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.
π― 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.
π 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.
π 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.
π° 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.
π 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.
π§ 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.
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 onlineFull show notes: https://saasclub.io/11Join 5,000+ SaaS founders: https://saasclub.io/email