Upwork’s Stephane Kasriel on Fixing the American Dream

Read more about Stephane Kasriel in “The American Dream Is Broken, and I Think We Have a Shot at Fixing It.”

“The American Dream is Broken, and I think we have a shot at fixing it.”

Stephane Kasriel, the CEO of Upwork, thinks that most work, as we think of it today, is in need of an overhaul. In this episode, Stephane explains how changing the way we think about work can simultaneously give workers freedom and flexibility, enable companies to operate more efficiently, and revitalize local economies all over the world. He also shares tips on how companies can make smart moves toward a distributed work model.

The full episode transcript is below.

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Matt: To start off, say your name and how long you’ve been here, just so people have a sense of you. And then we’ll talk.

Stephane: Sure. So my name is Stephane Kasriel, I’m the CEO of Upwork. I joined the company close to seven 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 promoted and became the CEO of the company. And that was about four years ago.

Matt: Awesome. How big is Upwork? How should people think of it?

Stephane: You know, that’s a great question, how big it is it depends if you define it by employees or everybody in the workforce. There’s about fifteen hundred people who work at the company, about four hundred of them are full time employees of Upwork Inc., the company, and they mostly work in one of our three offices in the U.S. 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 eleven hundred or so people that are what we would call freelancers and they work from home — they work from about five hundred different cities in the world, which is pretty impressive.

Matt: That’s a lot of cities.

Stephane: I’m not sure I can name five hundred cities in the world, so that’s a pretty big part of the world. And 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 U.S. would call leased employees, meaning they get a W2 but they get a W2 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 freelancers.

Matt: [laughs] And Upwork is now a public company.

Stephane: Mhm, yeah.

Matt: Tell me about that.

Stephane: Yeah we took the company public in October of last year, which is something that we had wanted to do for a long time. The reason being, you know, 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 the labor market is obviously one of the biggest markets in the world, like a hundred trillion dollars 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 messy — and we can talk about that if you want — but it’s 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 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.

Matt: And that also means all your numbers are public. So what’s the rough size of the business now?

Stephane: Yeah so this year we’re going to do on the order of about one point seven billion dollars.

Matt: Wow.

Stephane: And it’s growing pretty nicely so it’s going to be much more than that next year.

Matt: That’s super cool.

Stephane: Mhm. And I should mention that’s the amount of business that is done on the site, what we call gross services volume, or GSV — we looked at the financials of the business, gap revenue is… about fourteen point something percent of that one point seven billion. So the gap revenue in 2018 is on the order of two hundred and fifty million dollars.

Matt: That’s incredible.

Stephane: But what I really care about, to be honest —  

Matt: Is the gross.

Stephane: Is the gross. Because that’s how much money we give in the freelancer’s pockets. Fundamentally our mission at this company is to create economic opportunity so people have better lives. And the way we measure that is the amount of money that goes into people’s pockets. 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 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.

Matt: Would you call that number your north star metric?

Stephane: Yeah. I mean the one number — like, when I look at our all-hands and what we talk about all the time, we don’t talk about revenue, we don’t talk about EBITDA. I mean obviously we have a finance team and we have an accounting team and they really care deeply about this stuff but I would say the reason why people join this company either as full time employees or as freelancers and either in an office or remote, is because they get to create jobs for lots of people. And the proxy for that is how much money goes into the freelancer’s pockets.

Matt: You mentioned earlier that work was a little broken.

Stephane: Mhm. Very broken.

Matt: Tell me more about that.

Stephane: Well I think we’re in a place right now where if you live in San Francisco, for instance, where, ya know, we are based here, you have — If you are highly skilled you have access to amazing economic opportunities, great jobs, working for some of the most amazing companies in the world.

But the cost of living has been rising faster than your salary. The average rent in San Francisco has been growing by about seven percent per year for the last forty-five years, so you compound that, it’s become outrageously expensive. What we see is that young people, young college graduates, when they move to the Bay Area, spend close to seventy percent 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 U.S. market right now, right?

So you’ve got a place where [there are] 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 hundred miles away from here, you go to Stockton, you go to Modesto, you go to Fresno, you go to Sacramento, let alone going 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.

So fundamentally we are in this economy where 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 U.S. 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.

It’s the last evolution where we missed — we missed a turn. 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 our goods and you had to be on site and the whole nine-to-five was because the machine was gonna run from nine-to-five and so you had to work when the machine was gonna 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 fifties where manufacturing started to slow down in the U.S. and 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 — I would say — a bad metaphor.

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, and increasingly it doesn’t need to be done from nine-to-five, 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 are 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 the reason why it’s a big deal is like — not to get into politics or something — but there is increasingly, in the Western world, a group of, a part of the population that is saying this system is not working for us. And you have 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 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 — 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’ve got a shot at fixing it.

Matt: When I moved from Houston to San Francisco my rent went from eight fifty per month, which I paid half, to twenty-seven hundred dollars a month. And this was 2005.

