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Episode: 328 |
Jeff Wald :
The End of Jobs:
Episode
328

HOW TO THRIVE AS AN
INDEPENDENT PROFESSIONAL

Jeff Wald

The End of Jobs

Show Notes

Jeff Wald is the Founder of Work Market, an enterprise software platform that enables companies to efficiently and compliantly organize, manage, and pay freelancers (purchased by ADP).

Follow Jeff on Twitter: https://twitter.com/JeffreyWald

Jeff has founded several other technology companies including Spinback (eventually sold to Salesforce). He is an active angel investor and startup advisor, as well as serving on numerous public and private Boards of Directors. Jeff was a Managing Director at hedge fund Barington Capital and started his career at JP Morgan.

Jeff has an MBA from Harvard University and a MS and BS from Cornell University. Jeff is the author of The Birthday Rules and the upcoming book, The End of Jobs: The Rise of On-Demand Workers and Agile Corporations. Jeff was named “One of the 100 Most Influential People in Staffing” by the Staffing Industry Analysts in 2017 and 2018.

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Will Bachman 00:00
Hello, and welcome to Unleashed. I’m your host Will Bachman. And I’m excited to be here today with Jeff Wald, who is the author of the end of jobs, the rise of on demand workers and agile corporations. And Jeff is also the founder of work market, which he founded 10 years ago when it was acquired by ADP a couple years ago. I’m looking forward to hearing that it’s a work markets, an enterprise software platform that enables corporations to efficiently and compliantly, organize, manage and pay freelancers. Jeff, welcome to the show. Well, thank you so much for having me, it is great to be here. Let’s talk about work market. So 10 years ago, people were you know, there were freelancers and independent consultants. I got into it in 2008, but not as big of a thing as it is now, what got you thinking about setting up software to manage freelancers? Back in back in 2010 timeframe?

Jeff Wald 01:01
Well, as with a lot of things that I do, will, I’m driven by data. And the data was telling us that the freelance market the on demand market, writ large, was growing very quickly, and was becoming an increasingly important part of the labor force. And the data also said that companies lacked the systems and processes to manage on demand labor at scale. And that was one of the big impediments to an even greater growth of that sector. So when you look at problems as an entrepreneur, you want to try to solve a big problem. And this was a trillion dollar problem. So seemed like a pretty good thing to go after.

Will Bachman 01:39
Yeah. Now, my understanding of work market in terms of the description I’ve read is that it’s around compliance and efficiency. Do you also help clients discover the freelancers? Or do they mainly come with their freelancers already discovered? And then use their plot? Use your platform to to kind of do the all the compliance and manage them? Or is it a marketplace? Like let’s say, Upwork?

Jeff Wald 02:10
Will there’s so much to unpack in that question. So many of the things that we messed up as a company. You know, it’s funny, I often say to people of the 10,000 mistakes I made while building work market. The first was calling it work market, because it implies that there is a marketplace. And every time you go into a sales, meeting, a sales discussion and say, Look, we’re not a marketplace, we’re here to help you be efficient. We’re here to help you be compliant, we’re up the organize, manage and pay. And look is there are a marketplace short, you know, there may be a million people in the marketplace. But the vast majority of people that use work markets are in private environments, because companies bring their own freelancers, and they use our software to manage them. And so it is confusing. And that lies with nobody but me. But I think there’s a better question to be had around what the market needs. Does the market need more platform technologies that help with efficiency and compliance? Or does it need more marketplace? companies that help with discovery? And, you know, they’re I think there’s a substantive case to be made on both fronts.

Will Bachman 03:24
Tell us a little bit about from the enterprise perspective, what are some of the challenges that companies face in managing freelancers, most of the listeners of this show are on the other side, we’re independent consultants. And, you know, we just don’t have that much intuition or insight into, you know, what companies are facing when they bring on freelancers, we talk about some of those issues. Great question.

