Outsourcing 2.0: oDesk CEO Gary Swart (Part 9)

Sramana: After you had raised your initial rounds with Sigma, how much money had you raised?

Gary Swart: We raised additional funds with Benchmark. We took $6 million in our A round, $8 million in a B round, and $15 million in our C round. We have raised $29 million total. We have essentially not touched the $15 million that we raised in May 2008.

Sramana: Are you now profitable?

Gary Swart: We are choosing not to be.

Sramana: What are you spending money on?

Gary Swart: Research and development.

Sramana: How many people do you have?

Gary Swart: We have 36 employees and about 100 full-time equivalent contractors who come to work on oDesk full time every day.

Sramana: What types of functions are you staffing with contractors?

Gary Swart: We are moving to Redwood City [California] tomorrow. We have zero engineers locally; 100% of our development is done remotely through this fluid pool. Notice that I did not say outsourced. It is not outsourced. These contractors work for us. Some have worked for us for years, some for months. The good ones we keep, and the ones who do not do so well are allowed to move on.

Recently we needed a Python and Django developer for a services engagement for one of our large partners who wanted their system to talk to our system. We hired two into the network, and they were so great that we are keeping them on, and they are now working on other services engagements for other clients who wanted integration. We are able to eat our own steak for our own services.

We have a fantastic analyst in Florida who is an Excel jockey and does a lot of financial analysis for us. We have marketers all over the world. We have a stay-at-home mom in Tennessee who manages our support teams.

Sramana: What do the 36 people who are your employees do?

Gary Swart: Overhead like me. We have an executive team that includes VPs of engineering, marketing, product, and a CFO. We also have some fraud, trust, and safety folks as well as a small finance, product, and marketing team. We also have a small product architect team. They work together as a team and with the offshore contractors to implement [our products]. We are a unique company in that we eat a lot of our own steak. We have some customers that have ratios significantly higher than ours. There is a company in Texas with 13 employees and 180 contractors. Some of those are W2 workers through oDesk. The rest are 1099 throughout the world.

Sramana: Why are you not profitable?

Gary Swart: We are choosing to spend more money on what we think is a massive opportunity. There is a lot of complexity around global managed pay.

Sramana: Does the payment platform account for most of your investment?

Gary Swart: We are investing in all of the components. We are investing in the marketplace because it is the largest, with the most contractors and liquidity. On an individual basis, oDesk is head and shoulders above everybody else out there.

This segment is part 9 in the series : Outsourcing 2.0: oDesk CEO Gary Swart
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