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tomzilla1
Community Member

My thoughts on UW's efforts in courting Enterprise clients

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14 REPLIES 14
mystudiomke
Community Member

Tom - such an interesting topic and good point made.


I was just speaking about this with one of my recent clients and he told me the reason why he likes Upwork is that as a small business owner he can find the work he needs on this platform much easier than going to an establish firm. My work is all architectural. Now that I been on the platform for over a year and a half I can see how that has been majority of my work comes from those small business owners, starting developers who usually can't afford 20k-50k with an architectural firm when they are architectural freelancers on this site who can do the work at 25% of most firms price. In short, Upwork is great resources for those smaller businesses who don't get cater by larger/establish companies. Or I also get many projects that are conceptual for seeking investor/funding who get declined by companies. Of course, I can only speak for my line of work.

 

To answer your question, I too decline invites from enterprise clients. One is because in my category it doesn't make sense. Two, the first time I got invited, I went through the applying process and then never got a response back. More time was wasted by the Upwork talent specialist trying to connect us than anything.

 

Lila

Tom, thanks for posting that, it's interesting reading, though I have yet to work for an Enterprise client.

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lysis10
Community Member


Tom Z wrote:

 

 You're not getting money from Enterprise, and assuming my assumptions are correct, freelancers like me don't see Enterprise proposals as serious, and we just reject it (rather than going through hoops on a fool's errand), and therefore you don't get money from freelancers for Enterprise projects. Just a thought. And curious what other freelancers' thoughts are on Enterprise proposals.

 

 


Actually, this is wrong. Their main bread and butter is 3 large enterprise clients.   Whenever I see a freelancer complain about these large clients and report them and file tickets and whatever, I just think to myself "ooh boy you don't wanna go down that road. abort abort abort."

 

 

Marketplace - Freelancers, regular clients.

Managed services - Enterprise, maybe Featured Jobs?

 

Can you tell me who Upwork's biggest clients are again? 🙂

Additionally, if you look at the costs of freelancer services to deliver managed services - 18,172 (thousands), and you look at the revenue from managed services - 21,832 -- can you tell me are they making a killing or are they making a killing from marketplace? 42,406 (thousands) cost vs 164,180 in revenue from marketplace?

 

The world is vastly more complex than just "who's right, who's wrong", and this is no different, try not to think in terms of who's right who's wrong, you'll be better off with that mindset.

 

Managed services isn't enterprise. It's their Payroll service.

 

 

 

 

Was not aware they had a payroll service, other than charging the $1. If that's the case then I happily rest my case on that and trust your judgment.

browersr
Community Member

Upwork has had the tendency to get an idea and rather than fully flesh it out and test, they tend to throw it out there to everyone and hope for the best. My feeling is that the large enterprise client should be pursued given they can bring better jobs and more stability to the platform. I don't know how existing relationships are working today in all areas of course. Although I have been part of the "Talent Clouds" and "Pro" programs for a long time now, nothing has ever come from them. Other areas might have more traction. Perhaps they can find some targeted companies across a wider array of industries and work to refine the model encompassing how  they service these corporate clients and then ensuring a high quality mix of talent on the freelancer side. Nothing is going to make a corporate client flee faster than substandard talent. If I were UW I would seek out the cream of freelancers on this platform as a test base with the small subset of corporate clients. You want to put your best foot forward and build a strong base and positive word of mouth. I would look to stack the deck in doing that and not leave this up to random chance which is how so many things seem to be done. I think this path can work but it should be taken iteratively with lessons learned fed back. I have yet to see the discipline here to do that though, but hopefully some time down the line there will be leadership in place that will change that.

Tom Z., you make valid points.  @ Scott, as always ... AMEN! to your comments.  They are sound and, from my experience which is very similar to yours although our focuses are different, absolutely 110% correct.

 

This just makes solid business sense:

"If I were UW I would seek out the cream of freelancers on this platform as a test base with the small subset of corporate clients. You want to put your best foot forward and build a strong base and positive word of mouth. I would look to stack to the deck in doing that and not leave this up to random chance which is how so many things seem to be done. I think this path can work but it should be taken iteratively with lessons learned fed back."