Stephane: Yeah. It’s gotten worse since then.

Matt: So compound that by seven percent per year since then.

Stephane: It’s bad.

Matt: For a similarly sized place, ya know? A little bit of an upgrade. Yeah. How about you? Do you remember your old rent when you lived in France?

Stephane: Well I moved here in ’97 and I remember when I moved here people were saying don’t buy a house, it’s crazy, some of these houses are worth a million dollars. There is no way this is going to last. And of course the same houses now are probably three or four times that. You know, eighty percent of houses in San Francisco cost more than a million dollars.

Matt: Eighty percent?

Stephane: Eighty percent. There’s not a ton of people in the world, even if you work for a tech company — like the amount of money you need to save in order to have a down payment to be able to afford a million dollar house and then you pay, you know, one point something percent of property tax. I mean it’s really hard to afford a good life in the Bay Area right now, even if you are a data scientist working at Facebook. If you are not in tech and you’re just an average worker trying to get by, it’s a real struggle.

Matt: It’s kind of amazing as well. We think of the Bay Area as this engine of innovation but the percent of the economic activity that just goes to landlords is astounding.

Stephane: Yes. Historically there have been more billionaires coming from real estate than from tech in the Bay Area. [laughter] Little known fact.

Matt: You have so many cool stats about the Bay Area. [laughter]

Stephane: Twenty 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 [to the reality] 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 help us grow the economy — like, all 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 as the jobs being created and the displacement of the jobs comes from us, the tech industry, right?

And so I think increasingly there is both a practicality of — as a small start up you just can’t hire good developers in San Francisco because if they are really good, they are paid so much more money by the big tech companies that you can’t possibly attract them. So there’s a very down-to-earth, like, you-don’t-have-a-choice type of approach to this.

But I think increasingly there’s also a bigger social calling for realizing that hey, there’s some really great developers and great marketers and great everything else over there, 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 poach them back. This very zero sum game, red ocean type of approach of the war for talent, the way it’s conducted in the Bay Area.

Matt: If we allow the economic opportunity to be world wide, 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.

Stephane: Mhm.

Matt: 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.

Stephane: Well I think it’s — 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. I mean that’s going to be how to convince the CEO to then convince their board, to then convince their shareholders, right?

So in an ideal world you get to a place where — and that’s what we tried to do at Upwork, right? We tried 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 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.

Matt: Yeah.

Stephane: And for most companies, they really struggle. Not everybody is not attractive to workers as much as they’d like to [be]. And so sometimes — so, on the company side, some of it is driven by cost savings. For some companies, in particular very small companies that are bootstrapped and before they get VC funding and 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 is 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 on their own terms, and frankly potentially move to a part of the country where the cost of living is lower.

Matt: They could leverage that income way more.

Stephane: Yeah. For years we have had way more people signing up to become freelancers on Upwork than we’ve had companies signing up to post jobs on Upwork. I mean we have huge demand constraint, meaning we don’t have enough jobs for people. And that to me is an indication that people are ready for this.

The reason why people do this is because there’s really little not to like about being a successful freelancer on a platform like Upwork. You have the freedom and the flexibility and you make more money than whatever your local job market is, which might still be less money than if you lived in the Bay Area but then you don’t have the cost of living of the Bay Area.

Matt: Yeah and actually after we first met, Automatic became a much bigger client of Upwork.

Stephane: Thank you. Good.

Matt: So I’ll put in the plug here that we’ve been a happy customer. And if you’re listening to this and you’re constrained in some way, Upwork has lots of people who can help you. So. But you did say earlier that you didn’t love the wealth going to landlords.

Stephane: Mhm.

Matt: Yet we are in an office right now.

Stephane: Yes.

Matt: Tell me about why you’re paying a landlord for this space.

Stephane: You know, that’s a fun debate. In particular, this office here belongs to Google, like everything else in Mountain View. Google has notified us that at the end of our lease they are not going to renew. And so as a result we are 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 just do what you guys did, which is close the offices and have everybody work from home.

And you know, it’s a tradeoff. I think, like, here’s my selfish point of view on this. So we are in a small — describing it for the listeners here, right? We are in a small conference room where there is 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 a hundred and fifty people in this office, there’s about fifteen hundred people in the entire company, so ninety plus percent of the people that you’re gonna be engaging with are unlikely to be in this office, which means ninety percent of the time you’re gonna be on video conferencing. And the average time of commuting to this office for our employees is about forty-five minutes each way.

Matt: Really?

Stephane: Yes.

Matt: Wow.

Stephane: 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 ninety percent of the people they need to talk to are not physically present, plus this costs us millions of dollars a year. There is an argument for shutting it down.

I think, you know, 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 are 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.

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 a relatively small percentage of that goes into office space.

And ultimately, we care deeply about employee satisfaction and people really loving their job. And so we had enough people saying look, we have always operated this way, we totally embrace remote work — like, we fully realize that ninety percent of the 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. [laughter] So you know, like…

Matt: 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?

