Outsourcing 2.0: oDesk CEO Gary Swart (Part 1)

Sramana: Hi, Gary. Would you begin by talking about the genesis of your story?

Gary Swart: Odysseas Tsatalos and Stratis Karamanlakis, two Greeks, wanted to work together. Odysseas had co-founded Intacct, which was an accounting company, and he had always wanted to hire his friend, Stratis, who lived in Greece. The CEO of Intacct would always push back and point to time zone differences and other challenges. Ultimately it boiled down to trust and knowing that a remote employee would be working on what they were supposed to be working on.

In the background, Odysseas and Stratis worked on building a platform that facilitated remote work. It was like a virtual office that would allow people to work together regardless of where they were located around the world. They built the technology, and Odysseas decided that it was a better business, so he left Intacct to start oDesk. The backbone of oDesk was the technology that they had built. That was in 2004.

Sramana: Elance was already going by then, right?

Gary Swart: They were started in 1999, but they are a very different business. Elance was building a marketplace to match buyers and sellers for projects. You post a project and people can bid for that work. The entire premise was a marketplace that required pay to play. A provider of services would have to pay to join the marketplace. Elance tries to monetize the match.

Sramana: In oDesk you take a percentage of the project?

Gary Swart: We take a percentage of the hours worked. We are more of a global employment platform. We are not a platform to facilitate a project being done.

Sramana: Elance also takes a percentage of the project, right?

Gary Swart: Elance requires service providers to pay to use their platform. A subscription will entitle a provider to have a certain number of bids every month. If they want more bids, they have to pay more money. They make money by monetizing the marketplace.

oDesk has never monetized the match. We get in the middle of the work. We take a percentage of the fee for time-based work, but we deliver value after the match. We deliver value in the form of automated time tracking and billing. We have guaranteed payment to the contractor and guaranteed work to the buyer. Elance is primarily focused on fixed-term-based project work, and most projects are less than $250. oDesk is focused on time-based work. That means there are two entities working together over the long term. We are the platform that enables you to hire, contract, and manage that work, and to pay [the individual] legally.

Sramana: When oDesk began was that distinction already in place?

Gary Swart: It was not. It had a platform which allowed communication with a remote worker. Everybody who wanted to buy the platform had also asked if oDesk could provide the workers as well. People were not asking for fixed-price projects; they wanted to have working relationships for a given time with a particular contractor.

This segment is part 1 in the series : Outsourcing 2.0: oDesk CEO Gary Swart
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