Although online work is gaining momentum rapidly, there still exist many barriers which impede mass adoption. One such hurdle is outdated government policies. Simply put, many laws today are based on ancient “9-to-5” ideology and fail to embrace today’s transforming workplace. To open a dialog on this important topic, we invited public policy advocate Mike Hruby of New Jobs for Massachusetts to contribute a series of blog posts. Here are his first notes to the Elance community.
A humorist once said, “You may not think about government, but government thinks about you.”
Few independent contractors (ICs) spend time thinking about government. Yes, they pay their taxes, including employer taxes on their IC income. If they need to, they register with their city and state agencies and pay for a sign permit.
Mostly they think about promoting their work, preparing and winning proposals, creating project deliverables, meeting client needs, billing, and collecting. Government doesn’t come into view unless it’s a client.
Perhaps if their businesses were large they’d have a government affairs officer to think about government.
But wait—while you were minding your growing IC business, government at all levels around the globe has been getting more interested in independent contractors, so you’d be wise to put on your VP of government affairs hat for at least an hour or two each month.
It’s worrisome that some state officials believe three common myths about independent contractors: 1) that ICs are closet tax avoiders, 2) that they were forced into project work by an abusive employer, and 3) ICs are just hanging out a shingle until they find steady employment.
These officials, many of them powerful, do not realize that IC work is more profitable than employment and the IC lifestyle is much more flexible, especially for parents.
Acting on the tax avoidance myth, 16 state attorneys general are working with the IRS to significantly tighten rules governing independent contractors and restrict their freedom and flexibility, even though a 1991 Treasury Department study showed that ICs actually pay higher rates of Social Security and Medicare taxes than employees and employers do. The 16 states are California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah, and Washington. Several other states and countries are watching what results.
National and provincial governments in the entire English-speaking world are resisting self-employment in the services—the opportunities you find on Elance-oDesk and other contracting sites—and it’s the biggest single reason why worldwide job growth has slowed.
So in your skinny hour or two each month, it would help your cause to explain your business to people in government—you might even enjoy it!
One place to start is with a member of your municipality’s governing body, such as the City Council or, as we have here in New England, your town’s Board of Selectmen and women. Or you could start with state or provincial legislators, usually senators covering larger districts and representatives in smaller ones.
For both levels of the legislature, the message is that you work on a contract basis doing projects, you serve clients way beyond your town (mention Elance-oDesk, since they likely haven’t heard of the online work marketplace), make more than you would earn as an employee, that no one forced you into this, and you pay your taxes and work hard to earn respect in your field.
In my 12 years of involvement in state politics, I’ve been surprised at how open state and local officers are to constituents’ visits, and how responsive they are to their requests. Massachusetts officials joke that if they hear one voter comment on an issue they remember it; if they hear two comments on the issue they open a file on it; and if they hear ten, it’s a landslide and they vote for it.
Surprise! Your simple visit, call, letter, or email will usually be heard.
So put those couple of hours each month into talking with the units of government that are closest to you about your work and what you’d like to see improved or changed.
Then, when the legislature next thinks about ICs, they will attach a face to the issues – yours; a face that is hardworking, earnest, adds value and brings revenue into their district by doing interesting and useful work.
And the legislators might quietly ask you just how well you do with online contracting!
Mike Hruby is President of New Jobs for Massachusetts, Inc., a public policy advocate for rapid job growth in the private sector in Massachusetts. New Jobs works to create a million-job explosion in the state by reducing the legal barriers to entrepreneurship, start-ups, independent contracting, IPOs and spin-outs, corporate hiring, teen employment, mothers returning to the labor force, and part-time work in retirement.
Before founding New Jobs in 2011, Mike founded and ran a national consulting firm that helped large and mid-sized technology companies find new markets for their technical products and capabilities. He has sold, led and completed over 500 team consulting projects sized from $300 to $250,000. Mike lives in suburban Boston with his wife, Leslie. The couple has two grown daughters.
Adam Brazg is co-founder of Bilberrry, a digital agency with offices in Seattle, Washington and Kiev, Ukraine. He and fellow co-founder Ross Dzikovsky met while working together on Elance projects, and continue to use Elancers regularly. Adam also founded Trackolade, an online task management application.
If you’re a small business like we are, finding global talent online can truly be a win-win. For us Elance is a vital lifeline to high-value resources, both when we can’t find talent or when we’re priced out of our local labor market. Naturally it’s also an opportunity for professionals in other markets to realize more of the true value of their services. Here are some tips on making a remote partnership work — tips learned from an actual partnership that started on Elance.
