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Bonnie Sherman

Upwork’s VP
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The Growing Pains of a Recruitment Marketplace, Part 2

Hiring the right person for your business used to take weeks. It’s a process that involves a lot of effort and red tape. With online recruitment platforms such as Upwork, it takes an average of three days, and sometimes as quick as a few hours. It’s also much less costly for firms to hire independent contractors that work remotely. Other on-demand and gig marketplaces have brought similar changes, from the way we order our food, to the way we learn and teach.

That’s just some of the conveniences that technology has brought us, but with it came a new set of problems. When everything is made fast and easy for the sake of convenience, the initial step of trust-building is often sacrificed, and that could leave a marketplace more vulnerable to bad actors. Worse, the bigger a marketplace grows, the more likely it is going to be a target for scams and fraudulent activities.

Bonnie Sherman, Upwork’s Vice President, Products (Mobile, Enterprise, Workplace) gives us some practical advice on key factors that impact the marketplace experience, and on how to grow your marketplace sustainably.

Photo courtesy of Bonnie Sherman, Vice President, Product (Mobile, Enterprise, and Workplace) at Upwork

Stock the Pond

When oDesk (now Upwork) first started, the team reached out to their personal and professional networks to build an initial base of freelancers. The key is to solving the chicken-and-egg problem is to identify which side the marketplace absolutely cannot function without. Bonnie has a humorous way of describing the balance in focus between the customers and suppliers: “It’s like sibling arguing over who mommy likes best.

One side is usually easier than the other. It’s never completely balanced. But pick one side to build up your inventory. You want to be doing this before spending on SEO and driving clients to your website. Reach out to blogs and forums to identify your potential users, and make the registration process simple for them.”

Understand Your Buyers and Sellers

While a simple e-commerce marketplace aims to drive transactions and have everything completed in a single session, at Upwork, transactions involve multiple sessions. As such, Upwork’s efforts in figuring out what affects the user experience is much more extensive, as is the team’s considerations of the metrics to measure.

“A marketplace has two sides: buyers and sellers. When creating a framework for client retention and user satisfaction, the first thing you need to understand is what the buyers are sellers care about. What are they incentivized by, and what are they optimizing for?

Create Trust by Providing Transparency and Visibility

Some of the ways the Upwork team creates trust is by having certain criteria for who can interact in the marketplace, communicating that criteria and the role the marketplace operator plays, self-verification through the feedback system, and by offering guarantees for some aspects of the transaction. Upwork also uses third-party tools such as Modria for dispute resolution and arbitration.

“It’s one thing if the marketplace operator loses some money; it’s another thing when people lose confidence in your marketplace, because that’s going to have a much bigger impact. Trust is a table stake. If you can’t build trust within the community, between the buyers and sellers, you’re not going to get very far.

Think about the risks. With a platform like eBay, the risk is that I lose money, either because I don’t get the product or I don’t get what I expected. In Upwork’s marketplace, it’s even more severe because I pay for something and spend a lot of time and energy to find and hire someone, I may be sharing sensitive information with them, and there are more things that could go wrong.

In product marketplaces, a buyer protection policy may cover the risks, but for Upwork, we need additional tools that allow transparency and visibility creates trust. One of the reasons Upwork took off was that we listened to our clients’ suggestions and provided them a tool to check their freelancers’ progress through a time tracker.

The collaboration tools provided on Upwork’s platform allows for trust and transparency.
Photo credit: Upwork.

Grow and Differentiate

Size matters in a competitive landscape, but you can also compete based on a specialised category. You could develop and tailor the experience specific to that category and gain traction that way. Upwork caters to jobs in a broad range of categories, so it’s a more generic experience. You could also differentiate based on pricing or business model, like which specialises in hiring the cream of the crop of the job market.

In the beginning, we differentiated ourselves with the time tracking feature and freelancer guarantee. As you grow your marketplace, if you manage your supply and demand well, you have the network effect, which makes your marketplace hard to displace. As Upwork grows, we gain a wide breadth of skills, covering even those that are hard to find elsewhere.”

Upwork is also looking to further differentiate itself from other recruitment marketplaces by integrating the work experience into its own platform.

Bonnie adds: “A new area Upwork is going into is collaboration tools. A client cares about getting the work done, but it’s hard to tell when the freelancer is working remotely. We enable them to communicate via our chat tools, and we’re looking into features like automated updates, to-do lists, calendar or scheduling, and specific tools for jobs like coding. We use Google Docs now, but we could partner with other productivity tool firms and incorporate them into our platform.”

Learn as You Go

There is a lot of trial and error involved, but Bonnie insists that a marketplace operator should take negative incidents on the marketplace as growing pains, or a wake-up call.

Upwork hosts a training session on how to earn your first $1k using Upwork in Belgrade, Serbia. Photo credit: Upwork.

“Success for an e-commerce marketplace is pretty straightforward: your website needs to have good search capabilities, clear item descriptions, ease of adding to cart, a seamless checkout experience, and simple registration process,” she says, pointing out that these factors are well-tested. These work differently than traditional e-commerce marketplaces like eBay, where there is a clearly defined workflow. “With recruitment and rental marketplaces, there are best practices you would follow, but we’re still learning as we go.”

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