Upwork’s Stephane Kasriel on Fixing the American Dream

When you walk into the offices of Upwork in Mountain View, California, you're greeted by a surprising person. Their receptionist on a TV screen greeting you from her home in Detroit. This is not your typical Silicon Valley company. Upwork and its CEO, Stephane Kasril, have helped pioneer the future of distributed work. That is, the idea that a company no longer has to operate from just one office in one city. With a good Wi-Fi connection, you can work from anywhere in the world. It's the same future I dreamed about when I first created WordPress with some friends from the internet. I was just 19 years old, and I was working with people all across the globe. We never met and didn't need to to build something that could change the world. Now that little project powers more than 33% of all the top websites on the web. My company, Automattic, was launched as a distributed company in 2005 and now employs more than 900 people in 68 countries. We have no central office. Our producers are based in New York City, and my colleagues are in Seattle, London, Cape Town, and yes, the Bay Area. Even though we've grown tremendously, distributed work still just works. Through experimentation and communication, we've built the culture, the tools, and the systems to thrive in an environment where we don't physically see each other every day. Now I want to share what I've learned with the rest of the world. I believe distributed work is the future of work. Over the coming episodes, I'm going to share why I think it's so important and how a company can try it out. Distributed work is not just good for business, it's good for our world. We can reduce commute times, we can improve work-life balance, we can open up to the global workforce, be more inclusive of everyone, even those who have been disenfranchised or marginalized by traditional office cultures. The future is here, it's just not evenly distributed. Stefan was one of the first people I emailed when I decided to start a podcast dedicated to the future of work. Upwork is interesting not just because they're a distributed company, but also because they are in the business of distributed work. Upwork is a global platform for hiring talent all over the world. So he not only knows about how his company works, but also how the global talent pool is adjusting to accommodate this new future. Unlike Automatic though, Upwork does have an office and a headquarters. So I went to Mountain View to talk to Stéphane about how they make their model work.

So my name is Stéphane Castriel. I'm the CEO of Upwork. I joined the company close to 7 years ago. Initially, I was running product management and design, and then when our head of engineering left, I became the head of product management, design, and engineering. And then a couple years later, when the CEO left, I got I got promoted and became the CEO of the company, and that was about 4 years ago.

How big is Upwork? How should people think of it?

There's about 1,500 people who work at the company. About 400 of them are full-time employees of Upwork Inc., the company, and they mostly work in one of our 3 offices in the US. We have an office in Chicago, we have an office in the South Bay in Mountain View, and then we have an office in San Francisco. But then we have another 1,100 or so people that are what we would call freelancers and they work from home. They work from about 500 different cities in the world, which is pretty impressive. I'm not sure I can name 500 cities in the world. And, you know, part of the reason why we call them freelancers is because that doesn't have a legal meaning. And so some of them are full-time employees of Upwork, but they just happen to work remotely. Some of them are independent contractors or whatever is the equivalent in that particular country. And then some of them are essentially what the US would call leased employees, meaning they get a W-2, but they get a W-2 from something called Upwork Payroll, which is our product. So as you can imagine, we use our own product to manage our entire remote workforce. And so depending on the employment law and all of the other considerations that are embedded in the product, they end up being classified differently. And because this whole discussion was pretty long, we call them financiers.

And Upwork is now a public company.

Yeah, we took the company public in October of last year, which is something that we had wanted to do for a long time. A lot of companies go public because they need to raise a lot more money. In our case, we've been cash flow positive or break-even for many, many years, so we did not need to raise the money. What we really needed was to raise the awareness. And I think, you know, the labor market is obviously one of the biggest markets in the world, like $100 trillion or so, of which remote work can be a very substantial part of it. And I think Upwork can play a role in trying to create a better future of work. Like, I think the current present of the labor market is pretty broken for a lot of people in the world, and we think we can be a driving force in creating a better future, but we need a big, big loudspeaker in order to be able to influence influence people. And being a public company just allows us to have a lot more visibility, a lot more credibility than what we used to have. And that's been the main driver for doing this.

And that also means all your numbers are public. So like, what's the rough size of the business now?

