Is Freelance the Future?

Episode Summary:

Human Cloud CEO Matthew Mottola joins the Subject to Talent podcast to share insights on how the future of work could be shaped by the freelance economy. Through advances in technology, and greater opportunities for working outside of a corporate space, more workers are choosing to freelance, instead of seeking full-time positions. Mottola speaks to how corporations can capitalize on this shift in the workforce and set themselves up for greater future success.

Transcript:

Bruce Morton: Allegis Global Solutions (AGS) presents the Subject to Talent podcast, a hub for global workforce leaders to unleash the power of human enterprise. Listen in as we explore the most innovative and transformational topics impacting businesses today.

Bruce Morton: Hi, I am Bruce Morton, the host of the Subject to Talent podcast. Today I welcome entrepreneur Matthew Mottola, who has led enterprise adoption of the Human Cloud, which explores how artificial intelligence (AI) and the freelance economy could transform the world of work. I look forward to chatting with you today, Matthew, and thanks for joining us.

Matthew Mottola: Yeah, thanks for having me, Bruce. It's an absolute honor to be with you and on this today.

Bruce Morton: Great to see you, so those regular listeners will know here at AGS's Subject to Talent podcast, we always start each session by asking our guests the same first question, and that is how did you get into the workforce industry? I'll add onto that a little bit for you, and what inspired you to develop the workforce plan for freelancers?

Matthew Mottola: I would phrase it with the question of, ‘Am I in the talent industry and the workforce industry?” The reason I say that is because I had a sort of seminal moment happen in 2012, a long way back, and that was that I was consulting and freelancing myself, thinking it was a side thing that I would grow up and grow out of. I went into the Big Four and I realized really quickly that this is not going to work for me.

Now, at the time it was very much a, ‘oh, this way of working shouldn't exist,’ but now I look at it, I say it's great in some ways, but for someone that really wanted to make an impact, this isn't going to work for me. I think a lot of the behind the data that you look at in terms of half the workforce wanting to work for themselves, you look at over half of millennials and Gen Z already doing it. It's mostly because we want to make an impact.

How did I get into the world of talent? I had that aha moment. I then didn't give up in terms of I went to San Francisco and Silicon Valley to work at one of the first remote software development platforms called Gigster, and then went to Microsoft to build the freelance toolkit and really help them drive their freelance program. And, I just haven't stopped believing in this kind of crazy world of self-employment, freelance and digital talent platforms.

Bruce Morton: Great. Good response, thank you. So, let's start at the beginning then with the description of so-called gig economy, freelance and everything else. Give us a quick thumb-sketch view of where we've got to and how we've got to today in that space?

Matthew Mottola: Bruce, something you told me, actually I always keep in back of mind by the way, is it's always been here, right? In 2019, people were talking about it, but it's been in the ‘too hard bucket.’ I preface it by saying nothing is really that new, especially the technology, but if I have to give a lay of the land history of this world as early as the Medieval Ages, right? Freelancers were mercenaries, right? Let's go get a couple of freelancers, it's always existed. Self-employment always existed.

Then around 2012, 2016, you start to see remote work and remote technologies make self-employment easier. As early as early 2000s, you do see Elance and Odesk freelance platforms. Around 2012, 2016, it starts to become effective when you see Microsoft Teams, Google Workspace and the various collaboration tools.

Now, I'll give you a quick history, 2016, merger of Elance and Odesk into Upwork, you start to see Freelancer.com, Fiverr, those. In 2018, 2019, Upwork IPOs, Fiverr IPOs. Around 2020 and 2021. Okay, you see this crazy thing called COVID. Then you start to see things like the Great Resignation. You see all the recent Gen AI Large Language Models (LLMs), you see a very uncertain economy and we now sit in a world where I think the individuals have clearly chosen self-employment, not all, but a good amount. Meaning, here in Europe you see between 10 and 50 million. In the US, over 40 million full-time self-employed people. That's the kind of quick history though by the way, it's never not existed. It's just gotten so much easier.

Bruce Morton: That's a great way of setting it. I think they've always been there, but freelancers were a bit of an anomaly that perhaps used to do a lot of marketing, creative design stuff, people, that's how they thought of a freelancer. Now, organizations we're certainly seeing they are proactively thinking of this group of people as a proactive sourcing channel to get to great talent. How has that evolution happened? I mean, you talked about some of the technology platforms and the ability for the work of the individual to collaborate on technology platforms like Teams, et cetera. Do you think those have just given this cohort more exposure and that's why enterprises are now taking them seriously?