Jeff Wald 03:54
There was we talk about companies that have not engaged a freelance population will tell them, you know, you’re missing out on so much great talent, you’re missing out an important part of the labor force. For those that have done it, but haven’t really formalized it or done it at scale. The big issues are compliance, and insurance. So from a compliance standpoint, they want to be comfortable that if they’re engaging Sally Smith, as a freelancer, that they’re not going to inadvertently engage her in a way that causes Sally that causes a state regulatory agency that causes a federal regulatory agency to think that Sally might be an employee. All right, they can’t have that and most companies and I would I mean, when I say most Well, I’m saying like 99% are not sitting there thinking, how do we screw Sally? How do we you know, engage her but not pay your benefits that that is not what most companies do. They say, Oh, I want to engage Sally, but how do i.my i’s and cross my T’s here, when the patchwork of regulation is coming? blacks, confusing and contradictory. What is okay in Wisconsin may be completely not okay in Tennessee, it’s tough to run a business that way. So it’s a very long winded way of saying the more that Sally can demonstrate that she is truly an independent business, meaning she’s got a website she’s Incorporated. She has business insurance, separate business checking account, a separate business location, all the things that make it look like the reality that Sally is an independent business providing a service, the better off Sally’s going to be because ABC Corp is more comfortable engaging with Sally. The other thing that we find to be a big impediment is one of the things I just mentioned, which is the insurance component, this idea that if I’m going to work with ABC Corp, ABC Corp has to be comfortable that if I hurt myself, if I hurt somebody else, if I cause property damage, that ABC Corp isn’t going to be on the hook. And so it is often difficult for the independent professional to go and get $10 million of errors and omissions insurance and professional liability insurance and general liability policy and things like that. But those are the things that when you work with big companies, they need to make sure that they’re covered. Yeah, and now it’s taking steps to kind of protect them from a compliance issue or whether it’s taking the steps to protect them from an insurance issue. Those are the kinds of things that are the big impediments to companies engaging freelancers.

Will Bachman 06:36
Yeah, yeah. And I’ll jump in there. I haven’t seen a requirement of 10 million before, some companies may require it. But I have seen clients that require 5 million in cyber insurance. And that’s a really expensive one, you can get general liability insurance, or professional insurance, but the cyber insurance really expensive. So and some require 5 million of that, which you know, it really is quite expensive for an individual. So how does work market solve that? Do the freelancers become like w two employees of work market? Or do they do they just stay as 1099? But you like companies like that some very hard and make sure that they have an LLC of their own? Or so how do you address that compliance issue.

Jeff Wald 07:24
So here’s how we address it. Well, we say to ABC Corp, XYZ Corp, come onto the platform and set up your labor clouds, one of the core functionality of work market. And whatever you determine to be the right line of who you want to engage with using a labour cloud, and how you want to engage using our engagement tools. Our system allows you to set it and forget it. So it’s not up to me to go out there and tell Sally Jones and Joe Johnson to go get this insurance or that insurance or do this or that because I have no idea what different companies want. So because different companies view this so differently, because it’s so depends on their risk tolerance on the jurisdictions in which they do work on the type of work they do and the type of work they’re engaging freelancers to do, we set up a system that allows them to set the line that they think is appropriate, if they want in their labor clouds, to set it up such that only people that are incorporated, can get in great, then you will not be able to get into the labor cloud and therefore do work for ABC Corp. If you don’t have an Ei n, if you’re not incorporated. Right, the system won’t allow. But if ABC Corp wants to set up a rule that says, you know, you can set the time for Sally, Sally has to set her own time, Sally has to negotiate the rate, or other ways of engaging Sally can’t be on one of our locations, she can only go to a client location. Those are the not the who you engage with, but the how you engage them. And those are all these engagement rules. And if ABC Corp wants to set up that rule, great. Then Sally has to tell her tell ABC Corp what time she’s going to show up. Because the role of saying show up at 8am is something that some companies don’t want to do. They just say, Hey, we need this work done. You tell us when you’re showing up, right. So that’s a very different way of engaging and we build the tools to enable ABC Corp, and XYZ Corp to set and then forget the who and the how. And then it’s up to the freelancers on the platform, the freelancers they engage, to say Oh, if I want to work and get into the Labor Code of ABC Corp, I better go get that insurance. And then of course we give them a button to click to go and get it very easily. But to your point well it is expensive.

