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Business

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How helping out your mum could be the start of a big gig business

Penny Brooks

15th February 2017

Australian entrepreneur Matt Barrie's website has a simple concept - it connects people who have work they need doing with others who compete to do the task by submitting the fee they would charge. In other words it links demand for labour with labour supply, enabling the market for the task to find it's own level of price.

Freelancer's UK site invites users to notify a job they need doing, or to sign up as a freelance worker

His business start-up, making computer chips for security equipment, had not gone well because he just couldn't market the product properly, and by 2006 he walked out of it, feeling it had all gone wrong. While he was thinking about what to do next, he decided to help his mother build a website for her arts and crafts supply business, and was trying to outsource the dull task of setting up the data entry needed. He offered local people up to A$2,000, and was disappointed to find that no-one would take up the task. Hunting around online for a more enthusiastic response, he came across a Swedish website called Getafreelancer, which he describes as "he ugliest site you have ever seen in your life", posted the job, and quickly had offers from over 70 people bidding ever lower prices at which they would take on the task - and he realised that here was an opportunity to fill a gap in the market for matching people's skills with businesses' need for skilled workers.

Following a failed business, getting funding was not easy and he eventually relied on help from a friend. Since then, he has bought up first Getafreelancer, and later another 18 similar businesses, he directly employs 570 people, and Freelancer.co.uk now claims that it has over 22 million users, and nearly 11 million jobs have been posted. The contractors offering their services are ranked by employers using a star system, just like Uber drivers or Airbnb hosts, and employers pay them via the Freelancer website once the job is completed to their satisfaction.

Like most businesses in the gig economy, the business model has it's critics. It is accused of driving down the pay rates for professional work, but Matt Barrie replies, using the benefits of globalisation, that the company has had a huge, positive impact on millions of people in developing countries as they can compete to offer their services to employers in the developed world as a rate that is far higher than they could earn in their local economy, so raising their standard of living enormously. He also points out that it is not necessarily the lowest bidder who wins the job - Freelancer says that 47% of the projects on its site are awarded to "the median bidder or higher".

Quoted on the BBC website, fellow entrepreneur Emma Sinclair, co-founder of human resources software business Enterprise Jungle, says that this is an inevitable aspect of today's labour market as firms are increasingly looking to hire non-staff to complete projects rather than carry out the work in-house. "Nearly 35% of today's total workforce is comprised of non-employee workers and this is set to continue to grow," she says

Meanwhile Matt Barrie is a great example of how taking some time to help out your mum could lead to success you have never dreamed of!

Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor

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