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HRExaminer Radio
Guest: Jeff Wald, President and Co-Founder, Work Market
Episode: 153
Air Date: February 12, 2016
Jeff Wald is president and co-founder of New York City-based Work Market. He has a deep background and passion for talent management and is widely recognized as a thought leader on labor force evolution. Follow him on Twitter at @JeffreyWald.
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Begin transcript
John Sumser:
Good morning, and welcome to HR Examiner Radio. I’m your host, John Sumser, and we’re coming to you live from beautiful downtown Occidental, California. It’s a little Swiss village at the top of the hill, right before you get to the Pacific Ocean in western Sonoma County, near the Russian River. The sun is out. It hasn’t been out for months when the radio shows on. It’s nice to see the beginnings of the greening leaves as we come out of winter.
Today we’re going to be talking to Jeff Wald, who’s the president and co-founder of Work Market. Jeff, how are you?
Jeff Wald:
Now suddenly I’m feeling relatively colder than I was when I woke up in New York and I’m freezing, just listening to your words and how beautiful it is out there.
John Sumser:
Oh, it’s amazing. In California, winter is the time when things get really green. It looks like the best part of Ireland right now here. It’s wonderful.
Why don’t you take a moment and introduce yourself to the audience, Jeff?
Jeff Wald:
Sure. First off John, thank you so much for having me on. Longtime listener, first time caller. My background is in finance. I had the pleasure of starting my career at JPMorgan and then spent some time as a venture capitalist. I’ve started a few tech companies. One of them failed miserably, which is a wonderful experience. It’s something everybody should go through. The other, we were lucky enough to sell eventually to Sales Force. Then I spent some time at a hedge fund doing activist investing, buying stakes in companies, and saying, “We don’t really think that what you’re doing is in the best interest of all shareholders.” I still sit on some public boards from that, but in May of 2010, I was able to get back together with one of the most wonderful people I’ve had the chance of working with in my career, a guy named Jeff Leventhal and Jeff and I co-founded Work Market.
What we did was we wanted to take this very simple notion. People always say, “Oh, I want to connect the buyer and the seller of labor together.” You go, “Oh, that’s adorable,” but that’s not how corporations work. If you want to connect the buyer and the seller of labor together, and the buyer of that labor is a company, and that company has a lot of policies and procedures that have to be followed. It has a lot of data requirements. It has a lot of security standards. It has a whole host of things that have to be adhered to.
One of my favorite slides and we talk about Work Market is we have the buyer and the seller and we say, “That’s what people think.” Then the next slide is the buyer and the seller and 1,000 steps in between, from legal to compliance, to HR, to the business units and operating processes to APIs and to other parts of the ERP. It just goes on and on and on, the complexity of it. That’s what Work Market does, is we help the buyer or seller of labor connect directly, the brand and the employer connect directly. We take all of that complexity and we put a very simple UI in front of it.
We say, hey, you guys want to connect directly, here’s how we’re going to do it in a way that it’s easy for the buyer of labor, that it adheres to his or her standards, policies, procedures, legal accounting, and all that, and here are the things that allow that worker to very simply log on to Work Market and find hundreds of clients. Those clients are some of the largest companies in the world, the Lockheed Martins of the world, the Yahoos, the Walgreen’s of the world are all using our system to manage this on demand labor force to connect the buyer and the seller of labor.
John Sumser:
Give me a better sense of how that works. I’m a seller of labor and I want to sell my services which are consulting about strategy in HR. Do you do something to help me identify the actual person who would buy it, or are you a gateway for once I’ve got a deal, there’s all of the hair on the deal that comes because it’s a corporate deal?
Jeff Wald:
John, what I would say is we’re enterprise software. We have two customers in that. We have the buyer and the seller of labor, but we sell our software everyday to large companies that are managing on demand labor forces today that are thinking about how this on demand revolution is going to impact their cost structure, it’s going to impact their ability to attract talent. We are providing the software that helps make them more efficient in the engagement of on demand labor, and helps them mitigate the risks of engaging on demand labor. That’s what our software does. Our pitch is to Yahoo to say, “Hey, you have these 3,000 bloggers.” They came to us and said, “We have these 3,000 bloggers, but we don’t know who’s where, who signed what legal agreement, who’s insurance is up to date, who’s worked on what, what’s in process.” Then we show them Work Market. They say, “Oh my God. This is exactly what we need.”
