Podcast Interview: Matt Ridings Joins CrowdSource as Head of Market Innovation

By: Brittany Corners | Published: June 17, 2015

Matt Ridings, Former CEO of SideraWorks, a management consultancy acquired by CrowdSource, joins the podcast channel to discuss his new role as Head of Market Innovation for CrowdSource. For the last 10 years, Ridings, an entrepreneur, business strategist, and speaker, has been primarily focused on developing innovative cultures, change management initiatives, and specialized market research. Ridings will apply the findings of his research to CrowdSource’s freelancer management solutions.

“The freelance economy is here today. We act like it’s a future thing, but 34% of the workforce is currently doing some sort of freelance work,” says Ridings. However, it is not without a downside. Ridings contends the freelance economy will introduce challenges for organizations that will likely face a constant back and forth of matching up the right people, in the right place, at the right time, for the right price. Freelance management software is one way to overcome that, but there are other, softer initiatives that need to take place in order to build a strong culture within a virtual workforce or otherwise.

Listen to the full interview with Matt Ridings below:

Follow Matt Ridings on Twitter @TechGuerilla

View the podcast transcription here

Nicki: Hello, everyone, and welcome to the CrowdSource podcast channel. My name is Nicki Powers, and my guest today is someone I’m very excited to introduce to our listeners, Matt Ridings, the new head of market innovation for CrowdSource. Matt, welcome.

Matt Ridings: Thank you very much.

Nicki: So, Matt, you came from SideraWorks, a consulting firm.

Matt: Right.

Nicki: We’re super excited to have you. Can you tell us and our listeners what you were doing at SideraWorks?

Matt: All right, so SideraWorks was mainly a management consultancy so focused predominantly on trying to figure out organizational culture, right, so how do you basically take a large enterprise and modify their culture in such a way that it’s much more attractive to the employee workforce, right, cuz there’s a big disconnect right now between the incoming workforce and what they value and the cultures of yesterday that exist in these large enterprises.

So there’s a big conflict taking place for companies trying to satisfy their new workers’ needs and desires because they need the best talent, right? Companies with the best talent are always gonna be the ones who win. So how do you get the best talent? Well, you’ve gotta appeal to the things that appeal to them the most. So that’s usually cultural.

So we focused on that predominately, which meant that we then had to figure out a way to measure culture, right? How do we assess it? How do we measure it in such a way that it’s tangible. No one had ever really done that before, so there had been all these soft initiatives. You’d call in a McKinsey or whoever and they would say well we’ll do team building or we’ll do whatever happens to be right. Put a pool table in the office or whatever.

Somehow because the environment is cooler, there are new, fun things, that somehow means the culture is better, which isn’t the case at all, not necessarily even being happy, right, so organizations are not a single model culture. They’re made up of all the different micro-cultures. A single manager, as you well know, is not like working for another manager who sits in the same company, right?

The way you feel about your job, the way you feel valued, the way you value the work that you’re given, how much respect you’re given changes based upon who your manager is, where you sit, what that environment is like. So we had to figure out a way to measure culture all the way down to the individual level, personalities, all the way back to you know a multinational organization that’s crossing international boundaries for example to individual offices.

We succeeded at that, so that was a big coup for us and then finally started getting some traction in selling culture services for organizations, very, very large organizations. That led us though to having to understand this incoming workforce, right, predominantly millennials, but we did generational studies across the other generations as well, but predominantly we looked forward.

The incoming workforce is all about the millennial generation, and I won’t use a specific age group for them because our research didn’t really line up with what that’s called, but those were the two big areas of focus. So how do we understand why individuals within these generations do what they do, what motivates them, what do they value, and how does that fit within the organizational cultures that exist and how would we need to change those cultures to then allow them to be attractive to this millennial generation coming in.

So those were our big focuses, running big change management programs for organizations to make them more effective for the workers, and that’s what we’ve been doing for the last four years.

Nicki: Now how do you see that contributing to or impacting the freelance economy that’s now on the rise?

Matt: Yeah. Well, it’s exactly why I’m here. The way this started really was… I mean the way CrowdSource and I connected was the fact that you had this massive amount of content available to this giant database across a lot of organizations of content, and I needed a lot of content to be able to analyze because I needed to know what was appealing to what people because sometimes in surveys people will say one thing, but what they actually do is very different.