Stephane: It’s actually not gonna be much bigger partly because 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.

We want to make sure that if people are gonna have a good work/life balance, they need to have time zones that are somewhat aligned. So you don’t want to have somebody from India, somebody from Australia, somebody from France, and somebody from the U.S. having to be on the same agile development team, ’cause then somebody, at least one of the people does not sleep, ever, and that’s really, really painful for everybody.

Matt: Yeah.

Stephane: So we try to align people by time zone. But other than that, 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 the U.S. is only about five percent of the global population or whatever the latest number is, but roughly that number. So the odds of having ninety-five percent of your workforce in the U.S., let alone ninety five percent of your work force in the Bay Area, which is a tiny, tiny population, is pretty low.

Matt: Yeah. Although by that argument, isn’t more than half the world’s population in non-U.S. and European time zones?

Stephane: Yes. So one thing that I think is gonna change over the next decades, and this is a very risky prediction that I’m making because I might still be alive…

Matt: [laughs] Hopefully you are.

Stephane: But if you think about how the world is organized today, it’s very much organized by — and I always get them confused — latitudes, horizontally. 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?

Matt: Yeah.

Stephane: I mean agriculture in France is very similar to agriculture in the U.S., very different from Nigeria. But in a knowledge economy what really matters is not physical resources, it’s intellectual resources. And what really matters is time zone alignment. So this idea that the U.S. is outsourcing IT to India and outsourcing BPO to the Philippines from a time zone standpoint, except for a few things like QA where maybe the follow the sun model where the developers in the U.S. write code during the day and the QA team in India contest it during the night, which is day there. But if you are trying to be doing more like synchronous, agile type of development, time zones are a real issue.

So I think the real prediction would be that there is a lot more alignment between North America and South America. And that if you’re going to be offshoring software development, and you are based in the U.S., you should be doing it much more in Chile or in Argentina than you should be doing it in India. And for that reason, to your point about the southern hemisphere, if you look at Europe, the real alignment should be with Africa, right?

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 [there are] former colonies where people still speak French. But there is also Mauritius, which speaks English. I mean there is a lot more alignment from a time zone standpoint, north and south, than there is east and west.

Matt: I think we need to go to Mauritius for some research.

Stephane: I totally should be doing [that]. A great place for kitesurfing.

Matt: It’s actually on my bucket list.

Stephane: Yeah it’s awesome, beautiful place.

Matt: So you talked about investing a few million dollars to have this office, to really serve the people here. From your point of view as a CEO, what are other investments you’re making in employee productivity and happiness?

Stephane: Oh there’s plenty. But I would say let’s start by the office itself. So we want to make the office be as remote friendly as possible because 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 onsite people. But it’s harder to do it when you have ninety percent — when it’s reversed. Most companies have ninety percent of people in the office and ten percent 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, how that happens in the office.

Matt: What are some tools? You mentioned audio.

Stephane: Yeah, just buy good equipment. When people, like back in the days, and I’m not gonna mention old tools, but there used to be tools which would take fifteen minutes before you could get started. I would start with the obvious — it’s always the video. So when people are just on [a] phone call, you hundred percent 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 is listening to anybody, and the conversation tends to be extremely ineffective. So always do video unless there is a very good reason why that can’t be done.

Matt: Although I do like when I’m on audio calls and I can walk around my room or like sometimes I do little stretches.

Stephane: Yeah well ya know…

Matt: On video it’s a little awkward to do that.

Stephane: I mean there are some very legitimate reasons why some people — there’s also some people that 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 that stuff that you lose if you just do phone calls.

So generally I would say do video whenever you can. 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 regular meetups. Usually the teams that need to work together hire a freelancer on Upwork who is kind of a virtual assistant/travel agent who figures out where everybody is based, and based on that, what are some reasonable cost flights that would take them all to a nice place.

Matt: Oh cool.

Stephane: And then they rent a bunch of Airbnb’s, they stay there for a couple of weeks, there is a lot of working together during the day and I’m sure there is a lot of drinking together during the evening. And so there’s this more informal social connection that frankly gets lost over video conferencing. It’s hard to have a beer with someone.

You know, companies try to have the more informal stuff but every once in a while, having people meet face to face. And by the way, usually after two weeks what we hear from, especially from the developers, is “Enough of this whole social thing,” like, “I feel like I’ve spent too much time with the PMs and the designers and I want to go back and do my thing.” [laughter] And so quite often after ten days also everybody is happy to go back.

Matt: To go back, yeah.

Stephane: And then after that, the level of interaction, the ability for people to have conflict — 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. 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 one year they’re gonna be in Bulgaria and another year they are going to be in Sicily — the person sitting next to me had a trip in Bali a couple of years ago, which out of all places doesn’t seem central but apparently I hear that that was pretty good.

Matt: Somehow that was the most central thing for that team, yeah.