You know, this year we're going to do on the order of about $1.7 billion. And it's growing, you know, pretty nicely. So it's going to be much more than that next year. And I should mention that the amount of business that is done on the site, what we call gross services volume or GSV, if you looked at the financials of the business, GAAP revenue is, you know, the take rate, about 14-point-something percent of that $1.7 billion. So the GAAP revenue in 2018 is on the order of $250 million.

That's incredible.

But what I really care about, to be honest, is the growth. Is the growth, because that's how much money we give in the freelancers' pockets. Fundamentally, our mission at this company is to create what we call create economic opportunities so people have better lives. And the way we measure that is the amount of money that goes into people's pockets, right? So revenue is how much we get to keep. We are a for-profit company. We need to make money too. We need to hire all of these people and continue to build the business and all that stuff. But the real reason why this company exists is for the GSV, right? It's the money that goes and allows people to be more free, be more flexible, live anywhere in the world that they choose to live in, and be able to have access to jobs that they would not be able to get otherwise.

You mentioned earlier that work was a little broken. Tell me more about that.

Very broken. We're in a place right now where if you live in San Francisco, for instance, where we're based here, if you're highly skilled, you have access to amazing economic opportunities, great jobs working for of some of the most amazing companies in the world. But the cost of living has been rising faster than your salary. You know, the average rent in San Francisco has been growing by about 7% per year for the last 45 years. So you compound that, it's become outrageously expensive. What we see is that young college graduates, when they move to the Bay Area, spend close to 70% of their disposable income on rent. And that's despite the fact that they have a pretty lousy apartment and they typically have roommates. And that is more than twice as much as the overall US market right now, right? And so you've got, a place where great jobs, great environment, very international, very dynamic, all that stuff, but completely unaffordable to live in. And then meanwhile, you just go a couple of hundred miles away from here, you go to Stockton, you go to Modesto, you go to Fresno, you go to Sacramento, let alone going, you know, in the Midwest of the country. And you have places where it's extremely affordable to live in. And frankly, it's actually very nice to live in. There's plenty of beautiful places outside of the Bay Area where you really want to live, but there's no jobs. Right. And so fundamentally, we're in this economy where, you know, if you're a young person in particular and you don't already have real estate that belongs to you, and you might even have a ton of college debt to get started. You have this catch-22 where if you live in the middle of the country, you don't have a job. And if you live in the big cities in the US, you have a job, but you have no money. And either way, it seems like a pretty bad outcome. And it doesn't need to be that way. I mean, this is the last evolution. We missed a turn. You know, the first industrial revolution, you had to move people from the farms where they used to be working to the assembly line because physically we were manufacturing hard goods and you had to be on site. And the whole 9 to 5 was because the machine was going to run from 9 to 5. And so you had to work when the machine was going to run because frankly, at the time, machines were expensive and humans were pretty cheap. And so it made sense that way. Right. But you fast forward to the '50s where manufacturing started to slow down in the US and, you know, a big part of the Western world and the service industry, knowledge work became a big thing and increasingly a bigger part of it was done in office towers and cube farms. And if you think about it, that was a, I would say, a bad metaphor. You know, the cube farm is the modern version of the assembly line. Except that none of the work that you do in the cube farm actually has to be done on the cube farm. And increasingly, work can be done from anywhere. Increasingly, it doesn't need to be done from 9 to 5. Increasingly, it doesn't need to be this long-term one-on-one relationship between an employer and an employee. But somehow we missed the transition and we're continuing to operate as if work had to be done the same way. And you could say, so what's the big deal? Let's keep doing it. But what the reason why it's a big deal is, you know, the myth of the American dream, the idea that if you're highly skilled and working hard, you should be able to be successful, increasingly depends on where where you were born or where you live or how much wealth your parents have and whether you've been able to go to college or not as a result. And that is not what, you know, I'm an immigrant in this country. I signed up for the American dream and I think it's pretty broken right now. And I think we get a shot at fixing it.

It's kind of amazing as well. We think of the Bay Area as like this engine of innovation, but the percent of the economic activity that just goes to landlords is astounding. Yes.

Historically, there's been more more billionaires coming from real estate than from tech in the Bay Area. Little known fact.

