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Upwork is More Than a Freelancer Marketplace. Here's How You Should Use It Instead.
2 Unique Ways for Entrepreneurs to Use Upwork (that you've never thought of)
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Have them mention your name, and I’ll reach out when the deal closes.
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This newsletter will resume 7/11/23. 🏖️
I’ve been using Upwork more recently.
And I probably should’ve started using it sooner.
Initially my ego got in the way as I thought it didn’t make sense to quit a FANG job just to freelance on Upwork right after.
But having used Upwork as both a client and a freelancer, I’m a huge fan of the platform now.
It’s a good place for a consultancy to start as the clients there have both an urgent need and a budget or else they wouldn’t be on the platform at all.
This means you won’t have to deal with as many “tirekickers” who might waste your time.
Furthermore, every entrepreneur will have to hire people at some point to scale.
In fact, almost every founder I know leverages Upwork in some capacity to save themselves time.
So learning how to use Upwork is a critical skill that all entrepreneurs have to learn, which is why I started dabbling on the platform.
Just last month I finished my first three engagements there while maintaining a 4.8 star average rating on the platform.
I have also used it to hire engineers for consulting engagements as well.
My main learning from these engagements is that Upwork is a lot more than a website for freelancers to make money.
Upwork is important because it could form the foundation of your business if used in two unique ways:
Using it on the freelancer side to get paid to build your prototype
Using it on the client side for arbitraging talent across different marketplaces
In today’s article, I’ll discuss these two different ways of using Upwork, how to win your first few projects, and how I plan on using Upwork more in the future.
Getting Paid to Build Your Startup Prototype
The first way I recommend leveraging Upwork is for startup founders to use it as a way to get paid to build their prototype.
Usually most founders build their startup by:
Coming up with a new startup idea
Bringing it to market
Then they find out the market wasn’t interested in what they created. They then have to pivot and have thus wasted time building the wrong product.
However, it’s possible to avoid this common mistake by using Upwork as a place to validate and de-risk your startup idea.
What you do is go on Upwork and search for projects with keywords “<your industry> + software/saas/engineer/integration” and scan through the projects to see what people need built.
Then if you find someone who wants custom software that’s similar to your idea, submit a proposal for that project (also known as “bidding”), and build it for that client.
This is better than building your software product in a vacuum because now you’re starting with the market (Upwork) and building a product to fit the market’s needs instead of building a product and hoping you’ll find customers for it later.
It’s also a way to get paid to do customer research.
This first client is basically your first startup customer. They are someone you can study and ask questions about to better understand their problem and their needs.
This will help you build a better product later.
Of course, this all hinges on winning a project on Upwork first. This may require some patience, as it took me two months and 57 proposals before I won my first project.
Here are a few tips to help you win yours.
Winning Your First Project on Upwork
Early on you may need to be open to doing gigs that aren’t related to your field just to get a rating and establish yourself on the platform.
For example, even though I mostly deal with software projects, my first gig on Upwork involved writing a business strategy doc for an executive at a well-known tech company.
But once I won that gig and got a good review, I started to win other projects more easily.
I also recommend searching for gigs that have the keywords “urgent/ASAP/immediately.”
These clients are less likely to care that you don’t have any past ratings as they just need someone to get the job done quickly.
That’s your opening to win projects from the more established freelancers on Upwork.
You can also try filtering for listings with less than 5 bids submitted. By being one of the earliest people to apply, you maximize the chance that the client will see your proposal.
If you apply to a gig with over 50+ bids, your proposal will likely be at the bottom of the pile, and the client may have already started interviewing clients for the job.
My last piece of advice on winning your first gig is to start off pricing your work lower than your normal market rate. For my first engineering engagement on Upwork, I submitted a $100 bid to write someone a Python script to connect to ChatGPT.
This helped me get a good early review that made winning bids later easier.
Using Upwork for Talent Arbitrage
The second way to use Upwork is for talent arbitrage across marketplaces.
With this tactic, you hire talent off Upwork to help you complete more expensive projects on other platforms.
That way you can stay focused on higher leverage tasks like increasing deal flow, building your brand, and staffing while your freelancers help you complete your project.
For example, Upwork and Fiverr are the primary channels for hiring talent, but the pricing there tends to be on the lower end for freelancers.
However platforms like Catalant (a consultant marketplace often used by private equity) and Acquire.com (a marketplace for buying and selling startups) have higher average transaction prices than what you would find on Upwork and Fiverr.
This means you could hire talent on Upwork to help you complete more expensive deals on Catalant and Acquire - an arbitrage opportunity.
For example, if someone on Catalant hires you for a $10k job, but you can get the work completed using Upwork for $2k, then you’re essentially pocketing an $8k arbitrage difference.
In fact, this is what Sean O’ Dowd does, an ex-Boston Consulting Group consultant. He said he started freelancing on Upwork before moving onto higher-ticket projects on Catalant.
Now he hires people on Upwork to do the work on Catalant for him.
So even if you’re not making much on Upwork starting off, see this as a stepping stone for learning how to hire and manage remote teams using Upwork first.
It will prepare you for bigger projects on marketplaces like Catalant later.
Arbitraging Upwork and Acquire
Similarly, I’ve noticed an arbitrage opportunity between Upwork and Acquire.
For example, the average price of a pre-revenue company on Acquire is around $10k-$20k.
So if you have a startup idea that could fetch a high price on Acquire, you could use Upwork to hire engineers to get it built, and eventually list it on Acquire for sale.
And I believe it’s possible to complete this process in as little as 2 months!
When I listed my last business on Acquire, I managed to get 20 offers in just 2 weeks.
So if you only spend 1 month building a product and 1 month handling the transaction, then you could flip a company between the two platforms in about 2 months.
Bonus points if you can find someone to manage the listing and communication with buyers…by hiring someone on Upwork as well.
This is an idea that I’m bullish on and am in the process of testing, so I’ll let you know how it goes in the next two months.
Although most people think of Upwork as a marketplace for freelancers, it’s so much more than that.
By using it to validate startup ideas and arbitrage talent between platforms, you can harness the true value of Upwork to accelerate your own business’s growth.
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