As Covid continues to change the way businesses operate across the world, the positive fallout is the way in which #gigworkers/ #freelancers freelancers will play a dominant role earlier than most had anticipated. 1/n

It’s a topic I have been interested in the Indian context specifically and believe will be one of the main drivers to create employment for the youth. #Jobtech 2/n

I am trying to put my thoughts as I understand well established models better to then share what I think will work for #Bharat. In this thread, I start off with a deep dive into @Upwork . 3/n

#Upwork is USA’s largest online marketplace connecting freelancers with B2B customers (Mid-sized & enterprise). Want a UI designer/backend developer, a copywriter, social media marketer for a short term project- Upwork is your place.4/n

Largest as measured by total Gross Services Volume (GSV) of $2.1BN in 2019. GSV is the total business that flows through Upwork. GSV has nearly doubled in just 3 years!5/n

Upwork’s revenue in 2019 was at $300M on a GSV base of $2.1BN. This grew at the same pace as GSV Y-o-Y. 6/n

Let’s dig into how Upwork makes money-a)Marketplace commission- Straightforward cut from what the freelancers charge their clients and a small amount from clients/processing fees.7/n

Marketplace commission is ~89% of overall revenue. See below slabs from latest Annual report. Only 16% of marketplace fees comes from clients& the rest is from freelancers.8/n

Managed Services-When Upwork directly engages/employs (through 3rd party staffing agencies) freelancers to fulfil client projects. Managed services was only 11% of overall revenue and is expected to drop further. 9/n

Upwork wants to operate as a pure high-quality marketplace&not get into fulfilment of projects. Rightly so,given the operational overheads of managing workforce&assuring outcomes for a client.This is not in their DNA&you need to pick one or another-Tech biz or services biz.10/n

Client Stickiness-While there are no long term contracts with their clients, Upwork has managed to demonstrate recurring client biz. This is reflected in their-Client Spend Retention metric which has been at 102% in 2019& at 108% in 2018.11/n

Client Spend retention as on Dec’19 = Aggregate spends by the same set of clients measured in the denominator in 2019 / Aggregate client spends a year before the date of measurement (ie all spends in 2018)12/n

Since client spend retention has been >100% the last two years,this implies that the remaining clients have more than made up for any lost clients from the preceding year. Great stickiness even without having long term contracts!13/n

Since this is a marketplace and pretty much a self-serve model, clients could be anywhere in the world. Nos indicate otherwise- ~68%,and increasing, of all clients are based in the US. Why are others not signing up?14/n

2 reasons- Given that the sales team is based&focused on the domestic market,revenue is heavily dominated by US customers.Further,aided by the exclusive US to US domestic marketplace for clients & freelancers. 15/n

Important to note that a majority of the US clients are favouring US freelancers. This is not good news for freelancers in India & Philippines since this reduces their power to charge more & will confine them to lower paying clients from other markets. 16/n

While the Annual Report talks about client metrics, strategies to increase recurring biz, sales spend etc. it fails to talk much on freelancers. This is clearly a demand-supply mismatch. 17/n

Since there is an abundant supply of freelancers, Upwork admits to not tracking & focusing on freelancer retention metrics. 18/n

Freelancers are in a very much “fend for yourself” world. Hence the popularity of various courses on Udemy and other MOOCs on how to be noticed on Upwork.See sample below 19/n

The other interesting aspect is you could skill yourself just to become a freelancer on Upwork. This is creating freelancers and bringing in income where none would have existed previously. 20/n

I am very interested to see Q2 results, since this was a full Qtr post Covid and Upwork should have benefited, even if client spendings reduced. Revenue should exceed the guidance of $81M, maybe even closer to $85M? 21/n

I will update this thread post results. Will dig deeper into Fiverr next. Feedback and comments most welcome. n/n