Public Markets

Upwork Turns Forgiving Public Markets Into A Marketing Campaign

Freelance marketplace Upwork went public today on the NASDAQ. The unprofitable, yet cash flow positive company priced above its $12 to $14 range at $15. It opened trading up 53 percent, closing its first day of trading up over 40 percent.

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CEO Stephane Kasriel told Crunchbase News that he believes investors are interested not only because of its capital efficiency, but also the growing acceptance of freelancing as a viable means of hiring and employment for many millennials.

“For [millennials] the idea of [hiring] freelancers is completely logical,” Kasriel said. “I think it’s a combination of the company is doing well, and it’s a big addressable market with lots and lots of tailwind. That’s what is getting the attention of investors.”

Board member Greg Gretsch of JSV said that he initially looked at oDesk, the company that merged with Elance to create Upwork, months before investing in its Series A because of the potential for growth through network effects. Though the business metrics were relatively small at the time, Gretsch said that the potential to ramp into an IPO became clear a couple of years after Gary Swart became the CEO of oDesk in 2005.

“At that point, I knew it was just a matter of time. We had network effects, we were scaling, and if we executed well, we could be the overwhelming number one player in the market,” he said.

Thirteen years and a merger later, UpWork has reached that milestone. Kasriel said that the company’s decision to go public was not significantly influenced by the current, forgiving state of the IPO market.

“We started talking about this more than a year ago, there was no way to predict whether the market was going to be in a good state or not in a good state,” Kasriel expressed. He did say that the company could have waited longer if the market was not ready, but the primary reason for going public was not to fundraise, which made timing a less critical consideration.

Kasriel explained, adding that this is the case not just for freelancers but also for enterprise clients.

Gretsch echoed that sentiment, adding that the company saw the IPO as a marketing opportunity to build credibility for its customers.

That perspective comes after Upwork recently experienced negative feedback surrounding its “Work Diary” option, through which freelancers can opt to have the company track keystrokes and take screenshots to corroborate listed working hours.

“The main reason why we’re doing this is absolutely about awareness.”

We asked CEO Stephane Kasriel if that negative press had an impact at all on the IPO process.

“There are no other places—offline or online—in the world that allow you to do this,” he said. “But again, it’s completely optional. If you want to take the risk, and you don’t want to create the Work Diary snapshot, then nobody’s going to force you.” However, critics have complained in the past that this puts freelancers in an uncomfortable position, particularly when their clients would prefer the option.

Even so, as a public company, Kasriel said that Upwork plans to continue to invest in increasing current client use, add more enterprise clients, attract more freelancers to the platform, encourage local hiring, and deepen its category structure.

Upwork is the latest in a string of tech companies that have made public debuts in 2018. It joins the ranks of SurveyMonkey, DocuSign, Pluralsight, Dropbox, Huami, and many others. At the time of writing, the company is currently trading up 40 percent.

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