1. Look in the right place.
As an entrepreneur providing product management, web design and application development services in the very expensive labor market that is Seattle, I found myself unable to compete with companies like Amazon, Expedia and Microsoft for talent. I tried using services like Craig’s List to find people locally, but got zero qualified response. People with in-demand skills were simply not turning to sites like that to find jobs — they didn’t need to. I also used a number of contracting websites, but the quality of the work was not what I needed it to be. Without the resources available to invest in recruiters I eventually tried Elance, which is where I found Ross, from Kiev, Ukraine. After working on a few projects together, there was a clear fundamental difference (for the better) between what I got via Elance and what I saw from other sources.
2. Take it one step at a time.
You have to walk before you run. I started by collaborating on a few jobs with Ross and a group of designers and developers. These starter projects went well, and more importantly, I found Ross and I had similar philosophies around technology and how to approach building useful resources for companies. That meeting of the minds is critical — you want to find it before you start exploring a partnership. Do you work well together, naturally, without any incentives or long-term pressures of running a joint business? We did, so we started talking about how to get even more out of working together.
3. Find an equitable arrangement.
When you are trying to establish a value-added partnership, you cannot assume that an overseas partner’s time is less valuable than your own. After making the decision to grow a business together, we started out 50-50. That was and still is important to the trust between us. “Equitable,” though, doesn’t have to mean “equal.” You want to create incentives that align your interests. Having open lines of communication about shared goals and the emotions that sometimes get attached to the monetary side of the partnership is vitally important.
In our case, an even split has contributed significantly to the success of the firm. Despite the differences in living costs between our countries, we have positioned ourselves as a high quality service provider, not a low cost outsource center. We are able to compete directly with U.S. firms from a quality and price standpoint, which gives us a tremendous advantage over other digital agencies. Building a brand together, aligning incentives equally and establishing trust early were all critical components to successfully co-founding Bilberrry.
No surprise here – the world is changing fast. This is especially true in the startup world, where competition is increasing as timelines shrink.
That’s why it’s more important than ever for Elancers to stay on top of your game. Or better yet, on top of several games at once. Yes, today’s most-successful entrepreneurs have multiple skills beyond their “core competencies.”
It’s no longer enough to be a programming whiz who leads a startup. You also have to have graphic design chops and a working knowledge of the financial books. Ditto for the “big idea” person who dreams up the next world changer. As well as being that marketing genius, you also need to know your way around a NDA document and the difference between Ruby and Ruby on Rails.
Hence it’s no wonder those in startups are following in the path of the freelancers, and freshening up their skills and learning new ones. This includes taking classes and courses to broaden knowledge. Again, taking a cue from freelancers who understand the importance of staying sharp, you’ll find a plethora of skill-building opportunities at Elance (many available for free).
Here’s food for thought on why you need to enroll in an online video class or two:
1. Better understanding of your projects
It’s impossible to successfully manage a project when you only grasp certain parts of the job. A case in point is a mobile app. If you’re not a technical whiz, how can you make informed decisions about whether to focus on Java or Cocoa. By taking a quick online class on mobile design and development, you’ll see mistakes before they happen.
2. Better understanding of your workers
Being a great team leader is being an understanding team leader. When you’re asking a freelancer to code your new landing page or design a new logo by end of day, you’re not understanding the amount of work behind that project. A quick class or two will do wonders for grasping the intricacies (and help you build a great relationship with team members).
3. Help your team advance their careers
As your startup gets larger and larger, you’ll have bigger and bigger shoes to fill. By sharpening your talents and learning new skills you’ll have the knowledge to understand what it takes for others to flourish in major roles. You’ll also know what’s on the horizon for your business, as well as for the industry as a whole.
4. Advance your own career
Judging by the number of business books in your reading queue, you know that knowledge gives you an edge over others. As your startup grows and thrives, and you look for more opportunities to satisfy your personal and professional growth, multiple skills will play a major part in your success. Whether you’re starting another startup or sitting on a board, rounding out your know-how is only going to help you.
Keep in mind that this sort of continuous learning doesn’t have to be time consuming nor expensive. There’s no need for a 6 month sabbatical, second mortgage on the home, and graduate level classes at Stanford. Here at Elance you’ll find many online courses you can tackle on your free time at a very low cost, through our partner Skilled Up. There’s a good reason why the best freelancers continue to evolve and grow, and by borrowing from their playbook you’ll continue as a game-changer for years to come.
As you may have heard, the OpenSSL Project issued a Security Advisory on April 7th. The alert was regarding a possible weakness in encryption software used by two-thirds of all web servers in the world.
Nicknamed “Heartbleed”, the issue could potentially allow attackers to retrieve information from encrypted SSL endpoints.
We take security very seriously, and as of 11am PDT on April 9th we have completed the necessary fixes to eliminate these vulnerabilities. This includes patching all web infrastructure possibly affected by Heartbleed. The team has scanned our infrastructure and found no other points of potential vulnerability, and we’ll continue to actively monitor the situation.
