Work Market

This is a cross posting of a blog post I wrote this morning on the USV blog.

We are big believers in the power of Internet marketplaces to bring efficiencies and new opportunities to people and businesses. And the market where this has the most potential of all is the labor market.

So we are excited to announce our latest investment – Workmarket. Workmarket is exactly what it sounds like, a marketplace for employers and workers to connect to get work done.

Workmarket is the latest startup founded by serial entrepreneur Jeff Leventhal. Jeff has been working in this sector for the better part of twenty years and Workmarket is his fourth startup. We love working with serial entrepreneurs with a deep passion for a particular domain. That's Jeff and his passion is bringing transparency and efficiency to work markets.

Work Market is expanding their team and is looking for A+ development and product management talent (Java and PHP) in the Greater New York area; click here to see the company's job openings.

So that's what Jeff and his founding team will be building with Workmarket and we are really happy to be along for the ride. Also along for the ride are our friends at Spark Capital who invited us to this opportunity. We'd like to thank them, especially Mo Koyfman who will be joining me on the board.

#VC & Technology

Comments (Archived):

  1. Julien

    Interesting investment! I see a direct correlation between the last post on “risk” and this one : serial entrepreneurs are clearly a way to mitigate the risk, isn’t it?

    1. fredwilson

      yes, they do mitigate riskbut risk and return are correlated 🙂

      1. Julien

        Yes they are… and that brings us to asking how much investing on repeat-entrepreneurs is a Self-releasing prophecy. I don’t know Jeff and I obviously don’t mean to talk about his specific case, but I’m pretty sure there are cases where if you just change the name of the repeat entrepreneur into something unknown, VC wouldn’t invest, partners wouldn’t sign deals and employees wouldn’t apply.

      2. Tereza

        When you’re placing a bet, at that moment do you think some are safe singles and some are home runs?Or do you think each one will be a home run?

        1. fredwilson

          they all have to have home run potentialof course many do not end up having thatwe get things wrong more than right

  2. Tereza

    This is a really interesting investment and I look forward to following it. Congratulations!Having spent a lot of time dealing with professional service models that work and don’t work, and how varying skills plug in and out of projects, one conclusion that’s bugged me time and again is the degree to which the way work is structured inside of companies by and large hasn’t changed since the advent of manufacturing.It particularly bugs me because that construct has never, ever worked very well for women. 51% of our skilled population.There have been many attempts but since the core way people define work hasn’t changed, very few have the tools and skills to make things work for these ‘non-traditional’ (highly skilled) people other than in edge-case sorts of ways.And as we’ve seen recently, it’s failing pretty much everybody.And so more than ever we have people who call themselves consultants, lots of contractors, Mechanical Turk, etc. This shakeup works for the companies, it works for some people (who know how to play the game), and it doesn’t work for other people.And technology can and does play a big role, and can and should play a much bigger one, in making this shakeup work for a lot more people a lot better than it works today.The foundation of how we define work and the entities we do it for, and how it’s valued, measured, and sold on so that people still have steady enough pay to qualify and pay for mortgages…….it’s a fascinating, never ending problem and I can’t wait to see how Work Market attacks it.Let the games begin!

    1. Donna Brewington White

      I’ve been thinking for some time that some sort of disruption is needed in the world of work and employment. Once again, really appreciate how you have articulated some aspects of this. Just like in response to the shakeup in the financial and investment markets, the worst thing that can happen in response to the shakeup in the employment market is the effort to try to return to some prior state of being. The time is so ripe for new ways of doing things. Of course, I am piggybacking on what you’ve already said. The professions surrounding the work/labor/employment arena just don’t attract — as a general rule — the types of minds that are attracted to technology. When technology does get involved the focus is more on the processes rather than on changing the game. So, a company like Work Market, run by a guy like Leventhal, funded by a firm like USV is very exciting to me. Like you, I’m excited to see what they will bring to the party…or should I say the “game” (or maybe even the “battle?”).

  3. Avi Deitcher

    Two questions:1) There are plenty of marketplaces to connect employment seekers (labour supply) and employers (labour demand), whether in specific verticals ( or general (, high-end (, contract (, etc.). What is unique here?2) You indicated earlier that you invest in opportunities with large marketplace, great team, good traction in a market with strong network effect/broad base. These guys are pre-launch (as far as I can see on their Web site), i.e. zero traction right now. Isn’t that early for USV? Not complaining, mind you, more than happy to have more good investments around.

    1. Tereza

      There is precedent to this. Simulmedia was a bet on the horse with an awesome track record (Dave Morgan) and a smartly defined business problem. which he was perfectly skilled to assemble a team to crack.And also that’s a B2B play, a lot less risky. You know the customers you’re dealing with, the risks are imminently identifiable.End consumers are a lot more fickle. No matter how much you know about the market, it’s always a pretty big risk. So the burden of proof is higher…hence the desire for demonstrated marketplace traction.And then pair B2C with an unknown entrepreneurial entity. That’s a ballsy bet. But damn fun, though!

