Fabio Rosati, CEO of Elance
How to Disrupt an Industry – The Age of working Differently.
The Elance Story with Fabio Rosati
It’s not every day you change the way the world works. But with Elance, Fabio Rosati did just this, altering the way global labor markets operate for the foreseeable future. It’s no small task, but by providing an easy and secure way for businesses to find, hire, manage and pay freelancers, Elance’s online staffing platform has revolutionized the freelancing economy. And it’s one of the fastest growing companies in the industry, expanding at a rate of nearly 50% per year. As of 2014, Elance has nearly 4 million users, with over 800,000 businesses hiring from a pool of 3 million registered freelancers, who earn over $300 million annually.
Hailing from Florence, Italy, Elance CEO Fabio Rosati is polite and softly-spoken. Conversing with him, you wouldn’t pick that in the last five years he had become one of the most influential individuals in the entrepreneurial space globally. A thought leader on the future of work, the freelance economy and online staffing, Rosati’s views on the burgeoning online labor market have appeared in publications including The Wall Street Journal, Forbes, Fortune, Inc., and The New York Times. It’s no small wonder then that in 2013, Rosati was an Ernst & Young Entrepreneur of the Year Finalist.
“I got to Elance through a couple of mid-life crises,” Rosati says. “I was in my mid-thirties when I realised that the career I was pursuing wasn’t fulfilling enough for me and I kept finding myself excited to start new things within the company that I had joined. I spent ten years building a consulting organisation. When I joined that company they had 300 employees and by the time I left, they had 60,000.”
Rosati joined the first manifestation of Elance in 2001, then an enterprise software business that helped companies manage existing contractors, consultants, outsourcing firms through technology. Yet for the Italian entrepreneur, something was lacking. “I kept thinking about the ultimate vision, and I kept not being in love with it,” Rosati explains. “Despite being an interesting business, enterprise software was not going to change the world.” Instead, he wanted to start something “completely revolutionary.” He continues: “This was when I realised that being in love with a vision is incredibly important. And so, I convinced our investors to sell that business and we used some of the proceeds to fund a much more interesting version of Elance, which we launched in 2007.” Rationalizing the decision, Rosati comments: “If you rest on your laurels, if you’re not the one that innovates and even cannibalises your own business, your own comfort zone, somebody else will. Don’t rest on your laurels.”
Fabio Rosati saw a space where middlemen and inefficiency abounded. “Companies were hiring consulting firms who then hired independent contractors or freelancers. We were watching this whole wall of intermediary businesses going on at the same time as Facebook, Skype, Paypal were exploding. It became very obvious that one day, somebody was going to figure out how to connect companies directly with the talent.” A few years later, Elance is a workplace for the world. While declining to refer to itself as an empire just yet, it’d be hard to deny that it’s on its way.
On the recently-announced merger with the former competitor oDesk, Rosati says: “We really didn’t need to do that. Enough people were convinced that the market was growing and it was going to be huge, and the opportunity was there, and scale was going to matter. I felt that achieving scale faster was going to be a huge gamble that was worth putting money on.”
It might be some time before we realize how significant Elance is in changing the world. Already it’s being used in poverty-stricken areas of the globe to generate employment where employment is rare. Owing to the GFC that left large portions of the world reeling with high unemployment rates, Elance has blossomed in areas where unemployment has been a chronic problem. There are increasing reports of people becoming more creative about what employment means and turning to online job platforms to make ends meet. This is a major paradigm shift, with employment no longer dependent on location, but rather on skills. This is one of the single most significant alterations in the labor market since the industrial revolution.
Suffice it to say, work is changing. Thought leaders like Seth Godin strongly believe that in years to come, full-time jobs will become redundant with individuals simply working on projects as contractors in consulting roles. Rosati argues there is a business driver for that. “At the time of the industrial revolution, organisations discovered that it was much more efficient to centralise everything. That gave birth to these gigantic corporations that did everything. Companies never really outsourced to individuals because it was never efficient. Now, hundreds of millions of workers are connected with each other. That enables organisations to get someone else to do the job as efficiently, and perhaps a lot more cheaply, than on a central basis.”
Now Elance has boldly predicted one out of four college students in the new year will earn money through online jobs. So will freelancing overtake regular jobs? Having discussed this with his own four children, Rosati explains: “What we are seeing and what we expect – almost every business in the future, whether small or large will have a hybrid model.” Organisations will have “full-time core employees and distributed on-demand collaborators and freelancers. We’re going to start to see a velocity in the world of work and in the world of labour very similar to the velocity of booking a flight, booking a hotel room or buying something on an e-commerce website. Things are going to become near-instant. That means that anybody who chooses an independent career will have a much easier time being connected with prospective customers and will spend a lot less time schmoozing, taking people out to lunch, and running around with portfolios..”
