Outsourcing 2.0: oDesk CEO Gary Swart (Part 7)

Sramana: I think in many cases companies would hire contractors through Elance but would not use Elance to pay them.

Gary Swart: Absolutely, and I think Elance has recognized that. They realize they were only getting the tip of the iceberg. I think you will see they begin moving more toward the middle and move more toward where we are. A challenge for them is that it is difficult to get a marketplace to shift.

Sramana: Elance does provide lead generation, and that is a valuable service. I don’t see a problem with lead generation. There is also a place for fixed-price work. Elance does provide a valuable service. Isn’t Elance a bigger business than oDesk?

Gary Swart: No, not even close. A year ago we were 70% the size of Elance, and today we are 140% the size of Elance. More dollars go through oDesk on a monthly basis than any other marketplace out there by 40%.

Sramana: What about revenue?

Gary Swart: Our revenue is significantly larger. We have different business models. They are charging for the subscription and they take a percentage of work on fixed-price projects. Their revenue is lumpy. They have to monetize the match due simply to the number of transactions they would need to sustain their business on that alone. Their lifetime value is very low because people are disintermediating.

Sramana: One of my primary obsertavations about Elance is how easy it is to take the work offline.

Gary Swart: You could do that with oDesk as well. If we do not deliver enough value after the match then you should. Our entire business is focused on providing value after the match. We don’t even monetize the match. You can post a job free and you can interview free. If you found a great candidate, you could cut oDesk out right there. Our contract says not to do that, but what can we really do about it? If oDesk does not deliver value after the match, then we do not deserve the right to have you as a customer. We are very focused on delivering value and have been for the past five years.

Sramana: I do have to say that I have hired some very good people through Elance as well.

Gary Swart: Sure. If I am a contractor, I better have my profile there and try and get some clients. If I have enough clients then I can take me profile down and put it back when I have enough clients. Contractors have to pay the fees to work on Elance only when they need to get more work. It would also make sense for contractors to put their work profiles up in multiple contractor marketplaces.

This segment is part 7 in the series : Outsourcing 2.0: oDesk CEO Gary Swart
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