      1. Avi Deitcher

        Actually, I like it when VCs take ballsy bets; too many investors (of all stripes) just follow the herd. Hence, my “I am not complaining” comment.I have rarely gotten involved in B2C for exactly that reason. I spent a decade-plus in Wall Street IT; I know their purchasing patterns, risks, etc., but B2C has all of those uncertainties you listed. At the same time, it is much more unlikely to be a 2-3 year explosive growth in B2C. I cannot see or Facebook growth happening in B2B the way it did in B2C. I am partially involved in a B2C right now, it is really interesting.

        1. Tereza

          I do too. I don’t plan for them to make the ballsy bets, but when they do,I am delighted. You cannot plan on it, though.And of course media business are B2B businesses cloaked as B2C. And BTWthere are lots of things that each can learn from each other (B2B vs. B2C).

          1. Avi Deitcher

            Interesting line, “B2B cloaked as B2C.” I always called them trinary (vs. binary) companies. In a binary company, like Oracle or RedHat, you have a user, the user is a customer, they pay you. In a trinary company, like media companies (or Google), your user is not your customer, someone else pays you.

          2. Fred T

            B2B as B2C, ABC like 123. =)

          3. Aviah Laor

            e is for exit.(It’s good enough for me)

          4. Tereza

            “E” is a very important letter, kids!

    2. fredwilson

      we also back serial entrepreneurs pre-launch

      1. Matt A. Myers

        I imagine he’s putting in some of his own funds too?

    3. Fred T

      What’s unique here is there is another company out here in Menlo Park which similarly does what they do: (unless I missed out Work Market’s core competency, which I’m sure I have). Odesk attracts an ecosystem of employers and freelancers worldwide, charging them through “micropayment-type” contracts by the hour instead of the usual 40-hr workweek. This may not be ideal for some, but those who can accumulate a series of contracts into a regular workweek have it going. Despite the current no-traction premise happening here, Work Market’s served available market is just ready to explode.To learn more from Mo Koyfman, he was just recently featured in an interview with Mark Shuster by the way. Good discussion.

  4. Tereza

    An AVC website comment….I find it confusing that in the upper left hand corner the arrows are reversed from what I would expect them to be.Left means “go to next post” and Right means “go to previous post”.We’re reading in English, not Hebrew! 😉

    1. kenberger

      yep- the prev and next post buttons at bottom of each post are still backwards.

    2. fredwilson

      i will address this issue Terezamy next post will be in hebrew 🙂

      1. Avi Deitcher

        אשמח לעזור לך (=happy to help you)

    3. Donna Brewington White

      Tereza — I noticed that and just adapted. You spoke up and now it will be changed. Way. To. Go.

    4. Matt A. Myers

      Better yet, there should be a setting to make navigation easiest depending on reading style.. (can’t think of proper terms, and in a bit of a personal rut at this very moment… so idea is written anyway).

  5. Dave Pinsen

    I like the name Workmarket.Any chance Jeff will guest post (or comment) here and explain what makes it different from or better than Elance?

  6. K H

    So is this another, or is this an ebay for cheap/temporary labor?

    1. fredwilson

      closer to the latter but i can’t really lay out the details yet

    2. Donna Brewington White

      The comparison to eBay really helps to bring home the concept. Thanks.eBay was revolutionary in its marketplace. Wonder if Workmarket will be too.

    3. Matt A. Myers

      I pictured Guru, Elance, etc. combo with managing your own full-time / local employees.. lots of other little possible variations and such.. Those current sites are missing out a lot / have a lot to be desired. They’re pretty horribly done UX wise too.. some leading metrics and goals they’re not following (they try to do too much in some areas).Anyway.. I’m done rambling.

  7. David Robinson

    Delighted to see that they’re looking to fill a VP/Director of Product & User Experience role at such an early stage. That competency feels like it will be a critical differentiator in such an interesting space.

  8. jchewitt

    I love the brand name, and this is obviously a growing sector – but what will differentiate this from Mechanical Turk, eLance, oDesk, Guru, and even craigslist?What I’d love to see is more open reputation management. It sucks to have your reputation tied up with one labor marketing service, but it also encourages “stickiness” for both employers and employees. It’s unpleasant to have to build up your rating from scratch whenever a new website comes along. Another issue that many freelancers complain about (but that employers tend not to mind) is a lack of segregation. Westerners want higher wages and hate being undercut. Others are willing to work for much less and provide a comparable product.Employers also often have trouble managing outsourced employees properly. More guidelines, learning resources, and suggestions could create advantages for the platform. Forcing employers to use benchmarks and other tools doesn’t solve all problems.More community features would also be appreciated. It’s silly that there are so many fragmented question and answer sites that you can use to build up your credibility, but little integration among them.