Will Bachman 09:53
Okay, so it’s it’s really a software platform. It’s not like some other organization. That will actually kind of be the intermediary contracting vehicle. So like tap Finn with manpower is one of those where they will, they will be the one that contracts with a subcontractor and some cases as a 1099. In some cases I’m other firms may actually employ the person is like a temporary w two employee. So so you’re providing more of a software platform for companies to use to manage the whole thing.

Jeff Wald 10:31
You’re 100% correct. And what’s interesting is that the tap fins, the pontoons, the Randstad source writes, some of those bigger msps are actually clients of work market, they use our software to service their client base to help manage that population efficiently and compliantly. We are we are just software that we’re connecting point A and point B. And that’s all we do.

Will Bachman 10:56
You know, something that I don’t really ever experience just from the outside as a, you know, consultant is what are some of the pain points internal to companies around? The the paying freelancers like how does that work internally? And how does your software help?

Jeff Wald 11:14
Oh, a lot going on there too. One of the pain points is that this payment typically goes through accounts payable. And accounts payable has very specific terms, which might be 45 days, 60 days, we have one client work market whose payment terms are 90 days, you do one job for them for $1,000, you’ll get that $1,000.90 days from now, if you’re lucky. Yeah, that might be fine. You know, if you’re a vendor, it’s less fine if you’re a person trying to put food on the table. Yeah. So the payment terms and dealing with accounts payable are one the kinds of things that accounts payable needs in order to sign off on a payment. They can’t just say, you know, get a call from somebody in a division saying, Hey, we need to pay Sally Smith $1,000. They need to, you know, where’s the contract? What’s the P o number? What’s the GL code? It’s against where the deliverables are, we build the client. So what we enable is we enable the API, the assignment that ABC Corp sends to Sally Smith, to immediately turn into an invoice upon the appropriate deliverables being uploaded by Sally, meaning nobody at ABC Corp can say we’re good, close the assignment and have it turned into an invoice until all the deliverables that ABC Corp, procurement and legal and HR and finance have set up had been met. So it enforces that compliance along that parameter. And then that assignment automatically goes to the accounts payable department with all the right data that they needed, whether that data again was a sign off sheet, whether it was pictures that deliverable, whether it was a GL code a Pio number, again, the it can’t go through our system unless all the appropriate steps have been taken. And that allows for a much more efficient payment. You know, we have a very large media company that use this. And they used to take on average eight weeks to pay people not because they had an AP policy, it’s just took so long for stuff to get done. And once we streamlined everything for them, it took eight hours, eight hours just being the backend average back and forth time it was for the freelancer to upload the deliverables, click OK for it to go to a project manager that was assigned to it for them to review the deliverables and click click click Accept. And so that is one of the big pain points of companies is just the internal process. And by streamlining that process, we’re able to create efficiencies for the company and importantly for the freelancer.

Will Bachman 13:44
Yeah, so as a consultant, you know, I only see the side where, okay, I’ve signed a contract, I have the senior individual I’m serving, you know, we’ve got the contract signed. And then maybe at the end of the project, or you know, if it’s a monthly at the end of the month, I send an invoice in what’s happening on the other side there. In some cases, the client will ask me to put a purchase order number on there. I’m like, Okay, well, you tell me, I don’t know. Send me the purchase order. Case. They don’t. But maybe they’re handling that. This is such a naive question. But what’s going on? Like what exactly is a purchase number? And how do those things typically get created? Why do they need to get put on invoices? Walk me through that process, like walk me through a typical payment process at a client. So some they’ve received an invoice from a consultant for $50,000 there is a contract, what are all the steps that are typically happening on the other side at accounts payable to get that thing paid?

