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How many people do you know that actually use LinkedIn on a daily basis?

I personally don't know a single person that uses LinkedIn other than to occasionally update their profile.   The only time I check my LinkedIn account is to check "alerts", which typically are nothing more than the work anniversaries of people that I either don't care about or don't know.

From a recruiting standpoint there is value in LinkedIn due to the sheer volume of business people on the platform and the ability to possibly connect with those people.   That's where the value of LinkedIn ends and the real challenges of the LinkedIn network begins.

For starters, everyone on LinkedIn carefully curates their profile to look their best.  It's impossible to separate the A Players from the B Players.    It's simply not a true meritocracy.

With no way to identify the performance of prospective personnel on LinkedIn, your best bet is to rely on references.   Refereneces are largely unreliable because prospective employees will naturally obfuscate their weaknesses by providing you the best references they can find, therefore you don't have an accurate depiction of the person you are interviewing on LinkedIn.

On LinkedIn it's also impossible to find out who is in the market for employment, making it even harder to identify new personnel.   Moreover if you want to hire someone off of LinkedIn it's a laborious process that involves contracts, payroll setup/1099 setup, etc.

Upwork (UPWK) Solves The Down Falls Of LinkedIn

Last year I was faced with a major development challenge in a software startup I am involved in:  the Indians that coded our platform wrote really bad code that crashed as soon as people started using it.   Bottom line is that we had to fire the Indian development team.

Who would replace them?  How would we find the replacement?

A friend of mine recommended that I use Upwork.   I had never heard of Upwork but after some research I discovered  that the 2 largest freelancer network in the world, oDesk and eLance, merged to form Upwork just a couple of years ago, thus the new name.

After creating a free account on Upwork I then created my first job posting, which was also free.   That was a major plus for me because both Craigslist and LinkedIn charge money to create job postings.   The job posting process was seamless.

Once I posted my first job, I started recruiting talent myself.   The recruiter tool, which is also free, was extremely easy to use and gave me insights into talent unlike any other platform I've ever used before.

Notably I could choose the geo-area of the development talent I was seeking...in this case I chose Romania, Poland, and Ukraine due to their great reputations for development talent.

To identify talent, as you can see above, I narrowed my search to:

•  Freelancers must have a rating of 90% or higher from their previous engagements.   Ratings are key on Upwork, as freelancers can rate the business they are working for and businesses can rate the freelancer's performance.   When sourcing freelancers you can see how much money they've billed previous clients, the type of work performed, and the details of the rating.
• I typically only hire freelancers that have billed over 1000+ hours on the Upwork network.   That way I can better identify talent through their previous reviews.
• Upwork let's you choose the hourly rate the freelancers typically bills.   This is great because you can cut straight to the point with the freelancer and get one that is within your budget.
• All freelancers are subjected to testing to determine their English proficiency.  Since I speak English only, I'm able to narrow my criteria to freelancers that have a strong command of the English language only.
• There are both independent freelancers and agencies on Upwork.   I prefer to work with independent freelancers, cutting out the agency middleman from the supply chain.  Nevertheless there are agencies that have billed millions of dollars via the Upwork platform and appear to be worth hiring.

Within minutes of creating my first job posting I was able to access talent across the world that far surpassed any talent I had ever come across previously.   Best of all the response rate was almost immediate from the developers I connected with.

For the first time ever I was able to see beyond the "best references" and actually read real reviews from former clients.  This proved to be exceptionally useful in my search for a new developer.

By way of example, who would you hire:

When you compare apple to apples, Caitlin L. is higher rated and has set a rate similar to Gabriel, therefore he's the better choice of the two.

This search took all of 2 minutes to identify top talent for my business and it cost me nothing.

I eventually found a new developer on Upwork and hired him.  The experience far surpassed my expectations, and now, over 1 year later, I am still working with that developer.

My experience with Upwork was so good that I started sourcing additional talent off of Upwork including but not limited to:

Salesforce CRM Developer - took less than 10 minutes to find a world class SalesForce CRM developer that lives near me.

Copywriters - found great talent on Upwork to create content for my company's blog.

Graphic Designers - hired designers from Russia to Hungary, all of which were reasonably priced for the top quality work product they produced.

Amazon Expert - found a world class Amazon expert that used to actually work for Amazon.   He handled the professional photos for our business and did an amazing job with our listings.

Shopify Developer - hired 2 great Shopify developers that saved me months of headaches in getting our Shopify account setup.

Hubspot - although i found a great developer on Hubspot, I ended up going with Salesforce.  Nevertheless it took minutes to find the support I needed on Hubspot, which is a CRM i would not recommend.

I've hired for many more positions off of Upwork and have realized that without Upwork there is no way my business could have expanded to where we are today.

The best part of hiring on Upwork is that the platform is truly end-to-end.   When I engage a freelancer, I simply authorize my credit card to get billed, whereby the payment is placed into Upwork's escrow account.   Only after I approve the work by the freelancer will Upwork release it.

To date I've never had a bad experience with any freelancers on Upwork.   The scammers steer clear of the platform because they can't get their money until it is released by the client.   Also, Upwork carefully reviews applications of freelancers on its network and from what I have heard it is becoming increasingly harder to get approved.

Upwork is a Monopoly

I've searched high and low for a competitor to Upwork, none exists.

Fiverr - mostly low quality freelancers that are in my opinion scammy.

Toptal - vets its own talent, not creating a truly meritocratic environment for its freelancer community.

LinkedIn - most people have a LinkedIn account, but there is no way to truly identify top talent on the platform.  Everyone looks good on LinkedIn.

Freelancer.com - nice domain name but completely inferior platform.   Not easy to find talent.

As Peter Thiel always says, invest in monopolies.

