A brief history of freelance marketplaces
With the world gripped by a global downturn small businesses are clamouring to cut costs and increase profitability to stay afloat. Enter, the freelance marketplace. Freelance Marketplaces are not a new concept, the first marketplace was launched in 1998 and dozens have come and gone since.
In this article we take a brief look at the history of some of the better known freelancing marketplaces on the web.
Guru.com, the first online freelancing or outsourcing marketplace was established in 1998 as SOFTmoonlighter.com, it consolidated its position in the market, rebranding to A2ZMoonlighter.com in 2000 to reflect a move away from software programming and again in 2003 to Emoonlighter.com. In 2003 it acquired the guru.com domain and completed its rebrand in 2004. Under the stewardship of founder and CEO, Inder Guglani, a US based Indian emigre Guru has won a series of awards including: Ernst & Young regional entrepreneur of the year award in 2008 and a Pittsburgh Tech50 award for eight consecutive years since 2002!
Guru was closely followed by Elance which launched on July 4, 1999. Co-founders Beerud Sheth and Srini Anumolu brazenly stole the name from the title of a paper written by MIT professor Thomas Malone in the previous year. Elance quickly acquired over $1.2million USD in seed funding to enable it to get off the ground, operating from a stuffy New York apartment. In 1999 the founders set off on a whistle-stop tour of Silicon Valley in search of some VC funding. Within two weeks they returned to New York with a $12 Million USD deal with renowned venture capitalist L. John Doerr. The company has grown ever since and as of March 2010 it had reported total billings in excess of $260 million dollars.
Other prominent marketplaces for freelance workers and consultants were launched in 1999. The now defunct, Freeagent.com was launched by Opus 360 CORP on July 4 1999 (on the same day as Elance). Within 3 months they had raised $40 million dollars in funding and within a year it was billed as the number one freelance marketplace.1 It claimed to have been a source of freelance talent for companies including Microsoft, Pfizer, Ernst & Young, Lucas Films, MetLife, Lucent, and Xerox. Despite heavyweight backing and early adoption by major corporations, FreeAgent.com disappeared into the abyss of .com failures in 2005, without so much as a whisper to be found about its demise.
Since the launch of Guru.com in 1998 many pretenders to the throne have come and gone, but the turn of the millennium saw a new marketplace emerge – RentACoder.com (RAC) was launched in 2001. Based out of Tampa, Florida, RAC was founded by Ian Ippolito, CEO of Exhedra, a software development company. It was the first niche freelance marketplace to launch with a firm focus on programming and software development projects. With the explosion in popularity of the internet and a surge in small business grappling to get increasingly complex websites developed, Ian and his team at Exhedra were struggling to keep pace with demand. RentACoder.com became an outlet where they could send overflow customers to connect with talented programmers and get their projects completed. Today, RAC has total billings of $65 Million and in recent years it has broadened its horizons to take in additional categories such as graphic design and editorial projects. The second quarter of 2010 will see RentACoder.com rebrand to vWorker (v stands for Virtual), this will undoubtedly help the site move away from its techie roots and become a more widely accepted general freelance marketplace, ramping up their billings in the process.
A lull then followed, with little if any credible new entrants to the market, until 2004, when oDesk, GetAFreelancer (now just Freelancer) and GetACoder were all launched, each has demonstrated strong growth since their inception. oDesk has undoubtedly been the most successful of these, with over $160 million dollars of projects completed by March 2010.
Based in Silicone Valley, California, oDesk was founded by Greek students Odysseas Tsatalos and Stratis Karamanlakis who had a different vision for freelance marketplaces – pay for talent by the hour. While other marketplaces were running on bidding and auction style business models, oDesk was aiming for the untapped potential of a global hourly workforce. It experienced strong growth in its formative years and in May 2006 secured $6 million dollars in Series A funding from Venture Capitalist firms Globespan Partners and Sigma Partners. This was followed by an second tranche of $8 million in funding from the same VC backers in September 2007 and an additional $15 million in May 2008. Therein lies the answer to some of the sites success and exponential growth to its current position in the top 5 marketplaces worldwide - 2nd only to Elance in terms of lifetime billings. In additional to being well backed financially oDesk has courted the media consistently, has a resilient and reliable platform behind its marketplace and has invested a major chunk of cash on marketing – through Google and its affiliate marketing programme.
At the same time that oDesk was launching, a Swedish company, 'Innovate IT' was preparing GetAFreelancer.com for their entry on the global outsourcing scene. They experienced steady growth between 2005 and 2009. In March 2009 the GAF website and brand were spun-off from Innovate It to Plendo Sweden AB – a wholly owned subsidiary of Innovate It. Then, in May 2009 Plendo Sweden AB and GAF were bought by Australian outfit Ignition Networks Pty. By October the new owners had re-branded to Freelancer.com and the site is now experiencing exponential growth buoyed by renewed investment and an aggressive competition based marketing strategy which has seen over $100,000 in prize money up for grabs between October 2009 and the end of March 2010 for a series of competitions including a logo design contest, logo exposure contest, t-shirt design contest and most recently an API programming contest. Freelancer.com holds a strong position overall with $50 million in billings and 1.5 million registered freelance workers in its stable.
In recent years a series of newer marketplaces have come to bare. In 2007, People Per Hour (PPH) was launched in the UK by Xenios Thrasyvoulou, a Greek born Cambridge graduate who, within six months of launching, had managed to secure seed funding from investors who previously held roles at Skype and Ebay for example. PPH aims to be different and focuses very much on home-grown talent or 'home-shoring' with a strong emphasis on quality over price. In our discussions with Xenios he told WhichLance “I think there is a big market for higher quality freelance work both in the UK and the US.”
LimeExchange.com backed by LimeLabs was launched in 2008 and has gained a solid footing in a small space of time. The site has already clocked up over $5M in billings and has hundreds of active jobs open on any given day.
Most recently a trend towards ultra-niche marketplaces which focus on providing highly focused skill-sets has emerged. Two such sites are Joomlancers.com which focuses on providing services to a growing community of businesses which use the Joomla! Content management system as the framework for their online presence. WPLance.com on the other hand focuses on the WordPress community. Both sites are still in a relatively embryonic phase of development, with realtively few jobs and providers available through either. The major sites have also been quick to capitalise on development trends and are proactive about marketing their freelance developers capabilities on both platforms.
1. Source: Tech Republic - http://articles.techrepublic.com.com/5100-10878_11-1061532.html