Stephane: Exactly, very essential to go spend time in Bali. But 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.

Matt: So I want you to put on your Upwork advocacy hat for a second. There are some people listening to this that are probably in fully office-based companies.

Stephane: Sure.

Matt: How should they start to explore shifting that?

Stephane: Yes. So I think you shift — first of all it’s a change process, so 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, — ot 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 gonna make it fail, right? So start with people that are excited about embracing the change.

I would say ideally start with allowing well established people that already know the company in and out and allow them to go work remotely. One of our customers, the way they started is they had a developer who was from China and who decided to move back to China. And he was one of their earliest developers, he knew how things got done, he knew the code really well, he knew everybody back in the Bay Area. And he progressively started building a remote workforce that was partly in China, partly everywhere else, from there and they became pretty big Upwork customers.

I think it’s easier if you start with somebody who really understands how things get done. And then 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 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 connect, 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. You know, the thing that doesn’t work is if ninety-nine point nine percent of your workforce is sitting in the office and zero point one percent of your workforce is remote, they are always going to be at a disadvantage because they’re never gonna be top of mind.

Matt: They’ll be second class citizens, yeah.

Stephane: Right, exactly. Like, I mean the water cooler to me is the perfect example, right? If most of the conversations happen in a way that is excluding the remote people and is favoring the local people then they are never going to be successful in the long run.

Matt: So how do you go big?

Stephane: 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 it’s a different problem that you might be solving. But if you’re a growth company, figure out where you’re gonna be hiring a lot of people and that’s a very logical place to say we want X percent of these people, ideally more than fifty percent, to be anywhere in the U.S. or anywhere in the world. And because you’re going to be hiring a lot of people pretty quickly, it’s going to get momentum in the company.

But I would say I think what people need to watch for is the sense of isolation that the remote people are going to have, right? 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 are 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.

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

Stephane: I mean I can tell you. Of the first fifteen engineers that this company hired, and this was fifteen years ago, twelve of them are still at the company. There [are] not a ton of fifteen year old companies in the Bay Area that still have their first early employees. And the reason is because like one of them lives in the middle of Siberia.

Matt: Literally Siberia?

Stephane: Literally. [laughter] In a place that, from what I hear, used to be kind of owned by the KGB and used to not be on U.S. maps. [laughter] I think he is 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.

Matt: Yeah. [laughs]

Stephane: So there is 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 have started to do a few years ago is we allow people to de-locate. So a lot of companies relocate people, they do college recruiting elsewhere in the U.S., try to bring them to Silicon Valley, which adds even more to the drama that I was talking about earlier.

I think what makes a lot more sense is to do the opposite. Some people just say “Look, I have kids and I want them to grow up in a different environment,” or “I have my parents are getting older and I want to go live…” whatever the reason is. But a lot of people say I would love to keep this job, but I’d love to go work somewhere else.

Matt: I was actually one of those. I was [in the] Bay Area and as my parents started to get older, I wanted to go back to Houston so I de-located.

Stephane: There you go. But in your case, you had started your own company so you get to choose to do it however you want it. I think for a lot of employees, they ask permission from the employer and the employer says, “Well too bad, you need to leave the company.”

Matt: As a CEO, you know, you have to be where the people are. So if we had had an in-office culture, I couldn’t be not there.

Stephane: It would have been harder, yes.

Matt: Yea, it would’ve been, I think, impossible actually.

Stephane: Yeah, yeah.

Matt: So because we were distributed, that’s what allowed me to be in different places.

Stephane: Yes.

Matt: I will also confirm that Automatic as well has really off the charts retention. And I attribute that partially to the distributed model. Now correlation and causation — like, do we also do other things —  do Upwork and Automatic both do things maybe other ways that make people want to stay that happens to be highly correlated with the distributed first approach?

Stephane: Sure. I mean there’s a bunch of things, right? I mean we have people who work on Upwork either for us or for some of our clients for whom there is just no traditional job that would work for them. We run this study every year called “Freelancing in America,” and in the later study we were asking people, like, “Would you ever take a full time job?” And for a few years we’ve been asking this question, which is, “How much money would a traditional employer have to pay you to convince you to take a full time job?” And every year it’s come back with fifty percent of freelancers saying “No amount of money.”

Matt: Wow.

Stephane: And you’ve gotta wonder, like, well that seems like a big, I mean that’s a big number — no amount of money — right? [laughter] So there’s something there and we need to dig a little bit deeper.

So this year we asked additional questions to understand like, why are you saying this? And it turns out that forty-two percent of full time freelancers, and these are not Upwork freelancers, these are freelancers in the U.S. in general, forty-two percent of freelancers said they either have a physical or mental disability too that makes it hard for them to travel to an office or to be in an office — veterans with PTSD and people with Asperger’s — like, all sorts of physical or mental reasons why the traditional labor market does not work for them.

There is another bracket of people that are saying, “I have care duties, I have young children, I have a sick spouse, I have elderly parents,” but for whatever reason, the whole nine-to-five grind, plus the two hours of commute, just does not work with my life.

