On February 2, Upwork ($NASDAQ:UPWK) listed 2,614,107 registered users. By March 13, that number nosedived to just 833,042, a bizarre and alarming drop of 1.8 million — or 68% of its user count.
The abrupt drop came just as the company was reporting its fourth-quarter results when it surprised investors with a 16.67% jump in earnings at $80.29 million.
So what happened? Part of the shift may be attributed to Upwork's new CEO, Hayden Brown, who emphasized that the company is targeting Fortune 500 companies as opposed to smaller, one-off companies just looking for a quick gig worker. At the earnings call, she spoke of a "skill gap" between what companies were looking for on a platform like Upwork and what they were getting.
"Our goal is to become the world’s top provider of flexible talent solutions by attracting the best clients, with the best work opportunities, for the world’s best talent," she told investors.
It seems that as part of the process, the company has thinned its talent pool from 2.6 million available workers who may or may not deliver good work to just 833,000 who are more likely to please more lucrative clients. Indeed, the site had been seeing a growing number of workers along with a scarcity of jobs, and it wasn't a good look for a service that promised quick matches and quality work.
Brown pointed to three goals for 2020: 1. Attract more, bigger clients; 2. Enable more spend per client; 3. Make more high-quality matches, particularly in Upwork's technical categories of Web, Mobile, and Software Development.
In other words, Upwork is less interested in millions of projects for millions of workers. Rather, it'd prefer higher-paying clients going out to fewer workers who are certain to make said clients happy. Thin the herd, as they say. It makes sense, too: the number of projects at the site had been in a steep decline for months before Brown took the wheel.
In order to do so, the company is looking for larger companies that will hire from a smaller pool of skilled workers. Brown also pointed to Upwork's talent pool's high project feedback ratings.
And what's a super-easy way to up your talent pool's feedback ratings? Purge the ones with poor ratings.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.