You have so many cool stats about the Bay Area.

20 years of doing this. But, you know, the thing is, it doesn't need to be that way. And I think this whole distributed company, remote workforce, whatever you want to call it, movement is finally the awakening by the tech industry that we are part of the problem. Part of the reason why jobs have been destroyed in plenty of places in the country while all of the new jobs were created in a small number of areas is because of tech. And overall, it's a good thing, right? Increasing productivity makes people richer. We need innovation, we need automation. By the way, we don't make as many kids as we used to, so we need more robots to actually like, you know, help us grow the economy. Like all of these things are true. But the problem is the jobs that are being displaced are not in the same location and don't need the same skills of the job being created. And the displacement of the jobs comes from us, the tech industry, right? And so I think increasingly there's both a practicality of, as As a small startup, you just can't hire good developers in San Francisco because if they're really good, they're paid so much more money by the big tech companies that you can't possibly attract them. But I think increasingly there's also a bigger social calling for realizing that, hey, you know, there's some really great developers and great marketers and great everything elsewhere, and we can really help these people get a better life by giving them a job instead of trying to poach people from Google who will then push them back in this very zero-sum game, you know, red ocean type of approach of the war for talent, the way it's conducted in the Bay Area.

But if we allow the economic opportunity to be worldwide, won't that just mean more accumulation of capital by the companies themselves? So Google has to pay their employees very high salaries because they're in this competitive market. If the global average was much lower than that, let's say a third of what it was in the Bay Area, the extra profit would just go to Google shareholders or the company itself.

You know, the economy is not a zero-sum game, right? In an ideal world, workers are better off and companies are better off. I mean, that makes it much more attractive than if it's a win-lose where Yeah, Google is worse off, but Google's employees are better off. And that's going to be hard to convince, you know, the CEO to then convince their board to then convince the shareholders. Right? So in an ideal world, you get to a place where we try to make sure that the companies are better off because they get access to talent that they would struggle to get otherwise. They don't necessarily need the talent full time. And so they can pay, you know, by the hour or by the task. And frankly, they may not be that attractive to the workers in the first place, because if you're a highly skilled worker, In today's economy, your skills are in high demand and you get to choose where you work. And for most companies, they really struggle. You know, not everybody is attractive to workers as much as they'd like to. And so on the company side, you know, some of it is driven by cost savings. You know, for some, some companies in particular, very small companies that are bootstrapped and before they get VC funding or what have you, the ability to pay developers less than what they would pay locally can be a driver. But for the most part, it's just accessing the talent and being able to work with people on demand. And that is not incompatible with the fact that people are better off because they get to have more flexibility in their life, work, you know, on their own terms and frankly, potentially move to a part of the country where the cost of living is lower.

You know, they could leverage that income way more.

For years, we've had way more people signing up to become freelancers on Upwork than we've had companies signing up to post jobs on Upwork. And that to me is an indication that people are ready for this.

You did say earlier that you didn't love the wealth going to landlords. Mm-hmm. Yet we are in an office right now. Yes. So tell me about why you're paying a landlord for this space.

You know, that's a fun debate. In particular, this office here belongs to Google. And, uh, like everything else in Mountain View. And, uh, Google has notified us that at the end of our lease, they're not going to renew. We're about to sign a new lease in another office space. And there was a real debate as to whether we go and spend millions of dollars a year again on yet another office space or whether we close the offices and have everybody work from home. You know, it's a trade-off. I think, like, here's my selfish point of view on this, right? So we're in a small conference room where there's a big TV. With a webcam on it. The reason is because most of the work we do here is going to be with people that are remote. There's about 150 people in this office. There's about 1,500 people in the entire company. So 90+% of the people that you're going to be engaging with are unlikely to be in this office, which means 90% of the time you're going to be on video conferencing. And the average time of commuting to this office for our employees is about 45 minutes each way.

Really? Yes.

