Bill Kerr: Freelancer.com is a leading digital labor platform that harnesses for companies the vast global labor pool of internet-connected freelancers and the dynamism and creativity of crowdsourcing. In 2019, Freelancer.com boasted over 40 million registered users, 17 million jobs posted and 1,600 skill categories, making the Australian firm a key player in the space sometimes called the crowd economy. Success for digital labor platforms depends upon reducing frictions for matching employers and freelancers. Freelancer.com handles many of the regulations governing outsourcing, offers escrow services for payment and has even begun working to provide certifications and co-brand into communities with client enterprises. While Freelancer.com has enjoyed remarkable sales over the last decade, the potential for growth is even more enormous. What will it take to capture more of this business? Welcome to the Managing the Future of Work Podcast from Harvard Business School. I'm your host, Bill Kerr. I'm joined today by Freelancer.com Vice President, Sarah Tang, who led the company's entry to the corporate business which connects enterprises with the platform’s freelancers worldwide. Welcome, Sarah.

Sarah Tang: Hello, Bill. Thanks for having me.

Kerr: Sarah, tell us a little bit about yourself and what's your role at Freelancer.com?

Tang: Sure, a bit about myself, I initially was planning on pursuing a PhD in innovation science and strategy at MIT, and so back then I met the head of product at LinkedIn. And when I was doing my graduate thesis, he says, "You have three degrees. You're a professional student. Go get a real job." And, so I thought, "Well, there goes my plan."

Kerr: Harsh, but good advice, I guess.

Tang: Exactly, and so he actually spent a couple of years down in Australia. Now this guy's done well, Harvard Business School graduate, went to BCG, went to LinkedIn, and I thought, "It can't be too bad to move to Australia." And so it was serendipitous, I actually came across Freelancer.com within my first month of getting there, and so I really saw an opportunity to solve some of the biggest problems by some of the biggest companies in the world, whether that's product and technology or innovation with that platform. I signed on and the first role I had was a product manager role, where I built some of the features and functions of the site. Then I transitioned more into a global ops role and most recently started the enterprise business.

Kerr: Yeah, so tell us about how you came about identifying that segment as a place that your company should be targeting, and then also your role in creating this division.

Tang: Hidden potential is defined by the freelancers on our platform who are super talented, they're geniuses, but never got discovered into Harvard's pipeline, into Deloitte's recruiting pipeline or maybe even, say, Facebook's pipeline. So it was about uncovering that potential for them and connecting them to some of the best companies in the world who might be experiencing growth frictions in the fields of freeing up their budget or wanting to innovate faster and accelerating their time to market. Back in 2018 I was running global ops and I noticed a lot of support tickets coming into our support channels from, say, The Economist, Facebook, Google saying, "How do we get freelancers to work on projects across 156 different countries, and how do we get 300 of them on board at once?" And I thought, "This is really interesting. We're not doing any marketing in this space." And I think what's really driving this need is the fact that businesses have an urgency to innovate faster than ever before. McKinsey came out with a report that said that over the last 30 years they surveyed 3,000 companies and found that if a company was not growing at about 20 percent year on year, 92 percent of them would cease to exist. I mean, that's-

Kerr: Quite the imperative.

Tang: That's quite the imperative. And so companies are seeing this urgency and 80 percent of them are already on our platform and they're operating on our platform.

Kerr: They’ve already had freelance work that they had been posting there, but it sounded like they wanted to be able to expand across many different countries or put some more coordination around it. What exactly were you trying to unlock in terms of the functionality for the businesses?

Tang: So what we provided on the enterprise level was just a centralized governance for the company. We're creating a marketplace as a service model. Really ... I mean, the biggest barriers, I think, to companies adopting and scaling freelancers are really on the quality aspect, and so we really built our services around curating and finding the top talent, a subset of the 40 million people on our platform, for these companies.

Kerr: Create a little bit more context for us. Take us back to how did Freelancer.com get founded and then what was the state of the early years and how did it grow to become one of the two or three largest platforms in this whole space?

Tang: Yes, so the founder, Matt Barrie, was looking for data entry work. He was willing to pay about $2,000. And no one was willing to do this work for $2,000 over a couple of days. So, he went online and he searched freelancing and data entry and came upon a site called Getafreelancer.com. He posted the job. Overnight he got hundreds of bids and freelancers were willing to do it for $200, so that's kind of how-

Kerr: It was an eye-opening moment for him.