Matthew Mottola: It's a good question. We actually use this, and it depends on the region, but here, I'm in Germany right now for talking with over 300 executives. One of the things we say is that freelance actually is not outside of the box. It's the 5% on the fringes, still in the box, but it's on the fringes. We say that the box is the contingent talent spend that already exists. If you're looking at a Fortune 500, that's what, $1 to $5 billion. Then if you look at that $1 to $5 billion, between 60 and 80% [of that] is pretty much unmanaged. It's not properly centrally managed. Then of that 5% to 10% is this freelance spend, which usually means platform/unmanaged, independent contributor-type spend.

Now where it's changed, and this is what's so tough about this industry, is that it's usually not ‘let's go build a better talent strategy.’ It's usually someone in the working team or someone who's owning a product or innovation or marketing budget. Freelance is just a better way to help them drive efficiency, growth and innovation. What's really tough about that is it's been these quick or not these quick, it's been these big wins, but it hasn't been that gradual linear process. Unlike if you look at number of freelancers growing, that looks pretty consistent. That looks like a 30% to 100% growth year over year. With companies, it still sits in that innovation fringe usually outside of the VMS, managed service provider (MSP) and typical contingent talent program.  

Bruce Morton: Right. We're going to dig into a bit more of that later. But I guess let's kick off here. Tell us about your company and the Human Cloud concept.

Matthew Mottola: Okay, I like to think the industry grows. We grow. We are an advisory firm and a research firm at the intersection of technology and work. We very strategically say technology and work because the terms, it depends who's paying what they use. One company here in Europe would say we have a borrow strategy. Another would say we have a freelance strategy, another an on-demand talent strategy. So many different terms.

We don't care as long as the supply is self-employed and technology is at the core of the mediation, meaning the sourcing, the paying, the managing, you name it. With that said, we serve two people really well. We help companies be strategic about their freelance programs. We help them go from an idea up to $1 million, $50 million, $100 million spend, and then we help the industry from a growth perspective. By industry, there's over 800 of these talent platforms. Most of them are bootstrapped, most of them struggle to get their voice heard just because they're bootstrapped, but they're really, really good businesses at $20 to $100 million and they have incredible retention and growth per account. We kind of serve those two of hey companies, be strategic about freelance and industry. Let's get you into those enterprises, but we like to say-

Bruce Morton: Yeah, you mentioned you were in Germany, that's prompted this question. If we take one of the big folks like Upwork, you might be in North America using the platform, but the worker could be anywhere in the world effectively. Are you seeing the same thing in Europe or is it more localized if you're on a German platform, you're qualifying German workers living in Germany or is there much of a difference there?

Matthew Mottola: I'll give you the full regional rundown. You ready? In the US, we generally want cheaper or the smartest people and we're actually okay with where they sit. We do like English and we do like time zones. In Europe, localization is very important. If you look at one of the larger platforms like Malt versus an Upwork or Fiverr, and you look at their go-to-market and their service structure, Malt would say, this is our UK office, this is our Germany office, this is our France office. They have a very much localized branch. That is very true. With that said though, if you look at Europe, the maturity goes UK, France and Germany and Eastern Europe though is actually growing faster than the ones that are already mature. Even though kind of like the US, right, where we're a bunch of different countries inside one Europe's also, that way and dealing with talent, they don't all deal with it the same way and certainly better than others.

Bruce Morton: Interesting, and for those organizations that are more forward thinking or perhaps got into this world a lot quicker than others, what are some of the advantages that they're seeing by engaging these freelancers and actually formalizing this approach and this talent pool as opposed to it being more ad hoc and perhaps, low spend as you mentioned earlier?

Matthew Mottola: Yeah, it's funny. I'm going to start with the why not really quickly, just because I started in tech and sales to be honest. For me, if they're not taking action on something else, then it doesn't matter. In terms of the why not If they do nothing, then we are seeing really strong competitive forces that are really hard in the business. For example, if they're not shipping on time, if they don't get something out within six months, they're seeing 50% loss in anticipated revenue. Then if they're not shipping on time, and if you look at obviously, cloud computing and what we call even cloud, but so the startups are able to out-compete them. You're seeing a lot of industries that they are totally getting eaten up by these smaller ones. Now, the benefits, and there's two levels of this, the quick answer, if you want a really, really quick win, speed, cost, quality. Speed, averaging two to five days to get anyone in the building, these are abundant talent pools.

Cost, 30% up to 90% cost savings. No one's going to say 90 because then their PR team freaks out, but even up to 90, right? Then quality, and this is one where, okay, I can teach you how to game it, but quality you're going to see over 95% of whatever it's whether it's reviews or CSAT or whatever. Now the bigger thing though, is we always say it's actually more about efficiency, growth and innovation. Efficiency are the first two things that I told you about. Growth, new markets and new people to serve those markets. If you want to get into let's say Singapore or Philippines or you name it, you can have localized talent. You can have growth into there. Also, you can get into markets, and so Airbnb data actually shows on a few social networks, that Southeast, Asia and Latin-America are their two most fastest growing regions right now.

