How Upwork Can Leverage The Virtual Company Trend

Upwork, in my opinion, should focus on this trend and build an accelerator for startups on its platform that have a high potential for fast growth. 

Let us say, there are 25k startups on Upwork currently. Say, 10% of these are high potential. These, instead of spending $5k on Upwork, if properly supported, could spend $50k a year on Upwork. That would double the GSV from this segment. In addition, say, 1% of these are really fast growth companies that would spend $250k a year on Upwork. That would add another 50% lift in GSV. Thus, if Upwork is currently making $12.5 million in revenue from the startup segment, this number can rise to $28.75 million. That means an additional $17.5 million revenue with some focused nurturing. [Assumption: Revenue equals 10% of GSV]

For the 2019 fiscal year, revenue is forecast to be about $300 million. By focusing on promising startups, revenue could improve by almost 6%.

It may not happen in 2019, but in 2020, this lift could be achievable. Upwork will also learn what are the product extensions needed to cater to the startup audience to clinch this segment. For example, what if a startup wants to hire freelancers specifically in Bozeman, Montana, and have 20 of them locate in one co-working space? And of course, many of them are looking for some form of funding or other leveraged means of growing their businesses.

Analysts covering Upwork should start asking the company for a breakdown of its core client segments and revenue shares thereof. Each segment would require a customized strategy to grow systematically. 

Currently, Upwork doesn’t segment the core clients and caters to the segments individually.

They should.

And specifically for the technology startup segment, we have a wealth of knowledge on the requirements. Based on this, my conclusion is that Upwork is leaving a lot of money on the table.

A time will come in the not too distant a future when tens of thousands of fast growth technology startups that operate as virtual companies will dominate the planet.

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