Tang: Definitely an aha moment for him, and so the company started in 2009. He took about $2 million in private funding and was completely bootstrapped and he bought Getafreelancer.com, and since then he's acquired tens of dozens of the smaller marketplaces across the space.

Kerr: The consolidation of-

Tang: Definitely.

Kerr: -a variety of early attempts at this, and then creates a platform of a very large and global scale.

Tang: That's right.

Kerr: Okay, so beyond data entry can you give us an example of some of the types of projects that you are conducting or regularly filling on Freelancer.com?

Tang: NASA loves doing contests on our platform, and contests are where you post a problem to the crowd. Astronauts wanted to have all their bodily functions tracked and while they're out in space. They sourced 250 solutions for a UX/UI design. For $1,500 they awarded a winner and this winner was a UX/UI designer from Ukraine. Then they hired a specific developer on our platform in a project where they had to define outcome and timeline, and that developer ended up building that smart watch prototype, which now is actually being worn by the astronauts on the space station.

Kerr: And NASA's doing the coordination across these jobs?

Tang: That's right.

Kerr: They're taking one output and channeling it as the input to the next job.

Tang: That's right, and so these are some of the initial examples of what inspired the enterprise division as well.

Kerr: Staffing industry analysts portrayed your Freelancer.com as being this hybrid of crowdsourcing and crowd staffing.

Tang: That's right.

Kerr: Was that the way you had originally envisioned the company developing in its space or was it through a myriad of experiments and examples and trying things out that you ultimately come to this unique model?

Tang: We definitely take an experimentation approach, and so it was through trial and error over time, and now we effectively are building, becoming the experts in building the whole crowd economy industry for some of these marquee customers.

Kerr: If I picture what it must be to run operations in 150 countries and have an Australian company be able to work with a Deloitte partner in London who's sourcing work, there's a lot that is underneath that hood. Tell us a little about what are the main challenges or frictions that you need to be able to overcome to operate global business at this scale.

Tang: What freelance.com enterprise is really aiming to build is this crowd economy, and there's this real shift I think over the last decade from the cloud economy to the crowd economy. If you think about the cloud economy, it's originated by probably AWS, Amazon, right? Where you can enable customers and businesses to build and scale applications faster and on demand. You can pay for computing a storage on a per usage basis. You can scale up load. That becomes elastic.

Kerr: And one of the analogies there being organizations traditionally would've had to invest in large server farms for themselves, a lot of IT expertise to pull it off, and now become something that you can purchase as a variable input into your business, and you're imagining large portions of the talent that's coming into the company being similarly provided.

Tang: Yes, that's exactly, and this type of talent can either be used in a way as specialized experts—a skill set that doesn't currently exist within companies, but companies might need a couple of people on demand, or it could even... Imagine if a company could free up their staff and their budget to work on the most interesting problems and actually push some of the most annoying things that they don't want to work on to the crowd.

Kerr: I think of the data entry that we heard about at the very beginning with your founding story. So clearly as you bring in people from around the world and as you also bring in this variable, they're with me for a period of time, you're introducing a lot of risk, a lot of things that are different than if I have someone that I've hired 40 hours a week, they're my employee and only my employee, we're in close proximity every day. How do you manage or address some of those risks?

Tang: I would possibly challenge you to go back to the Amazon and AWS example because when they first came out, they had to address some similar issues. People said, "Oh, we know there are the benefits. I can scale applications and faster and on demand, but what about data security and all that sort of stuff?" And so fast forward to today, Amazon and AWS is the gold standard for the sort of things to be done. And so if you think about IP and confidentiality, we get similar questions from companies saying, "How do you protect those sort of things on the crowd platform?" First of all is we built in mechanisms to standardize a lot of what's already being done offline into an online environment. It's really just about thinking how do you take the existing processes to gate-keep around IP security and confidentiality and put that onto a platform model and redesign that to a platform model to mitigate risk for everyone.