If you're sitting in the US, Germany, you better be having an ability to tap into those markets. Then from an innovation perspective, there's literally brand new business models, there's new product lines, there's new service lines. Freelance in itself is a market, and so you can totally disrupt yourself and have a brand new product line, service line business model 100% because of freelance. One quick example of that is TurboTax Live. Everyone in the US, you're starting to freak out come December also because of your taxes and TurboTax figured out they get a CPA or accountant freelancer within 30 seconds. That's a massive disruption if you look at their stock price, things are good, so those are the benefits.

Bruce Morton: What would your advice be for folks that are listening in that perhaps it's a head of a function or highly manager per say, yeah, how do I convince my organization that we should take this more strategically and what's the starting point to try and create and generate some of that change?

Matthew Mottola: I'd say first, look for something to attach to that's not freelance. Don't fall in love with freelance. That's why a lot of our clients love us is because we listen. We know you don't care about freelance, we don't expect you to be the freelance expert. We'll be your independent advisor. First is don't worry about you don't have to fall in love with freelance. Second though, is look to something that's already broken and speak that language. For example, if you're leading a customer support function or a customer experience function, and what you really care about is CSAT or retention or a license is bought because of this, stick with that. Stick metric and tell your leadership that you're going to increase this by 30% or that you're going to decrease this by 30%, whichever it is stick with that metric.

Then the second thing though that I would say is be bold. I'll give another example where there might be things that seem really big, and if you're sitting an enterprise, it's usually risky to talk big, but you might be able to do that. For example, hey, we're going to create a whole new business line. We're going to go create TurboTax live. We're going to go create a whole new service line. Because of still the immaturity in this industry, it might require a big bold leap to get the discretionary budget to try it. That's the second thing is be bold.

The third thing, which this is where good news for all you listeners is really lean into your partner, and so this is not like you are priority 576 of a big agency. This is like you are probably priority one to 10 if you're thinking strategic of these platforms. Whichever talent platform you're working with and you're working with, think of them as a partner. Help them drive the strategy, help them build your strategy decks, make sure you got the case studies, make sure they help you with strategic planning. Really, really lean into them. That's what I love about this industry so much. They're partners, right? They're not just like another vendor and they probably can't bring you to the baseball games, to be honest. They might not get you a suite at the Jets game, but they're really going to help you move your work forward.

Bruce Morton: Yeah, that's great advice, thank you. How are advances in technology and AI, how are they making this vision and this trend that we're seeing at this ever-growing trend, more of a reality? What's the impact on this space?

Matthew Mottola: Two things. There's the good, the bad. I'll start with the bad, which bad for the platforms, bad for the individuals, good for the business. There's a lot of things that are just getting replaced. I invested in the company around two years ago called ElevenX.AI. They do SDR and BDR agents, 100% digital workers. If you look at things that are very task-based, transactional and very clear outcomes, that's probably going to be gone. A lot of basic writing, basic logos, you name it. I like to think, to be honest, the things that already could have been automated but weren't good enough are probably going to go gone, right? That's one side of it.

The other side though, is that the experiences should be frictionless and the data should compound to actually be intelligent. What I mean by that is one of my biggest, I don't know, just frustrations, when I started working at a company after doing way too much schooling and being way too start-uppy was how much of the onboarding knowledge that was not passed on. I really don't know why.

But when you look at certain generative AI and certain software, a lot of the data of what you've done prior, now it's easier to document and capture and learn from, whether it's your data or your other colleagues. If you look at a freelance experience, you have to think about it holistically, meaning everything from, ‘I identify a need,’ to, ‘this is the right pool of talent that I need,’ to, ‘repeat this and my org needs to repeat this.’ A lot of those processes in the traditional HR lens just don't make sense. Like a paper resume. Do we really need that? Actually, posting a job? Do we even really need to do that if someone can identify the talent of pool that I need? A lot of the, I don't want to say our cake, but a lot of the traditional HR processes, if you use a white piece of paper, we probably don't need them. A lot of the platforms are saying things like a frictionless freelance experience.

Bruce Morton: You use the term platform there, and I'd love to get your take – because there are many different terms thrown around in this space, and some of them mean the same. Some of them mean different FMS engagement platforms. How do you define? Are there differences in those two? In your world, when you're advising clients, how do you differentiate them?