And then the third bracket of these forty-two percent of freelancers was essentially saying “I live in a part of the country where there are no jobs.” And this is in the U.S. right now, this is a U.S.-based study, and there’s just tons of people that say “I’m college educated” or “I’m highly skilled, I want to work hard but I just happen to live in a part of the country where there’s no jobs and for any kind of reason, I just can’t move.”

And by the way, mobility in the U.S. keeps declining every year. So people are less and less inclined to move, especially across states. And in fact, what’s been happening in the last few years is the reverse to what’s happened historically. Historically it’s the gold rush, people go from the Dust Bowl to California because that’s where all the opportunities are. And increasingly people are not moving at all and when they do, they do the opposite because they just can’t afford to live in the coastal areas anymore. And they go back to their more economically-depressed parts of the country not because they think they’re gonna get great jobs, but just because they are being chased away from the rising costs of living.

Matt: There is a — and this might be related to this — but a lot of companies might consider certain roles being better for being distributed or not.

Stephane: Mhm.

Matt: When I walked into this office a few hours ago I was greeted by not a physical receptionist but a virtual one.

Stephane: Sure.

Matt: So tell us about that. I would say office receptionist is probably an area that almost everyone with an office would assume you need someone there.

Stephane: 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 really — the five whys. Like, why does it need to be on site? [laughter] No, but seriously, why does it need to be on site? And if you ask the question five 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 robots that they can move around to vacuum and all that stuff so some jobs surely need to be done on site. But I would say most of these environments, they are an exception, not the rule.

To the example of the receptionist, it’s a little bit tongue in cheek, it’s a good branding exercise, but it’s also a great job opportunity. The two women that do this, they have two shifts, they live — one lives near Detroit and the other one lives in the very far suburbs of Chicago and, you know, if you asked them, they would say yeah, this is by far the best job that I could ever get.

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 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 are 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 part of the Upwork product. And you know, we go and greet people.

And Faith, I don’t know which one you saw, but Faith has been with us for —

Matt: Faith welcomed me. It was an awesome experience.

Stephane: Yeah, I think she’s been with us for like eight years and 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 we had a — it was very emotional and it was great to meet with her physically. But I see her multiple times a day over video conference.

Matt: And I got the sense as well that people would come, which is what happens at normal offices, by the way, like, you go, you talk to the receptionist and then someone comes to meet you.

Stephane: Mhm.

Matt: Especially Silicon Valley offices. I got the sense that people coming to meet, ’cause I saw a few of that while I was waiting, had a real relationship with Faith. Like she knew their names, they knew her.

Stephane: Of course, yeah.

Matt: Like, it was pretty neat.

Stephane: Yeah, she’s actually a real human being, she just happens to be living a few hundred miles away from here but you know she cares about us and we care about her and she’s part of the team.

Matt: And do those two people cover all three offices or are there two per office?

Stephane: They cover two offices. I think we’re trying to figure out the whole Chicago thing. Like I’m not sure if — which is ironic ’cause Faith lives close to Chicago. But I think there’s a couple of other people doing Chicago. But yes, technically — actually there’s two entrances in this building so she covers both entrances and one in Chicago. So she has three 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.

Matt: And the money she makes goes into that local community.

Stephane: Well yeah, 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 four jobs. So what happens is they make a sufficient amount of money and they need to go to the dentist, they need to go to the movie theater, they are 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.

Matt: That’s one job, you also run — I forget the percentage but let’s call it the vast majority of the company — in kind of a distributed fashion.

Stephane: Mhm.

Matt: How do you manage, as a CEO, productivity and performance across that, especially as a public market CEO?

Stephane: Yeah well I think I get 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.

Matt: [laughs] If you were going to theorize why it might be higher for people not in the office, what would that be?

Stephane: Just, there’s fewer interruptions, for one thing. 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 awhile to get back in the zone. You know, definitely as a developer, having the sales person or the designer constantly distract you while you’re trying to write code and then it takes you thirty minutes to just get back into what it is that you are trying to do, and by the way, you have introduced a bug along the way because you don’t really remember what you were doing. So that’s part of it.

Part of it is that you don’t have to commute to work. It’s just like whatever time you’re going to be spending for work is gonna be spent for work, it’s not gonna be two hours a day spent in a car that ultimately either eats [into] your personal life, which means it becomes a grind and you don’t stay as long in the company because 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 down side, the thing that I hear a lot from people — like the two biggest objections I hear — like this can’t possibly work for us — one is culture. This can’t be good for our culture, like, how could people feel like they belong? Which is not true, but we can talk about that.

And then the second thing is oh, but we need to brainstorm, we need to ideate, we need to move fast and like — collaboration over video conferencing and Slack and whatever tools you use is not as good as it is on the white board. And I think that’s actually true. I actually think that when you are truly trying to figure it out and you are in the initial early phases of a project — that’s why we do these meetups, right? 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 messenger, you know — higher throughput, higher level of interaction —

Matt: Yeah, bandwidth.