Rosati also predicts the labour market will reach a level of transparency that is unprecedented in history. “We have already started on Elance.com to publish the most in-demand skills in real time. So, you can take a look at what skills are growing, what skills are declining, what’s the average hourly pay for a particular skillset, who the competition is. You will be able to reinvent your career on a regular basis based on market demand, not based on what you chose to do ten years ago or twenty years ago.”
But this does not necessarily mean a rise in micro-specialization in favour of hiring generalists. “You need both,” Rosati says. “You have to be really good at something, and then you also have to have wings. You have to be able to have breadth.”
Rosati places purpose at front-and-centre of this ideal that bears utopian hallmarks. “People increasingly are motivated by purpose. If you’re an entrepreneur, what’s your purpose? What’s your organisation’s purpose? That allows you to hire a whole new class of people who are really motivated by the mission, who are really in love with the creative process of building a company.” He continues: “The entrepreneur of today is an artist. It’s someone who can build some amazing things. Creating businesses today is a form of art, really, and the expression of that art.” A purpose-driven life where businesses are art? It’s not hard to see how so many have been drawn into sharing this vision. And according to Rosati, this isn’t pipe dreaming but rather something core to a successful business. “It starts with a vision of purpose. Successful businesses have a very crisp and clear vision that is well articulated and well understood by the people associated with that business.”
Despite the enormous success Elance has experienced, Rosati is the first to admit that the life of an entrepreneur is not without sacrifices. “You make enormous sacrifices. I sacrificed quality time with my family, much more than I had ever imagined. My wife and I have been married since college, and I absolutely adore my wife and she will say that Elance has seen the best of me for many years. That’s a pretty big thing to say. That your spouse thinks that you are giving more to work than you are giving to the family. And then I would say that there are many other sides of me as a person that I would have loved to develop. I would have loved to be a painter. I would have loved to be a musician. I would have loved to be a DJ. I would have loved to be a writer. And I would love to do many things that I’m not doing because work is so consuming.”
It’s not often the darker side of the entrepreneurial journey is discussed with such frank honesty, and it serves as a cautionary tale to those who might not have thought entrepreneurialism through. “I would say that your entrepreneuring adventure could consume you, and it is imperative that you learn how to make sure that doesn’t happen,” Rosati says. “You’ve got to have the tools to tame the beast, to take breaks, and most of all, to be present.”
The irony is that the technology making Elance successful by increasing efficiency and saving time, is also that which so quickly compromises quality family life. “It’s so easy to be with your family or friends on holiday, and not be there, because you’re really constantly being dragged back into work. I think that’s a huge mistake. Be very aware to not sleep with your iPhone next to your bed or have your iPad next to your breakfast table, or not to be on email while your significant other is talking to you. Be there. Be present when you’re home.”
Ultimately, Rosati advises any would-be entrepreneurs nursing embryonic businesses to value family first and foremost, then value their teams. He is the first to humbly acknowledge how much a quality team is part of a successful business’ skeleton. “I have developed teams all my life, and made a ton of mistakes along the way.” Rosati’s advice? “Be super humble about what you can and cannot do well. Then look for good people.”
Finally and solemnly, Rosati concludes by producing a twinkling pearl of wisdom that couldn’t be anything but genuinely heartfelt. “Make sure it’s worthwhile,” he says. “Ask yourself, am I doing this because I want to make a lot of money? Am I willing to take the journey even if I may not succeed in the end? Is the journey going to be as worthwhile as the ultimate outcome? Make sure the journey is worth it and surround yourself with great people all the way.”
THE NEXT GENERATION OF HIRING.
When it comes to building a team and hiring talent, Fabio Rosati offers readers his top 4 pieces of advice:
1. Build a team motivated by the mission.
People increasingly are motivated by purpose. This allows you to hire a whole new class of people who are really motivated by the mission. Find a core team that is good at choreographing others. Ultimately, the people you hire become an extension of your organisation. They are almost like part of your team. Even if they work for multiple clients, they are really an extension of you.
2. Be patient: hiring talent is takes skill and time.
Look for good people, recognise that hiring online is just like hiring in person – it takes time, you need to interview well. Give people trial projects. Some may work out, some may not, but ultimately build a team of really good people.