Traffic in the Bay Area, by the way, that's another thing that's broken is congestion in all of these cities. That were never designed for the level of density that we have today. And so people are going to spend an hour and a half every day to come to a place where 90% of the people they need to talk to are not physically present. If we had started as a fully distributed company, which a lot of companies are doing today, right? I mean, some of the companies that you're talking to never had an office and they started from day one being distributed. I don't think we would have ever signed up to get an office at some point. You know, some people here in this company have been working in this office for a decade. And when we told them, hey, you might have to work from home, a lot of people were not very excited about it. So we decided, you know, in the grand scheme of things, it's not philosophically aligned with what we want to do as a business. But in the grand scheme of things, it doesn't cost that much money, right? I mean, the entire budget for this company is in the hundreds of millions of dollars a year. So it's relatively small percentage of that goes into office space. And ultimately, we care deeply about employee satisfaction and people, you know, really loving their job. And so we heard enough people saying, look, we've always operated this way. We totally embrace remote work. Like, we fully realize that 90% of people at this company work from home, but we, the people in Mountain View, don't. And we'd like to keep it that way. And so, you know, like—

So will the new office be bigger? Will it be nicer? Can you make the office worse so people don't want to come in?

It's actually not going to be much bigger, partly because, you know, generally I would say we're expanding outside of the Bay Area more than we're expanding in the Bay Area. I mean, philosophically, what we tell people is hire the best people you can find anywhere in the world with one caveat, which is time zones. You know, we want to make sure that if people are going to have a good work-life balance, They need to have time zones that are somewhat aligned. But other than that, you know, if you find an amazing developer in Chile and a great salesperson in Greece, great. You know, like, why on earth would you force yourself to hire them just in the neighborhood? So, you know, the US is only about 5% of the global population or whatever the latest number is, but roughly that number. So the odds of having 95% of your workforce in the US, let alone 95% of your workforce in the Bay Area, which is a tiny, tiny population, is pretty low.

Although by that argument, isn't more than half the world's population in non-US and European time zones?

Yeah. So the, you know, one thing that I think is going to change over the next decades, and this is like a very risky prediction that I'm making because I might still be alive. Hopefully you are. But if you think about how the world is organized today, it's very much organized by like the northern hemisphere tends to work with the northern hemisphere and the southern hemisphere. And that's due to climate and it's due to the days when we were farmers, right? I mean, but in a knowledge economy, what really matters is not physical resources, it's intellectual resources. And what really matters is time zone alignment. Time zones are a real issue. So I think the real prediction would be that there's a lot more alignment between North America and South America, and that if you're going to be offshoring software development and you're based in the US, you should be doing it much more in Chile or Argentina than you should be doing it in India. If you look at Europe, the real alignment should be with Africa. Like if you look at France and Morocco, it's already happening. A lot of call centers for French companies are happening in Morocco. And that's historical because, you know, the, former colonies where people still speak French, but there's also Mauritius, which speak English. I mean, there's a lot more alignment from a time zone standpoint, north and south, than there is east and west.

What are some, from your point of view as a CEO, what are other investments you're making in kind of employee productivity and happiness?

Oh, there's plenty. But I would say let's start by the office itself, right? So we want to make the office be as remote-friendly as possible because, you know, the one thing that really doesn't work is if people in the office think that they are more important than people outside of the office. And I think in our case, we have so many more people outside of the office and it's a norm in the company and we train people and it's a big value part of the company. So I think people are just generally very aware of making sure that the remote people get preferential treatment over the on-site people. But it's harder to do when it's reversed. Most companies have 90% of people in the office and 10% of people that are telecommuting or remote working or what have you, and establishing the right technology, the video conferencing equipment, really good audio, And then cultural norms, like understanding that the person who is on the video conference call can interrupt. And in fact, you want them to interrupt because it's harder for them to indicate with body language that it's their turn to talk. So having the tools and the training and the norms to be able to make sure that remote people are really successful. And in particular, you know how that happens in the office.

What are some tools like you mentioned audio?

Yeah, like just buy good equipment. Back in the days, and I'm not going to mention old tools, but there used to be tools which would take 15 minutes before you could get started. I would start with the obvious. Is always do video, right? So when people are just on phone calls, you 100% lose the body language. By the way, when you don't see people, they also tend to be doing something else at the same time. Nobody's listening to anybody and the conversation tends to be extremely ineffective. So always do video unless there's a very good reason why that can't be done.