    1. Aviah Laor

      wild guess: some social graph and more personal recommendations network

      1. jchewitt

        That’d be OK. The current system is impressive, but it can be improved on more than through just that. The issue of being able to – for lack of a better phrase – allow what you’ve done before using the service show up in the reputation system – is so important.

        1. Aviah Laor

          Exactly. But one more thing: “allow what you’ve done before” … for people you know and trust.

  9. usb flash drive

    I would like to see more open reputation management. This marketing service to its agreement with a worker’s reputation is worthless, but also for both employers and employees “encourages stickiness. It is unpleasant to up your rating built from scratch whenever a new website comes along.Another point that many complaining about free (but mind that employers) are not short of severance. Western countries want higher wages and hate being undercut. For others too low to provide a comparable product and are willing to work.

  10. Michael Bien

    I don’t get the sense that you are particularly passionate about this deal:(

  11. Donna Brewington White

    “We are big believers in the power of Internet marketplaces to bring efficiencies and new opportunities to people and businesses. And the market where this has the most potential of all is the labor market.”That last sentence is a bold statement, Fred. For whatever it is worth, I wholeheartedly agree.Like others here, I am very intrigued by this investment and encouraged to know that USV is entering this arena.I don’t know which is greater — the problems faced by those looking for work or those who need to get work done — especially when the latter is a young company with a big need and limited resources.The way those problems are solved can change the game in some very positive and empowering ways for both sides. So a company like Work Market can do a lot of good. Hopefully, it will make a lot of money too…continuing from a previous hotly debated post. ;-)I’d like to think that you are on to something here. Congratulations.

  12. awaldstein

    Congrats on this…it’s a market that needs a new point of view.BTW…saw Mo speak on TWI…VC this week with Mark Suster. While he didn’t talk about this investment, he did speak about the need to not simply build on efficiencies of the internet, but to think through how traditional busineses will be different (not just more efficient) and plan for that trajectory.A wise planning note and will be interesting to see how WorkMarket reinvents this segment.

  13. Mike O'Horo

    I applaud the many different schemes to change the labor exchange market. The common failing I see in each, however, is the philosophy/strategy for “tagging” the jobs or providers. We seem to perpetuate the failed noun-based labeling that bears no relation to demand. Take a look at the structured-to-fail introduction mechanism in LinkedIn. Supposedly, LinkedIn exists to facilitate professional introductions, but the way it’s set up it cannot work.Likewise, searching for a “technical editor familiar with [editing toolset]” is guaranteed to produce as many useless search results as we all remember getting from the first-generation web search engines. There’s a better way and, as soon as we get RainmakerVT launched and successful, we’re going to fix it.

  14. Tim Johnson

    Wholeheartedly agree, too. Some questions and a related comment. How does an employer choose and vet a supplier and vice versa? Is the ‘power of the community’ going to be the driver, let people build their personas and community standing? What about employers who want to short-circuit that process? Are there any facilities for match-making in the community?Another area of business that is screamingly inefficient is the purchasing cycle, especially for enterprise software. There is the price list (published or not), the rep does the work, the PMM helps quantify the value and the rep puts the deal on the table with the decision maker. Then someone from Purchasing, who has no interest in the solution or the value it brings to the company, jumps in to break the legs of the sales rep because Purchasing gets measured and paid by how much they shave off the deal. Negotiations then take WAAAY too long and cost the vendor and the buyer tons of money so the purchasing agent can make his bonus.I have worked with reps who deliberately padded the pitched price because they knew the Legbreakers were going to beat them down. I’ve seen countless deals slip across quarters because of the process as I am sure you have, too.Do you see any communities or vehicles for driving out those inefficiencies?