So everyone to date had sort of stopped with those self-assessment type surveys with the millennials, you know, what do you care about, what do you want in a workplace, what are you looking for, but no one had really followed that up with trying to figure out okay behaviorally is that actually how they respond and one the ways you can get at that is through content, titles of content. What was the content about?

So if they say they value nonprofits, if they say they value service in the community, things like that, then you can back that up by seeing that’s the type of content that’s being… that demographic in particular is leaning towards. It gets much more traction than content about some corporate you know MBA-attractive type content.

So there’s a way of segmenting that content and we were trying to fingerprint content to see who it appealed to the most, what types of keywords appealed to the most, and in the process we started looking around here and I go wait a second, the millennial studies that we’re doing line up exactly with the freelancer economy growth because that is by far the largest group of people in the freelancer community and within by 2020 it is massive.

So 50 percent of the workforce in the U.S. will be freelancing of some kind by 2020 and of that group 70 percent of them are millennials by that point. So they lined up very, very well, so the research we had already been doing about that generation and what we needed to understand about them on the freelance side to make sure we could provide value to them, what were they looking for, having enough flexibility, consistent work, getting over some of the fears of being a freelancer versus a full-time employee.

So I already understood all of what they wanted. I just had to look at it and apply it in a new way and then it all fell into sleep for me one night and didn’t sleep for two nights literally and came back in and said we have to talk. That’s what led to this because I finally said I’ve been working on culture inside these large organizations for three years and while they’re moving in the right direction, they will never get there to where they need to be in time.

They’ll never be able to change, right, and turning that old analogy of trying to turn you know a battleship takes a long time and as I started looking at how much time it would take to get an organization to a place to be attractive to millennials versus what if we were using resources from the outside instead of the inside of that organization.

So what if I’m looking at it the wrong way? What if instead of trying to change this organization, I should really be looking at how can we provide resources in a new way to those organizations because that’s what we can do in time. The freelancer economy is already here today. We act like it’s a future thing, but 34 percent right now as of 2014 have workforces doing some sort of freelance work. So that’s like 700 million people [laughs], something like that. So it’s a very, very large number.

So the point became, I’ve been looking from the inside out, you guys have been looking at it from the outside in, right, freelancers going into organizations to help, and I’ve been trying to figure out how to pull people into it as full-time employees, and that was the big sort of a-ha eureka moment for us, is how we can combine that information and knowledge on both sides, me on how organizations work, what they’re looking for, what their needs are, where their cultures stand today, and you with having the largest pull of resources on the planet from a freelance standpoint and knowing what they need to be happy, right.

How do we make them more effective at what they do, because the better we can make them, the better the resource the companies who hire us can get, and the more successful CrowdSource can be. So that’s how that all aligned really is all the stars sort of came together in a perfect storm and here I am.

Nicki: Well, we’re excited to have you. Now for those who don’t you, CrowdSource has actually acquired Sidera Works, the consulting firm that Matt Ridings came from.

Matt: Right.

Nicki: You founded the consulting firm and now you’re here with us full time, but you were working with CrowdSource and you alluded to this for several months before this week. Now you’re officially here, so what were you doing with CrowdSource during that time?

Matt: Part of that I can’t talk about.

Nicki: Oh, secret stuff.

Matt: So it’s not so much secret; it’s just not out there yet. So I don’t want to sort of spoil the surprise as it were, but a lot of research, as well as some fun side research that I did on my own here at CrowdSource to test out some things that I wanted to see what the other platforms were doing. I mean if I was going to come on board to CrowdSource, I wanted to know how did it stack up, right.

So if I went out to other marketplaces and I hired people to write blog posts and what would the quality of those posts look like and how would you do that. How would you measure quality versus price, for example. We offered them at multiple price points, every platform we could find, to see if there was a correlation between cost and quality and how did CrowdSource fare in that.

The good news for you, and for me now, but the good news is that the only… because I went with some of the largest bloggers in the world to do this. I had them give me the topics and give me an example post that they liked that they had written. Those were the only criteria that the freelancers were given, you know write some posts for X amount of money. We gave them at multiple price points and then just send them back.

Then I gave them back to the bloggers and said you tell me which of these, rank them in level of quality, and which of these would you post right now, right? Do any of them meet that level of criteria without editing? The only company out of all of them, the only resource pool out of all of them that passed that was the people from CrowdSource. So that was pretty cool.

