What’s a six year old startup doing entering Y Combinator? Plotting a new growth trajectory after a pivot. Pilot may be a veteran in Silicon Valley startup terms but it reckons the freelance contractor marketplace model it switched to around a year and a half ago is ideally positioned to serve a future of work that’s increasingly fragmented and distributed.
So while the business has long been profitable it’s now getting put through its paces at YC’s bootcamp, and will likely be looking to raise VC funding once it graduates to help it step on the gas, says co-founder Matt Drozdzynski.
“We’re focusing on enterprise customers right now, because that’s where we feel like the pain is strongest and where we can make the most impact. But long term we think of ourselves as more of an enabler of the future of work — of an environment where every company could be working with a vastly distributed talent pool, everywhere in the world.
“The ultimate end game here [is] where we could be this talent infrastructure, almost, for a lot of companies — not only the Fortune 500s that we’re going after right now, but also for early stage startups. And any company in between.”
Pilot is not the only startup thinking how it can serve and tap into growing demand for more flexible and piecemeal, gig economy style ways of working. Lystable is another that springs to mind, though unlike Pilot, Lystable is just making the platform — not seeking to operate a contractor marketplace of its own. And a curated talent marketplace is key to Pilot’s proposition, with in-house vetting and ongoing assessment of its freelance talent pool (and currently a wait list to get onto its books).
It’s also not just matchmaking contractors with vacancies and then walking away after trousering a hiring fee, like some in this space; Pilot’s role (and fee) continues for the duration of any contract, acting as a support platform to help resolve issues that might arise during the term of the project.
It’s intending to develop machine learning tools to automate performance tracking in future to aid management of its remote contractors. Though — at least at this point — its employer clients are large enough that they do have in-house staff whose primary role is to manage teams, including Pilot’s remote freelancers, so it’s only aiming to offer assistance rather than fully replace human managers.
The talent-vetting process Pilot users does involve a lot of manual work, to ensure it’s identifying high quality contractors with strong communication skills to allow onto its platform (it says it’s prioritizing comms skills because of its focus on remote work). But it reckons it can scale that in future by looping in relevant expertise sourced from its own marketplace. So, in other words, its vetted talent can become paid vetters to help it scale the size of the marketplace, as and when needed.
In terms of core tech, Drozdzynski says that’s its matching algorithm for connecting contractors with vacancies (again with a little human input looped in at the end of the process to select candidates from an algorithmic shortlist). This is another area it intends to enhance with machine learning going forward, as it pulls more performance data and learnings off its platform, he adds.
“The key is understanding or matching contractors to projects and this is something that we’re able to do much more efficiently because of the software that we’ve written,” he argues. “We don’t have to automate all of the [vetting] tests to make this process much more efficient, by just using software to co-ordinate some of these human efforts. So I think by being smart about the features that we build into the platform we’re able to maximize our efficiency when it comes to using human labor.”
“One thing that we’re also really excited about is some of the things that we can do by connecting different tools that our contractors use — like time-tracking software, GitHub, Trello, project management tools — connecting them into our system and then being able to infer what’s happening on the project, what are the potential issues, and basically entirely automate the function of a project manager. Our contractors are managed by project managers within large companies but we can make sure that they’re as effective as they can be by helping them out in this automated fashion.
That’s something we are really excited about long term — this notion of giving our talent ‘superpowers’. Giving them all of these tools that they would need to be extremely effective remote workers.
“So that’s something we are really excited about long term — this notion of giving our talent ‘superpowers’. Giving them all of these tools that they would need to be extremely effective remote workers wherever they happen to be around the world.”
Pilot’s pivot away from its original, more traditional consultancy firm/dev shop model, where it had some 60 paid contractors on staff to fill a mixed bag of clients’ needs, came not so much from a flash of inspiration about the inexorable rise of the gig economy, says Drozdzynski, but more gradually; from analyzing its operational data and realizing there was a another need it could move into serving.
“We weren’t very happy with our model,” he tells TechCrunch, discussing how the pivot came about. “We found that our developers were happiest working for companies that were a little bit larger, a little bit more established, and they’d already had engineering teams because they don’t want to be the only developer on a project, they wanted a stable paycheck, they wanted to work on a team so they can learn from other people — so this is kind of what led us to realize that we should only work with companies that are large enough to support a full engineering team. As opposed to say a small, early stage startup.
“We realized that …if we opened the company up to independent contractors then we can not only pay them more — in some cases double or triple what they’re making before — but we can also lower the cost for our customers, and allow them to hire better quality talent for the same price that they were paying before. And the reason we were able to do that is if you work with larger companies these tend to be longer term projects, six months+.”
At this point Pilot has no contractors on its payroll; its marketplace of vetted talent is free to work elsewhere should they wish. It’s not disclosing the number of contractors on its books at this point, nor the number of employers it’s working with. Nor will it name many customer names either, though there are a few examples on its website — such as long time client travel publisher, Lonely Planet. Drozdzynski agrees a target employer could include a company such as Google which clearly has ongoing needs for the kind of developer and design talent that Pilot is working to pull in.
