Freelancing and the Startup Ecosystem

Freelancing and the Startup Ecosystem

Freelancing and the Startup Ecosystem 800 479 Sumit Bhagat

Importance of freelancers in the startup ecosystemFreelancing has been one of those trends that has been steadily picking up over the last few years. As per the 2015 Freelance Industry Report, US had 53 million freelancers comprising 34% of the workforce. India has 15 million freelancers and the number has been growing steeply over the last few years. Another trend that is now well permeated in the Indian subcontinent is the maturing of the startup ecosystem. These two trends are poised to feed off each others’ growth story — we discuss how we see the story unfolding.

Product vs. Service-Based Firms

Most startups that have flourished globally in the last decade fall in one of two categories — product-based or service-based. In the former, they are providing you a product, i.e. something you can directly use like Google’s Gmail service to manage your email or Rovio’s Angry Birds that you can play for your pleasure. What is imperative among product-based firms is that they need a really strong technology team with the best of programmers and product managers, at the very onset, as their software is the main value proposition and nothing short of the optimum would fly with their customers.

The latter is primarily providing you a service, in that the firms manage to achieve an end outcome through their website or app, like Airbnb, which helps you book home stays. Most Indian startups fall in the latter category, in that they ease the completion of a task through the use of technology. These firms need a validation of their business model before churning out world-class websites or apps that usually require a heavy technical team. For example, Airbnb first needed to validate whether a critical portion of the population was willing to become a host, whether people would actually prefer home stays over hotels and whether their reviews and rating systems were robust, etc. For someone like an Airbnb, just a basic search and book website would do (Airbnb still maintains a very minimal website).

The Hurdles

Having observed several startups in recent years, two of the most pronounced hurdles that they run into are ‘scalability’ and the much touted f-word — ‘funding’. Either entrepreneurs find that the idea which worked so well for ’n’ people doesn’t quite scale well for 1000n or that they simply don’t have enough money for upfront resources which majorly comprises employee salaries. For a startup, grooming a good team is a classic chicken and egg problem. Great talent isn’t usually interested unless you offer attractive salaries and you won’t be able to offer attractive salaries unless talented teams make great products to then enable you to raise funding.

A New Solution is Emerging

Both product and service-based businesses can look towards the freelancing domain to scale in an asset-light and cost-efficient manner. The former by supplementing its core technology team with freelancers while the latter by outsourcing its entire product — hiring a freelancer to build a basic workable solution or the minimum viable product (MVP) would help them save an enormous amount of money, and validate their ideas in the short term. If the business model stands the test of time, they can then seek additional funding and build a more extensive product. If the pilot turns out well, the MVP could help them refine their ideas and improve the credibility of their product, both in the eyes of the funding sources and potential employees.

It is also critical to note that technology is not the only category conducive to freelancing — design and content writing are two other prominent categories. While websites detailing previous experience and projects of several freelancers are widely available, a few promising startups have pushed the envelope by also validating the skill sets of the freelancers, matching the right person for your requirements and easing the execution of a project. This has revolutionized the freelancing experience and has made the proposition of hiring freelancers extremely compelling.

Startups, particularly those in India, would do well to leverage the emerging freelancing scenario. It provides a tailored solution to the aforementioned problems and enables budding entrepreneurs to hire the best of talent without incurring astronomical costs. If you are an entrepreneur, a nascent startup or even someone with just an idea, freelancing is your go-to solution to experience your dreams in reality.

Sumit Bhagat

Sumit Bhagat

Harmless, mostly.