Stephane: Bandwidth does help. 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 is a very small percentage of the time. Most of the time, especially if you’re a slightly later stage company and you’re iterating on the nth time on your payments infrastructure or what have you, it tends to be a little bit more programmatic. We have three month quarterly roadmap cycles and people have relatively clear roles and we are relying on strategy and all that stuff. And for the most part the dispatching of tasks using Jira and the clarification using Slack — I mean we use our own version of Slack, which is embedded in Upwork, but whatever people want to use, and then when you need to [have] a quick sync up meeting, as a daily stand up, over video conferencing or what have you, it works pretty well.

And I think there is also this — 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 it 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.

The two options you have is deal with local talent who, by definition, [are] not as strong as global talent 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 rate, 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 tradeoff. It’s the distributed model versus the lots-of-compromises model. And I think that’s what’s quite often missed in the conversation.

Matt: 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. So what are we recreating and what should we try to keep?

Stephane: Yeah I would say, like, 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 a synchronous text message than it was to ignore the person who is desperately trying to wave at you and attract your attention.

Matt: [laughs] It was a little awkward to do that before.

Stephane: Yeah, but you know, like, at the end of the day it’s a cultural norm. If you as a CEO impose the norm of as soon as you get a dash — sorry, Dash is our internal tool — as soon as you get a Skype message or a Slack message or what have you, you have to respond within the next five 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 “It’s ten p.m., 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 synchronous work I think will end up leading to better productivity for the most part.

You know, one of the things we tell our developers is you should not get blocked for multiple hours but you also should not get help after two minutes of trying. [laughter] Right? So there is a window and — I don’t remember where [the window is] today — but I think we tell people, “Like, try for fifteen minutes and then ask for help.” And I think when you ask for help, help will come fast because people know that you’ve given it a fair shot.

But at the same time you don’t get blocked for four hours, wasting your time, because somebody probably has the answer. And its finding the right level of tolerance for when you should be interrupting somebody else versus when you are so stuck by yourself that you should be interrupting somebody else.

Matt: Yeah. And CEO to CEO, something I have 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 p.m., even if they’re not responding, they’re stressed out about it, things like that.

So I’ve actually started batching things. I keep a text file using Simple Note that I keep all my questions that occur to me in 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 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. [laughs] They’re thinking about it.

Stephane: Yeah. If the CEO does not follow the cultural norms of the company then the cultural norms won’t happen. My previous assistant is on maternity leave right now and when we decided to hire somebody new I was getting a lot of push back that the person had to be in the office. And I said no, she doesn’t have to be in the office. And people were like, no of course she has to be in the office, she needs to greet your visitors and all that stuff. And I’m like frankly I can greet my own visitors. [laughter] I’m pretty sure I can do that.

So we hired somebody through Upwork a few weeks ago. And she’s not far, she’s in Half Moon Bay, but she’s far enough that she works from home and she takes care of her horses and doesn’t want to come to the office.

Matt: Horses?

Stephane: Horses. Yes, she’s on a farm. And it works just fine, you know? And so I think part of it is — model your own behaviors. Like if you expect the company to be a very distributed company, then I should do the same thing.

Like one of my direct reports is based in Chicago. She’s like semi-local but remote. And generally I would say we are all spread, the leadership team of this company is spread between this office, the Chicago office, the San Francisco office and then people having to travel for all sorts of reasons. And so most of our meetings are also fairly distributed. So I think us modeling the behavior makes it more credible when we also tell other people to do the same.

Matt: You literally wrote a book about distributed work and engineering teams.

Stephane: Mhm.

Matt: Tell me what you learned about different types of teams working together in a distributed fashion.

Stephane: So I wrote this book many years ago. Thank you for reminding me, I had totally forgotten about it. But I wrote it —

Matt: Oh [laughs] it was — part of my prep was checkin’ it out.

Stephane: Thank you. But I wrote it at a time when we had switched from doing traditional waterfall type of development, which was still big in the early 2000s, to doing agile. And as part of the transition we had said “Hey, even though most of us have done some form of agile development at some previous company before, [there are] a lot of people that haven’t gotten the training and we should hire trainers from the outside.”

So we interviewed a bunch of consultants that were doing agile training and all of them told us you can’t do agile and be distributed. Agile means physically co-located. And I was like, “Well that’s bullshit.” [laughter] I don’t think that’s true at all. Like, I think there is absolutely no reason why that’s the case, but clearly you are not qualified to [be] training us on this because you don’t believe it can be done.

And so we decided to start essentially documenting how we thought agile should be done in a distributed environment and then we practiced it for a while and then I ended up documenting it for other people because, frankly, I was talking to all of these startup founders and they were asking me how do you guys operate an engineering team at scale in a distributed way. And I just thought okay well this is — rather than me repeating myself a hundred times, let’s just write it down and describe how it works once and for all.

