Startups, more than any other type of business, are sensitive to change. Macro and micro influences which others survive can often be fatal to that of the startup. Why? Because startups are fragile and fledgling. They are trying to find their place in the world and carve out a niche – all the while making every dollar go further.
This is a delicate balance that nine out of 10 startups do not find. This makes over reliance on outside forces very dangerous for that of the startup – and yet this is what many do when it comes to employment.
Freelancing is the preferred method of employment for startups all over the world. However, many use employment platforms like Fiverr or UpWork to make these hires – and the platforms themselves are anything but unshakable institutions. Therefore, startups are best advised not to tie their fate to third-party businesses.
Too big to fail.
What happens if – one day – the freelance platform used by any given startup from simply disappears? The work history, clients, portfolio and reviews are gone, just like that? Such a scenario would push hiring processes back to square one, potentially spelling disaster for those who solely contract online.
Platforms like Fiverr or UpWork may seem like staples of the industry that are too big to fail – but this far from the truth. Fiverr, for example, announced in May that it would file to go public in the U.S. In the filing, Fiverr revealed it had lost more than $38 million in 2018. The potential for big players to fail and take others down with them is a scary thought – and one that could happen if the startups themselves are not careful.
Startup businesses all over the world use freelance hires. This is because freelancers can be scaled as the business grows, and they can be hired for specific skills. Further, the majority of hiring managers find that utilizing freelancers help them to get more work done. The problem, however, is when the hiring process is left to be handled by a third-party – and the risk involved if that third-party goes under.
Finding quality help.
The good news is that it is not hard for startups to free themselves from platform overreliance. The easiest way to do this is to open and operate multiple accounts on multiple service providers. If one goes down, at least you are not stranded without other options. Diversification is the key – and this is true both of platforms and business intelligence.
Just like freelance marketplaces can supplement the startup’s list of contractors, startups can also post their own projects on platforms to find people to work on projects outside of their expertise. Hiring is a complicated process, especially when one may not know the industry in which they are hiring the contractor. There are some marketplaces that pre-screen contractors on your behalf, and the trade off for acquiring amazing talent is a higher price tag.
If you would rather try your hand at hiring and hope you get lucky when screening contractors, platforms like Upwork provide the perfect opportunity for that. However, be aware that unscreened contractors pose a much higher risk. For instance, an unscreened software contractor might go Missing in Action or write unusable code. The benefit is that you could hire talent for a lower rate than hiring prescreened talent where you know you’re hiring the best.
The way forward.
Diversification is healthy, therefore it is always best for startups to think in worst case scenarios. The worst case scenario for any Fiverr user, for example, is for the platform to go down when there are multiple active hires moving through on that system. Only using one platform to hire leaves the door open for a third-party’s business failure to bring potential failure to your door.
In short, freelancers need to diversify their offering to protect themselves and their livelihoods. Tying any business to the fortunes of another is always risky, and this means that overreliance is simply dangerous in the world of freelance platforms. A remedy is always better than the cure, so startups are best reminded to find other platforms that work for them and start to build out secondary profiles.
Remember: The freelancer and the hirer are not directly working for UpWork or Fiverr, but for themselves. Therefore, allowing such marketplaces to dictate terms and potential failure is just not sound business building. They are intermediaries, and granting the possibility for intermediaries to prevent hires in the event of business collapse is a worrying proposition.
The best way forward is to hedge your bets. Use freelance platforms to connect with talent, then contract those who fit your business model outside the confines of the intermediary. Spread risk by operating multiple accounts and keeping your contact book at the ready.
Rick Mac Gillis is the Founder and CEO of Dragon Cloud, a service connecting high-quality clients with high-quality contractors. Rick has over 15 years of experience in software engineering, is the author of “The New Frontier In Web Api Programming“, and has engineered a library of popular software algorithms (HackFastAlgos). He is one of the most sought-after engineers by top companies, and has worked on contracts for the WTC, Dragon Cloud, Bluewater Yacht Sales, and other top brands both personally and through his companies.