Jeff Wald 14:46
Well, the first thing I’ll say well is that there is no typical, okay, every company does this differently. My life would have been so much easier building work market if there was a typical standard the way everybody did it. Unfortunately Everybody does this stuff differently. So here’s what has to happen. And they’re basically all within this confines of what are called internal controls. If you’re a big company, and you’re writing checks or $50,000, or something, you need to be 100% certain that that person that that contract was signed appropriately, that the appropriate approvals were done, that the appropriate people signed up for it, and that you’re following, you know, a host of different regulations, and money movement concerns, and then that money is being sent to the right person. And so, what we had to build, or a series of approval flows that are customized for each are configured, I should say, as each company sets up their work market account. So it might be that every single invoice needs to have a purchase order attached, meaning that they can relate it back to something in a purchase system that says, Jeff Wald asked Will Bachman to perform this task, and it’s in the system meaning that a legal document does back it up. Secondly, they may want to attach a GL code. So they understand where does that $50,000 that’s being paid to will get charged. You know, we are moving billions of dollars around, we need to account for every single penny. And so those are things that allow companies to understand was this legitimate? Because unfortunately, billions and billions of dollars are stolen through fraud every year. And we had to build systems into work market, those configurable approval flows, where it might be somebody in legal that has to approve an invoice over x. If the invoice is in this department and has to go to a different department before someone approves it. You want to avoid the situation where Jeff Wald sends an invoice to somebody named Will Bachman. Jeff wall then approves it, Jeff well then makes the payment. And nobody else at my company has any idea what I just did. I could have just made up a guy named Will Bachman. Yeah, they don’t know. And so that stuff does happen. And we had to build this series of fraud alerts within the system, that if you have an employee that is the sender of the assignment, the approver, the assignment, the approver of payment, that bubbles something up if they do it all very quickly. And even if they’re different people that bubbles up, because if somebody sends that assignment, approves an assignment and approves the payment all within one minute, highly unlikely that that person on the other end actually did that work in one minute possible. Could be something where Oh my God, we forgot to pay well, we got to create an assignment and do all that stuff possible. But if those kinds of things are happening, I want to bubble that up to the appropriate administrator within the account and show them because the reason that there are p o numbers and GL codes and approval flows, is to dot your i’s and cross your T’s to count all your money and to make sure that it’s going to the right places, and nobody’s stealing it.

Will Bachman 18:15
What do you see as kind of the top two or three or four trends around, you know, engaging freelancers over the next couple of years? What are people talking about when you talk to corporations, you know, that are on their mind about engaging freelancers for their companies. What do you see happening?

Jeff Wald 18:39
There are two things out point two, one is skills gaps. And two is the regulatory environment. So the skills gaps will mean look, there are just certain skills where there are supply and demand and balance. There are more people that need cybersecurity experts and in commerce people and blockchain people and data people and coders and things like that, then there are people with those skills. And whenever we see that in the course of the labor markets, what we see is a lot of people tend to work in a freelance context, they say, well, I’ll come and work with you whenever I want. And so that actually drives a big skills gap because of the supply and demand imbalance and that skills gap tends to get filled with a big freelance population. That happens obviously at the high end of the freelance market. The second big trend is regulation. You and some of your listeners may well be aware that California passed a law last year went into effect January 1 of this year, called the EB five, assembly bill five. So an EB five was designed to tighten up the definition of who’s an employee because you in California we had Luber and Lyft and Postmates and doordash A bunch of other companies that an argument was being made that they were running fast and loose, treating people as employees, even though they were classified as independent contractors. And that bill, as legislation tends to do from time to time, tended, some believed it overreached, and caused a contraction in company’s engagement with freelancers. Now, we won’t really know because the bigger impact of everything was, obviously the pandemic. But there’s a lot of talk about changes to that bill, there are a lot of other states that would have passed bills similar to AB five, if not for the pandemic. Clearly, they all had now other things to worry about. So the the regulatory environment and that headwind, headwind to the freelance market is very, very powerful. And as we think about the freelance market over the next five to 10 years, if regulation follows the path of AV five, I would argue, pretty strongly that the on demand market will see a contraction over the next five to 10 years. And regulation is is the main driver of that.

