Instawork | Flexibility on Demand

Hi, everyone. Welcome to Gray Matter, the podcast from Greylock, where we share stories from company builders and business leaders. I'm David Thacker, a general partner at Greylock. Our guest today is Samir Magani, the co founder and CEO of InstaWork, which is building a flexible work platform connecting businesses with hourly workers. Greylock has been a partner to Instawork since their Series C round last year. And I've known Samir for over a decade. We work closely together at Groupon. One of the areas that we track closely at Greylock is the future of work. The nature of work is rapidly changing and InstaWork is one of the companies powering that transition. Today we're going to talk about how the company is helping both its partner businesses and its professionals, and what's next for the company. Sameer, welcome to Gray Matter. Thanks so much for joining us today.

Thank you. It's great to be here.

All right, well, let's get started. Let's hear about instawork. Can you give us a high level description of the company and tell us where the company has a presence today?

So InstaWork is a flexible work platform. We connect local businesses who need staffing with over one and a half million hourly workers around the country. So for example, if a hotel or restaurant needs an extra bartender for the weekend or a warehouse needs to scale up to deal with a big order coming in, they can take tap into our marketplace of skilled hourly workers, or professionals, as we call them. The businesses we call partners, they pay us and we pay the professionals instantly after the shift is over. InstaWork is live in 25 markets today, and that number is growing every month. Internally, we've got a growing global team across seven countries. I want to emphasize growing, David. We're hiring in every function and I just want to highlight that we're all really excited to be part of this vision to create economic opportunity for local businesses and professionals globally.

Great. Now, you and your co founder started Instawork in 2016. I think you went through Y Combinator, and at that time, the gig economy had been on an upward trend for a few years. Why did you decide to launch the company then? I mean, what made it the right time to launch? Where did you see your entry point?

I grew up near Detroit. As you know, David, my parents were small business owners. They had immigrated here from India. And I have vivid memories. You know, whenever they have a surge of orders or someone not showing up, I get this phone call to come over to the office. So the earliest memories I have from the Start of my career was helping my parents manage through labor shocks. And then when I couldn't drive, they would come, my mom would come pick me up and by the time I was in high school, I'd have a car and they would tell me to come, come on over. If you fast forward to our experience working together at Groupon, David, we're gonna date ourselves here. So for those listeners who don't remember Groupon, Groupon created marketing campaigns to help a lot of small businesses like restaurants get new customers and fill empty seats. And I still remember sitting in the dining room of an Italian restaurant here in San Francisco in North beach with my team when I was a Groupon and we were meeting the owner and we were pitching her on running a Groupon. The restaurant was maybe like one third full, tons of empty seats. And David, I remember our team pulled out this ROI analysis on why the owner should run a Groupon. There were empty tables. It seemed like a no brainer. We had examples ready if similar businesses nearby that had succeeded with us. And she stopped us like 30 seconds in and we were confused. What do we say? What do we do? Why won't you let us sell you on this? And she pointed to a sign on the window and the sign read, se solicita lava platos, which in Spanish translates to we need dishwashers. And it struck me, here is a business that couldn't handle more customers because it lacked the basic infrastructure. Any business needs quality talent, and quality talent is as important to Greylock or Instawork or any other business that wants to be successful. And this owner, she didn't need more customers. She needed more staff to handle the customers she was already getting. And at that moment and over the coming weeks and months, I reflected on that problem and realized the labor market for hourly workers was quite broken. The mechanism to find hourly workers or to get a relevant job were basically a sign on the window, word of mouth, a job board, maybe a staffing agency if you were big enough. And with all of these solutions that I just mentioned, there were a lot of challenges. High search costs, distributed quality signals about both sides that didn't exist online. And most of all, like lack of a good mobile first interface, which was increasingly what both sides were using in their lives at that moment.

Yeah, no, that's really interesting. I mean, we see this with all types of businesses. You know, everything from, you know, I can certainly see a small business like a restaurant, but even like a Silicon Valley startup, they can't grow their business faster because they just can't find the right talent. Right. You know, there's, there's such a scarcity of talent for any type of skilled professional job. Let's talk about other platforms you may have looked at as you went off and started the business. I mean, there's been some innovation in this space for the last few decades. Were there things that, in terms of hiring platforms that inspired you that you thought had done a good job? And there also are the things that you. That showed you kind of what not to do.