    1. Mike O'Horo

      Tim, the sales situation you describe is 100% the fault of the sales rep, for whom I have no sympathy because he or she has no real skills and is behaving like a product pitchman. You cannot hope to get a sustainable decision by attempting to block out a legitimate stakeholder in that decision. It’s insanity, structurally doomed to fail.Professional selling is simply the process of facilitating well-informed, self-interested decisions by a critical mass of stakeholders who constitute a legitimate Sponsorship group within the buying organization. The old-school strategy of trying to sell to one top decision-maker is silliness, simply because there is no singular decision-maker in any modern organization. Even if a CEO or other senior person actually has such authority, they have no reason to exercise it because they know there is no profit in jamming a decision down the throats of those who must live with it. Wisely, they include enough legitimate stakeholders to legitimize the decision.The problem is that too few salespeople know how to manage a stakeholder alignment process, which means they rarely can reliably get to any kind of decision, even “no.” As a result, cost-of-sales and cost-of-purchase skyrocket, as you point out, but not because of any singular actions by devils in Purchasing, but because the rep has attempted to apply a flawed process or, worse, has no decision process at all.There are three axes of evaluation in these things: 1) Business Need, which most sales reps do a decent job of getting defined; 2) Organizational Readiness (to integrate the solution into existing ops), which few reps understand and, therefore, cannot help to define; and 3) Cultural Willingness (to embrace the implementation behaviors), which doesn’t even exist as a concept for too many reps.Failure to identify deficient Org Readiness results in a deal cratering at the last minute when a knowledgeable stakeholder who has been excluded previously points out that the organization’s existing infrastructure (or cost structure, in your example) cannot absorb the new solution. Failure to identify deficient Cultural Unwillingness results in Shelfware, i.e., solutions purchase but never implemented. A prime example of the latter is CRM, which many companies buy but get little value out of because few people in the org — particularly within the sales and executive ranks — are willing to take time to refresh contact data and titles, or enter interaction notes.Just as the 11th-hour problems a trial lawyer experiences in court were created by seemingly innocuous decisions at the outset of the case, the first few decisions a sales rep makes about how to approach the buyers and what process to use create all the apparent 11th-hour crashes by evil Purchasing agents. If you know that, categorically, it’s almost a certainty that, at some point, Purchasing will be invited in by someone to shave $ off the contract, why do you leave them on the outside, looking in, with only one way to contribute and look good? It’s fundamentally stupid. A smarter rep would accept that these folks are going to show up at some point, and be the ones to invite them in earlier and find other forms of value to make them look good rather than simple discounting.Sorry, but this is all on the sales rep’s ineptitude and, perhaps, arrogance.

      1. Tim Johnson

        Mike,I agreed with you on the 3 components and sales rep deficiency. Shame on them for not including Purchasing early in the process (or at least trying to do so). At the end of the day, and I realize this is oversimplified, a purchasing agent whose comp plan is based on $$ off deals, negotiating with a sales rep whose comp plan is based on $$ added is an inherently inefficient system – no matter where they are in the process.My question really is whether community-based marketplaces – or other social media for that matter – are putting pressure on this inefficiency? WorkMarket drives out inefficiencies for both employers and providers (but also introduces some others). Is the same happening in Purchasing/Selling?

        1. Mike O'Horo

          I don’t have an informed opinion on that, but my personal observation over four decades in business suggests, “over time, probably.” The limitation, it seems, is that the community-based marketplace serves simple decisions well, but complex, multi-stakeholder decisions far less well because there is no way around the inherent people-process. Also, many corporate purchase decisions are, of necessity, private and sensitive, so the public nature of community-based markets does not align well with that factor.I think that social media puts pressure on incumbent brands by removing the barriers to access to the incumbents’ customers. Whereas for decades access was controlled by major media, access via social media is universal and largely free. I think that’s where the big shift is happening — in the early-stage product-awareness and pre-purchase relationship-building, the “inclination to favor” your brand, perhaps.No one is going to buy high-impact enterprise software or capital goods via community markets or social media, so those “considered” decisions will always require an adept facilitator of people-processes.The inability of groups of people to make good decisions of any type shows up in research all the time. For example, studies about corporate IT projects consistently shows that 40% are abandoned as unworkable after significant time and investment (insufficient Organizational Readiness) and another 35% are so far past deadline and so far over budget as to be virtual failures. I don’t know what percentage of those actually completed lie unused due to insufficient Cultural Willingness to embrace necessary implementation behaviors.I’m not sure I agree that the Purchasing v. Sales conflict is unresolvable. IMO, it’s akin to the narrowness of view that results in “price” being the determining factor. If price is the decision factor, your solution is either 1) a commodity, i.e., so mature or undifferentiated as to command no pricing power at all, in which case you have a Marketing problem, e.g., Product/Market Fit, not a Sales problem, or 2) your sales rep is ignorantly permitting such a narrow examination of the underlying business problem that drives demand that there are no other values under consideration. In 2) you definitely have a Sales problem. Purchasing’s reward system merely exacerbates it. If sales reps’ Comp systems were expanded to include cost-of-sales and cost-to-buy as factors, you’d see behavior change quickly in favor of more collaborative decision-making and less grinding on the buyers. CTB is important because, as it increases, the relationship degrades and may eliminate any chance of customer loyalty or partnership; under such conditions, you’re always vulnerable to customers being seduced in the future by competitors’ price inducements. Your sales behaviors manufacture the virtual certainty of lower prices and a higher COS/CTB in the future. Any incremental increase in the sales price achieved by wearing down the buyers with old-school sales behaviors would surely be offset by a COS/CTB factor that’s a multiple of that margin.