Kerr: Okay. This brings us now back I think to the enterprise segment and your particular growth and functionality and development for that. Tell us a bit about what new services you're bringing to the very large Fortune 500. We can start there and we can work our way down into small enterprise, but just for the largest of clients, what services are you now trying to build that are new and unique?

Tang: We built a strategic partnership with some of our marquee customers, whether that's Arrow Electronics for the electrical engineering space, Deloitte for the consulting and professional services space or even Facebook for ads. They come to us and they define the gold standards of what's required within their industry, and they certify a subset of our 40 million people based on those standards. It could involve doing an interview, a code exam, work samples, background checks, et cetera, whatever they think is required to define that gold standard for that industry.

Kerr: I'm sorry. They're the ones that are doing the vetting.

Tang: That's right. So we actually do this in partnership where they vet the freelancers on our platform, and the freelancers then, once they pass through that certification, they become qualified to work for that particular company, but more so for them, what's interesting is they become more marketable to other companies.

Kerr: Is this sales force? Is it service technicians? Obviously, Deloitte would be some sort of consulting background work. What are some of the things that they're trying to fill in terms of an occupation or role?

Tang: We've got the private branded community and the public branded community. So for the private, let's take Deloitte as an instance. We built that branded community where they have tens of thousands of Deloitte consultants that are on the platform. The private instance is that these consultants are actually full time Deloitte staff and they are working with each other and getting matched to projects with each other. And so that's really interesting because the problem that Deloitte came to us to solve, the big strategy problem, was that they wanted to increase their utilization rate of their consultants because if a consultant can increase that utilization from 80 percent to 100 percent, the bail out rate to the clients would be significant, right?

Kerr: Yeah, 25 percent productivity boost right there.

Tang: That's right. But more so importantly, the consultant industry is actually quite transient, so when these consultants leave, they actually already know the nuances and the cultural contexts and have the best practices of working within Deloitte. Deloitte can then hire these freelancers or these ex-Deloitte people as freelancers back onto the platform. So that creates a transition then to the public branded community. An example of what we created in the public branded community space was with Facebook. So, Facebook came to us saying that they actually had a revenue friction with their customers who wanted to purchase app products. Now the friction was that there was a skill shortage in developer and technical skills, so their customers didn't actually know how to install Pixel or APIs or Advanced Matching, and so Facebook came to us and said, "Well, we're going to define all the certification process. They need to go through a blueprint exam, do a coding exam, they have to be interviewed and come onsite and do x, y, z," and so they certified a subset of our freelancers who are really good in developing or have developer and marketing skills and then they're offering that to their customers. Now once these freelancers are certified by Facebook, they can also be more marketable to other customers outside of Facebook who want similar skills, so that's an example of a public branded community.

Kerr: Sarah, I'm sure that on Freelancer, you've collected lots of data about the performance of freelancers, their feedback, you maybe even have some star systems that you're working with, but you've actually done a lot more in terms of creating two or three different types of categories of workers. What is that differentiation trying to solve?

Tang: On our platform there's 40 million people. Now at the very base level, we have a matchmaking algorithm that can detect some of the people from that 40 million pool. And if they bid on that project, then they get surfaced into a bid-ranking algorithms, not too dissimilar from say Google page rank. So the best freelancers get surfaced to the top based on their rankings and reviews. That's the very first layer. The next layer actually is one of my favorites is what we created called a rising stars program. With the rising stars program, that means that people that have previously not worked on a job, but could be really exceptional, I'm talking about people that... I had an ex-GE executive, people that have been ex-Harvard and ex-Google, a PR executive that has been working in the House of Commons for 20 years. They're the type of people that we want to bring into the rising stars program. And an example of that is, recently I'm working with the chief strategy officer at a global consumer goods company, and just for fun I thought, “would we have any management consultants on the platform?” Because I actually haven't seen a lot of that type of job done. I looked into our database. It turns out we have about 13,000 tie-one and tier-two management consultants from companies like Bain, BCG, PwC. I'm looking through the profiles and we have everybody from an ex-Navy seal who then went to Goldman Sachs in M&A and then went to Bain, to an ex-McKinsey partner on the platform. A high percentage of them actually have no reviews, have never done work on the platform because there's a real latent demand on our platform. The rising stars program is really meant to surface these caliber of people.

Kerr: Great.

