I just attended Upwork's Stockholders annual meeting for 2022 and their forecasts for 2023.
It was a very interesting meeting and below are my takeaways from the meeting in no specific order. Feel free to ask any questions.
- In 2023 40,000 Clients have signed up for longer term hiring on Upwork and 2,000,000 Freelancers.
- Upwork lost $89.9 million dollars in 2022 with a possibility of becoming profitable in the second half of 2023.
- The current focus is to generate more revenue from existing clients versus adding new clients in the first half of the year.
- Clients are taking longer to make purchasing decisions due to the macroeconomic conditions.
- Marketing spend will drop 12% in 2023.
- Companies are in Phase 1 of 3 phases of economics. In English - companies are scaling back and are cautious.
- Upwork is very excited about AI and stated that during the past 4 months AI posts are up 39 x!
- Upwork stated clients are purchasing from freelancers that produce their work using AI because it reduces client costs.
- Indirectly stated skilled freelancers are in more demand and less skilled in less demand.
- Upwork sees the first half of 2023 as challenging and the second half to be better based upon their enterprise sales team.
My takeaway is that freelancers need to be incorporating AI and expert level Skills or risk being less in demand. Expect the first half of this year to be slower due to the economy. AI and the economy have taken the show for the next six months.
This is a recently written Post with the SECRETS to growing your Upwork Sales at:
This is a recently written Post with the SECRETS to hiring freelancers on Upwork at:
Very interesting numbers, or maybe just worrisome.
With 40,000 clients doing longer term hiring, the loss per is over $2000 ($89.9 million/0.40million = 2250).
Of couse there are more than 40,000 job posters but I'd think the one-off cases are all profitable on a net basis to UpWork.
The longer term hiring is a 2023 initiative for Upwork so we will not know until first quarter results of the effects of the program. Have a great day!
It's important to note that the calculation you provided is based on the assumption that all 40,000 clients who do longer-term hiring experienced a loss of $2,250 each. However, we don't have access to the exact numbers of clients who experienced a loss and the extent of their losses, so it's difficult to say whether this assumption is accurate.
Additionally, it's important to consider the long-term value of retaining clients and building a strong reputation in the industry. While Upwork may experience short-term losses from unhappy clients or freelancers, the company may also benefit in the long run by providing a high-quality platform for remote work and attracting more clients and freelancers to its platform.
It's worth noting that Upwork generates revenue from multiple sources, including fees charged to clients and freelancers, as well as premium services and add-ons. Therefore, even if the company experiences losses in one area of its business, it may still be profitable overall.
You dont make any profits in highly regulated, almost command environment. Unfortunately, the future of Upwork and wish of its shareholders is that they get the most capable individuals for as less money who would work for corporations basically. All the talk in prior year or more about "transformation of work" and "working less, earning more" was a prelude to this what is happening. That however wont happen, they will just force many capable people and clients who are not corporate off the platform and they wont get what they wanted - they will get people who are ready to work for peanuts. All of that leads me to believe that shareholders of UW are actually big corporations and they don't care about either freelancers, smaller clients or even platform and its future at all.
For the freelancers reading this post, the net result of increasing the minimum connect bidding to 8 will be:
- Fewer freelancers bidding on jobs that truly are not a good match.
- Fewer freelancer submissions for client review which speeds the client decision making process.
- Increased revenues for stockholders. Upwork NEEDS to become profitable. Hopefully by 2024.
Increasing the minimum bid should make the professional freelancers, clients and Upwork shareholders happier.
It is highly likely that the bid system will need to continue to increase to the 12 to 18 minimum range to met the above goals. The data scientists and the economist at Upwork can optimize for the best outcome once the new data starts coming in. My best guess is that 8 connects will be very inelastic and bidding will need to go higher to have the desired outcome for all involved.
That is only detailing about truely irrelevant thing, to distract attention while the plaform transforms into Big Corporations' Recruitment Office. They don't really care about profiting from UW and that is obvious, I believe to you as well. Who else would have tens of millions and interest to finanace losses of UW, if not big corporations? They are its shareholders and their goal is not to maximize profits from UW (big corps have much, much larger profits as we both know), but to access the flow of talent, as cheap as they can get it.
Thank for you your description of the Upwork meeting. I enjoy reading your posts. Interesting situation. I am surprised Upwork has not figured out how to make money. My only concern is when they finally figure it out my fees will go thru the roof and make it harder to compete with offshore.