Well, there are certainly several companies or movements that have inspired us along the way. First, we're not the original company to evangelize flexible work. I think Upwork and Hayden, they've done a fantastic job promoting this. Hayden's a great CEO. LinkedIn, of course, David, where you were an executive, invented this notion of building professional identities online, which I think is super powerful and really drives a lot of our product thinking. You know, finally, years ago, I remember Matt Kohler spoke about this idea of the mobile phone being the remote control for our lives. And it really couldn't be more true. We're seeing that, you know, today we use our phones for everything. And we spent a lot of time thinking about why can't we leverage that remote control, that technology, to help people find work, make extra money? Some of the most popular apps we use today use technology to solve the challenges I mentioned earlier. Uber is lowering search costs by matching you with a car at the touch of a button. You don't need to wait outside to hail a cab, and drivers don't need to drive around aimlessly waiting for their next pickup. Everyone is better off because of easier onboarding, better matching the smartphone really makes this easier. With a lot of these platforms and marketplaces, especially where supply is more heterogeneous versus homogeneous, quality is very critical. So you can make the liquidity, high fidelity, high quality. So that really Inspired us at InstaWork to assess and develop our talent pool of pros around quality. We collect dozens of data points around our pros, areas like skills and certifications and attitude, reliability, job performance, and more. And then our team of data scientists, engineers, use this data to improve the quality of their skills by identifying training opportunities for them that'll help them increase their earning potential and get access to more work opportunities. Every Insta work pro is making a profile of record where they can add their experience and their qualifications. And today, all of these signals are really scattered offline across many sources. And so our pros, their profiles get stronger as they pick up new skills, complete training Build their reputation, grow their network. And then this also helps them separate signal from noise as they look for new roles and opportunities on Instawork that may be a good fit for them.

I can see how the pros on your platform could build a really rich profile which would help them find other relevant opportunities in the future. You know, there's been systems in place for job seekers for a long time. I mean, there's been online job boards that have been targeted at hourly workers. But Instawork really changed the game for the hourly workforce. And you've streamlined the process of finding work opportunities that leverage these skills and experience, you know, on the profile you're building. And it's so critical to have a great product experience that's intuitive and easy to use for these job seekers. How did you approach building a platform that was attractive and easy to use? You know, from both a business and a worker perspective?

One of the big lessons from the early days in Y Combinator especially is to spend a lot of time with users and doing customer development. And so we did a lot of that. And after reflecting on our early journey and the conversations we would have with partners and pros regularly came down to really three things that matter to both sides. Quality, reliability, and convenience. And these three tenets really became our value proposition for how we craft great product at instant work and how we solve problems. So let's take local businesses, for example. What do they want when they're looking for stunning colleagues? They want great workers who can actually do the job at hand. They've got the right skills, the right attitude, the right expectations. They want colleagues who show up on time, and they want a system that's really easy to use. It's very convenient. And so it's really about quality, reliability, and convenience. Now jump to the pro side. The workers, we give them the quality and flexibility that they're looking for. We did a recent survey, and 90% of our pros said flexibility was the single most important reason they're using instawork to find work. The app is really high quality for them as well, because they know exactly what they're going to make, what the job responsibilities are. When they accept a shift, there's no smoke and mirrors around how much money they're going to make, and their wages are significantly higher than alternatives. And so when it came time to thinking about how do we solve our users problems, our first principles approach was really just rooted in fundamental truths that we believe would never change. And to this day, we orient the vast majority of our product energy, operational, energy towards investments to improve quality, reliability and convenience. I think the other big insight and differentiator over time has been again in how we leverage mobile. The system we've built for matching pros with available shifts, it's really fast. We can dispatch shifts to our large pool of quality pros and match them and within 24 hours, majority of our shifts get booked and get picked up. Previously, if a business was using a physical staffing agency or a job board, you might have to wait days or even weeks to get these shifts filled. On the pro side, you can literally download our instaork app. You can pick up a shift the next day and get paid immediately. And that's really powerful. David, we see all sorts of cool use cases emerging that we didn't even envision before. Like friends and teams getting together to go work a shift together. This idea of a professional network, right, that comes together for a football game, for example, on a Sunday, or people who lose their jobs and need to make rent, but they decide not to apply for unemployment and they just use instawork to immediately get to work, like the next day. We share these types of prose stories that are all hands, all the time, and it continues to get me and our whole team excited about the impact we're having for our pros especially and the communities that they're a part of.