Although I do like when I'm on audio calls and I can like walk around my room or like sometimes I do little stretches. Yeah, well. On video it's a little awkward to do that.

There are some very legitimate reasons why some people, like there's also some people that do people just don't want to be seen for very legitimate reasons, and that's okay. And I think you also need to be culturally sensitive to some of these things. My point is there is a real value in seeing eye contact and the body language and all of that stuff that you lose if you just do phone calls. I would say have the level of empathy for the people that are remote that make sure that you don't have the water cooler discussions with the people that are in the office that are essentially making it harder for the remote people to know what's going on. Invest in face-to-face meetings. So we do, you know, regular meetups. Usually the teams that need to work together hire a freelancer on Upwork who's kind of a virtual assistant/travel agent who figures out where everybody's based. And based on that, what are some, you know, reasonably cost flights that would take them all to a nice place.

Oh, cool.

And then they rent a bunch of Airbnbs. They stay there for a couple of weeks. There's a lot of working together during the day, and I'm sure there's a lot of drinking together during the evening. And so there's this this more informal social connection. And then after that, it's just, you know, the level of interaction, the ability for people to have conflict. You know, it's easier to disagree with somebody that you have a personal relationship with. And conflict is important. If everybody always agrees and nobody ever dissents, then you typically don't have a really good outcome. And so building these social ties really helps in having a more productive working relationship moving forward. So it's an investment. It's not cheap to travel people around the world. It's also a big perk. You know, some of the People who work at this company have never traveled abroad before. And when they know that, you know, one year they're going to be in Bulgaria and another year they're going to be in Sicily, it's a great perk for people. And I think generally it's something that is hard to measure the ROI, but I think it's probably the right thing to do for the company as well.

So there's some people listening to this that are probably in fully office-based companies. Sure. How should they start to explore shifting that?

Yes. First of all, you find people that are excited about the change and not people that are resisting the change. You know, if you want to prove that it doesn't work, You know, not to give names of companies that we all know that stopped allowing remote work. Like, if you want to make it fail, you can make it fail. Generally, if you want to make anything fail, you're going to make it fail, right? So start with people that are excited about embracing the change. Ideally, start with allowing well-established people that already know the company in and out and allow them to go work remotely. I think it's easier if you start with somebody who really understands how things get done than if you're If your first remote person is also so remote that they don't know anybody in the company, it's just putting them at a disadvantage. If you do start with people outside of the office, I would say at least for the first few, have some form of, you know, on-campus training for them where you bring them into the company, have them spend a few weeks with people just to build that social connection, understand how things get done, and then you allow them to go back and work remotely. But I think after that, you need to go big. The thing that doesn't work is if 99.9% of your workforce is sitting in the office and 0.1% of your workforce is remote, they're always going to be at a disadvantage because they're never going to be top of mind.

So how do you go big?

Well, I think you start by looking at which parts of your company are growing. I mean, hopefully you're a growth company. If you're a shrinking company, like, it's a different problem that you might be solving. But if you're a growth company, figure out where you're going to be hiring a lot of people. And that's a very logical place to say, we want X% of these people, ideally more than 50%, to be anywhere in the US or anywhere in the world, and because you're gonna be hiring a lot of people, pretty quickly it's going to get momentum in the company. I think what people need to watch for is the sense of isolation that the remote people are gonna have, right? I mean, like, for, for them to be successful, you need to go out of your way to help them be successful. If people feel like they don't belong, then they're not gonna stay. One of the frankly biggest benefits of distributed teams that I don't think people talk about so much is how much longer remote people stay in your company compared to Silicon Valley-based people.

Tell me about that. Do you have any stats there?

I mean, I can tell you, like, of the 15 engineers, first 15 engineers that this company hired, and this was 15 years ago, 12 of them are still at the company. There's not a ton of 15-year-old companies in the Bay Area that still have their first, you know, early employees. And the reason is because, you know, like, one of them lives in the middle of Siberia.

Literally Siberia.