3. Hire A-players that play well together.
Focus on how well your team can work together. Don’t just focus on hiring A-players and rock stars. Sure, they might have phenomenal intellects, energy and experience. But you need to focus on their ability to work together as a team. You can get a lot more done if you put a premium on people’s ability to work together. Hire people that are sensitive to the needs of their colleagues. If you can build that culture in your organization, it becomes unstoppable.
4. Be in love with your vision.
Critical to your success is being in love with your vision. Successful businesses have a very crisp and clear vision of purpose that is well articulated and well understood by the people associated with that business.
- 06:00 – Fabio Rosati’s rundown of his journey as an entrepreneur
- 10:00 – The process did you go through to come up with that vision of building a workplace for the world
- 12:00 – The importance of pushing your comfort zone
- 24:00 – Fabio talks abotu the difference between generalist versus being a specialist
- 26:00 – Tips on How to start an online business
- 28:00 – Learn How to go about recognizing “A” players and recruiting and finding and hiring “A” players
Full Transcript of the Podcast with Fabio Rosati
Nathan: So welcome to the first episode of the “Foundr Podcast.” Yeah, look, I’ve got really some exciting things planned for you guys. So I just wanted to firstly thank you for sharing your eBooks with me. So before I go into today’s guest who is an absolute game changer, who is the CEO of Elance and now oDesk, too, I’d like to first off start telling you a little bit about me and why I started this podcast.
It’s been something that I’ve been procrastinating with and putting up for such a long time. And to be honest, I don’t know why. It’s just something that just has needed to happen. See, here’s the thing, I independently publish a digital magazine on the App Store and Google Play Store, and it’s called Foundr, hence the podcast. And it’s a magazine targeted at young entrepreneurs, early-stage startups, and aspiring entrepreneurs. And we interview some extremely successful entrepreneurs and founders from all around the world.
I really try and showcase what it takes to become a successful entrepreneur, and really, what it takes to build a successful business. And I really try to extract, you know, leverage points and find out what that person had to give up to get where they are today, and what you can learn from them. Because the life of an entrepreneur, it’s a lonely journey. And I felt that there wasn’t a publication out there that really, you know, solved this issue. It was just a pain that I had as an aspiring entrepreneur myself.
So I started the magazine and it’s been going for about 18 months now, it’s going great. I started it as a side hustle project, and I’m making enough money, it’s going really well; I left my job a while ago. And yeah, that’s why I created the magazine. And the magazine has interviews. I do interviews over Skype, and those interviews sit inside the magazine, and then we have articles and editorial pieces and stories and all sorts of other cool, really useful stuff for you as an entrepreneur.
So I just felt that I’m doing a disservice to the world if I don’t put out these epic interviews that I have and just give them away, give them away for free, and hope that, you know, you will want to check out the magazine. Or even though, if you don’t want to check out the magazine, you’ll get something from it.
So that’s a little bit about me and the background of why I started this podcast. And what you’ll find, and this is something that I will promise you, is some of the interviews that you’re going to see over the next coming weeks and days and months, interviews that you will have never heard before, I wanted to make a point that this is not going to be like your regular podcast with the same people. Because with the magazine, I have the power to speak to extremely successful founders that a lot of people can’t get in touch with, especially from the tech side of things.
You know, just a little bit of a teaser of some to come, you know, we’ve got the CEO of Elance today. We’ve got the founder of SurveyMonkey, the founders of Eventbrite, the founders of Indiegogo. And this is just a few; some very big tech companies that I’ve been able to get in touch with, and these are game changers that are coming for you.
So that’s it from me, guys. And I’m really, really pumped to be launching this podcast. So yeah, thank you and let’s talk about today’s guest. So today’s guest is Fabio Rosati. And this guy is literally changing the world of work as we know it. He’s building a workplace for the world. So I’m sure you’ve heard of Elance and I’m sure you’ve heard of oDesk; these are very, very big online staffing platforms just recently merged.
And I talk with Fabio of what it really takes to disrupt an industry. And also, his recommendations on hiring staff. So Elance is actually a global team itself, and they have staff from all around the world. And the stuff that he reveals with us is amazing; it’s really next-level around structuring teams, how to hire staff online, what it takes to build a successful team. And you have to remember, this is a billion dollar business. So this guy, Fabio, you are in for a treat. He is an extremely talented, extremely insightful guy, and I had a lot of fun with this interview. So I thought what better way to launch the “Foundr Podcast” with a game changer, an absolute game changer. So let’s hop in to the first episode of the “Foundr Podcast.” Enjoy, guys.
Today, I’m speaking with Fabio Rosati. He’s an internet executive best known for his role as CEO of the online work platform Elance, a global online staffing platform. Rosati oversees strategy and overall operations for Elance, and is a thought leader on work and in the freelance economy and online staffing. So Fabio, thank you for taking the time.