None of the others did, but the interesting point on the outside ones, and I won’t get drug down into data here because I’m a total data nerd, but it was really interesting on all of the outside marketplaces is that there was zero correlation to how much was paid to the quality level of what was received. None.

Nicki: That’s amazing, and that correlates well with the millennial set of values as well, right?
Matt: I don’t know that I would go that far. The problem with being a data geek is you get very cautious about making a definitive statement like that without backing it up. What I would say is that what it tells me is that there is a large fluctuation in demand and supply out there and that people of quality who are willing to pick up work sometimes just don’t have enough consistency of work.

So to me I took away from that it’s a consistency of work problem is one of the biggest challenges for a freelancer and therefore in a down period a quality writer will pick up work that they normally would not pick up at that rate, right?

Nicki: Got it.

Matt: I can’t really make a definitive statement on that. It could have just been that there’s some great writers that’ll pick up whatever they find. I don’t know. [laughing]

Nicki: Interesting. Then there’s the case to be made for the intrinsic value to you can’t necessarily measure on a large scale like that. So thanks for the insight from what you’ve been up to the last few months. What’s next? How’s your first week going?

Matt: You had to ask me that question. It was going really well [laughs] and it’s still going well but I had my first experience so being into research as I’ve been having to pull together a lot of research from the industry, sort of the state of the industry, where everything is and who all the players are and backed my way into the different business models that they all have.

So I saw one set of stats in that research that just struck me as odd, being somebody who’s into statistics, it just struck me as odd. I couldn’t say it was wrong; it just didn’t seem right. It seemed way too high to me.

So instead of just taking it at face value, I said well what if I really wrote these questions into plain language, sent them out to our workforce in a survey and asked them the same questions because that would give me some idea of whether or not the research that I had seen was accurate and I was just wrong in my head, or that they had asked the questions in a slightly different way to get a response that they wanted. Boy, I kind of set off a firestorm a little bit [crosstalk] I fear.

Nicki: Already?

Matt: Already. Yeah, I’m on day three, day four, something [crosstalk] like that.

Nicki: Nice work.

Matt: We also posted it into the forums where the workers are and the questions are questions like you know would you pay for X, Y, Z service or you know and if so how important would that be to you or whatever. Well, I guess I should have known as an old-school marketer and writer myself and tech person that that would be looked at as oh well that’s what CrowdSource is going to do. They’re going to start charging us for everything because this like thread started immediately of this sort of backlash.

Nicki: Uh-oh.

Matt: Well, it wasn’t big, but I kind of had to learn oh there are forums first of all. Give me an account on the forums so I can log in and just try to explain. I was really interested in some of the answers, though. I mean I love feedback of all kinds, even though some of it was you know kind of conspiracy theoryish.

I liked it but what struck me the most is I think we need to do a much better job of education in this space in general, not just CrowdSource but in general about economics, really you know in general because what I’ve noticed is that there were comments like I’ll never pay for work, right, but the reality is, is we all… there’s a cost to all work, and the best way to look at it is the value exchange, and that’s… you know, in economics that’s really the way you would look at it.

So if you went and got a full-time job down the street, let’s say you’d made $100,000 a year at that job. The reality is that there’s about a 40 to 45 percent overhead for an employee, for a full-time employee to a company because they cover your benefits, they have to cover Social Security, all those other things you don’t pay to a 1099 freelancer, contractor. There’s about a 45 percent overhead because they have to cover office space. They have to cover everything, and it all gets rolled in to the cost of an employee.

The reality is they’re taking a big cut of what they could pay you and putting it into those things because they have to pay for those costs. Now are you paying for your work, or is that a value exchange? The value there is you wanted somebody who gave you consistent work. You wanted a workplace that was a good place to work in. You wanted somewhere that felt safe. You wanted all these other things, benefits, I want to check out at 5:00 and I don’t want to think about work after that, and whatever it happens to be you were the person who sort of valued that full-time employee status.

The exchange you get in return for that was all of the things we just talked about: space that you don’t have to worry about. You don’t have to worry about somebody filing your taxes. You don’t have to worry about you know going and getting your health insurance plan negotiated. You don’t have to worry about any of those things cuz you’ve got HR people and finance people and all of that taking place. Here, someone’s gotta fix the light bulb if it goes out.

