Based in Menlo Park, CA, oDesk was founded by Odysseas Tsatalos and Stratis Karamanlakis in 2003. It is a platform that lets companies hire and manage remote workers from a global talent pool and pay them on an hourly or fixed rate basis.
Service providers are not charged any subscription, but oDesk charges the companies who post projects, 10% of the amount paid to the remote worker. This fee was previously 23% but the company managed to lower it due to increased operational efficiency. For this fee charged, oDesk helps the companies to hire and rank remote providers from all over the world, manage and monitor the process, pay the provider and handle all the country-specific statutory requirements. This business model is different from its competitors like Elance, who charges the service provider a subscription fee or Guru where freelancers are either free or subscribing members.
The general opinion is that the site is user friendly and has a few good projects mixed with many less attractive ones. Often the price offered per project is very low and not feasible for a service provider from a western country. Yet, the company’s homepage claims there are currently about 48,000 providers for 3,700 open jobs. Overall, the remote workers who use oDesk from all over the world (over 80% being overseas) are satisfied.
In April 2006, oDesk secured a $6 million Series A investment from Globespan Capital Partners and Sigma Partners. Later in September 2006, they raised another $8 million Series B investment led by Benchmark Capital and the former two investors. The venture investors on oDesk’s board include Greg Gretsch (Sigma Partners), Venky Ganesan (Globespan Capital Partners) and Kevin Harvey (Benchmark Capital).
In April 2007, oDesk announced that “a record ten million dollars have been spent on outsourced technology projects through the company’s global job marketplace.” Today, the company states that the amount earned through its site is over $26 million. At 23% fees and $26 million in projects, one can estimate their 2007 revenue to be between $5-6 million, and current valuation in the $20-25 million range.
Exit, for oDesk, unlike eLance, could best be in the arms of a Human Capital Management player.
This segment is a part in the series : Deal Radar 2008