Fabio: Pleasure, Nathan.
Nathan: So can you first of all tell us a little bit about yourself, and how you ended up doing the work that you are doing today, and give us a rundown of your journey as an entrepreneur?
Fabio: Sure. I got to Elance through a couple of midlife crises. I think you end up building something and starting a business as a result of realization. Some people have it early on in their careers, they decided they need to be working for themselves and others, later in life. I was in my mid-30s when I realized that the career that I was pursuing wasn’t fulfilling enough for me, and I kept finding myself excited to start new things within the company that I had joined.
I was in consulting. I spent ten years building a consulting organization. When I joined that company, it had 300 employees, and by the time I left, it had 60,000, which is a massive transformation. In the period of time that I was doing this consulting work, I kept longing and dreaming about moving to Silicon Valley and become a tech entrepreneur in Silicon Valley. And one day out of the blue, the opportunity came up. I was contacted by investors who started to describe this idea of Elance and were looking for someone to come in and really help the business grow.
And I fell in love with it. And I joined Elance in 2001. The first version of Elance was an enterprise software business. We basically built enterprise software that helped large companies manage all of their existing contractors, consultants, outsourcing firms through technology. And I quickly realized that while that business was actually going very well and had a fairly interesting potential market, it was never gonna be a revolutionary business. I kind of kept thinking about the ultimate vision for that business, and I kept not being in love with that vision. And this is as an entrepreneur when I realized that being in love with a vision, being in love with a business that you build is incredibly important.
And so, I convinced our investors to sell that business, and we used the proceeds of the sale, or some of the proceeds of the sale, to fund a much more interesting version of Elance which we launched in 2007. That business, by the way, the original Elance business, is now owned by IBM, the technology is still in use. It’s a highly respected product, a lot of great companies are using it. But we decided to kind of move out of it and reinvent ourselves to do what we do today.
Nathan: Fascinating. So there’s a few things that I’d like to unpack there. And the first thing is is how did you just envision that you were going to build an online staffing empire?
Fabio: I wouldn’t call it an “empire” to be honest, Nathan, but at least not yet. What I would say is that we clearly were in the business of connecting businesses with individuals in the first version of Elance. But we were doing it through intermediaries. So what happened in that first version is that companies were hiring consultants and consulting firms and staffing firms and agencies who then, in turn, hired independent contractors, freelancers, creative programmers.
And so, we were watching this whole world of intermediary going on at the same time as Facebook, LinkedIn, Skype, PayPal were exploding. And it became very obvious that one day, somebody was gonna figure out how to connect companies directly with the talent. How to basically do what Amazon was doing, what eBay had been doing which is to create a much more efficient model. We also noticed that most of these agencies and staffing firms were stuck in a local model where they served very well local needs with local, physical people showing up in buildings and offices, while so much of the work was moving online. And so much of the opportunity was to connect the person in San Francisco with the person in New Orleans or the person in Sydney with a person in London and create magic by that connection using the internet.
So we kind of realized “Look, enterprise software is a really interesting business, it could be very big. But we are not gonna change the world. We’re actually paving the cow path if we keep doing this. What if we let another company pave the cow path and let us go off and start something completely revolutionary and, frankly, even disruptive?” And that’s how we came with this idea. We started to describe to ourselves a workplace for the world. We started to believe that we could connect the world through work. The more we talked…myself and a few others, about ten of us that we started the company in 2006 and launched the new version of Elance in 2007, we kind of started to drink our own Kool-Aid. “We can build a workplace for the world.” And a few years later, it’s not really the workplace for the entire world, but it’s definitely a workplace for the world.
Nathan: Wow. Now, I just wanted to touch on that. You talked about vision, and you mentioned that as an entrepreneur, you need to have a big vision and you need to believe in it. What sort of process did you go through to come up with that vision of building a workplace for the world?
Fabio: It’s a very fair question, Nathan. I wish I could give you the fun in “Here’s how you do it: one, two, three.” At least in my case, it was serendipitous. It very obvious that there was a better way to do what we were doing. It was very obvious that there was a more efficient way to do what we were doing. And what happened, what really gave me the impetus to move forward and ditch the old model, if you like, and embrace the new, even though it’s much more risky, was that the impact that we could have if we did it right could have been so much greater.
So I guess the essence of entrepreneurship for me, my entrepreneurial journey, this one, at least, was really the realization that it’s worth gambling, it’s worth giving it all if the potential impact is big enough. And you normally wouldn’t do it if the impact was not gonna be that big. I would have stuck with the old way of doing things. But I saw something much bigger. And I was willing to go for it. And I was willing to convince everybody around me that it was appropriate to pursue it and even exit the comfort of a well-established business that clearly had customers and revenue and value in order to do this.
