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Outsourcing: Matt Barrie, CEO of Freelancer.com (Part 3)

Posted on Friday, Nov 4th 2011

Sramana Mitra: What is your business model? Do you charge a percentage?

Matt Barrie: We take a commission from the employer. We take 3% of the payments made or $3, whichever is higher. From the worker, we take 10% or $5, whichever is higher. But we do have a membership subscription package where if you subscribe for $24.95, it’s free for employers completely. For workers, the commission is 3%.

SM: That’s an essential difference from the oDesk business model. The oDesk business model is 10% flat.

MB: It’s actually 11.11% flat. They grossed the fees up. So, effectively, the commissions for people who do long-term work are about 25% of what you’re paid over at oDesk, for example. We want to be like eBay. We want to be in every country in the world, in every language, every currency. We’re currently doing 13 currencies. No one else does this. We’ve got a bunch of original sites globally. So, we’ve got a freelancer.co.uk site with a country manager in the United Kingdom. We’ve got one in Australia. We’ve got New Zealand, Hong Kong, Singapore, Philippines, Canada, and European sites. And we’re launching Indian sites. We’re at the volume end of the game.

Elance is kind of stuck in the middle, whereas oDesk is kind of bidding these long-term, high-end premium engagements. We’re bidding at the low end in terms of just getting the volume, offering a low-cost, high-volume solution. It’ll be interesting to see how it plays out over the next few years.

SM: I see oDesk being focused on the freelancer, and they service companies across the board. We are a small company; we use them. There are lots of small companies using oDesk. The difference with Elance is that rather than solo freelancers, they actually are a marketplace where small services companies are selling services to employers. That’s the way I see the differentiation.

MB: The amazing thing about our business is we’ve got freelancers all the way from the solo practitioner who’s a stay-at-home mother of two or someone who’s freelancing on the side out of the Philippines, right up to the top freelancers who are making almost $1 million a year. We’ve got a guy who’s building effectively in the vicinity of $65 websites, making $1 million a year with 100 people working for him, in India. The way that works is – for the reputation system – as you do more jobs and you get a good rating, you get more of what we call reputation, which means you get higher on the bid list. It’s like Google PageRank. The people who are at the top of the list are making about $1 million a year, and ones at the bottom of the list are brand new.

SM: And the ones at the top of the list are hiring the ones at the bottom of the list to work for them.

MB: That’s right. The other thing is, we have a lot more liquidity in the marketplace than Elance, for example. The reason we have more liquidity is we don’t charge people to bid on projects. So, it’s free for you to get going, free to sign up, free for you to start bidding, and so forth. What that means is, it’s very liquid in terms of not just the breadth of work you can get done. It’s everything from developing six formulas for chewing gum for the Australian market that gets past the food safety authorities right through to quantum physics work. We’ve seen all sorts of sophisticated jobs. They’re right through to the basic get me a logo designed or build me a website.

SM: What are the top five or top 10 job functions on your marketplace?

MB: It’s very much on the digital side, so it’s build me a website, get traffic to my website, design for me a logo, do some copywriting for me and so on. Those sorts of jobs.

SM: It’s the same across all of the sites, actually. On oDesk and Elance, it’s the same.

MB: That’s right. Getting back to the demographics, I mentioned it was U.S. 40%, U.K. 10%, India with about 7% and then Canada and Australia tie for about 5% each. And there’s a very long tail that goes for 234 countries, regions and territories right through to people from the Vatican, people in Antarctica on the site. On the worker side, India’s number one at 34%, and then it’s the U.S., Pakistan, Bangladesh, and the Philippines. The numbers change a bit sometimes.

This segment is part 3 in the series : Outsourcing: Matt Barrie, CEO of Freelancer.com
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