Yeah, I think this is really a powerful new way of working for the pros and for the businesses, you know, how they approach staffing, their open roles, you know. And I also like your approach on first principles here. I mean, I think going back to probably the beginning of capitalism, you know, businesses cared about quality and reliability of their employees and, and workers have cared about having more flexibility and having higher wages and more choice on where they work. So these are kind of fundamental truths and you've really oriented the company around those things. Now, at its core, instawork is really a marketplace business and you've got quite a bit of experience building up consumer products and marketplaces. You were at Groupon, which was a really big local marketplace for nearly five years, and you worked at Yahoo before that. How do you approach building a two sided marketplace of InstaWork? I mean, it's really hard oftentimes for entrepreneurs to bootstrap the early days of a marketplace. Tell us how you went about that.

Well, I think the best way to build any two sided marketplace is to start and manufacture liquidity yourself. And before my co founder and I wrote any code, we decided to go deep with our users and just match them ourselves. Manually, like literally being a staffing agency. And it's the best advice that I give to any marketplace founder that asks. This approach really forces you to dig deep and understand the pain points of your user and make sure you can solve the problems that they have. Because technology can always help you scale do things more efficiently, but it won't create product market fit on its own. So in our case, it was simple. We need to get businesses and workers. So we started in San Francisco and we had a handful of hospitality professionals we had gotten to know do some early market research, and we made digital identities for them, sort of actually like a LinkedIn profile. We made these profiles that listed their work experience, what their references had to say about them, their photos, their skill sets, all that type of stuff. The next thing we did was we identified restaurants that was a very specific customer segment we had targeted. And we found restaurants who were looking for people like these workers. And my co founder and I literally started driving door to door and we would print out and leave a physical stack of these profiles, like under the door with a cover note that I would like sign. And we would ask the GM or chef to call us if they wanted to interview anybody on this list. So we're literally nothing digital. It was all physical paper we would print and leave under these doors. And I think the response rate for these first cohorts was like 50%. And actually some of the days I remember it like raining and our paper packets got drenched. So the true conversion rate may have actually been higher. But we really knew we were onto something then, right? If we were able to get chefs and GMs to respond to these physical pieces of paper that look like basically a beautiful resume, we basically started creating the first version of liquidity. And word of mouth really started kicking in on both sides. And people would tell each other on both sides, or businesses would tell workers, workers would tell businesses, and that's when growth really accelerated.

50% is pretty astonishing for a response rate. It's a good lesson for other founders that may be listening. So many founders, especially in Silicon Valley, just want to start building technology and products before really validating the customer pain points and whether it's a fit for their solution. So I've seen companies spend a year building, throw something out there, and it just doesn't really get product market fit right because they didn't really fully understand the problem. So it's great that you went through that approach to validate this before you started building. Let's go back to your partner businesses. Many of These businesses, they're small businesses, they're slow to adopt new technology for a variety of different reasons. Oftentimes the owners of these businesses are just super busy. Oftentimes they're not very technology savvy. Sometimes they have on very strict budgets. They're on very thin margins. So what were the first few years like in terms of attracting customers?

The great news with our business model is that you only pay when there's a successful match. A business pays us when a qualified pro shows up and does a great job. So our interests are really aligned. We don't require them to pay up front to post an ad like a job board, or they don't have to install any physical hardware or there's not a contract they've got to sign. We're really fortunate to launch instawork several years after many companies had already been built, socializing a variety of businesses, especially small businesses, to the power of technology. And I'm really grateful because I think we were able to stand a little bit on their shoulders. You know, you think about, you know, Groupon, which I mentioned earlier, where you and I worked gusto and what they've done around payroll, OpenTable with reservations, toast as a point of sale system. And then finally I think maybe one of the lessons in terms of attracting customers, you know, with our go to market, we, we tried really hard not to boil the ocean from the onset. Most of our history we've only really been in a single market, the Bay Area. And it was only a couple years ago we started expanding really, really fast. We resisted every temptation to expand and chase Greenfield. And the good thing about this approach is when you're focused, you get really good at building a base of promoters and network effects. And word of mouth really kicks in, as I mentioned earlier, because your go to market energy can really be deployed in a dense way. And David, I'm sure you know, and you see great examples like the quality of referrals, the quality of word of mouth acquisition is way higher than any other form of customer acquisition. And so as we got big enough in San Francisco, what started happening was that we just started getting pulled into new cities, both by partners, the businesses on Instador work and pros. And that just meant the lift to launch new markets got lower and lower over time. And so customer acquisition on both sides just became easier. You know, today we're seeing more demand from new users on both sides in markets that we haven't even launched, which makes it such an exciting time to invest in the business and to accelerate Our growth.

