Outsourcing: Fabio Rosati, CEO of Elance (Part 7)

SM: I find this model incredibly compelling. I actually am a huge believer of the growth rates. I think it’s going to go very well. I think it’s going to be a $10 billion, $15 billion, $20 billion economy.

FR: I think it’s going to be bigger than that. We’re at the beginning of this e-work phase. Work is huge. Employment is huge. A portion of it will go online, and whatever small portion goes online is a huge number.

SM: And I think flexibility, from an employer’s perspective, is an interesting value proposition. I think more and more companies not hiring people and putting people on payroll but doing these kinds of models.

FR: I agree with you. A piece of anybody’s business model will include the online, flexible model. It makes so much sense … but not for everything, for some things.

SM: For a lot things, actually.

FR: Yes. We have 160 people on our team. Sixty are full-time employees and 100 are Elancers.

SM: Yes. I have a lot of exchange people. Actually, I don’t have anybody on my full payroll.

FR: So, you have a whole hierarchy of people managing people on your system.

SM: But not everybody is on an exchange. I have direct freelance people. I have over 40 people. I’m not hiring yet.

FR: You should teach people how to do that. It’s a skill in demand.

SM: We do teach that in One million by One million. One of the things I would actually like to get your opinion on is the 60,000 companies that you have, what does it take to make all of these companies become $1 million plus companies.

FR: Entrepreneurship. You need to teach them how to do it. You need to have a dedication to delivering customer satisfaction. One of the very interesting things we do – oftentimes I have to get on the phone to call one of these companies. I say, “I have to explain something to you. If this happens again, you will lose the privilege of being on Elance.” And the reason is that we track performance for everyone. If somebody doesn’t understand that, occasionally what we say to our community is look, if you want to be in business, you have to understand that, especially in the US market, people here are used to wearing a dress and returning it. They’re used to buying anything and returning it, no questions asked. You may not like it, but it’s the mindset. It’s the culture. So, please, if you deliver a service and [the client’s] not happy, ask your client what you can do to make them happy. If she says, “Nothing. I want my money back.” Be prepared to do that. It will happen once in a blue moon. And we’ll make sure that if that person is taking advantage of you, she loses privilege. We don’t let her back on Elance.

Once in a while, there’d be a customer who had an idea that he thought he was going to get this, this and this. You delivered and he is not happy. It is more cost effective for you to do the right thing. Many of our customers understand that. As a result, they have built extraordinary relationships and ongoing. They just keep getting the customer back.

The other big lesson that we have for entrepreneurs, and I’ll give an example without naming the company, one of the biggest users of Elance, huge company with a huge brand, started with a $200 project, and now they’re spending over $1 million a year on Elance. It’s the kind of customer that everybody wants to have. Nobody would have guessed from that $200 project the kind of relationship [that would develop]. So, I always tell people, “If you want to be successful on Elance, don’t focus on the initial project. Imagine what kind of relationship could build behind it.” Does that make sense?

SM: Everybody has to test, test the model, the vendor because they are so far away. With no real relationship, that test is important.

FR: Exactly.

SM:  Well, Great. Thank you, Fabio.

FR:  Thank you. It’s been nice talking to you.

This segment is part 7 in the series : Outsourcing: Fabio Rosati, CEO of Elance
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