Nathan: It’s amazing. And it’s a very interesting story. And it just shouts out at me, do you often go for a practice of pushing your comfort zone?
Fabio: I think that’s really important that we constantly do it. Not to steal a page of the Steve Jobs playbook, but if you’ve been reading about him, and a lot of people know about some of the things he has done. And frankly, another great entrepreneur today, Jeff Bezos, seems to be doing the same thing. If you rest on your laurels, if you are not the one that innovates and even cannibalizes your own business, your own comfort zone, somebody else will. Don’t rest on your laurels.
So for us, on a regular basis, we try to identify how do we challenge ourselves to do even better than what we have, and push? And push to accomplish that? Even if it may cause some of the other things that are working well to be left behind. If you had read about the recently announced merger with our competitor, oDesk, or one of our competitors, we really didn’t need to do that. It was not something that was done out of necessity. It was simply that we felt, I felt, and a few others…I always say “we” because nothing happens by…not one person changes the world; you had a group of people that change the world.
Enough people are convinced that the market was growing and it was gonna be huge, and the opportunity was there, and scale was gonna matter, that I felt that achieving scale faster was gonna be a huge gamble that was worth putting money on. And that’s why we did it.
Nathan: Yeah. Well, thank you for sharing that because we talk about disrupting and, you know, shaking up and changing the world, and the way that we do things. And I see you as somebody that is an innovator, but you also see trends. And I’d like to know where you see the world of the 9 to 5 and online staffing in the future? Certainly for, you know, up and coming young entrepeneurs, people just finishing at a university degree, do you think eventually you will not go and apply for the top-tier consulting firms, accounting firms? People more often will become freelancers?
Fabio: You know, it’s great that you asked me that question. I have four children and two of them are in college. And I have this conversation with them on a regular basis; it’s very dear to my heart. And of course, given the business I’m in, it’s incredibly relevant to so many other people that we serve in our community.
So I would say the following: the world of work moves fairly slowly. Contrary to what everybody believes, our consumer lives evolves a lot faster than our business live. It is just an observation that I’ve developed over the years. Businesses are usually the last ones adopting some of the cool consumer trends. And that’s why you always read about big companies trying to be like startups; be more nimble, be faster to market, etc. Something happens with scale and you start moving more slowly.
So the world of work is evolving, but it won’t be an overnight change; what we’re seeing and what we expect. Almost every business in the future, whether small or large, will have a hybrid model. It will be a fait accompli that you will learn to design an organization that has full-time core employees and distributed on-demand and collaborators are freelancers. And you will make a choice as an entrepreneur, as a manager, what needs to be done by your core team, and what needs to be done on an on-demand basis by the right person at the right time.
The average time to hire, we track that metric; TTH, we call it, time to hire. The average time to hire will drop tremendously over time because technology is gonna make it so much easier to connect the person that needs a particular skill set with a person that is looking for work. And we’re gonna start to see a velocity in the world of work and in the world of labor very similar to the velocity of booking a flight, booking a hotel room, or buying something on an eCommerce website. Things are gonna become near instant, even in the world of work.
And that’s really important because it means that anybody who chooses an independent career, freelancers, in particular. But not only freelancers, consultants and lawyers, will have a much easier time being connected with prospective customers. Will spend a lot less time schmoozing and taking people out to lunch or taking people out to dinner running around with portfolios. And instead, they’re gonna become very, very efficient at connecting the right people at the right time through technology.
If you are graduating from school and you’re entering the workforce, or you’re outside of the workforce and are looking to go back in it, or you’re stuck in a job that you don’t like and are thinking about your next career move, there’s gonna be something new for you, which is a much better understanding of the labor market. We all talk about big data. There’s an enormous amount of information available. And one of our big predictions for the future is the work market, labor market will become…will reach a level of transparency that is unprecedented in human history. We will be able…we have already started on to publish, but we’ll do a much better job over time, publish the most in-demand skills in real time so you can take a look at what skills are growing, what skills are declining, what’s the average hourly pay for a particular skill set, who is competing with me. So that you will be able to reinvent your career on a regular basis based on market demand. Not based on what you chose to do ten years ago or 20 years ago, but rather based on what the demand is today and what the demand is gonna be in the next five years.