Matt: Cool. Tell me a bit about your exec team and the org structure of Upwork.

Stephane: Yeah, I think we are organized I would say in a relatively traditional way for a tech company. It’s very functional. And so there is somebody who runs marketing, somebody who runs engineering, somebody who runs product, somebody who runs legal, HR, finance, sales and operations, and they all report to me directly, and then they each have team members, some of whom are employees, some of them are freelancers, some are remote, some are local, and it’s organized that way.

I would say there is one specific part of our organization that — you and I had this discussion a little bit earlier, off the mic. We also do a lot of managed services for our clients. So we have clients where we deliver the work for them. And of course we, with a quote, [have] freelancers. And so we have freelancers that are on Upwork that work for Upwork. We have freelancers on Upwork that work for a client but essentially for Upwork who then subcontract it to the freelancers. And then of course we have hundreds of thousands of freelancers that work directly with the client.

So there’s an interesting continuum of — when you say who works for whom, it’s almost, like, not so super clear. You know what I was telling you earlier, like, we have enterprise clients who regularly ask us, like, can you please do this for us? And I’m like, sure, “we,” quote/unquote, will do it for you but the “we” is a freelancer.

And so whether the freelancer works for us and we pay for them, or they work for us but we cross charge them to the client, or they work for the client who hired them and pays them directly, these things are almost very fuzzy, if you will. Like, ultimately it’s human [beings] that do work for a specific company through an agreed-upon engagement in a remote way and it’s very fluid how this happens.

Matt: That is pretty fluid. What would be a typical day for you? One on ones, direct reports, meetings?

Stephane: I would say I wish they were perfectly structured and very typical. I would say I spend as much time as I can with customers. Because we try to be a very customer driven company. So I talk with freelancers, I speak with agencies, I speak with our enterprise customers, we do dinners with customers, all that stuff. Then I have weekly one-on-ones with all of my direct reports. We have regular, I would say, updates on some of the key initiatives, like just before this I was chatting with our legal team about a potential new thing that we’re going to offer to our enterprise customers that they need to finalize.

And then, you know, increasingly I also spend time with investors. And that’s the pluses and the minuses of being a public company is that we used to have a very stable base of investors historically as a private company and now that our stock is open for the public I run a second marketplace, which is in addition to running the Upwork marketplace, I run the marketplace for the Upwork stock. And so there is also supply and demand. The more I can get demand for the stock, the more the price is going to go up.

Matt: What is the biggest misconception of those public investors that they have about Upwork?

Stephane: Oh, misconceptions about Upwork? I think we have tried really hard to make sure they don’t have misconceptions about us. Yeah, I’m not sure. I would say the biggest misconception in our world in general is this idea that work needs to be done on site, but I wouldn’t say it’s with investors. I think it’s…

The thing that frankly keeps me up at night and the thing that constrains our ability to completely fulfill our mission is the fact that there are so many people looking for work everyday on Upwork than there are jobs available. Every day [there are] over ten thousand people who apply to join Upwork, we only have jobs for about two hundred of them.

Matt: Wow.

Stephane: So literally we are going to turn down, every single day, ninety eight percent of the people who sign up. And it’s not a happy message, right? We are going to say you might be amazingly qualified but we just don’t have enough work for you. And so workers are convinced — like, people want to do this and the thing that’s really blocking — the complete unlock of doing this at a much bigger scale than we do today is convincing companies to change how they operate.

And so that’s why I spend an inordinate amount of my time on working with enterprise clients, working with SMBs and really trying to get to the point of — now this does not need to be done on site and no you don’t need to quote/unquote “own” the worker, which is a complete misnomer anyway. Like the idea that you own your employees and you don’t own the freelancers. Like, nobody owns anybody, we are all human beings here and we are free to go where we choose to. And the way you retain people is you give them meaningful, exciting things to work on and you treat them the way you’d like to be treated. It’s not based on whether they get a 1099 or a W2 and they are on site or what have you. But there is a lot of, just, misconception about how work gets organized in corporate America that we are really trying to change.

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

Stephane: Yeah, I think the moral reason is what I said earlier. Forty two percent of freelancers have a physical or mental disability, have care duties, live in the wrong part of the world, wrong being defined by the norms of the traditional labor market. You can have an impact, you can create opportunities for these people.

You know, when the Bureau of Labor Statistics in the U.S. says that the unemployment rate in the U.S. right now is three percent 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. That is the percentage of adults between — so they have different trenches but let’s say between eighteen and fifty-something that participate in either — they are either employed or they are unemployed. And that number is about sixty percent.

So there’s essentially a real unemployment rate of about forty percent. And of course they are not 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 a 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 X, Y, Z type of workers, African Americans being an example. You know what, [there are] 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 are] 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 are willing to hire people that are super hard working, probably more dedicated to you than any of your traditional workers will ever be because you’ve massive changed their life, you can have 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.

