GREAT 158 IDEA: Work with a Virtual Talent Agency
Every week, Grover Righter, CEO of Aftertising.com, works with two or three people he's never met. “It's the modernization of work,” said Righter, founder of the small San Francisco-based firm, which enhances the impact of online advertising.
He relies on Elance.com, a leading virtual talent agency, to find freelance programmers and market researchers to hire by the hour or the project. He monitors their work online and pays them through an escrow account using a credit card.
“We could never hire all the skills we need without Elance.com,” said Righter, who has spent about $60,000 in the past two years on talent he's found through the site. He said Elance's systems and procedures to track work flow are so good, his full-time staff has adopted them for in-house projects.
That's great news for Elance.com founder, Fabio Rosati. In 2000, Rosati was working for a big consulting firm when he was recruited by venture capitalists funding an online talent agency. When he took the helm in 2001, the tech bubble had burst and the company was floundering.
Under his leadership, Elance.com built enterprise software to help big companies like GE and American Express manage $10 billion worth of vendor relationships.
“When the company was sold in 2006, we didn't sell a tiny web site with a very loyal following of small business users,” said Rosati. “I tried to understand what they liked about it and came away convinced that small businesses needed flexibility and access to talent. The Internet was an amazing way for an entrepreneur in the Midwest or a worker in Minnesota to overcome geographic disadvantages.”
Elance.com relaunched in 2007 with a focus on helping small business owners find great talent. In the past two years, more than 400,000 projects have been posted. About 70 percent of jobs are related to information technology or marketing.
The company has about one million profiles, with about 295,000 active users, who are either performing or contracting for work.
“Just like cloud computing, there is something called the ‘human cloud,’” said CEO Fabio Rosati. “It means a business can tap into a whole network of people.”
He said employers are attracted to the concept because everyone on Elance has to pass a verification test and, if necessary, a variety of skills tests. The company provides about 400 skills tests and can publish scores for potential employers to view.
Here's how Elance.com works: Once a freelancer registers and passes the online verification test, the system asks them to specify their skills and the rate they want to be paid for work. The software automatically marks it up by 8.75 percent before posting the information. That 8.75 fee includes 2 percent paid to the credit card company for processing and 6 percent paid to Elance.com.
Having a payment process in place is great for freelancers, especially since 40 percent of freelance jobs go unpaid, according to a Freelancer Union survey.
“If you do hourly work, we collect on a weekly basis,” said Rosati. Funds are wired into the provider's account. The company also issues 1099 independent contractor forms required by the IRS. The company is now looking into handling W2 forms for part-timers who are considered employees. (Elance limits access to the site to U.S. residents who file a W9 form.)
Practicing what he preaches, Rosati said Elance.com follows a 30/70 model, which means 30 percent of the staff is full time and 70 percent are “elancers.”
He said brick-and-mortar clients are also finding talent on Elance.com. “One of my favorite is a restaurant, Elevation Burger, based in Arlington, Virginia. They supplement their local team with freelance marketing resources,” said Rosati. “They also found a thermal engineer to design a new type of grill and a patent attorney.”
Meanwhile, Rosati is happy with the way things are going. “Our future looks very, very bright,” he said. “We are finally making money and growing.”