Nathan: Wow. You know, this is simply fascinating stuff. And somebody that was shouting out at me was…Seth Godin talks a lot about the Industrial Revolution, and he talks about how…the way work is changing. And he strongly believes that in years to come, people won’t have full-time jobs; they’ll simply work on projects. People will be hired for a project as a contractor, and then once they’re done, they’ll move on to the next project. Purely like a consulting role.
Fabio: Yes. I love Seth Godin. I love a lot of the things he says. And what I would say is that there is a business driver for that. The time of the Industrial Revolution, organizations discovered that it was much more efficient to centralize everything. That gave birth to these gigantic corporations that did everything from soup to nuts. Over time, gradually, companies started to focus on core competencies and started to outsource. But they never really outsourced to individuals because it was never efficient. They had to outsource to other companies.
Today, at least in the area of knowledge work, for the first time in human history, it is really something that none of us has experienced in our lifetime. And even my predictions about the future are probably gonna be totally wrong. Because for the first time, we have hundreds of millions of workers who are connected with each other. Hundreds of millions. Hypothetically, you and I could connect with anybody we want within seconds if we know how to find that person, if we know how to find each other. And that has never been done before.
And what that does is it enables organizations to get someone else to do the job as efficiently and perhaps a lot more cheaply than on a basis. So when Seth Godin talks about an evolution of an organization with the decline or the demise of the industrial age and the rise of the independent worker, he’s talking about the consequence of a much easier model where hiring anybody just in time is available and more efficient than doing it, you know, within.
Nathan: Love it. Let’s switch gears and talk a little about outsourcing. Why is it, do you think, online businesses should be outsourcing?
Fabio: I’m not a huge fan of the term. Because in my opinion, that terms comes with some baggage. For whatever reason, over a decade or two, the concept of outsourcing has equated with winners and losers. Somebody has a job and now the job got outsourced and the job is lost. At least the world that we operate in, almost all of the jobs that get done online and on-demand are actually jobs that someone wouldn’t be doing; they’re fractional work. It’s the concept of the hybrid model, core and known [SP] core.
I am super excited to talk a little bit about why every entrepreneur should be thinking about “What do you need to do centrally? What do you need to do on your core team? What makes sense? And what should you be willing to have done anywhere by anyone who specialized, available, and willing to do the job?” I think that’s a really good way to think about it.
The idea is that the people that you hire, when you build your distributed team, these people become an extension of your organization. They are almost like part of your team; even though they may be working for multiple clients, they’re really an extension of you. Does that make sense?
Nathan: Yeah, 100%. I’m thinking of the magazine and my own business right now.
Fabio: Exactly. I would imagine that you have exactly that model. You know what’s core and you know what other people can do.
Fabio: Yeah, so I think that there’s a couple of interesting things. First of all, your core team probably needs to be very, very good at choreographing. People ask me, “Are there any new jobs that are emerging as a result of this evolution of work?” And I use the term “conductor” or “choreographer” a lot. And I say, “Yes.” At Elance, for example, we tend to hire people who are really, really good at coordinating and orchestrating teams of people that aren’t necessarily here on site. For example, Lauren, who runs our PR team, is a choreographer. She is a single employee in a function, but she manages, she choreographs a team of over ten people. And these ten people are highly specialized individuals who do what they do really well for us, but they do it on their time and they also have other clients. And we literally apply this model to almost everything we do in our company; we eat our own dog food, as they say. We really like the idea that everybody here should be really, really good at not just being individual contributors, but orchestrating and choreographing others. That’s how you get leverage.
So if I were to think about starting a new company today, I woudn’t necessarily hire individual contributors; I would hire choreographers that can scale themselves. Not somebody who says, “I’m the best writer in the world,” but somebody that says, “I’m gonna get you the best writers. I’m best editor in the world because I can find the best writers, pull them into the story, and then with nothing to write about, not necessarily have to work with them.”
Nathan: Interesting. So what is your thought between being a generalist versus being a specialist?
Fabio: You need both. You absolutely need both. A consulting company, McKinsey, describes a career path…what they call the “T” model. Where you have to be really, really good at something, but then you also have to have wings. You have to be able to have breadth. If you are shaped like an “I,” you are not gonna have leverage. And I believe that your core team members in an organization need to be shaped like Ts. They need to be really good at something so they understand it. For example, you may be in engineering. In order for you to be able to orchestrate a team of engineers, you need to understand coding really well. If you are head of a design team, you better be really good at design. You better know the craft really well. But you also have to have wings. You have to be able to lead, you have to be able to manage, you have to be able to mentor, you have to be able to program manage, schedule, communicate. Those are sort of the horizontal skills.
Nathan: I see. So what advice would you give to someone wanting to start an online business? Do you believe that, straight away, they should be using platforms like Elance to leverage?