Even though Yahoo’s a tech company, it’s still a big organization, but a few weeks later, they’d signed a multi year agreement to use our software, because it so incredibly increased their efficiencies. It so incredibly increased their ability to mitigate risk associated with engaging on demand labor. Once Yahoo has built up their environment, once Yahoo’s legal department and their HR department, and procurement have come in and said, “Here’s who you can engage as an independent contractor, and here’s how you’re going to engage them.” They set that up within their Work Market environment. Then they put those things forward to the world. They’re known as our talent pools. Most of the talent pools are public facing.
Jump back to your question, if you came onto Work Market, we would say, “John, tell us about your skills. Tell us about the different things that you have. Tell us about you, and what you want to monetize in the Work Market, because you have your storefront in the Work Market and our algorithms are going to serve you a host of different talent pools that match to your skills.” We’re going to say, “Oh, that’s interesting. Walgreen’s is looking for that talent. Oh you do that, that’s interesting, Sysco is looking for that talent.” We’re not here to show you jobs. We’re here to help you get clients.
That’s why workers come onto Work Market, is to get more clients, because once you establish that relationship, you are now in Yahoo’s environment. You’re in Lockheed Martin’s environment. You’re in SAPs environment on Work Market. You’re a kind of “approved vendor”. You didn’t see that I just air quoted. It’s probably not really effective on the radio, the air quote. You’re in their approved environment, and therefore they will send you work on a regular basis.
This is not going on to another platform where you just get a discrete assignment every now and again. That’s not how people sustain themselves in the on demand world. That doesn’t allow a person to monetize their skillset. That doesn’t allow you as an individual to make a lifestyle choice to be a freelancer, but to earn enough to actually have the lifestyle you want. Getting a bunch of clients allows you to do that, those clients that are sending you sustained work. These large enterprises that are just now emerging into the on demand labor landscape that aren’t sending an assignment every now and again, they’re sending $100 Million worth of work a year. Those are the kinds of people that can generate the work into the on demand economy, that makes the on demand economy sustainable.
John Sumser:
How did you figure out to do this? How’d you get here?
Jeff Wald:
I don’t know if we’ve got time on the show for that. That’s a long story. I will give you the short version of it. Look, I had the pleasure of going to Harvard business school and while there had the freedom to explore things intellectually. One of the things I always found the most fascinating, I’m going to get really, really dorky on you for a second here, was a paper written in 1937 by a gentleman named Ronald Coase, most well known for the Coase theorem for which he won the Nobel Prize.
He wrote a paper in 1937 called The Nature of the Firm. In it he talked about what’s the ideal structure for this corporate entity. The theory was, the ideal structure for a corporate entity is a very fixed cost kernel where everything else is a done at a variable model. The conclusion of the paper was that the transaction costs associated with constantly spending up and spending down to those variable resources actually made it inefficient, that you were actually better off having under utilized resources in a fixed cost capacity, because the cost of getting an on demand labor force going was so high. The knowledge transfer, the constant onboarding and off boarding, the ramp up times, those things were so vast that his conclusion in 1937 was you’re better off with a large fixed cost structure and then from that evolved the [inaudible 00:09:28] structure of General Motors and the modern corporation.
While at business school, I thought to myself I want to rewrite his paper. I’m going to write the Nature of the Firm revisited. Here we are at the time in 2002, and I started to do that. It proved intellectually beyond me, so I very quickly stopped and continued just drinking beer and just doing whatever it is we actually do at business school, but I always found it intellectually fascinating that if you were to look at all the technologies that have evolved, obviously telecommuting and obviously the internet and blah blah blah blah blah, but the emergence at the time of mobile technology and then all the different algorithms and search functions that help with a process of keeping institutional knowledge in a way that search algorithms can just pull it out when necessary.