Matthew Mottola: We have 11 different segments. If you were to say, "Well, freelance, we have 11." I know it's very painful – very, very painful. But here are the top ones, you ready? We start with platform, we then go into provider, we then go into service. Platform, we're talking about a large horizontal platform or we're talking about a vertical niche, specialized platform. Large, those are the big ones. That's the Upwork, the Fiverrs, they have absolutely everything. Niche ones, those are the ones that are really, really good at a specific industry skill set, and at times even region.

For example, there's one called Khibraty based out of Saudi Arabia. They're the best at working with Saudi Arabia, so niche and they actually help other platforms work with Saudi Arabia. There's another one here in the US called UnCompany for design. Platform, right? Large, horizontal and small niche specialized. Now we look at providers. You have freelancer management system (FMSs), you have the traditional MSPs, you have the compliance, you have the employer of record (EOR), vendor of record (VOR), agency of record (AOR) probably pick another letter up front and you'll hear it next week. That's sort of the okay platform into your provider.

Then when you look at services, you have people like us which are actually going to educate you and teach you what is freelance, what is a freelance strategy? Not to get too complicated Bruce, but we've only talked about the B2B side of this meeting. I'm going to B2B, so there's also its own industry is the B2C side of freelance when we talk about collective with those, a bunch of other business to freelancer tools.

Bruce Morton: Got it, so if you were an enterprise looking to put your toe in the water, would you suggest starting with the platforms or the providers?

Matthew Mottola: Both. I would actually start with the pain and then I would go with what are we currently doing? I would even say, I would think from finding, vetting, onboarding, managing, paying, I would break it up by the specific use case/outcome that you need. Then most likely, there's a specialized platform for each one, and I would never say just stick with one. I would say set up meetings with all of them and start to pilot with all of them.

Bruce Morton: Have you seen any examples of aggregation yet where, again, from an enterprise lens, they want to use different specialty for marketing and for IT, but there isn't one that does it all. Is there a way of aggregating if they're going to integrate with the VMS or something?

Matthew Mottola: Yeah, there are, and there's been multiple for me, as early as 2016, and remember I started in San Francisco, so the Uberification and the Amazonification, that's everyone could think about. The problem that we see with this aggregation, and actually, I'll give you what's happening in terms of where the success comes from.

Successful aggregation that we've seen has actually mostly come from platform to platform or traditional vendor to platform. Platform to platform looks like small, niche, specialized, one wins the work, the others subcontract with that or work in a relationship way. The big to small looks exactly like that, right? It looks like probably you having another freelance vendor and kind of sharing terms. We've seen a lot of aggregation. Where I've seen it break is that the industry and the actual freelancer experience, it's not standardized enough that a hiring manager knows how to go from, ‘I have this pain’ up to ‘this is the person or this is the outcome that I need.’

What happens is you try to aggregate all of these individuals or all these freelance platforms, but you haven't solved the core issue of enabling a hiring manager to scale the outcomes that they need. I've seen multiple attempts, and this is why Human Cloud, we have not laid a line of software into that or the freelancer experience because we do it 100% manually and we do that for our clients. We do 100% manually just because I don't know how to standardize it yet. Maybe I'm not a good enough CEO, but I don't know how to standardize it yet.

Bruce Morton: Yeah, okay. Interesting. Will be interested to watch to see how that evolves. Last time we chatted, you mentioned anchovies and I was intrigued, so I'd love you to share that with our listeners, the story you told me about how you think about that.

Matthew Mottola: You know what I've learned by the way, since we had our first keynote on Thursday is here in Germany at least it's not anchovies, it's the train system.

Bruce Morton: There you go.

Matthew Mottola: Yeah, right. The overall sort of coming to why not, right? The overall thing that we tell leaders, whether it's CEOs, VPs, you name it, is if you don't have a talent strategy today, you're going to be stuck with anchovies tomorrow and whatever we want to call them anchovies, the train system. What we mean by that is the B players, the C players. Now, for me, as an entrepreneur and someone that from the second I started working was like impact, impact, impact. I really didn't understand why it seemed like the corporate incentive structure was to just not get fired and not take risks. I was like, let me make an impact, right?

Bruce Morton: Right.

Matthew Mottola: What I've learned by navigating freelance and corporate is that freelancers, all they care about is making an impact. They are A-players, and the best freelancers are usually the best employees. Especially now, if you look at the rise of fractional, these individuals look like the five to 15-year, they'd be the quickest promoted, but they're choosing an independent career path over firm. The A-players are increasingly freelance, and if you look at MBO Partners recent study that literally came out this week, the data's there, the proof is there. Now, what's different is cloud computing. If you were late to it, then you just got cheaper software meaning, okay, you used AWS, used Azure, right? Things were cheaper. The Human Cloud freelancers don't want to change their clients. It's one of the biggest myths. If you're not actively investing in a freelance strategy right now and building your talent pools, they're not going to want to work with you. You're literally going to be fishing with B- and C-players. You can call them anchovies; here in Germany, they said to use the train station. They also said to use North American beers as an analogy too.