Literally in a place that, from what I hear, used to be kind of owned by the KGB and used to not be on US maps. And, you know, like, I think he's loyal to us because he loves what we do and because we pay him really well and all that stuff. But partly also because frankly, I don't think there's a ton of other jobs in the middle of Siberia right now. And so there's definitely like a, I would say, a social contract for those types of workers that is very different. And I would say, for instance, one thing we've started to do a few years ago is we allow people to delocate, right? So a lot of companies relocate people. They do college recruiting elsewhere in the US, try to bring them to Silicon Valley, which adds even more to the drama that I was, you know, I was talking about earlier. I think what makes a lot more sense is to do the opposite. You know, some people just say, look, I have kids and I want them to grow up in a different environment. I have, you know, my parents are getting older and I want to go live, or whatever the reason is. But a lot of people will say, I would love to keep this job, but I'd love to go work somewhere else.

And so I was actually one of those. I was Bay Area. And as my parents started to get older, I wanted to go back to Houston. So I relocated.

Yeah. But in your case, you had started your own company, so you get to choose to do it however you wanted. I think for a lot of employees, ask permission from the employer and the employer says, Well, too bad, you need to leave the company.

A lot of companies might consider certain roles being better for being distributed or not.

Mm-hmm.

When I walked into this office a few hours ago, I was greeted by not a physical receptionist, but a virtual one. So tell us about that, because I would say office receptionist is probably an area that almost everyone with an office would assume you need someone there.

Sure. Yeah. I mean, I think generally everybody assumes a lot of things about this job has to be on site. And I would just allow people to challenge themselves and then really, you know, the 5 whys, you know, like why, why does it need to be on site? No, but seriously, why does it need to be on site? And if you ask the question 5 times, maybe you'll say, yes, it has to be on site. Right. I mean, clearly there are some jobs, you know, there are people here that clean the office. Clearly, at least with the current state of technology, there are no remote-controlled, you know, robots that they can move around to, like, you know, vacuum and all that stuff. Some jobs truly need to be done on site. But I would say in most office environments, they are an exception, not the rule. Right. And so the example of the receptionist, it's, you know, it's a little bit tongue-in-cheek. I mean, it's, it's a good, you know, branding exercise, but it's also a great job opportunity. The two women that do this, they have two shifts. One lives, you know, near Detroit and the other one lives in the very far suburbs of Chicago. And, you know, if you ask them, they would say, yeah, this is by far the best job that I could ever get. And so the reality is, I think in our case, it's aligned with our brand. And so visitors get excited about the idea that they have a remote person, you know, greeting them in the office. Maybe in a more traditional company, this would come out as being a little bit weird, but it works pretty well. So they're on the screen and they have an ability to open up the door and they can ping us through our messaging system, which obviously is, you know, part of the Upwork product. I mean, Faith, I don't know which one you saw, but Faith has been with us for—

Faith welcomed me.

I think she's been with us for like 8 years. And she, you know, if you ask her, she loves her job. I met her for the first time last year. She actually came to one of our All Hands and I had never met her before. And it was very emotional and it was great to meet with her physically, but I see her multiple times a day over video conference.

And do those 2 people cover our 3 offices or are there 2 per office?

They cover 2 offices technically. Actually, there's 2 entrances in this building. So she covers both entrances and one in Chicago. So she has 3 screens in front of her, which, by the way, purely from a cost savings standpoint, makes sense, right? We probably pay her less than she would get paid in the Bay Area, and she can do multiple offices, which she couldn't do if she was physically present. So to your earlier question about can it be a win-win, we do something that's right for the economy, right for her. We save money and she has a better job and makes more money than she would make otherwise.

And the money she makes goes into that local community.

Well, you know, that's another thing that economists have been studying for a while. They call it the local multiplier effect. And so the idea is if you have a highly skilled, highly paid person in an economically depressed part of the country, on average, they create another 4 jobs. All right. So what happens is, you know, they make sufficient amount of money and they need to go to the dentist. They need to go to the movie theater. They need to— they're going to consume goods locally. And so that's gonna create jobs for the baristas and create jobs for the local retail shops and what have you.

You know, that's one job. You also run, I forget the percentage, but let's call the vast majority of the company kind of a distributed fashion. How do you manage like as a CEO productivity and performance across that, especially as a public market CEO?