Will Bachman 21:15
Let’s talk a bit about your book, the end of jobs. what’s what’s your argument there, you say the rise of on demand workers and agile corporations? Tell me a little bit about your argument.

Jeff Wald 21:29
Well, I’ll tell you this. Well, the book started out because I got very frustrated with people making predictions about the future of work, that were not based on evidence that weren’t based on the data that weren’t based on the history of work that weren’t based on how companies actually engaged workers. And the biggest culprit of this, by the way, was in the on demand market. In 2010. I don’t have you remember this, but everybody that was talking, the future of work was saying, oh, by 2020 50% of the labor force is going to be on demand. And I remember thinking, no, that’s doesn’t make any sense. That’s not remotely accurate. But that sort of already said, and it was based off of literally the growth rate from Oh, nine to 10, I think uncovered by the freelancers union. And everyone took that one year growth rate and threw it out the next 10 years and said, Oh, it’ll continue growing at 5% a year 10% of your whatever it was, and therefore, it’ll become 50%. You’re like, what, that’s not how statistics work. That’s not how analysis works. That’s not what has ever happened in history of labor. And so I wrote the book to kind of bring a framework around looking at these evidence, points, history data, how companies actually engage workers, to make some thoughtful predictions on the future of work. And in my mind, it was very important to do that, because we’re at the crossroads of a very important change with the increasing prevalence of robots and AI, and the impacts that they may have on the labor market. So that’s what the book is about. It’s about taking that look and making some thoughtful predictions. But more importantly, is that I gathered 20 of the leading men and women that are actually shaping the future of work to give their predictions on what the world of work looks like in 2040. That was by far the most fun part of the book, mostly because I didn’t have to write it.

Will Bachman 23:33
Now, you mentioned that 50% statistic, which, which, which I think we both agree sounds as far fetched would be a long time before anything reaches that. What’s your sense of among their white collar office workers? What percent do you think will be either contractors or consultants or some sort of freelancers? You know, in sort of the five to 10 year time frame?

Jeff Wald 24:00
Maybe it’s a really, really good question. There are a it’s very difficult to make these predictions. The freelance market, there’s not a huge amount of data on the freelance market. And when we start to subdivide the market, there’s the data gets even more scarce. So that said, we have pretty good evidence that between 25 and 30% of the labor force operates on an on demand capacity, we have pretty good evidence that a large portion of that is at the high end of the market. And that is the part of the market that is growing because regulation, like the regulation is not there to help a consultant making $200,000 a year. They don’t need the government to protect them from abuse. They have enough market power that they can take care of themselves. regulation is needed when there is a huge market imbalance. And companies have every incentive to take advantage of workers, as in the case of an Uber driver, some of whom effectively We make six bucks an hour. And that’s not okay. So the regulatory environment shouldn’t touch the high end of the market that much the high end of the market will continue to grow. Will it grow in a freelance context or attempt context, tough to say? tough to say. But I think it will certainly grow in the areas where there supply and demand imbalance on those very technical skills. That’s where the market will grow the most.

Will Bachman 25:30
You’ve got a chapter in the book, chapter seven is what on demand labor teaches us about the future of work, share us shares, some of the lessons that you have about the future of work?