Ultimately, he reckons workers want the flexibility of being able to work remotely from home (as essentially all Pilot workers do) so they can be with their family or so they can travel, but combined with the reliability of a steady wage. And contractors can get that from Pilot because it offers longer term project work, and lets them line up the next gig as needed. (He says its longest serving gig between one of its contractors and one of its employers has gone on four years at this point.) It’s able to attract talent because he says it takes a lower cut of wages than an average dev shop, for example, charging a fixed 30 per cent fee over the duration of any contract — with the rest (i.e. 70 per cent) going to the contractor.
The imperative on the employer side which Pilot is seeking to tap is the pressing problem for enterprises of filling in-demand talent vacancies — giving businesses an incentive to accept a vetted contractor as a remote addition to an existing IT or design team if it means they get to tap into skills they might otherwise find hard to secure. Pilot’s philosophy is that a globally distributed talent pool ultimately means more choice and, statistically speaking, access to better choices (“We believe talent is evenly distributed across the globe,” is how Drozdzynski puts it). And demand for engineers and designers typically continues to outstrip supply — hence in part Pilot’s focus on those two skills.
He reckons the model could work for other product development roles, and perhaps more widely still for all sorts of other work that can be done remotely. But with a lot of job specific expertise and knowledge needed to support the smooth running of the platform, and to underpin the development of additional tech features (such as its machine learning plans), he says it makes most sense for Pilot to constrain itself to those two (in-demand) skills for now.
“We’re trying to stay focused on what we know right now, and I think it’s more likely to be other areas in product development, broadly speaking, where we can be of help. If you look at some of the recruiting marketplaces, like Hired, they branch out to other verticals — like sales and marketing — and the reason for that is that their core competency is just on the screening part. That’s where they focus 99 per cent of their time because as soon as a customer has hired someone they never see that person again, at least until they’re looking for another job. Whereas the difference with a platform like our is that that moment where somebody gets hired is almost the beginning of a journey, as opposed to the end of it.
“So the reason why it makes sense for us to constrain ourselves to certain domains is that if we want to build up the machine learning features around predicting what makes for a good worker, what makes for a bad worker, based on the output that they’re producing — then that’s very output specific. Even doing design and development is already quite difficult because the tools that each contractor uses are very different; a developer will be using GitHub and writing code, a designer would be using Sketch and sharing files with Dropbox. So if we want to integrate with all of these tools, these are very different problems.”
Why is it operating a marketplace at all? Why not just provide the platform and tools to help companies manage their own freelancers? Drozdzynski’s take on that is that the most pressing need for most businesses is filling vacancies rather than gearing up for the more distributed, on-demand workforces that are coming down the pipe. So the strategy is to secure a working relationship with enterprises now, by first helping them fill their empty seats; after which the team has a foot in the door so is better positioned to sell the advantages of its contractor management platform, and to add smarter features over time to serve its users’ changing needs.
“On the companies side I think the talent problem — in terms of not being able to find great talent — is a more pressing one, than ‘I have too many contractors that I have to manage today’,” argues Drozdzynski, adding: “I think we would rather bring a client to a contractor and then have them realize how great our systems are, and how great out platform is — and then bring their customers into the platform, than the other way around.”
“We’re working towards that [bigger] vision [of becoming a talent infrastructure for all sorts of companies]. Building tools that make it easier for contractors to work with anyone in the world and vice versa, building tools for companies that make it extremely easy to find and hire these talented individuals, wherever they happen to be in the world… They won’t have to figure out the logistics of that, they won’t have to be scouting for people in all of these different cities, figuring out the legal/administrative work required to event hire that talent pool.”
In terms of competitive landscape, he says the team’s current focus on enterprises’ recruitment needs puts it in competition with the likes of Accenture, IBM, Infosys and Cognizant — so it’s competing for customers with the big, management consultancy type firms, rather than (at least most of the time) smaller recruitment startup players.
“There’s also dev shops and smaller consulting shops that we run into occasionally but those typically can’t meet the very growing needs of large enterprise customers,” he says. “We can deliver better talent faster, and because it’s a software platform they can use we don’t get in their way — they don’t have to schedule a call or a meeting with an account manager to get anything done.”
Given the size of some of its rivals Pilot’s desire to step on the gas now (via YC and probably also by taking VC) makes sense. He says it’s looking to build out an enterprise sales team as a priority now. It’s also continuing to work on the product, with a new version of its client app due to launch in the next few months to further streamline identifying and hiring contractors, especially for the target enterprise user.
“We’re definitely looking into raising a venture capital round because we’re seeing this model as something that can scale and can grow into a really large company. If we’re competing with the likes of Accenture it will take capital to get there,” he notes, adding: “We’re already talking to some investors so that’s something that will come after YC — so in a couple of months.”