Although we have no evidence of any Elance accounts being affected, as a precaution and best practice we do strongly recommend that you change your password.
Thanks, Simon Yeo, VP of Technical Operations, Elance
Welcome to Advice From An Elancer – a place to ask your Elance questions (through Elance’s LinkedIn page) and get them answered as thoroughly and personally as possible. My name is Dorothy D. and I have worked with Elance as a freelancer since April 2009. I have always tried to help other Elancers understand how things work and how to accomplish more. In Advice From An Elancer I will address as many questions as I can each week. In some cases, questions have been edited for clarity.
Can you offer tips on how to vet a client so I can avoid falling prey to difficult clients again?
Advice from an Elancer:
This is the million dollar question. Some clients are just really difficult and there is no way to tell how your experience will be. However… there are some things you can do to evaluate the client before submitting a proposal or accepting a job.
Step 1: Look under “Client Info” in the job description. By hovering over the green dollar sign dots, you can view the total amount the client has spent on Elance, their award ratio, how long they have been a member, and their location. This is a brief overview.
Step 2: Click on “Client Info”. Some clients have chosen to complete the “About” section, but unfortunately not many. The real telling data here is the ability to view what jobs they listed, what jobs they awarded, what they paid for them, and what kind of feedback they gave.
Step 3: Read through the data carefully. The client may have a tendency to list jobs for a certain category and never award them. Have they awarded any jobs recently? This may be a factor for consideration. They also may leave positive comments, yet very low star scores. If you are worried about rankings and stars, this is an alarm. Some clients are never satisfied and give mediocre or poor feedback to all freelancers. This is another alarm. If they didn’t specify in the job listing, look at freelancer earnings. They may be very low-paying and either try to expand the scope or have a tendency to argue about work that has been done.
Step 4: Consider all of the available data before deciding if you want to bid on or accept a job from this client. You may think the job is perfect, but if the client’s reputation doesn’t sit right with you, walk away and keep looking.
Occasionally we invite clients to discuss issues of importance to those who engage freelancers on Elance. Here are some thoughts from Nicholas Wright. He frequently hires freelancers and is one of the founders of AppInstruct, an online Course that teaches people how to create an app utilizing the Elance platform.
This week, we’ll run through the various startup funding stages you may require to progress through the development of your idea, from concept to launch and on to success.
The 3 Fs – Friends, family and fools
These are likely to be the first port of call, to get your idea off the ground. They may require equity for their funding, or be happy to provide you with a loan (on favourable or no interest terms) to get you started.
Okay, so the important thing to note here, is that an incubator is not an actual investor, they will not give you any funding. Rather, incubators provide co-working space in commercial premises on monthly terms at reduced rates, so you can be there one month, and gone the next. They’ll provide the space for you to work together as a team and, importantly, they’ll expose you to a network of other startups and consultancy businesses, whose experience and expertise you can learn from, and whose own journeys you can share. The hub is a global network of such spaces, so you may find them in your own city.
Seed round - accelerator ($Up to $50k)
In most of the main cities of the World, certainly Sydney, Berlin, London, New York and San Francisco, there are accelerators. These accelerators run programs throughout the year where you pitch your early stage product to them, and if successful they will provide you with a small amount of funding (up to about $50k) as well as expertise, contacts and support to test that product over a compacted timeframe to establish whether it might succeed or not.
The most famous of these is Y-Combinator, which is based in Silicon Valley.
So, hopefully you now have an established team and a product on its way to being proven (some first customers). This is where an angel or team of angels can come in.
Angels are wealthy individuals who have an interest in the startup space, money to invest and hopefully business skills and contacts that can help you succeed. This latter point cannot be stressed too much. At this round, a good personality fit between a founder and the angel, may make a crucial difference to being successful.
It’s important to remember that the angel is making an investment, not providing a gift. They both want and expect a financial return on their funding, so they will expect you to have a product and a plan that supports such an outcome. Your angel will be looking for you to have an idea of potential exits within 5 years, and will weigh trade sale opportunities more favourably than IPOs (the availability and success of which are dependent on more factors, than your own success).
They’ll also look to negotiate the maximum possible amount of equity for that investment, but won’t expect you to just roll over. The $/% will depend on your potential valuation, but they’ll be looking for between a 7.5-30% share of the company.
One thing worth asking your potential angel, is whether they have the ability to fund further growth beyond this round. Some angel groups have also established sidecar funds, which may elect to provide the next round of funding on their favoured investments. Access to such funds may ensure your continued growth.
Among the most famous of all angels is Ron Conway, who was one of the first investors in both Google and Facebook!