 

This just makes solid business sense:

"If I were UW I would seek out the cream of freelancers on this platform as a test base with the small subset of corporate clients. You want to put your best foot forward and build a strong base and positive word of mouth. I would look to stack to the deck in doing that and not leave this up to random chance which is how so many things seem to be done. I think this path can work but it should be taken iteratively with lessons learned fed back."

 

There are several reasons this is difficult to do. First is UW's operations model. To run a platform, you don't need to know anything about freelancing domains, how freelancers win work and how they manage client relationships. You also don't need to know anything about consultative selling. The business model focuses on commodity services, and the operations model is designed to execute the business model. None of that applies to large programs and projects, nor to high-value freelancing.

 

I offered elance an introduction to a lucrative market, filled by myself and maybe a couple hundred other top-tier consulting veterans. Companies that are relatively new and growing like crazy have many needs and few people to meet them. They would hire someone such as me to look at the situation, determine what was needed, and find an appropriate provider. I managed multiple millions in spend for each client. This isn't for tasks such as "Build me an xyz app." It's "Find the right location for my warehouse, arrange to lease or build. Design warehouse for operation." It's "Find me a native speaker of English qualified as a multi-engine jet pilot with at least 2,000 hours." Both are real examples. I was told to go pound sand because elance knows what it's doing, and doesn't need amateurs from the outside throwing out random thoughts.

 

If this mind-set hasn't changed, then it doesn't matter if UW focuses on Enterprise clients, Mom and Pop shops, or the Mafia. The system is self-limiting.

 

Selling these services isn't done by code writers and other tech types. It's done through consultative selling by people with industry expertise - the client's industry. The value proposition is easy for a publicly-traded client. Turn project development and management from a fixed cost to a variable one, and reduce headcount without reducing revenue. The former benefit offers the CFO a lot of flexibility, and the latter benefit boosts the client's stock price. But, what do I know? I can't code a ham sandwich.

 

Rather than a limited number of companies, I'd start with a limited number of industries. Target the prospective clients in the 40th-70th percentile of revenue that are relatively new and growing. This captures both the ones wanting to move up the ranks, and those afraid of falling further. Get smart on the industries, find freelancers with credibility in them, and use a consultative sales rep to explore opportunities. UW employees know how to wite algorithms to get rid of human employees, but little to nothing about, say, transportation management, discrete manufacturing, hospitality, professional services, health care delivery, supply chain management, etc.

 

To find the freelancers, the temptation will be to go straight for JSS/Rankings. Wrong starting point. I'd start at the 90th percentile of hourly rate, model those folks, and disregard UW's existing evaluation approach. The freelancers with significant credibility in an industry will tell UW which companies to target, how, and what kind of solutions to focus on. The experts in their field almost all use consultative selling; if UW understands the topic, I'll be surprised. It's not a numbers game.

Crossing my fingers that some smart folks are already huddled up, creating the next freelance platform with this perspective in mind.

Bill, glad you're back!

"There are several reasons this is difficult to do. First is UW's operations model. To run a platform, you don't need to know anything about freelancing domains, how freelancers win work and how they manage client relationships. You also don't need to know anything about consultative selling. The business model focuses on commodity services, and the operations model is designed to execute the business model. None of that applies to large programs and projects, nor to high-value freelancing."

 

I want to make sure we are not conflating issues. There is the notion of the "platform" and then the notion of "those running the platform". I do believe the platform can be extended to better service the needs of corporate clients. I cannot fully speak to those running the platform, but as I mentioned prior, I have not seen the kind of leadership nor process that would support corporate initiatives in a way that will be successful. that is why, at least to me, I don't think this has been successful yet.  I actually believe the platform is quite frictionless and the friction, generally speaking, comes when you start introducing "talent specialists" who in fact do not specialize in any sort of related talent.  I'll get to this more down below.