Right? So all of that overhead is being taken care of, so there’s always a value exchange taking place in work. So I don’t look at it as paying for work. I always just look for where’s the value. If I came up with a really common analogy, let’s say there’s a $10 pizza. It used to be the only way to get your pizza was to drive there, sit down and eat it. Pizza restaurant, that’s what you had.

The next generation of that was well, what if we took some boxes and we put the pizza in the boxes and we let people pick it up and take them home. We can charge them a little less for that because they’re not going to take up space in our restaurant. I don’t have to have a server go and serve them. Won’t take quite as much of my resources and so I can charge a little less for a takeout pizza. Now the next level of that was somebody asked me the question somewhere on this survey would you pay for me to bring the pizza to you?

Nicki: I sure would.

Matt: [laughs] Well, okay, we all do. That’s why these places exist, but I have to believe that a lot of people sat there and went it’ll be cold, it’ll be gooey, it won’t be… no way. I can just run down the… cuz that’s what they’re used to. I can just run down the street and pick it up. Why would I pay more for it to get here.

So at the end of your receipt there’s a delivery charge so that let’s say the pizza is $10. Your delivery charge at Domino’s is $2. That’s 20 percent of the cost of that pizza. Now think about that as a percentage, but $2 is eh $2. For me not to have to get out of my pajamas and get in a car and drive and spend gas and pick something up, it’s absolutely worth it.

Now I still only paid $10 for the pizza. What I paid $2 for was the value exchange, the service of you now bring that to me. So there’s this concept that I think people get stuck in of I’m paying for something versus there’s a value exchange. Everyone’s paying for something. So if you go to Elance or Odesk or Upwork [phonetic] [19:46] or whatever they call themselves now or any of the other platforms, they all have different revenue models in the way that they execute.

One side may be… look free, and the other side maybe pays a percentage of revenue for example if you’re looking at like an Upwork. Well, those organizations, you’re still… that cost is still being passed on to you whether you see it or not. The difference is that the person just marks up the job higher so that they can cover the cost of paying out their percentage of revenue to Upwork cuz that middle person’s always gonna get their cut because they’re providing a value of your saving time on having to search, find the work and get there and negotiating the rates and pulling the… so there’s a value there that you have to pay for.

The same thing happens here. I mean we’re no different than that. You know something pays for this building. Something pays for our lights and our electricity and our employees and our salaries. The question is just what’s the different revenue model. Do you see it or not see it?

There was a comment like it was I don’t ever want to spend more than… or I just want my 5 cents a word work and I don’t ever want to pay for that, but it’s kind of like asking someone if you’d ever pay for Twitter, you know. Everybody would say no.

Nicki: No. Probably not. I wouldn’t pay for Twitter, no.

Matt: If I took away Twitter tomorrow and said the only way you can go onto Twitter is to give me a dollar a year.

Nicki: I guess I would I mean… if you’re asking me, I would consider the value. I would say sure a dollar a year [crosstalk] sounds fair.

Matt: Yeah, no, yeah, yeah, I’d probably do it.

Nicki: I’d do it.

Matt: Right? That’s a bad example, because we’re never gonna just shut off our access because there’s no plans. I mean that free tier is actually really, really important to us. We want to maintain that, keep that. These people… one of the core things that I’m here to do is to help figure out what is most valuable to the freelancers.

I think that’s a key point, and in my opinion a key differentiator, because when I look across all the other marketplaces, when we sat down and we said look it’s a dual-sided market. You’ve got businesses and you’ve got freelancers. Every single other marketplace chose the businesses as the person to call their client.

Freelancers service those clients, right? I said well I don’t really think that’s our future. I think our future is in finding out what’s most valuable to the freelancers and instead saying if the best freelancers are here, if we can make them the best, if we can get them the best money for the job because they’re at a higher quality level than everyone else, then this is where the businesses will go.

You have to pick a side. You have to say who is my main client in a dual-sided market and I really believe that we’re the only ones that are saying it’s the freelancer. So that’s why I’m asking all of these questions of the freelancers, just trying to understand what do you find of value, right? What else can I add to this value exchange that is worthwhile to you? Is it health insurance? Is it negotiating better health insurance for you? Is it… I don’t know.

