The Intersection of Network Effects and AI in Business Growth

Erica Gessert, CFO of Upwork, and former Senior Vice President of Finance & Analytics at PayPal, joins CJ for this episode. They discuss Erica's experience with forecasting models at PayPal, emphasizing the need for adaptable models that change with economic conditions. Delving into her role at Upwork, Erica explains the company’s approach to customer acquisition costs, the significance of network effects in marketplace businesses, and Upwork’s take rate strategies. The conversation covers Upwork’s investment in R&D, how the company maintains platform trust in the face of bad actors, and the impact of AI. Apart from explaining how Upwork gained 20 points of EBITDA in just three quarters, Erica also sheds light on their North Star metrics, how they balance growth and profitability, their approach to M&A, and her experience reporting to Masayoshi Son during her time at Sprint.

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TIMESTAMPS:

(00:00) Preview and Intro

(02:30) Sponsor – Planful | MUFG | Brex

(06:17) Budgeting at PayPal

(10:23) Forecasting Methodologies at PayPal

(13:15) The Impact of the Calendar on Forecasting

(15:01) Forecasting and Macroeconomic Indicators

(16:29) Planning Will Take as Long as the Time You Allot for It

(17:56) Surprising Insights About Freelancers

(19:26) Sponsor – Vanta | Tropic | RightRev

(24:55) Upwork’s Customer Acquisition Cost

(27:59) Freelancers and AI Adoption

(29:07) Network Effects in Upwork’s Model

(31:14) Upwork’s Take Rate Strategies

(34:49) R&D Investing at Upwork

(38:36) Selling Trusted Transactions

(41:12) Upwork’s North Star Metrics

(42:59) Recognising the Potential of AI

(44:05) How Upwork Gained 20 Points of EBITDA in Three Quarters

(45:29) Balancing Growth and Profitability

(46:41) Upwork’s M&A Strategy

(48:35) Long-Ass Lightning Round: A Big Career Mistake

(50:55) Reporting to Masa from SoftBank

(52:49) Advice to Younger Self

(54:18) Finance Software Stack

(54:55) Craziest Expense Story