Fabio: Well, I think that it depends on the business and what the person is trying to do. You should conclude very early on that you’ll never have all the smart people working for you. You can’t have a monopoly on the best team,
even if you are Google. As an entrepreneur, in particular, you probably won’t be able to hire all the expertise you need. Recognize that. Be super humble about what you can and cannot do well.
Then tap into a platform like Elance for the things that make sense. Don’t be shy, try it. Look for good people. Recognize that hiring online is just like hiring in-person. It takes time, you need to interview well, you need to give people trial projects. And some may work out, some may not. But ultimately, you build a team of really good people. Then you can bring to life your ideas, you can amplify yourself and be a lot more effective.
There is a company in the U.S. that I love to talk about. There’s an entrepreneur who started a chain called Elevation Burger, which is a restaurant chain. It’s a high-end fast food chain. And the reason I bring them up is because a fast food restaurant is kind of the last business you would think would be started using Elance, since most of the work is physical, on-premise, and local. And yet, the entrepreneur behind this business started with Elance. Started by hiring researchers to find the right real estate locations to open up, lawyers, IP experts to patent some of the technology that he wanted to patent. Obviously graphic designers, web developers, mobile app developers, etc. Training creators because a lot of what goes on in a restaurant is training material. You’ve got to train your staff in order for them to do a good job.
It’s fascinating that if you’re creative and you step back and say, “My gosh, how many things would I like to get done?” there’s no way you can do them all yourself. So my advice would be don’t try to do it all…that’s very common. Understand what needs to get done. And then recognize that a lot of what needs to get done can be done by other people.
Nathan: Okay. So you talk about teams and you mentioned that you talk about “We” because it’s never just one person. When you build a team, which is something you’re obviously very good at because you wouldn’t have been able to take Elance to the position it’s at now if it wasn’t for building an amazingly well-organized, structured team. How do you go about recognizing “A” players and recruiting and finding and hiring “A” players?
Fabio: That’s a great question, Nathan. I have to tell you that I have developed teams all my life; even in my previous life, I was in consulting. It was all about bringing teams very quickly around a client engagement. And some of the teams were, you know, global, crossing countries and time zones.
So what I’m about to say comes from someone who’s made a ton of mistakes along the way. I have concluded that the single most important thing about building teams is the jazz ensemble model. I made many times the mistake of hiring just “A” players; rock stars, individuals with phenomenal intellect, work ethic, energy, experience without paying as much attention to their ability to work together as a team.
And later in life, I realized that you can actually get a lot more done if you put a premium on people’s ability to work with each other. So today, of course, we’re still looking to hire great people. But people that work well in a team, people that are sensitive to the needs of their colleagues, who are out there to get their job done, that look left and right to see what they can do for others. If you can build that culture in your organization, it becomes unstoppable.
And the other thing I’ve learned about teams is that you can’t just build a team by throwing people together and telling them to operate as a team. You need to have a vision. People increasingly…and I think probably forever, but in my observation, increasingly are motivated by purpose. We need to establish purpose. As a leader, if you’re an entrepreneur, what’s your purpose? What’s your organization’s purpose? Why should I come to work for you and with you? Why should I tell my friends to join your team? What’s the purpose?
And you know, sometimes the purpose could be just to make money. If that’s all you do, you’ll end up hiring a lot of mercenary types. And sometimes, you can convince your potential team that it’s not just about money, but it’s also about doing something special, unique, or great or different. And that allows you to hire a whole new class of people who are really motivated by the mission. Who are really in love with what can be created, the creative process of building a company.
The entrepreneur of today is an artist. It’s someone who can build some amazing things, create businesses today, are a form of art, really, and an expression of that art.
Nathan: Yeah, so much of that rings true to me, especially about the “Why?” You mentioned the “Why?” and the vision. That’s something that Simon Sinek preaches a lot, is people aren’t…not only people that are gonna come to work for you but also consumers; they’re more concerned about the “Why?” than the “What?” and the “How?”
Fabio: I agree completely. I agree completely.
Nathan: Let’s switch gears a little bit and talk about successful businesses. I’m interested to hear what your thoughts are on core elements and foundations. Common denominators you see in building successful businesses that you think are required by entrepreneurs.
Fabio: Yeah, I’d be happy to talk about it. I actually have that firmly in my mind. I think that it starts with a vision and purpose. Successful businesses have a very crisp and clear vision that is well articulated, well understood by the few or the many that are associated with that business. That have clear and simple plans to accomplish that vision. They have a culture of teamwork where the culture of teamwork is especially important today where things are moving so quickly, that not one single person, not single organization can keep up. And you have enormous amounts of…frankly, unprecedented amounts of interdependence between departments. No marketing department today can succeed without the help of IT. No sales department can succeed without the help of marketing. And the list goes on. So there’s essentially a high degree of interdependence across all functions. That teamwork, again, is critically important.