 

"I offered elance an introduction to a lucrative market, filled by myself and maybe a couple hundred other top-tier consulting veterans. Companies that are relatively new and growing like crazy have many needs and few people to meet them. They would hire someone such as me to look at the situation, determine what was needed, and find an appropriate provider. I managed multiple millions in spend for each client"

 

I am not surprised they did not bite on this and frankly I cannot really blame them. They were building  mass-market platform that would require low touch. looking at niche markets with a high degree of specialized experienced talent is taking their eyes off the ball. That isn't in the business model and early on I don't think it should have been. However, once the main idea is presented and found to be working, they could begin to expand into the areas you describe. Still I do not see this as platform for very specific consultations requiring a high degree of specialization and experience. Those companies needing that already know the players within their industry and are going to bypass these kinds of sites. Now obviously there are exceptions but when I worked in biotech, insurance and entertainment, I knew the key value-add players who showed success with other like companies. I had zero need to screw around with a freelance platform for that kind of expertise. 

 

 "This isn't for tasks such as "Build me an xyz app."

 

Not really related to this discussion but I feel the need to provide a perspective.  An application of any note is not a coding exercise. These are not task based experiences akin to someone taking an order at McDonald's. These are extensions of a business designed to provide value, lower costs, increase profits, etc. In some cases they are the business itself. These can be highly complex integrated systems that require a deep understanding of the business and its customers. There is a high degree of analytical thought requiring experience in marketing, sales, finance, supply chain, etc. depending on the needs and scale of the application. This is all before the true software engineering comes into play to make sure it's extensible, maintainable and scalable across a technology landscape that just changed again before I could finish this sentence . Heck, this doesn'e even include things like understanding GDPR, HIPAA, and other security/privacy initiatives that can shut-down a business if not handled properly.  Now I completely understand when someone sees a fart app or a flashlight app, that the above would seem ridiculous. Obviously there is a spectrum, but if you are a freelancer looking to make money without a company support system, you darn well better have analytical project management and business skills across numerous disciplines. All this is to say that "build me an xyz app" is not the rote monkey banging at the keyboard exercise that it might seem from the 100k ft level. 

 

"If this mind-set hasn't changed, then it doesn't matter if UW focuses on Enterprise clients, Mom and Pop shops, or the Mafia. The system is self-limiting."

 

Agree the right leadership needs to be in place. However, this is not a function of the "system" being self-limiting unless of course if by "system" you are speaking specifically of the leadership. 

 

"Selling these services isn't done by code writers and other tech types. It's done through consultative selling by people with industry expertise - the client's industry. The value proposition is easy for a publicly-traded client. Turn project development and management from a fixed cost to a variable one, and reduce headcount without reducing revenue. The former benefit offers the CFO a lot of flexibility, and the latter benefit boosts the client's stock price. But, what do I know? I can't code a ham sandwich."

 

Either you have little respect for technical people or just have not been around any that were worthwhile. The latter is understandable and I have been around many in that camp as well. Of course I have also worked with people that are completely non-technical that had no business being anywhere near the position they occupied. Hell, Bill Gates could be described (and would describe himself) as a coder and tech type. He made plenty of mistakes but is otherwise someone who I think the business world has respect for. Back to the topic at hand though and frankly I do not want nor expect the platform to sell these services. I want them to create a channel for me, you, and others here to sell them. I've worked for many CFO's and CEO's. I'd prefer making my own business case and not leaving it up to any platform's experts on staff, thanks. 

 

"Rather than a limited number of companies, I'd start with a limited number of industries. Target the prospective clients in the 40th-70th percentile of revenue that are relatively new and growing. This captures both the ones wanting to move up the ranks, and those afraid of falling further. Get smart on the industries, find freelancers with credibility in them, and use a consultative sales rep to explore opportunities. UW employees know how to wite algorithms to get rid of human employees, but little to nothing about, say, transportation management, discrete manufacturing, hospitality, professional services, health care delivery, supply chain management, etc."

 

I can certainly get behind the notion of targeting industries but I still would refine that further in the initial stage. My guess is that industry net will be wide and I have no confidence that this platform will handle all of the companies within that industry in a constructive way. I cannot put numbers on what makes sense other than to say I would be more granular at this stage. I have also seen no evidence that UW employees know how to write any algo that will get rid of human employees. I also do not want them thinking they are experts in health care, manufacturing, etc. That's just dangerous and it runs the risk of getting into areas I'd rather handle directly with the client. I want them to be experts in creating channels for me to sell my services to these companies and functions. I want them to know how to create the handshake and then I want them to get the heck out of the way.

