we car pool”…I was the guy that was saying, “Let’s get this thing solved.”
I wouldn’t just talk about it, but I would spring into action. I would say, “Okay. I’m going to call the bus company what are you going to do?” So I was kind of a default leader. I just think it was an innate capability that I had. I usually ended up leading by doing the job and then getting the job. Not saying, “I want to be the leader.” By default I would say, “Something needs to get done. Let’s do something.”
Andrew: Where most people would say, “Someone needs to do something about this. This is not right that the bus is broken down.” I’d like to do that.
Gary: I just kind of would do it. I was the person that was planning trips. I became the default leader of things because…I think maybe one of the capabilities or one the things [??]…excitement from seeing things done…or getting things done.
Andrew: Well, congratulations on how big of a company you’ve built. What were the sales 2013? Can you [??]
Gary: We’re not talking about them, [??] but they were quite significant. So we can from zero to quite a lot over the years.
Andrew: Here’s one I see…I think you guys reported this for 2012…360 million in revenues.
Gary: In gross services through our platform.
Andrew: Gross services through the platform, right. So it’s not your share. It’s your plus the freElancer share.
Gary: Yeah. Our business model is to take roughly 10% of that, but we monetize a little bit more. So you can roughly back into our 2012 numbers. 2013 was obviously a bigger amount.
Andrew: Overall $1 billion worth of hiring was done on oDesk since its founding in 2005?
Gary: Yeah, and that was as of six months ago. So again, we’ve continued to blow through that. It’s millions of dollars a week now. It’s quite significant.
Andrew: One of the big inspiring stories of that tech world, a new way of working that hadn’t existed before. A way of connecting people from parts of that world that never would have connected before and having them be coworkers, teammates, and having them build new companies together. It’s a privilege to have you on here. I appreciate it.
Gary: Well, thank you so much for the opportunity. I love the conversation, I love talking about it. I’m happy to join any time and talk about anything that can [??] entrepreneurs. Thank you.
Andrew: Thanks a lot. Company is oDesk go check them out. Thank you all for being a part of it. Bye guys.