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

Stephane: I think it’s still very small. What the U.S. government tracks is telecommuters.

Matt: [laughter] That’s such a funny term.

Stephane: And I don’t remember the latest number, you know, but like telecommuter typically means you’re local, you just don’t go into the office everyday because you’re somewhat far away and your traffic kind of sucks. And that’s great. I mean obviously if somebody lives fifty miles away it’s probably nice that you allow them to work from home a couple of days a week, but it’s still, like, you’re still stuck in a suburb of Chicago or the suburb of New York or what have you.

If you’re truly looking at a fully distributed workforce, I think it’s still a pretty small number. Now if you’re looking at freelancers, not just looking at full time employees, it’s a much bigger number, right? So the estimate we’ve had for a number of years — you know, we track this number of freelancers in the U.S. through our annual survey and it’s about thirty five percent of the U.S. workforce that’s doing some amount of freelancing. And increasingly — and they made, through freelancing last year they made about one point five trillion, so that’s about seven percent of U.S. GDP.

Matt: That’s a good amount.

Stephane: So it’s a pretty substantial amount. And it’s back to my point about —

Matt: A lot of room for Upwork to grow too.

Stephane: Well yes, it means we are a very, very small part of a much bigger pie. People tend to obsess about this whole gig economy, [or] on demand economy. Like us and Uber and TaskRabbit and whoever else, if you add all of us up we are like, [a] single digit percentage of the true freelance economy. Like, most of it is done in a fairly traditional way where, as a freelancer, you have your own professional network and you re-engage with clients, and it’s highly inefficient.

I mean the idea that as a small business I’m supposed to figure out who the best independent lawyers and the independent recruiters and independent designers are by looking at the yellow pages or wherever it is that you find them. And then on the other side, as a freelancer, you spend an inordinate amount of time on business development, networking, trying to find the next gig.

Matt: Billing.

Stephane: Billing, getting paid, like, nobody ever pays you on time if it’s not done electronically through a platform. And so that’s the stuff that we are trying to fix through Upwork is basically streamlining all of that stuff so that as a freelancer you can spend less time on business development and administrative tasks and more time on what you actually like to do, which is being a great designer or a great developer or whatever it is that you do as a specialty.

Matt: It reminds me of commerce in the US. Like, we think ecommerce is so huge because we always have Amazon boxes in front of our house. That’s still like single digit percentages, all retail and commerce that happens just in the U.S., not even globally.

Stephane: Yeah. I mean the reality of having a really, really big market is that it takes a very long time to get to a big percentage of it. So e-commerce, twenty plus years in, is about ten percent of U.S. retail. Upwork type of platform based freelance work is definitely in the low single digits of the freelance economy, let alone the other labor markets.

Matt: Wow. So let’s fast forward as the final question. Twenty years from now, what percentage of jobs do you think will be distributed?

Stephane: Oh, I think the jobs that can be distributed — because there’s always gonna be local jobs — it’s gonna be the majority.

Matt: The majority? Wow.

Stephane: Yeah. I mean I think like the — first of all, there’s a generational cut of this. 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 there on the manager side, right, they were the managers. Until recently the typical director, VP and, let alone CEO and other execs of a company, was a baby boomer. And they are not digital natives and there is 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 are very fast exiting the workforce and they are increasingly getting replaced by millennials. The oldest millennials are thirty-eight now. They’re not exactly kids anymore, right?

Matt: I’m close to that actually.

Stephane: Yeah, yeah.

Matt: I think I’m one of the older millennials.

Stephane: Well exactly but you’re a digital native and you have a totally different behavior towards work and towards collaboration than what my generation had, let alone the one before. And so what’s happening — part of the reason why it’s gonna be fifty percent and it’s relatively easy to predict is that it’s already fifty percent in that generation.

So what’s happening is the baby boomers are exiting the workforce — by the way, they are coming back as freelancers, they are coming back as entrepreneurs, and when they do they suddenly awaken to the idea that, hey, maybe this “digital online” thing actually works. But they are no longer the CEOs and the CHOs of companies and they are being replaced by younger people for whom it’s totally obvious that this should be how it gets organized.

So I think [it will be] the social, economic, [and] 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 founders started the company, the idea of remote work done over an expensive landline and a fax machine — [laughter] It was crazy. Like visionary way too early, right?

Matt: Yeah it’s changed.

Stephane: And you look today, 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 technology, whether it’s augmented reality,  it’s much better chat tools — I mean there’s gonna be all sorts of things that make the location so much less relevant. Fundamentally if everybody is using AR goggles in order to do 3D modeling of a product, we are 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. So like I don’t think we’re gonna 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.

Matt: Longitude versus latitude.

Stephane: Whichever way that is, yes. [laughs]

Matt: Well we could obviously talk a lot more but 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 and hopefully we can chat again sometime.

Stephane: Of course, thank you for having me.

Matt: Of course. Appreciate it, man.