How I Would Have Advised This Client:

The Deal that Fell Through

One thing about me, I am a terrible salesperson. I am the opposite of Jordan Belfort, Tony Robbins, or Alec Baldwin in Glengarry Glen Ross. Mostly introverted, my ‘best’ is in analysis and listening.

In some ways, this lack of sales acumen works in my favor. People don’t want to be hard sold and I can discuss the weeds of a project in full detail. I am more of a sales engineer than a business development rep. And many prefer that.

A few weeks ago a prospect reached out: his startup idea was to build a niche competitor to Upwork – a dual-sided marketplace with a select group of job professionals and higher qualifications. He didn’t know exactly what that professional role would be. My job was to assess the potential of hundreds of roles and rank accordingly. We spoke in detail about the challenges, how it would work, and a strategy I often use for these (unbundling, explained later).

Rarely do I go into that level of detail on a first call but there’s no set script for these things (a sales professional would say otherwise).

I felt really confident I’d close the deal. I was wrong.

Instead, he went with a local (Israel) hire who could also build the app (I’m not a developer). That was a deal breaker for him. Many people separate those two roles - after all, do you get financial advice from your plumber, or plumbing advice from your financial advisor?

I asked him a bit more about the candidate’s specifics, he seemed like a fine choice. I’m not mad. But because I built the strategy out in my mind, here’s some napkin consulting for you to see how to solve the question. Enjoy!

The Foundation of Unbundling:

The core concept of this a project like this is a term called unbundling, a strategy whereby you take a large business and offer higher quality for a particular piece of that business. One example is Craigslist.

Despite many impressive strategies – tinkering and finding new and innovative ideas – most of the largest businesses are actually just unbundled versions of Craigslist.

Why is unbundling Craigslist so successful?

You see, there are only two types of internet businesses:

• high cost, low quantity (premium quality)

• low cost, high quantity (mass production)

Craigslist falls into the latter category.

If you’re wondering why there’s not more types, it’s because the middle mostly gets squeezed in internet companies.

But what Craigslist makes up for in quantity, also means it has a glaring issue: quality. There is a lot of garbage, spam, and scamming on Craiglist. For every legimate posting on there, visitors have to sort through hundreds of bots and fake listings.

Craiglist has a search and discovery problem. Finding something takes time and, well, people don’t have time.

In fact, people don’t even have more than a few seconds. Here’s two common metrics to prove it:

• Page Load: Time it takes to have your website load

• Bounce rate: The percentage of users who leave your website before it loads

Almost 40% of visitors will leave if it takes just 5 seconds (!!) to load your website. Add in multiple clicks and scrolling, very quickly you see a more extreme drop off.

When you’re searching for an apartment, a significant other, or a job – you don’t want a sea of options. You want the best and you want it now!

The same goes for Upwork’s clients, which actually is an unbundled layer of Craigslist’s ‘jobs’ section.

Upwork matches open roles with freelancers, with a bend towards global talent at reduced rates. Freelancers are then reviewed like restaurants on Yelp, so you can easily sort by ‘star’ rating.

Like Craigslist, Upwork clients want the best option available and have very little time. The company thrives best on short-term fits, smoothing out the workload cycle.

Three negatives with Upwork are:

1. Upwork is ONLY a $1.6B company in market cap as of this writing

2. Many competitors already exist in this unbundled space. Things like MarketerHire offers the ‘top 3% marketers available to you.’

3. This strategy has been around for decades and is well tested. If a new market was available, smart money would be pouring capital to test the potential

Okay, that’s enough context. Without further ado, here’s how to actually figure out an unbundled version of Upwork.

Baseline Metrics:

You could easily add hundreds of metrics to measure the effectiveness of a strategy but this is napkin consulting – we have less than 1,000 words! Here’s the top ones:

• Total number of employed by role: How many people work in each specific role?

• Expected Growth of occupation: Is this role increasing or decreasing with major macro trends (AI, outsourcing, industry shrinking, etc)?

• Contingency Ranking: How likely are these roles to be cyclical?

• Local vs. Not: Simple yes or no. Local is hard to scale but more sticky. Also has some concerns with non-circumvention.

• Industry Specific or Mass Appeal: How relevant is this to many industries or just a one?

• Barriers to Entry: Are there any issues with approval processes (healthcare, nursery workers, etc) or is this an open market (software developers, office admins).

The BLS has detailed research on occupation, median wage, and growth rate. Of course, the BLS (a US government organization) doesn’t have global data. Still, it’s good enough for napkin consulting. Here’s an abridged version.

To keep things simple, let’s rank these in a standard x/y chart.

From there, review what data points stand out. Now, I actually built this out for just contingent workers but found there’s only a handful that stand out. One thing to note - because Upwork collects a percentage of the wage, you want to go a bit on the higher end.

From here, you’d review what already has competition. Again, there’s a lot of companies already in software engineering. Off the top of my head, consulting has Catalant, BDRs have a lot of players domestically and abroad, and nursing would be tough from a regulatory perspective.

That leaves us with two options: HR and Project Managers.

With HR, it’s very cyclical and would imagine if they were going to Upwork - that is their form of HR. Also, HR positions in a shaky market is a hard sell to get venture funding.

PMs are interesting. A quick Google search showed this company, The Mom Project. I’d never heard of them but they seem like a nice business that you could compete with. They have $80M in venture funding so it’s important we pick a sector they aren’t in.

Either way, props to them for a great name and building a strong foundation for my thesis.

So there you have it. Upwork for PMs is the (short) answer.