Can I guarantee you better consistency of work? Can I add new types of work? Can I give you better training to get up at a higher level so you can charge more at a higher rate. So all of those things I’m looking at trying to say how can we make the most valuable platform ever for freelancers, because if we do that, I think we win.

Nicki: That’s a really interesting way to come about it and like you said I think a lot of the competing freelance marketplaces have gone about it the other way around.

Matt: Exactly the opposite.

Nicki: So it’s just taking it and saying how can I make this service the best one and going from there. If you think about it, you think well that’s obvious, but no one’s really thought of it before.

Matt: Well, they’ve thought of it. It’s just the harder path. CrowdSource has taken the harder path starting with the enterprise end of things, which is [inaudible] [23:59] and it’s been millions of dollars in three years getting it right, but which is great, but now it’s time to really say the quality level and our attention, where are we gonna put all that attention.

Where are we going to make sure… are we drawing the employers here, or are we drawing the freelancers here because of the work. My fear is that when you have an open marketplace that is geared only to the business side, then there’s only one outcome in an open marketplace and that’s to drive down price.

To me that is the last thing that benefits a freelancer, and so you need… I want to see a rating system that means something because like on the other… a five-star rating system or whatever on the other platforms when I look at them, a five to you is not a five to me. It’s not objective. You might have a style of work that worked really well with that person and you gave them a five.

I might have a style of work that I like to micro-manage. I want you to check in four times a day. I don’t want you to have a lot of independence. I’m a very controlling person and I didn’t like the way you worked, so I gave you a one, but the level, quality of work came from that freelancer, and so I really want us to be able to play a role of how do we get a meritocracy into that process.

How do we give an objective rating system that means something so that if an employer looks over there and says that’s a four star, they know that’s a four star because I’m only showing four stars to them because I’ve analyzed them. I’ve seen what style of work they like. I’ve seen that manager. I’ve seen that person and I know how they work and we can better align them to freelancers who are going to work really, really well with them.

So there’s this constant back and forth of matching up the right people at the right place at the right time for the right price, and if you can get that right, which is part of why I’m here is because of all the research and the understanding that the cultures and behaviors of those systems, if you can get that right, then I think you’ve won the game at that point because what the freelancers want is time and what the businesses want is time.

What we really are are brokers of time so if the more time I can give back to a freelancer, the more they can do whatever they want with it. There’s an extreme value in that. They can decide how to use that extra time to work more, therefore I make more money, or I can use that extra time to go have fun, go on vacation, whatever it happens to be, but the more I can take off of their plate that does not make them money, all those logistical things of running a business as a freelancer, the more I can get rid of those, the more time they have and the more I can make a business not have to worry about compliance, searching the right person, person’s not working out well for them, whatever it happens to be, lower editorial cost because the people I’ve put on the job are rated better at a particular job.

Then they’ve got more time to do their job, and when they get more time, they now have more money to pay into us, which then pays more money into the freelancers. So there’s this cyclical thing that we’re trying to get right here and it’s really complex and it’s very data intensive and I geek out on it and I’m really excited about it.

I kind of got my foot put in my mouth a little bit doing this survey because it sort of made people think I was saying well this is what we’re going to be. So I had to go in there and sort of explain myself a little bit. So that’s me, though. I’m always disrupting something.

Nicki: Here you are disrupting CrowdSource on day three.

Matt: Yeah.

Nicki: That’s exciting.

Matt: It’s exciting and scary [laughs].

Nicki: We’re definitely excited to have you, and disruption is a topic near and dear to all of our hearts.

Matt: Yeah.

Nicki: So it really couldn’t be a better match, and I know the entire team of CrowdSource is extremely happy and we’re looking forward to the future now that we have Matt Ridings on the team. Matt, how can our listeners reach you if they would like to connect and talk about this further?

Matt: You can definitely email me if you like, matt.ridings@crowdsource.com. If you prefer rambling, nonsensical humor, you’re welcome to go find me on Twitter, @techguerilla and do a Google search and you’ll find more than you ever wanted to know.

Nicki: Uh-oh. To our listeners, we will post the links that Matt just mentioned on our blog. That’s CrowdSource.com/blog. Matt, thanks for joining the podcast and thanks for listening.

Matt: Thank you.

 


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