When you talk about the mobile interaction points and the UIs that were making it much easier for an individual to engage directly with a large brand, a large owner, a large buyer of labor online, that those things so massively reduced the transaction costs that Professor Coase was discussing, that it was time to revisit this thought. That was in the intellectual under penning of the founding of Work Market is can we build a piece of software that creates the efficiencies for any type of on demand labor to interact and if we can do that, because there’s again this massive black box underneath it.
It is unbelievably complicated and by the way, what makes it even more complicated is that every company does it differently. I can get my 10 largest companies in here and their 10 heads of HR, 10 legal councils, and we will get 30 to 40 different opinions as to what is the appropriate way from a regulatory standpoint to engage on demand labor, let alone what the business processes are involved for each company, because obviously they’re going to be unique company by company. When you mix those very complicated business processes with a very complex and opaque regulatory regime, you’re in a bad spot if you want to try to do this on your own and that’s why we invented this company, was to help solve that problem.
At the end of the day, Work Market does two things, and it does it better than anybody on the planet. That is when you’re engaging on demand labor, it helps you do it efficiently and it helps you to mitigate your risks associated with doing it. That’s what we do, and that’s what we bring to the enterprise.
John Sumser:
That’s great. That’s very complete and very clear. Let me ask you, you’ve mentioned that you have clients in HR. Typically the function of contracting for contingent labor has been handled by purchasing.
Jeff Wald:
True.
John Sumser:
Do you have purchasing clients and …
Jeff Wald:
100%.
John Sumser:
What makes the difference between somebody who does this through purchasing and somebody who does through purchasing and somebody who does it through HR?
Jeff Wald:
That’s a great question, John. We actually, at the beginning of the year published our on demand survey in Corporate America where we did the first study of it’s kind to look at corporate … Actually we titled it Corporate America, but it was actually a global study where about 1,100 different companies with heads of HR, heads of procurement, business unit heads, C level executives from companies like Bank of America and [inaudible 00:12:58] down to SNBs responded with this is how we think about on demand labor.
I will tell you, one of the biggest takeaways from that study was not that 88% of the companies in America are using on demand labor now. It was not that 17% of the workforce in corporate america is now an on demand labor asset. It was that the answer I don’t know was the most prevalent answer throughout the survey. I don’t know how much on demand labor we use. I don’t really know who controls it at our company. We saw, literally an even distribution between procurement, HR, business unit heads, in terms of who owns it, but the fourth answer was the largest answer, which was I actually don’t know, which is to say it’s handled multiple places.
What you have going on is this massive change that is occurring in the labor market. You have a lot of large companies that have said, “How do we respond to this change? It’s change we have to acknowledge the facts on the ground. The labor market’s changing. We want obviously to attract the best talent, and increasingly, and specifically in some sectors, that talent is demanding to be engaged as a freelancer. They’re saying, “I don’t want to work for you.” I’ve got some theories on how that evolved. We can jump into it in a second, but first let me responsive. The ability for those companies to really understand what’s happening in the market is difficult because the market’s changing so rapidly.
The workforce is changing so rapidly. We want to be able to give those people the right tools, but everybody’s still learning. That was the big takeaway from the surveys, that everybody’s still learning how do we cope with this change, what’s the right business process and whether it ends up with sourcing, whether it ends up in HR, whether it ends up in the business units, I think it will differ company to company. I will tell you this, every single large corporation that we deal with, they’re all on the phone. We had a call this morning with one of the largest equipment manufacturers on the planet and it was HR, procurement, legal, and the business units were all on the phone. That’s what it will always be with a large company. As then for who owns it at that company, I think it’ll be a [inaudible 00:15:21] answer.
John Sumser:
What an interesting theory. That means that you’re going to end up having multiple installations per company and how do you suppose you manage the overlap between the two players?
