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Outsourcing: Fabio Rosati, CEO of Elance (Part 3)

Posted on Wednesday, Dec 14th 2011

SM: Talk about the 20 metrics around which you measure behavior.

FR: They’re broken into three big categories. The first one is marketing, how you market your services. We felt that was instrumental to the perception of professionalism and the perception of quality. The community on Elance bought into the idea that when they see a potential client, when they see a proposal, a job being posted, it was important to only respond and only apply to the job if they felt qualified, if they felt that they had a compelling reason as to why they would be hired, as opposed to the typical behavior of exchanges where you have hundreds of applicants.

SM: Random.

FR: Random.

SM: And they don’t read the specs. They respond without the proper information.

FR: They respond without the proper information. There is absolutely no concept of somebody really tracking your success rates, your response rates, and — by the way, we also introduced limited capacity. Let me go into a greater amount of detail. Depending on the level you’re at in the system, you earn these points every week. As you move up a level, it means that we are increasingly confident you’re doing a good job, so we can give you more capacity to apply to more jobs. But if you start doing a bad job, you lose that capacity, because we will quickly want to restrict your ability to do damage. It creates all the right behaviors.

So, the marketing resource is a big piece. It’s like step one. Let’s get our community to buy into this idea, and let’s reward people who do a great job. Step two was delivery, the ability to deliver on time, on budget, getting really good feedback, responding to messages on a timely basis. Let’s see if we can identify key measures of that and reward those.

And the third piece is client relationship. We, obviously, have a huge incentive to keep clients coming back to Elance. The more they come back to Elance, the more likely that not only Elance does well, but also the rest of the community, because the person who is hiring a Web developer may need a writer, may need a designer, may need a researcher, may need an SEO consultant. So, if we are able to create a system where every member of the community is rewarded for maintaining the relationship with the platform, everybody wins. So, that’s the social engineering system that we put in place.

SM: How did you do that, that last piece? The first two pieces I understand.

FR: The average relationship value, relationship duration, repeat business.

SM: So, you’re encouraging the service providers to work with one another as well?

FR: We need to bring customers back to keep them on the platform and to work with each other, yes.

SM: All right. So, when an employer wants to recruit on Elance, what are some of the best practices that you recommend?

FR: It depends on your level of experience, and also a lot depends on what you’re looking for. If your goal is to build a team, you have the ambition of building an online team that you will be working with for a long time, you’re looking, for example, to build your  virtual customer support team, or you have a vision of a marketing department, but you can’t afford to hire a whole marketing team. So, you want to have a few designers, a few writers, a few researchers to work with the one or two people that you can dedicate to the marketing organization full time. Well, we always suggest that you start by interviewing candidates and evaluating candidates as you would if you were hiring them full time.

We provide an enormous amount of information about every candidate. We have an incredibly sophisticated portfolio management system with 1.8 million work samples. So, when you identify a candidate you’re interested in, you can see all of his work. You can see, of course, all of his prior history. We verify a whole bunch of credentials, location, etc, etc. So, there is verification. There is the portfolio. There’s work history. There is skills testing, as you probably are familiar with. We give them as much information as possible.

Evaluate the candidate. Interview the candidate. You can interview the candidate in the flow, in our system and get to know him. And then, give trial jobs to people, even while you do the interview process. There’s nothing better than trial jobs.

This segment is part 3 in the series : Outsourcing: Fabio Rosati, CEO of Elance
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