Episode Details

oDesk was manually screening every freelancer before they could join the SaaS marketplace. With a backlog of 5,000 workers and only 40 getting through per day, CEO Gary Swart realized the company was blocking its own growth. He killed the high-touch model, lowered prices, and let the SaaS marketplace mechanisms take over.

The result: $1 billion in work through the platform, 10 million freelancers, and a merger with their biggest competitor Elance. Gary shares how he scaled this two-sided marketplace from 15 people to a dominant online marketplace - and the mistakes he made along the way.

🔑 Key Lessons

• 🎯 Focus your SaaS marketplace on one thing first: oDesk's earlier venture Intellibank tried to build document sharing, workflow, and version control all at once. Dropbox won by doing one thing well.
• 📉 High-touch models block SaaS marketplace growth: oDesk manually screened every freelancer, capping onboarding at 40 per day with 5,000 in the queue. Removing the bottleneck meant trusting marketplace business mechanisms over human gatekeepers.
• 🚀 Referrals beat paid acquisition in a SaaS marketplace: oDesk's best customers came from friends who not only brought new clients but helped onboard them and recommended specific freelancers, creating a self-reinforcing growth loop.
• 💰 Lowering prices can accelerate marketplace scale: oDesk dropped prices when shifting from high-touch to an open two-sided marketplace. The lower margins were offset by dramatically faster growth and higher volume.
• 🔄 Mergers beat endless competition: oDesk and Elance were heading to the same destination. Rather than fighting for market share, they merged to create a $1B combined platform with 10M+ freelancers.
• 🧠 Say no more than you say yes: Gary credits "shiny object syndrome" as his biggest early mistake. Chasing too many directions diluted focus and slowed growth during the critical early years.

Chapters

• Introduction
• Gary Swart's background and oDesk overview
• Success quote on learning from failure
• Leaving IBM as employee 131,000
• Intellibank - "Dropbox gone wrong"
• What Gary would do differently at Intellibank
• How Gary joined oDesk as CEO
• Starting with just 15 people
• The early SaaS marketplace business strategy
• Why the original model could not scale
• Manual screening bottleneck - 40 workers per day
• Quality vs scalability tradeoff
• Biggest early mistake - shiny object syndrome
• Advice for marketplace founders
• Customer acquisition through referrals
• Growing pains and balancing both sides
• How the oDesk-Elance merger happened
• Moving to Polaris Partners
• Lightning round
• Where to find Gary online

Resources

• Full show notes: https://saasclub.io/11
• Join 5,000+ SaaS founders: https://saasclub.io/email