Venture Capital – ($500k-$5mil+)
To be here, you’ll have built and launched your first product, established product/market fit, have proven methods of attracting customers and will be earning revenue (although you may not yet be profitable). If the earlier rounds have essentially served to validate your idea, this round will fund your growth.
The leading names in Venture Capital include Kleiner Perkins Caulfield & Byers (investors in Elance), Benchmark Capital, Andreessen Horowitz and Sequoia.
In our next post, we’ll discuss the different legal entities you may operate your own business within and the best ways to structure the equity interests.
Once again it’s nearing the April 15th deadline for filing taxes in America.
While many U.S.-based Elancers know about tax benefits available to the happily self-employed, it’s possible that a large number of those new to freelancing may be unaware of allowable deductions.
This is especially true now that more and more 9-to-5 staffers are making the switch to freelance work (welcome).
Note that for freelancers in other countries, this may not apply directly to you now. But keep these principles in mind if applicable, and at the appropriate time. Naturally all freelancers should consult your own tax advisor before making decisions.
If you are paying U.S. taxes, however, you’ll find a plethora of valuable information on the Internal Revenue Service website. One such page discusses the home office deduction. A few topics covered include:
• How using your home for office storage differs from working and meeting clients there
• How to determine the amount you can claim on your taxes
• Which forms to use when making home office deductions
Of course your home office is but one of the many possible tax deductions available. While we can’t begin to explain them all in detail here, hopefully this is a good starting point for your own research. Another good tip is to contact fellow Elancers who are tax experts. You know as well as anyone how many great resources are available to us all on Elance. Good luck on those taxes.
Elance is now up-and-running following a series of denial-of-service (DDoS) attacks which occurred Monday through Wednesday of last week. These attacks prevented some users from accessing our website and caused intermittent issues that interfered with normal site functionality.
We know that Elance is a marketplace you’ve come to trust and rely upon, and we have invested in new technology to help thwart future attacks.
During the attack, your personal information was safe at all times and no data was compromised. You can learn more about DDoS attacks here.
Please accept our sincere apologies for any inconveniences you may have experienced. During the outage we sent an email to all recently-active clients and freelancers. The note explained the situation and asked for people’s consideration regarding delays in communication and work delivery.
We hope your jobs are now running normally. If you are still experiencing issues, please report them here. If you have any difficulty accessing our site in the future, you can always check for real-time updates on Twitter (@Elance) and Facebook. Thanks again for your support and understanding.
Occasionally we invite Elancers to discuss issues of importance to businesses who use our online work marketplace. Here are some thoughts from Emma Siemasko, who uses Elancers regularly and has just published a new online publication, JUMP: The Ultimate Guide To Starting And Growing Your Business.It's about taking that great idea of yours from concept to fruition – as she did with her most-recent publication, thanks to the help of Elancers.
You’ve got a big project coming up and you’re going to need some extra help … but your payroll doesn’t have the wiggle room for a new employee. So, what’s a business owner to do?
For many projects, a freelancer is a great solution. At my company, we have a network of freelancers we turn to for writing projects, illustrations, radio ads, and more.
There are no long commitments, no need to pay health and retirement benefits, and since a freelancer won’t be on your payroll indefinitely, this type of hire might allow you to budget more for the project than you’d otherwise be able to bankroll.
But you still have to do your homework. Keep these points in mind when vetting the freelance pool.
Any freelancer worth his or her salt should have a portfolio. A great portfolio will open a window into your freelancer’s world. It displays his work, sure – but it should also display his personality.
Some questions to ask yourself when evaluating a portfolio:
Does the work show creative, outside-of-the-box thinking?
Is the portfolio correctly formatted and easy to navigate?
Does the candidate stand out from the crowd in any positive way?
Does the candidate’s personality seem to jive with your company’s brand?
If you like a candidate’s portfolio, add to it by giving her a small assignment to use as a sample. This will help you gauge how well that person understands your brand’s style, audience and goals.
Getting through the portfolios of several dozen freelancers might take some time, but it’s crucial to finding just the right fit for the job.
The portfolios are a start. Now that you’ve got a short list of potential candidates, it’s time to begin making calls or checking ratings and reviews.
The portfolio should contain references. Always check references and read online ratings.
StartupBus North America 2014 is now in our rear view mirror, and needless to say it was a gas (as well as another exciting and inspiring journey). Here’s a quick video recap of the action-packed competition that followed the 72-hour StartupBus journey:
Next order of business: Congratulations to contest winner SmartHost.
Their StartupBus pitch introduced a clever new business and app allowing you to estimate the optimum price to charge for your rental property. An example of their differentiating point is, for example, if a huge Amway conference is coming to town they calculate the law of supply & demand into your estimated rate. Pretty smart, eh?