Jeff Wald:
John no, let me make sure I’m clear. There aren’t multiple installations per company. What’ll happen is procurement may help negotiate the deal. Legal and HR will help set up the environment and set up the business engagement rules. Then the business unit will own the environment. It’s all one environment. It’s just they all have different touch points to it.
John Sumser:
It’d be a much longer conversation, but I can’t imagine that that’s actually true. We’d have to go a long way into fortune 100, multi divisional, multi regional operations that couldn’t possibly be [crosstalk 00:16:28].
Jeff Wald:
You are correct in that construct. You are 100%. Look, using Yahoo as an example, because they’re one of our customers that we’re allowed to talk about more freely, although not that freely, they have multiple accounts. Each account is done my geo, because their business engagement rules are different by geo. That’s fine. All those accounts obviously roll up to a master account on the system, because to your point, their business processes are different, their engagement points are different. That we’ve seen replicated throughout the enterprise, is multiple divisions using their own environment.
What is standardized is that HR and legal will go in and they will set up the environment. They get to set up those business process rules. They get to set up those who you engage with rules and this notion of set it and forget it to say, “We feel for our business that we don’t want to engage anybody more than 29 hours a week. We don’t want to engage anybody more than $5,000 a year. We don’t want to engage anybody more than 72 different discrete assignments. We don’t want to be more than 40% of somebody’s work.” Whatever those parameters are, our limit functions, and our business engagement rules within Work Market help companies adhere to those standards. What will always happen is legal will set this is how you engage and then the business units will go off and they want to engage and then use our very complicated tools to make the process itself efficient. There are custom fields and labels and we could spend hours.
Here’s what I’d love to give you a quick thought on if I may, we’re in the middle right now of writing a book on this is how corporate America is responding to the on demand labor evolution. We’ve had the privilege of interviewing heads of HR at [inaudible 00:18:28] and Avon and ITT, the former head of Adecco, and one of the heads of Omnicom. We have coming up Este Lauder and Match.com and Yahoo and E&Y. The interesting thing was how did this evolve?
The book is actually going to be a host of different questions around how things evolved and how each different company is responding to give best practices and what leaders in corporate America are doing. Certainly each chapter’s going to go into if you were graduating from college now, how would you go about thinking about your career, because there’s been such a fundamental shift. What’s been interesting is how we got here. How did we get to this on demand revolution?
What we found was a lot of companies saying this, because these are people with decades of experience and it’s just such an honor to interview them and to hear their thoughts. It started, this on demand notion with the remote work that technology enabled. All of a sudden people said, “You can work from home two days a week.” Those were things that were happening in the late 80s, let’s say. What enabled that where all these technologies, be they mobile, telecommuting, whatever. The internet enabled that.
What it did was it forced people to think about the desegregation of work. For the first time, you’re now seeing, this work can be done without everybody in the same room. That broke a mold. Wow, if it doesn’t have to be done in the same room, maybe it can be done in entirely different locations. The first move was this remote movement.
The second move then became and outsources movement to say, “If I can desegregate the work, which I just learned a decade ago, now I can outsource that work.” Then we saw the rise of Indian outsourcing companies, because if I’m going to outsource, I’m going to go to the lowest cost geo. Okay, but I’ve got issues with that. These guys don’t speak the same, “language.” As much as they don’t know what it is to work at [inaudible 00:20:44]. They don’t understand our processes or understand how we do things. They don’t understand our templates and understand institutional knowledge. It worked, but it didn’t work incredibly efficiently.
Now you had this notion of the breaking of this lifetime commitment. When you got a job in the 80s, 70s, and obviously thereafter, it was this notion of you’re making a commitment to this company. This company is making a commitment to you. They’re going to train and develop you. When I started JPMorgan, we had a five month training program. The training program today is two weeks. Same junior bankers coming out of the same schools. The five months they gave us, they give these kids two weeks, because they don’t expect those kids to be there for a long time anymore. The training and the development that goes into an employee, the 401Ks and the pensions obviously we’ve seen what has happened with [inaudible 00:21:39] benefit plans, versus defined contribution plans.
