Outsourcing: Matt Barrie, CEO of Freelancer.com (Part 2)

Sramana Mitra: How many freelancers are in the system?

Matt Barrie: We have more freelancers on our site than any other marketplace in the world. The mix is about, three quarters freelancers and one quarter who are our employers.

SM: What can you tell me about the employers? What kind of employers from what countries, what industries, and what sizes?

MB: The number one employer base is the US; about 40% of the employers come from the US. Number two is the UK with 10%. Interestingly enough, India is the third largest employer at about 7%.

SM: Very interesting.

MB: There’s a lot of intra- and inter-exchange arbitrage going on between the different outsourcing marketplaces. Our model is more of a high-volume, low-cost provider model. We really embrace the macro trend that is going on. The big macro trend is the fact that the global labor markets are disrupting.

There are seven billion people in the world. There are two billion people on the Internet, but 70% of the world’s population, or five billion people, are not connected. But they’re connecting now at double-digit and triple-digit rates. If you look at the rate of growth, for example, in the Philippines, in 2009, there were eight million people connected to the Internet. In 2010, there were 30 million people online, and 25 million had Facebook accounts.

The speed at which the Internet is now connecting the other 70% of the world is astronomical. Now, the thing about the other five billion people worldwide is the poor, the hungry, the driven, the self-motivated, they’re just like you and me, but they live on around $10 a day or less. So, the first thing they want to do when they go online is try and get jobs and raise their levels of earning. When you can jump into a marketplace like ours and make your month’s wage in a few hours or a few days, I think this is just an economically and socially transformative force.

The crux of what we do is empower entrepreneurs. We empower, in the West, small business entrepreneurs, who are resource constrained. They’re busy. They don’t have a lot of money, and they’ve got all these sorts of things they have to deal with day by day. But they can’t afford to hire full-time staff. Traditionally, even though they’ve been the backbone of the US economy – representing over half of the nation’s GDP – they’re traditionally not well serviced, particularly by technology. What we do is give them a digital workforce to get things done. I mean, every small-business owner has ideas about how he’s going to grow his business. What if I had a website? What if I had an iPhone app? What if I could find a product in China I could sell or get someone to redesign my showroom, find some packaging for me or whatever it may be?

First of all, they have no Web designer, and by the time they go and find one, they’re getting quoted $20,000. And then they just give up. Now, we put that power into their hands. You simply come along, post a project – it’s free to post a project – people start bidding on your job. On average, you get 60 to 80 people or more bidding. You can now get things done incredibly cost effectively.

SM: How are you different from oDesk, Elance and the other players in the segment? If you could put some context around the competitive landscape, that would be great.

MB: ODesk are doing a great job. I get on really well with Gary. There’s only really three marketplaces in the entire space that have liquidity and scale, and they’re oDesk, Elance and us. Where oDesk plays is more at the beginning of town. As Gary says in his own words, “we don’t monetize the marketplace. We have a workforce management solution.” Their average project size is somewhere around $6,000 and climbing. I think it’s a bit higher than that now.

They actually have a sales force that will go to Facebook and Google and say, “buy 10,000 contractor hours, and so on. Imagine having an adjunct engineering team or test team or what have you.” They’re going to larger sized customers than we are, on much longer projects, with a heavy focus on alley projects and alley billing.

Where we focus is on are very high-volume jobs at low cost. So, $200 or less is where our bread and butter is right now, but lots and lots of jobs. We’ve done 1.25 million. We’ve got users spread out all over the world. We’ve got a business model such that it’s growing like wild fire in developing economies and emerging economies because it’s free for freelancers to start up, it’s free for them to start bidding. As they start making money, we start charging them.

This segment is part 2 in the series : Outsourcing: Matt Barrie, CEO of Freelancer.com
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