Wealth for toil
Jonathan Porter talks to Matt Barrie, the founder of world-changing outsourcing website Freelancer.com,
Before we go any further let me just say that Matt Barrie is fast. I mean fast. He talks fast, he thinks fast, heck, he even eats kind of fast.
I sit down with the dual Webbie winner and future owner of his own space program – a la Paypal’s Elon Musk – at the Malaya Restaurant on King Street Wharf in Sydney.
It is a sparkling late fall day that Sydney throws your way occasionally, and the day is filled with promise.
I’m reminded of JFK’s quote about when he sat down to dinner with a whole pack of Nobel laureates and commented that it was the greatest assemblage of minds in the White House since Thomas Jefferson sat down to dinner by himself.
Barrie says his entrepreneurial streak took off after enrolling in IE273 Technology Entrepreneurship at Stanford back in 1997, a class where Paypal and Yahoo started as student projects. Taught by real world venture capitalists, this class took 40 of Stanford’s brightest, and organised them in 10 teams of four in writing business plans. The final mark was determined by pitching to real world investors to see if they would fund their companies- for real. Every week a CEO or founder of hot technology company in Silicon Valley came in to guest lecture. After two weeks in the class, he was hooked.
He says 70 per cent of the people in that class eventually ended up starting companies of their own. I’m briefly tempted to find the one member of the class who is flipping burgers.“They say nine out of 10 businesses fail. In that class, the quality of founders was so good that probably nine out of 10 of the businesses founded by people coming out of that class became a success.’’
Barrie is of course the founder of freelancer.com, and is already well on the way to adding to the number of gazillionaires from his graduating class.
Freelancer.com is quietly revolutionizing the way business is done on planet Earth. Do you have an idea for a widget that will take the world by storm and enable you to install platinum commodes in your bathroom? No problem: get it designed in the States, have a prototype built in China and mass produced in a factory in Vietnam. This was how the New York Times described this amazing platform.
And have it done for less than a takeaway dinner.
How does Freelancer.com work? Well once you have posed your project on the site, freelancers from around the globe bid for the job.
Once the employer and the freelancer have agreed on a price, the employer pays Freelancer.com, which holds the money in escrow until the employer is happy with the work, then the payment is released. How does Barrie make money? Freelancer.com takes a commission from both ends that works out to be a lot less than catching planes to the US, China and Vietnam.
“Freelancer.com is like Ebay. Post the project and you will have 60 to 80 people bidding for the project for a fraction of what you would normally pay,’’ he says.
“It allows people in the West to become more of a knowledge economy. We can focus on creativity. The execution you can delegate to freelancers to get it done.’’
And he says he practises what he preaches. “I get crazy ideas all the time, of course we all use Freelancers at work to get them implemented.’’
Barrie says he believes his company is helping to enable a whole new class of entrepreneur, globally.
“In the west we are empowering small business owners to be entrepreneurs by providing the digital workforce to turn their ideas into reality, without the cost, time and hassle. In emerging economies, we are enabling entrepreneurs to build service organisations to help the West. So it’s win-win on both sides.’’
Freelancer provides the labor force that will enable the western world to power into a digital economy, he says.
“We deliver jobs to emerging economies, in technical areas, that are desperately needed, at fantastic rates of pay.
“We are spanning a wage arbitrage of 55 to 1 between the US and India,’’ I nod as if I know what he’s talking about. “The average wage in the US is $123 a day. In India it’s $2.25 a day. This enables us to deliver technical jobs to emerging economies, which might be otherwise unavailable, at fantastic rates of pay.’’
He said his business is continuing on a micro scale what American Express began 10-15 years ago when they outsourced their call centres.
“Originally, outsourcing was the preserve of large businesses. It started with companies like American Express outsourcing low value work like call centers. Through the 2000s, the BPO phenomenon took off, and outsourcing increasingly went up the value chain, and filtered down through medium sized businesses. Freelancer.com is the natural extension, filtering down to small businesses and individuals outsourcing $30 jobs.’’
Naturally I ask him if he has plans to emulate Paypal’s Musk and found his own space program, “I’d like to,’’ he tells me, a glint in his blue eyes.
“And if you become an overlord, will you be good or evil?’’ I ask.
He changes the subject and I briefly ponder the headline, “Future overlord mum on good, evil plans’’.
He even has advice for Fairfax and Murdoch’s News Ltd: “You can’t fight the Internet- you have to embrace it.’’
“It’s clear that none of the big media players have figured out how to make money in the new paradigm. You have got Murdoch trying to put a pay wall up, but that means Google can’t index his content, so how is anyone going to find the content?
“You have to find out what’s working in media and embrace and extend it. An example of what’s working now is Reddit.com. It’s got a firehose of traffic. Content gets curated and generated by users there’s only one bloody programmer. It’s the 50th biggest website in the US and the 140th biggest website in the world. It gets more traffic than the Sydney Morning Herald and News.com.au and it’s run by one programmer. Just one guy. Surely there is a way to make money off that kind of traffic.’’
And what is Barrie’s advice for budding entrepreneurs who want to join the ranks of gazillionaires?
“There has never been a better time to start a company. It’s never been so cheap.’’
“There is so much that is free in terms of software, operating systems, programming languages, web servers, databases, software tools. And the stuff that isn’t free is cheap, like cloud computing, your internet connection, your domain name, even freelancers,’’ he says with a grin.
“In certain sectors like consumer software and Internet services, you can literally start a company with a good idea off the back of a credit card. The scale of distribution provided by the Internet can allow you in a very short space of time to generate hundreds of millions of revenue. Look at Zynga and Groupon, for example. Zynga started in 2007 and last calendar year did $US850 million in revenue. This sort of growth is unprecedented in history.’’
This has led to the development of a whole new paradigm in venture capital – the emergence of ‘super angels’ that instead of funding $5 million in a Series A investment, fund many companies to the tune of about $20,000”, he says. “You can get four guys together and for a few months they can eat noodles and bootstrap it into profitability. There is so much opportunity.’’
Barrie initially raised money from an Australian entrepreneur and ran the site from his house.
“After we hit 1 milllon users we decided to get an office and in late 2009 got up to about 10 people, then we ran out of space. We moved to the wharf up here (King Street Wharf), now we have 35 people upstairs; we have 50 people in Manila and one guy in New York and one guy on London, so there are 85 people globally.
I ask him how does he find doing business in Australia, as a former prime minister once described it, the “ass end of the world.’’
He shrugs, as if he could just as easily be running it from a jail cell on Pluto, “It’s a website. Australia is 2.7 per cent of our business right now. Being a website, it doesn’t make a difference where we are. If I was selling semiconductors, I’d have to be close to the customer, but running a website with a global audience- you can be anywhere.’’
He still lectures engineering at Sydney University and says the campus is a great place to scout out talent to aid in the various schemes that constantly bubble into the mind of the author of over 20 US patent applications.
“I also do it for fun. I teach entrepreneurship (copying the format of his old IE273 class). What’s great is that already a few real companies have spun out my class. I’m hoping that one or two end up being big.”
It makes me feel slightly guilty that I’m only helping to bootstrap one global worldwide media enterprise.
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