That system is breaking down. If you’re no longer making a long term commitment to me, as an employee, why I am I making a long term commitment to you? Now you see people start to respond to that change to say, “If there is no long term commitment for the company, and if I could work on an on demand basis, maybe I’d like to do that.
Rewind that two tiered structure two decades ago, and if you were part of the full-time employees, now I’m going to use a company like IBM as an example. They had this notion of deep blue versus light blue. If you were deep blue, you were an IBM guy. You’d been there, you’d been trained, you’d been developed. If you were light blue, you were a temp. You were a contractor. You were looked down on. That has flipped, John. People want to be light blue now. They don’t want to be deep blue. IBM’s not really making a commitment to me for my lifetime anymore, but I have to be here everyday in a suit, and I’m looking at that guy, Joe. I’m looking at that woman, Sandy. Joe and Sandy come and go as they want. They’re getting paid effectively more than me. They’re working their own hours. They’ve become subject matter experts in something. They have tons of clients.
That has flipped. People now want to be a temp. They want to be a contractor. When you said you were freelancer 20 years ago, it meant you were unemployed. Now, when you say you’re a freelancer it means you’re an entrepreneur. There are fascinating changes, and I think it all began, at least that’s what we’re seeing from these different conversations with this breaking up of the work process, the first desegregation that occurred, and that started with technology.
John Sumser:
That’s an interesting thesis about it. My sense would be that the change started coming when the military started leaning on contractors after the Vietnam War.
Jeff Wald:
Interesting.
John Sumser:
Many of these models actually come directly out of what it takes to do large scale technical contracting. Companies like Boeing, Westinghouse, Lockheed Martin, some aspects of GE, even the big engineering, architectural firms or the folks who do contractual work in the Mid East today, these companies have been doing contracting and the generation of the [inaudible 00:24:04] workers for years. Then the next step in that story is the emergence of the job boards. You would look at Dice, who made it possible to be a contractor at your own leisure in Silicon Valley in the late 80s, and the access to work part of that story, which is different than the corporate adjustment to the work, is as big a part of the story as the internal corporate policies for [inaudible 00:24:44] out the work.
Jeff Wald:
I love it, and you know what I’m hearing right here? I’m hearing another chapter. I hear another chapter of the book, John. We got to get you in for an interview. I’m going to flip the tables on you.
John Sumser:
I tell you what, when I first went to work, I ended up in a section of a large defense contractor that was largely populated by contractors. They moved and worked wherever they wanted to work. They generally partied better than anybody else I’d ever met. They were gypsies. They were gypsies. They were gypsies who moved as big defense contractors won big contracts. They moved into the work as the work moved. There are a number of streams that make this thing possible. I’d love to talk to you some more about that.
Jeff Wald:
I look forward to it.
John Sumser:
There are competitors emerging here and there have been some competitors in this space. What makes Work Market so different?
Jeff Wald:
Competitors, what? I don’t know any competitors, John. That’s just crazy talk. I will tell you this, our biggest competitor is the status quo. We right now are in the process of having a conversation with one of the largest media companies on the planet. This media company 20 years made the decision to engage on demand labor. It was part of their business process. They got very comfortable with a regulatory environment and they thought, all right, we have to engage on demand labor. They actually built their own very rudimentary, very simplistic version of Work Market 20 years ago. It’s terrible. I’ve seen it. You can’t believe that someone actually still uses something like that, but it was a testament to the fact that there was nothing on the market. There was nothing they could do.
They had to build their own thing. They’re not a technology company. We had the pleasure of being introduced to them, and we came in and they said, “Oh my God. This is exactly what we need.” They started freaking out, but someone in procurement said, “Whoa, whoa, whoa. We have to run a process. We’re not just signing a contract with these guys. We have to run a process. They did.