That's a really powerful flywheel effect. I think there's a temptation. Sometimes companies get focused on top line growth. They try to go to as many markets as possible before really perfecting the model in one or two markets, core markets, and you really did that and saw it working, and it made it much easier to launch each additional market. I know we've talked about before, you'll have pros sign up in markets you're not in yet. So when you first go into a market and you sign up the first businesses, you immediately have skilled professionals on the platform that are ready to work. And this is something, in effect, we've seen with other past Greylock portfolio companies like LinkedIn and Airbnb, where your users and customers are pulling you into new additional markets, which just makes it much easier to launch each additional market. Let's go back to something we talked about a bit before, but just that, the vertical focus of the company. You start out as very focused. I mean, I think you initially focused on the hospitality industry, but ironically, that's the industry that probably got hit the hardest in the early days of the pandemic. And now, of course, every business, every hospitality business, as we're reopening, is scrambling to try to find workers. So many of them are turning to you in droves. But I would love to hear the story of how you adapted to uncertain conditions in the market. How did you redirect your focus to other areas where instawork could be useful?

Well, I have to begin by first recognizing my colleagues who are here in 2020. There's so much disruption and uncertainty in the world and in our professional and personal lives at the time. And I'm incredibly grateful to all of them for sticking with us and making Instawork a better company as we emerge from the pandemic. So when Covid hit, many businesses who used instawork were affected differently. And David, as you mentioned, hospitality was one area. Hotels and restaurants and event venues didn't need labor because they effectively shut down because of shelter in place orders. But we noticed specific customer segments were actually using us more than ever. And as you can imagine, businesses participating in E commerce and supply chain saw an incredible demand for their services. And on the pro side, we looked at the profiles of all the workers on instawork and we noticed many of them had actually worked across many different types of industries and had a wide variety of skills. And so we started kind of looking for certain customer segments or profiles and users on both sides that were a good fit for the way the world was evolving that year. Then I vividly remember a board meeting in May 2020 where one of our board members told me, samir, you used to go hunt deer, but the deer have left the forest for now and you have to go hunt rabbit instead. And David, now, as you know, I'm vegetarian, but that analogy has really stuck with me the last couple years. And so Mike, who's our VP of sales, he and I got a lot of our operations sales team together. At the time, it was like seven or eight of us. Aaron, Matt, Geraldine, Chris, Christian, Jenna, Richard, the Dans. And we said, look, team, we've got to go hunt rabbit. And they all looked at me as if I was like a crazy person. What was I talking about? And I paused. We shared some of the data, the insights we were seeing, and that team responded enthusiastically and got it done. And then on the product and engineering side, we got our team together, which at the time the team was split between the US and India. And we said, let's go automate and keep building to the future we want so that when the next round of scaling hits, and it will hit, we will be even stronger. And going back to our value proposition, it was extremely helpful and grounding to stay rooted to quality, reliability, convenience, to keep us all aligned internally, even as the world changed externally.

It's remarkable how you all adapted so quickly to these changing market conditions. We've always seen that's one of the traits of our best startups and leadership teams is that ability to be responsive and nimble. And I love the saying about hunting deer and rabbit, although since you're a vegetarian, perhaps they should have said, you can't hunt deer anymore. You've got to go out and forage for mushrooms or something. Let's fast forward to today. You're in a period of explosive growth and support. You raised a Series C funding a few months ago and you have several new board members walk us through the business.