Tang: Yeah. Then the next layer on top of that is the preferred freelancer's program. That's effectively our own certification process. We surface the best, the top 3 percent from each skill category of the 1,600 different scale categories based on their past performance of projects on the platform, and then they go through a certification exam that we've created as well as go through a security identity checks and the like. They actually then get access to the top value projects on our platform. Then stage three to that is then the branded communities, which is us doing certifications with our partners in the industry.

Kerr: As you look at the whole digital labor space, it's in the $4- to $5 billion range, and of course the US economy is in the trillions of dollars in terms of worker wages. What do you project in terms of digital labor's future? How rapidly can this penetrate other segments than the way that freelancer market is historically kind of come at things?

Tang: I think just in terms of some of the trends that point towards the crowd economy really being the future of work is that the labor market itself will become... 50 percent of the fulltime working population in the US will become full-time freelancers by 2025. On the skill side with the rise of AI and automation, you'll find that we'll have a real skill shortage of some of the most in demand skills because a four-year university degree is not going to suffice or be fast enough to train up these new skills. My nephew is five and I read a report by the World Economic Forum that said by the time he turns 18, 65 percent of kids his age would be in a skill category that does not even exist today. So, as a result of all this, there's been some reports saying that there'll be $11.5 trillion of skill shortage by 2025.

Kerr: Sarah, one of the things that's heavily in the news right now, extremely heavily as we record this podcast, is the coronavirus.

Tang: Sure.

Kerr: And this of course is going to influence many parts of global business, but probably provides some opportunity for the freelancer market, for people not needing to travel from locations, being able to access people around the world. Talk to us about the implications this has for your business and how you're approaching this condition.

Tang: Nobody likes pandemics, but I think a global cataclysmic event like this really offers an opportunity for people to observe the benefits and the ability to work remotely. I think it really becomes a stress test or proof point and it could force remote work within business interactions. I think large events like this could definitely trigger a wave of change into people seeing that business as usual won't work anymore. It's better to work with crowd platforms and to work or freelancing, and for them to become part of or an extension of their core team. They're just a more flexible component.

Kerr: Yeah. It went ahead and may just overcome initial fears for using some of these platforms and for digital labor. And the second is just then appreciating the functionality that you can offer, and oh, it's not that hard.

Tang: Yeah. This is not that hard.

Kerr: Are there certain policy environments that you find very difficult to work in, others that are more helpful?

Tang: In terms of policy environments, I think for enterprises that come in to work with us, one of the first questions they asked what about worker classification, right? Especially with things in the news about Uber and everything else. So we really mitigate the risks for our customers by ensuring, first of all, a properly functioning platform, but inherently the platform itself actually mitigates these risks because there's 1,600 different job categories versus Uber where there's just one. The choice is up to the freelancer. As well we kind of work with these companies to classify these freelancers, just ensuring that they're free from control, they can work in a category that they have already established a trade in. Most importantly, working in the area that the company doesn't usually have a usual course of hiring or its usual course of business. Now on the freelancer side, I think it makes it even more interesting because the labor market is clearly showing that they prefer this way of working. They can actually earn more money, they can upgrade their skills. They have more freedom. Actually one of my favorite stories is one of our product manager, Mike Ni, had to hire a freelancer to do some UX and UI design flows. He found a designer based in Manila. For $6,500 over a period of three weeks, which is a lot of money for the Philippines as well, she produced 247 pages of UX and UI designs, which is incredible. Now the even better part of the story is that we were so impressed with our work. I said, "Why don't you come in full time to work in our Manila office?" We actually found that she used to be one of our employees three years ago, and she said, "No thanks. I'm making two to three times more on the platform, so I'm going to stay on the platform."

Kerr: So, there’s a bunch in there. First off, you're using your own product, which is always exciting.

Tang: Yes.

Kerr: Then you see the potential there. I think your example is also highlighted, going back to our earlier conversation, the sheer challenge of pulling this operation off in that California's trying to treat workers in different ways than other states. I'm sure there are probably within the Philippines or within India, definitely differences across states in terms of what workers must do and just being able to put all that on a legal footing is a difficult challenge.