Yeah, well, I think I would argue that from what I can tell, productivity for remote people is at least as high and probably a little bit controversially higher than it is for local people.

Why would you say, if you were gonna theorize why it might be higher for people not in the office, what would that be?

Well, I mean, just there's fewer interruptions for one thing, right? I mean, the culture of I can turn around and tell you, ask you a question. Well, for a lot of jobs, it takes you a while to get back in the zone. So that's part of it. Part of it is you don't have to commute to work, right? And so it's just like whatever time you're gonna be spending for work is gonna be spent for work. It's not gonna be 2 hours a day spent in a car that ultimately either eats in your personal life, which means, you know, it becomes a grind and you don't stay as long in the company 'cause you get burnt out. Or it comes from your working hours, in which case you don't work as many hours and you don't get as much done. I think the two biggest objections I hear for like, this can't possibly work for us. One is culture. This can't be good for culture. Like, how could people feel like they belong? Which is not true. And then the second thing is, oh, but we need to brainstorm, we need to ideate, we need to move fast. And collaboration over video conferencing and Slack and whatever tools you use is not as good as it is on a whiteboard. And I think that's actually true. I actually think that when you're truly trying to figure it out and you're in the initial early phases of a project, that's why we do these meetups. If you really don't know what you're doing and you're really trying to hash it out, then working synchronously rather than over messages, higher throughput, higher level of interaction bandwidth does help. And so, yeah, go fly across the country and go meet physically together for a couple of weeks while you figure it out. Guess what? For most jobs, that's a very small percentage of the time. And I think, you know, there's also this, like, what I hear a lot of people is comparing the ideal scenario, which is, boy, if I could have exactly all the same people paid exactly the same amount of money and be as loyal to me and stay for as long of a time, and they could all be local to me, then that would be even better than my current situation. And it's like, yeah, but that's not the choice, right? The two options you have is deal with local talent, who by definition is not as strong as global talent because because it's a tiny subset, pay them the local rates, which are tied to the cost of living, which is always going to be higher than the global rates, have them not stay with you for nearly as long because they're going to get poached by somebody else sooner rather than later. And by the way, in the agile world where we document a lot less than we used to and a lot more is in people's brains, when they leave, it's really, really painful for everybody. Right? So that's the real trade-off. It's, you know, the distributed model versus the loss of compromises model. And I think that's what's quite often missed in the conversation.

Are we recreating these problems? So before, maybe the person in the cubicle next to me could interrupt, but now everyone in the company can interrupt me on messaging or Slack. And so what are we recreating? What should we try to keep?

I would say people need to recreate norms in general and think about what makes sense and what doesn't. I would say it's easier to ignore an asynchronous text message than it was to ignore the person who's desperately trying to wave at you and attract your attention.

It was a little awkward to do that before.

Yeah, but I think it's, at the end of the day, it's a cultural norm, right? If you as a CEO impose the norm of as soon as you get a Skype message or Slack message or what have you, you have to respond within the next 5 seconds, then yeah, all you've done is replicate in a virtual way the same type of behaviors that people used to have in the office. If you're allowing people to work more asynchronously, And in particular, when you have multiple time zones, the respect of saying, you know, it's 10 PM unless it's really, really urgent, I probably don't need that person to respond to me until tomorrow morning. Like that level of tolerance for asynchronous work, I think will end up leading to better productivity.

And CEO to CEO, something I've been learning as well is that because of the power dynamics of where you are in the company or where I am, if I send that message, even if I don't need a response, till tomorrow. If someone sees it at 10 PM, even if they're not responding, they're stressed out about it, things like that. So I've actually started batching things. So I keep a text file using SimpleNote that I like keep all my questions that occur to me and the hours where they often occur to me, which is usually off hours or I'm traveling or something, and then try to batch those, um, at more work-appropriate times. Just because of that dynamic, people would respond even if They know, even if I say it's not urgent. Yeah, I mean— They're thinking about it.

If the CEO does not follow the cultural norms of the company, then the cultural norms won't happen.

You made a very good case for the practical reasons to go more distributed. Is there a moral reason?