We're thrilled to welcome Kraft joining us on this journey. Craft ventures that led our Series C. Jeff Fleur is an entrepreneur himself, founded StubHub. David Sachs, another founder. They've been great. And David, it's a treat to have you and Greylock involved. Obviously, I've known you for a long time and Greylock's been involved in many networks of all kinds. So we've crossed one and a half million pros across our network. We've been adding hundreds of thousands of new pros just ahead of the holiday. So it's been an explosive time. And in Terms of the business, we're just seeing a huge increase in the demand for flexible work from both sides of the marketplace. Businesses are leaning into the model more than ever, and pros are raising their hand and saying, this is how I want to work. We're so grateful to be in a position where we can help create more employment in the world.

Something else that's really interesting about InstaWorks platform is that you become this huge repository of data about hourly workers. You recently announced that you're launching a research division within the company. What have you learned and what do you hope to learn more about?

Well, that's right, David. We barely tapped into the wealth of data we've accumulated, and the next set of big product investments at instwork will require unlocking our data with data science, machine learning, engineering, econometrics, and more. So first, as you mentioned, I'm thrilled we have Daniel Altman here. He's our first chief economist and he's going to publish some of our data regularly. Encourage anyone who's interested to sign up for his economic research newsletter that his team is going to be publishing. We have a link to it on our blog. We're also excited to have launched the division. Its goal is to provide insights into the hourly workforce and how flexible work is impacting local businesses. Now, regarding the data, I'll talk about it from a macro perspective and then maybe at the micro level. We're gaining a lot of insight into the hourly workforce. They make up about half, more than half of the American workforce, and they're often overlooked when we look at analyses around the macro economy and the future of work. So a couple examples of things that we've been talking about lately based on our data. What's the impact Omicron had on job fulfillment by individual markets? We're collecting a lot of data on market clearing, wage rates, David, because we have real time data on what businesses are willing to pay and what pros are willing to accept. On the micro side and more at the individual pro level, we're thinking about what we can do with data about individuals to help them get more value from instawork. So if David is a great bartender who shows up on time and works often on instawork and has built his profile and his reputation, what financial services can we offer him, especially if he's under banked or doesn't have a credit score, what are training opportunities or programs we can offer to him to help him get access to more work on instawork? And so I think that's interesting. As well. Lastly, some of the most valuable insights that we've been seeing have actually been qualitative trends or data around how people's lifestyles and habits have shifted during the pandemic. So, for example, we have pros living the nomadic van life, traveling all over the country and picking up shifts in different cities. Anyone who's seen the movie Nomadland might appreciate this. We have single parents who are using Insta work to create flexible work schedules around their kids, needs, doctor's appointments and soccer games, et cetera. And we have all these interesting people from different backgrounds, different ethnicities and races and socioeconomic statuses. And the one thing that connects them all, David, is their desire for flexible work. And they love Insta work.

We've seen this. A few other greylock portfolio companies I'm thinking of, like LinkedIn, Redfin, have also launched economic research teams. And because you have really powerful real time data at your scale and growing, and oftentimes your data is going to be more accurate and timely than what you'd see coming out of a traditional government bureau or reporting agency or a third party that are trying to track some of these trends. So look forward to signing up and getting the research reports now. You've grown significantly in the past year, both in terms of customers as well as your internal team. As we all know, it's a tough time to be hiring across every industry. And when you're in a growth period, it's crucial to hire the right people who can lead your teams. How do you find great leaders for your various teams?