Jeff Wald 25:41
Sure. So, you know, I called the book The end of jobs, Rise of on demand workers, and agile corporations and the rise of on demand workers, a lot of people into it and say, oh, does that mean everyone’s going to be an Uber driver? And the answer that is a hard No, everyone is certainly not going to be an Uber driver. What it tries to illustrate is that all of the things that the on demand worker faces today, the total personal responsibility for health care, retirement training, development, the task based work, algorithms, allocating work, data driven HR, remote work, always on work, those tenants, that the Uber driver knows all too well. Right Uber driver is given work based on tasks take Jeff, from point A to point B, the data is the only HR interaction they have. Did I get there on time? Did I did Jeff Give me five stars, all of those things. The work is allocated via an algorithm. You know, it’s not like an Uber driver goes into the office and says, Hey, what’s my route today, it’s go pick up, Jeff, because you’re the closest and blah, blah, blah, blah, blah. So all of those things are permeating the full time workforce. every worker is going to become an on demand worker in as much as workers in full time jobs today are increasingly seeing data driven HR, they are increasingly seeing algorithms allocating work, they’re increasingly seeing that they have responsibility for their retirement, their health care, their training, their development. And all of those tensions from remote work to always on work, are going to be the problem of every worker in the future of work. They are not just the on demand worker that faces those things. And so that’s what I talked about when I say the rise of on demand workers.

Will Bachman 27:39
You’re talking about skills and being responsible for your own skills. That’s something that, you know, really comes home to, you know, when you when you strike out as an independent consultant that you no longer have a firm sending you to the annual kind of one week off site training session. What do you see as full time employees like meeting to take more control over their own professional development.

Jeff Wald 28:07
So you know, whether it’s the defined benefit pension plan becoming a defined contribution plan becoming a 401k, with a match becoming 401k, with less than a match. That’s an area where we have some statistics, when we talk about the anecdotes of there used to be IBM University, and employees used to go down there for two weeks for refresher courses and things like that. But when we look at IBM today, they say, well, you have to do 40 hours of online training on your own time. So over a 30 year period, it went from two week training junket, and fun and good times to figure out on your own time, 40 hours to upskill. That is, is an area we don’t have a lot of data, but we have anecdotes. It’s just it illustrates how workers need to constantly be mindful of their own skills. And importantly, again, this is now more anecdotal. It used to be that you went to school from basically 18 to 22, you accumulated the occupational skills that you were going to need for the next 30 to 40 years, and you could monetize those skills over that period. The argument in the world of education today is that skills abatement, how quickly that skill becomes not monetizable can earn a living on it has gone from 30 years to four to five. That’s how quickly because of the rate of technological change skills are abating. And if that is the case, and we have strong evidence, anecdotal evidence to say that that is the case, then everybody needs to become a lifelong learner. And you need to constantly be reinventing yourself and upskilling and rescaling in order to make sure that you have the skills that are monetizable over a career.

Will Bachman 30:02
Yeah, absolutely, it seems like you need to be spending 10 or 15 or 20% of your time, just building your skills on an ongoing basis, learning the latest software platform or the latest, you know, mural or Miro or, you know, Rome research or notion or, you know, just always learning some new software platform or, and it’s not about going back to school, it’s just you have to be investing in

Jeff Wald 30:28
it. completely correct. Ongoing. Look at zoom, there were very few on demand workers in February of 2020, that we’re not proficient in zoom. Now everyone’s provision zoom. Yeah, they had to everyone had to upskill on that real quick. Zoom was a, you know, a province, mostly of the on demand remote worker before the pandemic. Now it’s a province of everybody.

Will Bachman 30:54
Yeah. Yep. Where can people find you online? If they want to find out more about what you have going on? And your latest thinking?

Jeff Wald 31:05
Well, you know, LinkedIn is always the best place to connect me always happy to talk with people about the on demand workforce, about the future of work about the book, certainly on twitter at Jeffrey Wald. And then the book is, you know, we were fortunate when we released the book a few months ago to hit number one in all of Amazon’s HR categories. And it’s been super fun. And for the first time, well, I can actually say now the book is available in bookstores nationwide, as bookstores start to open again, and I will tell you, I I certainly look forward to heading down to Union Square here in Manhattan, then go into the Barnes and Noble and, and purchasing an in person copy of my book.

Will Bachman 31:46
That’s fantastic. Well, we will include all of those links in the show notes. So follow Jeff on Twitter, and you know, check them out on LinkedIn, buy the book. Jeff, it’s been great having you on the show really enjoyed the conversation. Thanks for joining. Thank you so much for having me. It was super fun.

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