It’s been six months and they basically have come back and said, “Okay, there are other people that are in this market, but there’s nobody that does what you do. There’s nobody else that is a true piece of enterprise software that can allow us to have our business processes, that has powerful APIs, that we can move data in and out into our other parts of ERP, into our accounting systems, into our project management tools, into our HR software, into whatever other piece of software we want. There’s nothing else out there that hits the standards of you guys.” Now, in time there will be. The market is too big. It is growing too quickly. In time, there will be other companies that evolve. You certainly have the VMS players that are tremendous companies. We have the pleasure of having close relationships with most of them. They do temp labor. They don’t do freelance labor, and they’ll evolve. Some of them may stop their evolution in partnerships with us. Some of them may build their own stuff at some point. There are other companies out there that are large marketplaces.
I’m going to draw a very, very, very, very, big distinction between a marketplace and a platform. Now Work Market, obviously given that I called it Work Market, has a market attached to it. We are first and foremost a piece of complex enterprise software. It’s the enterprise software that handles the complex process. The Work Market software itself is actually quite easy to use. That’s our roots. We are evolving, and we will now start building a huge marketplace. You will be able to come onto the Work Market and find anybody you need with whatever skills. You’ll have data about them. You’ll be able to interact very quickly. They’ll have everything on their mobile app, and blah blah blah blah. That’s amazing stuff, and I don’t mean to say that it’s easy.
It is certainly not easy, but building software that you can sit and go through SAPs onboarding process from a software vendor and be run through their gamut of all the different things that they have to see, table stakes around redundancy and data security around user roles and internal controls, right around the robustness of an API. Those are things that just take five years to build. I’ve been lucky enough to be an angel investor and a VC in my career. I’ve been lucky enough to be an entrepreneur a few times.
I will tell you, this one’s different. My first company, Spinback, for $250,000 we had built it and we were out the door with our minimum viable product. Here it took us about $30 Million and four years to get that first product out the door. You can build something like a Task Rabbit, and no disrespect meant to Task Rabbit, it’s an amazing company, but you can build something like that for a few hundred thousand dollars and you’re out the door with it, because it’s a very simple interface between a consumer and another consumer.
To build enterprise software of this scale and magnitude, it’s complicated. I think about the VMS’. I’m sure one or two of those marketplaces, not the Task Rabbits of the world, I think they stay in the consumer space, but I think one or two of the marketplaces out there will try to build the enterprise software suite. I think they’ve got a long road ahead of them. We’ve got a lot of green in front of us, but that green, the competitor that we think about is the status quo, because whatever it is that they’ve built is … The thing is, as terrible as this large media company software is, they built it. They’ve used it for 20 years. They’re all trained on it. It’s already integrated into all their systems. They will go through a change management process.
I will tell you just as an anecdote, this particular company just did a work day deployment. When I say just, I mean over the last three years they’ve been implementing Workday in their environment. It’s been painful and Workday is an amazing, amazing, amazing company, but it’s taken them three years, and it ain’t fully done yet. They’re like, “Oh my God. Now we’re going to do another deployment.” I was like, “Guys, it’s never taken longer than a week to deploy Work Market anywhere. I don’t care how complex your systems are and everything else, we have built it to be integrated massively, massively quickly and efficiently.
John Sumser:
That’s great. We have blown through our allotted time. It’s been a really interesting conversation. I want to take a moment to say thanks for showing up and doing this. Would you mind reintroducing yourself and tell people how they might get ahold of you so that if they are in the market for your services they can go to the right place?
Jeff Wald:
Of course. Let me return the compliment. It’s been wonderful speaking with you. Again, I’ve always been a big fan of the show, really excited that we got a chance to speak. For your listeners again, my name is Jeff Wald. I’m the founder of Work Market. I currently serve as our president. You can certainly find me at Twitter at Jeffrey Wald and you can certainly find me at LinkedIn anytime.
John Sumser:
Great. Thanks again for being here, and thanks everybody for tuning in. You’ve been listening to HR Examiner Radio. I’m your host, John Sumser and we’ve been speaking with Jeff Wald, who is the president and founder of Work Market. It’s been a great conversation. I hope you all have a wonderful weekend. Thanks for tuning in. We’ll see you next time. Bye bye now.
End transcript