With the successful IPO that landed Upwork an additional $90M in its coffers (which apparently were already deep), the company intends to throttle its advertising, bringing on more businesses and freelancers.

Labor is Undergoing A Revolution & Upwork is At The Forefront

Taken direct from the preliminary prospectus of Upwork:

"The online freelance economy represents a shift in how labor markets operate. We believe that we are still in the early stages of the online freelance economy, with a multi-industry and multi-decade global shift affecting how businesses find talent and how people want to work.

In today’s economy, knowledge is a key driver of productivity. The first and second industrial revolutions of the 18th and 19th centuries created the industrial economy and moved workers from farms to factories. The third industrial revolution of the 20th century created the knowledge economy and moved workers from factories to office buildings.

The World Economic Forum believes that the global economy is now undergoing the fourth industrial revolution, fueled by rapid technological advances. One of the defining features of the fourth industrial revolution is the transformation of how and where work gets done, as work is increasingly no longer constrained by location. In the fourth industrial revolution, instead of the worker moving to the workplace, we are seeing that work is moving to the worker—collaboration is less constrained than ever before by physical proximity and geographic borders, particularly for highly-skilled professionals.

Jobs are Overly Concentrated in Large Cities

Data from the Bureau of Economic Analysis shows that the top six U.S. metropolitan areas alone were responsible for 26% of total U.S. GDP in 2016. This has led to imbalances in labor markets, with jobs becoming 

increasingly concentrated in those cities. Despite this concentration of jobs in metropolitan areas, workers not only have become increasingly reluctant to move into large cities, but are also leaving large cities at higher rates due to continued rising costs of living and lengthy commutes.

The Labor Market Remains Inefficient

Labor markets remain fragmented and local, and the increasing specialization of work has further reduced availability of talent in local labor markets. As a result, hiring processes can last several months, which is costly to businesses, workers, and the economy. In the United States alone, employers made an average of approximately 178,800 hires per day in 2017, according to the U.S. Department of Labor. Despite this volume of hiring, as of April 2018, the average time taken to fill a job vacancy in the United States was over 31 working days, according to DHI Group. Increasing restrictions on immigration and insufficient availability of visas for skilled workers are expected to make it even harder to find specialized skills.

Businesses Face a Skills Gap

In addition to the increasing specialization of work, several other factors are exacerbating skills shortages. According to a 2014 study by the Federal Reserve Board of Governors, labor mobility has been trending downwards since the 1980s. Due to the costs of relocation, labor immobility can often result in a local skills gap or persistent regional supply-demand imbalances within skill categories. In 2018, the number of visas sought by U.S. employers for skilled workers was over twice as high as the number available, and additional restrictions on immigration may increase skills shortages. Moreover, population aging is occurring throughout the world, with many countries facing growing labor force shortages due to demographic changes. Illustrating these difficulties, according to a survey conducted by the NFIB Research Center, 88% of small businesses surveyed that were hiring, or trying to hire, reported few or no qualified applicants for the positions they were trying to fill as of April 2018.

Businesses and Workers Desire Flexible Work

In January 2018, 59% of hiring managers indicated they were leveraging flexible talent, which includes temporary, freelance, and agency workers, up 24% from January 2017, according to the 2018 Future Workforce Report, a study we commissioned from the independent research firm Inavero. According to the same report, hiring managers anticipated work performed by flexible talent will increase by 168% in the next 10 years.

Simultaneously, knowledge workers are increasingly demanding flexible and independent work arrangements. According to economists Lawrence Katz of Harvard University and Alan Krueger of Princeton University, 94% of net job growth in the past decade was in the alternative work category, which they define as temporary help agency workers, on-call workers, contract company workers, and independent contractors or freelancers, and over 60% was due to the rise of independent contractors, freelancers, and contract company workers. The freelance workforce is one of the fastest-growing segments of the U.S. labor market. From millennials to retiring baby boomers, the number of people choosing to freelance is growing.

Technology is Enabling Remote Work

Rapid technological advancement and innovation in connectivity, communication, and collaboration solutions continue to enhance remote work capabilities and increase trust. Additionally, the global workforce is now able to access technologies and tools such as email, enterprise resource planning, and customer relationship management from anywhere with a laptop or mobile phone. With continued innovation in remote work capabilities, businesses are increasingly able to effectively connect and work with non-local talent, and the benefits of geographic proximity are diminishing. According to a McKinsey Global Institute report, an estimated 11% of service jobs worldwide could be performed remotely. Illustrating the increasing amount of remote work, the number of telecommuting workers grew 115% in a decade, from approximately 1.8 million in 2005 to approximately 3.9 million in 2015, according to the 2017 State of Telecommuting in the U.S. Employee Workforce report.

In the Accenture Technology Vision 2017 report, Accenture forecasts that in the next five years, on-demand work platforms will emerge as a primary driver of economic growth in developed and emerging economies worldwide. We believe that prevailing conventional methods for sourcing talent, finding and completing work, hiring, and making and receiving payments will be increasingly inadequate.

Final Thoughts

If LinkedIn (Microsoft) were smart, they would buy Upwork fast.

As a client whom has used LinkedIn to recruit in the past, I will never go back now that I've discovered Upwork.   Upwork is expanding to cover areas such as sales, marketing, executive assistants, and more.   This is especially problematic for LinkedIn because Upwork is now cutting into the core jobs that many recruiters use LinkedIn for.

Upwork has solved the challenge of finding top talent, and now that it has an additional $90M+ in advertising dollars on top of its annual $1.56B in GSV (with revenue growing 20-30% a year may I add), this largely unknown Unicorn is on the bullet train to disrupt the Silicon Valley giant LinkedIn.

Disclaimer:   I invested in Upwork at the IPO and intend to hold my shares for years to come.