Tang: I mean, I think we definitely all have a shared sense of responsibility right now. Everybody from policymakers to governments, to companies, to the freelancers themselves, the unions. Even platforms. I think we all have a responsibility to play in terms of redesigning the system and policy so that freelancers and companies can thrive in this new era of work. The people are clearly asking for it. The labor market is shifting this way. Companies are starting to hire this way. The system just has to be designed to be able to keep up. I think we all have a part to play in that.

Kerr: As you think about your freelancer population and the example you provided, do you have a sense of how many people find freelancing important work due to some flexibility that they need? Maybe they want to live in a certain location or maybe they have family responsibilities, versus the example you gave where somebody was earning a premium on what they could get in full time employment.

Tang: I think, you know, 10 years ago when freelancing first started on these platforms, there was a lot more of the lower task level work, like data entry, et cetera. Whereas now we're really migrating into more highly skilled people who are choosing this type of remote work because they want more freedom and they want to do it full time. I mean, actually what's interesting is we found... I spoke to Steve Rader who runs the crowdsourcing center in NASA. He told me an example of a freelancer that he works with based out in Greece. Steve asked him, "So how much of your time do you spend upgrading or upscaling yourself?" The freelancer said, "Sixty percent of the time." I'm working full time. I don't have 60 percent of my time to spend upscaling myself and all the things that I want to learn. Then Steve said, "So how can you afford to do that?" He said he's earning six times the amounts in the average wage salary increase.

Kerr: Let's think about your typical Fortune 500 potential climate. Somebody inside the organizations has already been posting stuff on Freelancer.com. They're coming to you and they're wanting to think about ways to extend more in this market. What do you typically find is the biggest challenge or hurdle for them to overcome or what's the thing that you identified this is the pitfall that you need to be watching out for?

Tang: I think the first is probably, or the most important thing, is that cultural shift. Because people recognize that yes, there is an opportunity in the space. We can do things better and faster, but why change the business as usual? I'll give you an example actually from NASA. When they first started trying to implement crowdsourcing, it failed miserably. I think there's a Harvard Business School case study on this. Then NASA actually changed the messaging to say as scientists, you don't have to be the problem solvers anymore. You can be the solution seekers and you can actually solve problems better and faster if you enable people from all over the world to help you solve that problem. They crowd source ideas from each other or they did do projects with each other. Then once they max out on that capacity and that utilization, once they actually get more comfortable with this concept that they don't have to do everything themselves, they can get people to come onto their team and to help them. Then you can open up that tap to create an instance where you bring freelancers onto that team. This private kind of marketplace as a service to public marketplace as a service, as something that we've created for customers to be able to drive that sort of cultural adoption.

Kerr: It's a fascinating transition that companies are taking. My colleagues, Mike Tushman and Karim Lakhani coauthored that case study and also worked with NASA. Resources to go for people looking to engage more in open innovation with Freelancer.com having been a important platform for them in the early days.

Tang: It's a great study….

Kerr: Sarah, beyond the companies that we've talked about, like Deloitte and Arrow, are you working with schools or unions or other groups to create these branded communities?

Tang: Sure, I think currently we're not working with them, but it could certainly be a really good opportunity. If you think about it from a school's perspective, if a fresh grad from MIT or Harvard, the best in class, instead of working with one company for a summer internship and then going through HR and going through all those scary interviews, they can work directly with business line leader on a few really interesting projects and they can choose to work with Amazon and Deloitte and NASA and whoever else they want to over an entire summer.

That creates an opportunity for them to be more marketable when they graduate with these particular companies. In terms of unions, we certainly welcome them. We're agnostic to whether someone is part of that union or not because our job as the platform is really to surface the best talent regardless of their affiliations.

Kerr: It's interesting to contemplate in some union-based environments, the union may want to be the one that helps certify people's skill sets in a way that then makes them more attractive to employers. Sarah, thank you so much for coming to join us today. We appreciate you sharing with us where Freelancer.com is, how it's opened up new products in the enterprise space and where all of this digital labor and talent might go in the future.

Tang: Wonderful. Thank you for having me.

Kerr: Thank you for listening to this special episode of the Managing the Future of Work podcast. To find out more about our project on the future of work and for more information on the coronavirus’s impact, visit our website at hbs.edu/managing-the-future-of-work and sign up for our newsletter.