So I think that successful businesses…you know, if the entrepreneur is in the right market or has spotted an interesting market opportunity, has articulated that vision and that purpose, and is honest about it, and compelling about it enough to be able to assemble the right teams, that entrepeneur assembles a great team with a great culture, then the next thing that really matters is execution. In my space, I’ve seen hundreds of companies come and go over the last few years. And the difference between who survived and who didn’t, who’s really not that they didn’t…it’s not about the quality of the person or the quality of the entrepreneur, or the idea or the market, it was mostly about execution.
So you can have all these wonderful visions. But the grit, tenacity, and ability to execute are also critical.
Nathan: Love it. Okay, look, I have a couple more questions for you, and it was more around about who you are. And I’m curious, what did you have to sacrifice to be where you are today? What did you have to give up?
Fabio: You know, I think that as an entrepreneur, you make enormous sacrifices. I’ve sacrificed quality time with my family much more than I had ever imagined. My wife, I’ve been married for since college and I absolutely adore my life. And she will say that Elance has seen the best of me for many, many years, and that’s a pretty big thing to say. To recognize that your spouse thinks that you are giving more to work than you’re giving to the family. So I would say family has suffered.
And then I would say that there are many other sides of me as a person that I would have loved to develop. I would love to be a painter, I would love to be a musician, I would love to be a DJ, I would love to be a writer, I would love to be a philanthropist, I would love to be an athlete, and I would love to do many things that I’m not doing because work is so consuming. So that’s the answer.
Nathan: Thank you. It’s a very heartfelt answer, but I can see you wouldn’t choose it any other way, though.
Fabio: Well, I think that if I had to rewrite the book of my entrepeneurship and give advice to any other entrepreneur that is either, you know, facing the same challenges, I would say that you can become…your entrepreneurial adventure could consume you, and it is imperative that you learn how to make sure that doesn’t happen. You’ve got to have the tools to tame the beast, if you like. To take the distance that you need, to take breaks. And most of all,
to be present. In a time where everything is connected and you’re carrying around a supercomputer in your pocket that’s constantly being updated with information about your business and questions from your colleagues and e-mails from your customers 24/7, it’s so easy to become a slave to that, and it’s so easy to be with your family, your friends during the holiday and not be there, because you’re really constantly being dragged back into work. I think that’s a huge mistake.
And I actually learned to keep a distance from that, but it hasn’t been an obvious thing; I had to get there. And I would say any entrepreneur today has to be very aware, do not sleep with your iPhone next to your bed. Do not have your iPad next to your breakfast table. Do not e-mail while your significant other is talking to you. Be there, be present when you’re home.
Nathan: Thank you for sharing that. It was a very heartfelt answer. We have to look at wrapping things up, Fabio. It’s been amazing chatting with you and I’ve really enjoyed our conversation. I just wanted to know, was there any parting words of wisdom that you would like to share with our listeners of aspiring and early-stage entrepreneurs in startups?
Fabio: I would say when you start a business, you’re setting yourself up for a long adventure. Make sure it’s worthwhile. Ask yourself, “Am I willing to take the journey, even if I may not succeed in the end? Is the journey gonna be as worthwhile as the ultimate outcome?” Which, of course, for every entrepreneur, is to build a great, valuable business. I think that’s really important.
So many times, I hear about entrepreneurs who start businesses and what they get into, and why they do it is entirely motivated by some mathematical calculation about what they could create. And what if they fail? They will have spent three, five, six years changing something not worthwhile. So make sure the journey’s worth it.
And two, surround yourself with great people all the way, including investors and customers. Be prepared to say no to certain investors just because you don’t get along with them or you don’t like them. Be prepared to say no to some potential customers for the same reasons; not all customers are great customers. Not all great investors are great investors. But once you tie the knot, they can really have a dramatic impact on your business, and if they’re not great people, you’ll be regretful.
Nathan: Love it. I just have to say, it’s been an amazing time speaking with you. I feel very, very privileged, Fabio. You’ve shared so much gold with me and the readers. So thank you very much for taking the time.
Fabio: Nathan, thank you. And good luck with your venture. And if I’m in Australia one of these days, I’ll come and see you. And if you’re out in Silicon Valley, please stop by. I’d love to meet with you in person.
Nathan: Yes, I would, too.