First, we look for people who are aligned with our values. Our four values are act like an owner, always be learning, bias for action. And the last one is empathy, trust and candor. Next, I think people get really excited about our vision, which is to create economic opportunities across local communities. And that helps us in two ways. First of all, our network has been instrumental. Colleagues are excited about the impact we're having and they want to share it with their network. They bring former colleagues and friends whenever there's a role that has a fit. We actually recruited an independent board member this way, Jody Kozlak, who's fantastic. She was an executive at Target and Alibaba for many years. And we're so happy to have Jodi here. That was all sourced through the company network. But also many folks in tech want to make an impact, right? They want to make a broad impact on the world and they came into tech for that reason. And we really think being an in store is our chance. We're Actually creating more employment in the world, which is only a good thing. David, you and I and most people that work in tech, we're relatively comfortable. We've gotten to work from home when there was a pandemic lockdown, for example. We're not worried about our next paycheck. Tech sometimes gets criticized in the media about creating a lopsided economy and an economy that works to make privileged folks more privileged and disenfranchise those without privilege and changing the concentration of wealth further away from those who have worked the hardest and put their lives on the line the last few years for the rest of us. I think there's a lot of people in tech who will listen to this podcast who may be frustrated that they're not having the impact that they intended. Our team is made up of incredibly talented colleagues coming from incredibly successful companies who are all aligned in one thing, that they want to create economic opportunity for the businesses and professionals on Instawork really create economic freedom. And they wake up every day knowing that what they do has a tremendous impact. If you work at Instawork, the code you write, the Figma design you're shipping, the cold call you're making to a business, it can be the difference between someone making rent this month or making a payment for childcare or paying a hospital bill or having a holiday present ready for a family member. I think it's really powerful. Also, our biggest partners are many of the same brands we use as customers. Venues where we go to watch sporting events with our friends and family companies we're ordering from online. And it's always fun to see people's reaction because they don't realize how much labor is needed to produce the goods and services we consume every day. So the growth's been tremendous. We're over 300 colleagues now across multiple countries, seven countries all over the world. Our leadership team and companies being recognized by Built In. We were recently recognized as a top place to work and so excited to continue growing the team with stunning colleagues who are really aligned with our values and our vision.

Yeah, it's a really inspiring vision. And I think the talent I talk to these days, especially people looking to go to startups, they really care so much about what's the mission of the company they're going to.

Right.

And it's actually going to make a difference and they want to identify with that. So it's great to hear all that. One last question on this. I mean, so coming out of the pandemic, are you going to be a fully remote company and can you hire talents pretty much anywhere?

We are going to offer flexibility, which is actually the same thing that our pros want. And so I think that the vast majority of our colleagues crave in person interaction. David. So the way we've had it set up is we've got about a dozen hubs around the world, a bunch here in the US and then Bangalore, Singapore, Sydney. And we'd like to encourage colleagues to come to the office a couple days a week. And we're going to probably kick that off in the next quarter, but also give people the flexibility for the rest of the week to work from home or come to the office. But we'd like people to come in a couple days a week. But of course, if we meet great candidates who aren't located near a hub or for a variety of reasons, don't want to come in, we're going to accommodate them as well.

Great. So you'll be in a hybrid model. Well, my last question for you. I wanted to get your thoughts on the future of work. You're immersed in this, you have been for many years, and you're on the bleeding edge. How do you think the way we work is forever changed and will continue to be? So where do you see the labor markets going and how will instawork play a role in this?

Well, the one thing that I can talk about that we're seeing right now happening before our very eyes is flexibility. Everybody wants flexibility, and over half of the American workforce is paid hourly. But that community hasn't been included in national conversations about the future of work. And we're helping give flexibility at insta work to those who don't have the luxury to just work from home and in fact give them and our business partners more freedom to self organize and ultimately create more employment in the world. And so I think we're going to play a really, really important role in driving flexibility. And now is the right time. The pandemic really gave all of us the opportunity to assess what we want out of our lives, our work lives, our personal lives, the balance between the two. And if there's a silver lining out of all of this, it's that hourly workers want to build work schedules that provide them with balance and increased income opportunities not very different from the rest of us. And being on the front lines for so long, especially the past few years, it's given them the opportunity now to advocate for themselves and decide what's best for them and their families. So I think flexibility is a permanent change that's happening before our very eyes. I think the other thing that we're seeing and excited to participate in is this idea of reputation which is here to stay where workers or any types of professionals can store digitally their skills and their aspirations in a central place and use that reputation, use that profile of record as they traverse and advance throughout their career in search of economic opportunity. And so we're excited to be a part of that as well.

Great. Well, thank you very much, Sameer for joining us today and congratulations on the success you've had to date scaling Instawork and really appreciate you sharing your thoughts and your insights.

My pleasure. Thanks for having us.

That concludes this episode of Gray Matter. If you liked this interview and want to hear others, Please subscribe at SoundCloud, Spotify, YouTube or wherever you get your podcasts. You can also find all Gray Matter content on our website greylock.com and you can follow us on Twitter reylockvc. Thanks for listening.