 

"To find the freelancers, the temptation will be to go straight for JSS/Rankings. Wrong starting point. I'd start at the 90th percentile of hourly rate, model those folks, and disregard UW's existing evaluation approach. The freelancers with significant credibility in an industry will tell UW which companies to target, how, and what kind of solutions to focus on. The experts in their field almost all use consultative selling; if UW understands the topic, I'll be surprised. It's not a numbers game."

 

Well said.

Well said, Scott.  VERY well said ...esp. this >

"I want them to be experts in creating channels for me to sell my services to these companies and functions. I want them to know how to create the handshake and then I want them to get the heck out of the way."

petra_r
Community Member


Tom Z wrote:

According to UW's latest 10-Q,

 

 

Spoiler

Our sales efforts are increasingly targeted at large enterprise clients, and as a result we may encounter greater pricing, implementation, and customization challenges, and we may have to delay revenue recognition for more complicated transactions, all of which could adversely impact our business and operating results.

 

Our sales efforts are increasingly targeted at large enterprise clients, and as a result, we face greater costs, longer sales cycles, and less predictability in completing some of our sales and in increasing spend by existing clients. For larger clients, use of our platform may require approvals by multiple departments and executive-level personnel and require us to provide greater levels of services and client education regarding the uses, benefits, security, privacy, worker classification, payments, and compliance services offered on our platform. Larger enterprises typically have longer decision-making and implementation cycles and may demand more customization, higher levels of support, a broader range of services, and greater payment flexibility. In addition, larger enterprises may require greater functionality and scalability and acceptance provisions that can lead to a delay in revenue recognition. We are often required to spend time and resources to better familiarize potential enterprise clients with the value propositions of our platform generally. Despite our efforts in familiarizing potential enterprise clients with the benefits of our platform, some potential enterprise clients may decide not to use our platform if, among other reasons, they do not feel that their procurement or compliance needs are or will be met. It is more difficult to find sales personnel with the specific skills and technical knowledge needed to sell our Upwork Enterprise offering and other premium offerings. Even if we are able to hire qualified personnel, doing so may be costly. As a result of these factors, sales opportunities with large enterprises may require us to devote greater sales and administrative support and professional services resources to individual clients, which could increase our costs, lengthen our sales cycle, and divert our own sales and professional services resources to a smaller number of larger clients. We may spend substantial time, effort, and money in our sales efforts without being successful in producing sales or growing client spend.

Even if we reach agreement with an enterprise client to use our platform, the agreement may not be on pricing or other terms that are favorable to us. Moreover, a significant portion of the fees we typically receive from enterprise clients is contingent on the level of spend by the client. If an enterprise client negotiates pricing terms that are not favorable to us, does not engage freelancers on our platform, or uses freelancers for projects of nominal value, our revenue from the relationship may be minimal.

We also have in the past agreed, and may in the future agree, to take on additional risk for worker classification, privacy, security, work product, payments, or other services for larger clients, or to other terms that are unfavorable to us in order to secure a client’s business or increase their spend. All these factors can add further risk to business conducted with these clients even after a successful sale.

 

 

I've been on the platform for about 2.5 years. I've had a few proposals from Upwork agents on behalf of Enterprise clients. They were all either:

 

  • Enterprise client had no spending, no review.
  • Had very low spending, relatively for an Enterprise, highest I've seen was they've spent $50,000 on the platform.

That is meaningless. Enterprise clients tend to have dozens or hundreds of different teams and create teams all the time, those may have little spending, but the overall client account has Millions spent. You'll never know. You may be looking at new or small teams of a big client.

 


Tom Z wrote:

 

  • According to the cited 10-Q above, apparantly Upwork is fully aware of all the high costs of trying to get business from Enterprise with little to no return.

As Jennifer pointed out, a huge chunk of Upwork's revenue comes from a small handful of huge Enterprise clients.

Usually a NDA prevents us (who work with Enterprise clients) from disclosing who they are, but there are some really huge (huge as in massive / "everyone knows them" and big spenders) players here.

 

 

Good to know. The more Upwork wins the better for everybody.

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