I'll tell you, and I'll give you one quick starter. When I was 24 and I was living in a living room in Silicon Valley, I kind of inherently knew if I want to do more, I have to go hire people. I think every leader inherently understands they can't do it themselves. I had no money and I was 24. I couldn't say, "Hey, I want two head count," right? Instead though, since I've freelanced, I knew about these platforms. What did I do? I learned how to eat one meal a day and I saved up, so I had a thousand bucks a month. I then went and I hired a designer. I then went and wanted to build a report on the future of how AI has impacted work. I went to these platforms and I found one of the early deep learning experts. His name was Matt Coatney. He ended up becoming my coauthor for the book.

If you look at these younger leaders, it's just second nature to us. It's not about getting a head count. It's not about looking like we have a big team. Most of us just want the impact. That's the intro, the references, you're going to be stuck with B-players. I know that sounds really rough. I'll probably get yelled at by some people about this, but that's fine.

Bruce Morton: No, that's cool. That's great. Thank you. It's a good analogy. It brings it home. By the way, us old folks as well, when I wrote my first book in 2019, I used Fiverr. It's for a designer that cost me about a 20th of what it would've cost in the US. I've been big fans of freelancers ever since.

Coming to an end here, this has been great, great conversation, very enlightening, and I'm sure our listeners will have learned a lot from this, and I'll get you at the end too. I'll give you a contact details, so I think you'll get some reach outs. But I just want to wrap up here with looking to the future, as always, the crystal ball question, where do you see the future of enterprises engaging freelance market and platforms in let's say five years from now?

Matthew Mottola: I see it and I'm going to give an answer based off the data in terms of the data and just trying to be as simple as possible. To be honest, it's going to have to be decentralized in a way that legal and HR understand it being centralized. I know that sounds very complicated. What I mean by that is the five to 15-year leaders need to be empowered with budget and less restrictions about what that budget goes to, but rather more strict on the outcomes that they produce. It simply has to go that way. The reason I say that is because freelance as a concept and even talent, it's just so broad it so general, and so not sexy, that your future leaders do not care about your talent strategy. They do not care about creating a job, right? No one, okay, not no one, but a product marketing innovation leader does not care where the talent's coming from, how they got it there. They just want the best people and the best job.

These talent platforms are incredible at doing that, but they require budget and investment and autonomy to run the teams they want to run their teams. Now, obviously, that freaks the chief procurement officer out, right? It's like telling a CIO, CTO, use whatever system you want. It freaks them out. There is going to have to be centralization on the legal aspects of this, the compliance aspects of this, the privacy and security, so that is real. With that said, companies that want to stay relevant, they need to access top talent. Top talent is in these independent freelance pools. You need to give your up-and-coming leaders. You just need to give them budget and hold them accountable to outcomes. Don't just give them money for tree houses and fun stuff. Hold them accountable to outcomes, but literally decentralize the budgets to enable them to do what they think is best.

Bruce Morton: Great. Love that answer. Thank you, Matthew, so how can listeners find you and learn more about you?

Matthew Mottola: LinkedIn last name is Mottola. M-O-T-T-O-L-A, Matthew. Pretty simple. Our email at, okay Bruce, boy, we learned some SEO mistakes. It is matthew@humancloud.work. Trying to get a passport and saying that my last name is, or my email is dot work pretty difficult. But for you listeners out there, it's matthew@humancloud.work or just go straight to HumanCloud.work. We have a podcast as well, not as good as yours, Bruce, but more narrative freelance. So Human Cloud podcast is everywhere. Human Cloud podcast, HumanCloud.work, matthew@humancloud.work.

Bruce Morton: Awesome.

Matthew Mottola: You name it.

Bruce Morton: Great. Thanks Matthew. Really enjoy the conversation today. Appreciate you.

Matthew Mottola: Of course. Thanks for having me, Bruce.

Bruce Morton: If you enjoyed this episode, please subscribe, rate and review us on Apple Podcasts, Spotify, or wherever you get your podcasts. And if you have questions, send them to SubjectToTalent@AllegisGlobalSolutions.com. Follow us on LinkedIn with the #SubjectToTalent and learn more about AGS at AllegisGlobalSolutions.com, where you can find additional workforce insights and past episodes. Until next time, cheers.