Yeah, I mean, I think the moral reason is 42% of freelancers have a physical or mental disability, have care duties, live in the wrong part of the world. Wrong being, you know, defined by the norms of the traditional labor market. And, you know, you can have an impact. You can create opportunities for these people. You know, when the Bureau of Labor Statistics in the US says that unemployment rate in the US right now is 3% or whatever the latest number exactly is, it misses a big part, which they also report on, but nobody ever talks about. It's called labor participation rate, right? And that is the percentage of adults between— so they have different tranches, but let's say between 18 and 50-something, that they're either employed or they're unemployed. And that number is about 60%, right? So there's essentially real unemployment unemployment rate of about 40%. And of course, they're not all unemployed. Many of them are freelancers. But for many of these people, they just can't participate in the traditional job market the way it's defined. So yes, there is this social aspect to this. Yes, you can increase the diversity of your work pool. People in the Bay Area are complaining that they don't have enough of XYZ type of workers, you know, African Americans being an example. You know what, there's a ton of really, really highly qualified African American developers in Atlanta. But if you just hire them in Silicon Valley and you force people to relocate, like there's a lot of them that just don't want to relocate and they won't. And so if you open up the aperture of what you do and you're willing to hire people that are super hardworking, probably more dedicated to you than any of your traditional workers will ever be because you've massively changed their life, you can have, you know, much more diversity, you can have much more social impact, and you can frankly do something good for your company at the same time. It's not either or.

What percentage of jobs would you say are distributed today or remote?

I think it's still very small.

So let's fast forward 20 years from now. Yeah. What percentage of jobs do you think will be distributed?

Oh, I think in the jobs that can be distributed, because there's always going to be like local jobs, it's going to be the majority. And I think the majority. Yeah. I mean, I think like the first of all, there's a generational cut of this, right? So we study both the supply side. So the freelancer side through our Freelancing in America study, we also study the buyer side of this through what we call the Future Workforce Report, which is coming out right now. And I can give you the highlight of it is that the young generation, so managers on the buying side of the equation, managers that are Gen Z and millennials are much, much more likely to leverage freelancers and allow remote work than the baby boomers. And what's happening is the baby boomers are fast exiting the workforce. I mean, they were the managers, right? Until recently, the typical director, VP, and let alone CEO and other execs of a company was a baby boomer and they're not digital natives. And there's still a lot of managing by FaceTime and a lot of very traditional conceptions of how work should be organized and how management should work. They're very fast exiting the workforce and they're increasingly getting replaced by millennials. You know, the oldest millennials are 38 now. They're not exactly kids anymore, right?

I'm close to that, actually.

Yeah. Yeah.

I think I'm one of the older millennials.

Well, exactly. But like, you know, you're a digital native and you have a totally different behavior towards, you know, work and towards collaboration than what my generation had, let alone the one before. Part of the reason why it's going to be 50% and it's relatively easy to predict is that it's already 50% in that generation. So I think the social, economic, political pressures along with the generation replacement, along with technology that keeps getting better and better. You know, when we started this company, I wasn't there, but when the founder started the company, the idea of remote work done over an expensive landline and a fax machine was crazy, like visionary way too early, right?

Yeah, strange.

And you look today, you know, like broadband is fairly ubiquitous in many parts of the country and many parts of the world. A lot of the tools we use are in the cloud. You can do video conferencing pretty much for free. Like every device you have has a webcam. And so it's already gotten a lot better. And I think you'll see the next wave of technologies, you know, whether it's augmented reality, it's much better chat tools. I mean, there's going to be all sorts of things that make the location so much less relevant. Fundamentally, if everybody's using AR goggles in order to do 3D modeling of a product, we're all watching the same thing virtually. So whether we sit next to each other or we are far away from each other, it matters a lot less. I think the only thing that will stay probably forever is time zones, right? And so I don't think we're going to fix the fact that when it's the middle of the night for you, you probably don't want to be at work. And that's why I think the world will be much more organized vertically and much less organized horizontally.

Longitude versus latitude.

Whichever way that is, yes.

Thank you so much for this time. Also, thank you for the leadership that Upwork has in this, what I think of as a revolution of distributed work. I'm really looking forward to the story getting more out there. Hopefully we can chat again sometime.

Of course, thank you for having me.