Pete Buttegieg’s experience at McKinsey & Company has been a hot-button issue in the 2020 democratic primaries. Similar to the attacks on Mitt Romney working at Bain Capital in the 2012 election, the criticisms of McKinsey are that it is an institution that participates in work that many see as fundamentally bad through its recommendations and controversial engagements with domestic and foreign governments.

I don’t have an ultimate stand on whether or not the strategy consulting industry is good for the world, but because it is an industry shrouded with secrecy it seems to be the target of an unusual amount of attacks bordering on conspiracy theories.

I don’t wish to explore where those attacks are coming from or why they seem to be overly focused on one firm, McKinsey & Company. What I want to do instead is explore what I see as the real “dark side” of strategy consulting — more subtle and deeper issues that are fundamentally not solvable and are the shadow side of the ultimate success of the industry.

Growing up, I had never heard of the consulting industry nor had I ever met anyone who had worked at these elite institutions. Due to the combination of good luck and the delusional optimism of youth, I ended up landing a job at McKinsey early in my career and stayed within the industry for almost ten years. 

While I tend agree with Ezra Klein that there are probably better options for many of the typical people that McKinsey recruits, I experienced my shift into this industry, someone from a “non-target” school, as a dramatic step up in terms of skill development and opportunities available to me, many I didn’t know existed before joining.

I always experienced my time within the industry, especially at McKinsey and Boston Consulting Group, as an outsider simultaneously amazed that this world existed at all and wishing more people had the opportunity to work at these firms while also being shocked at some of the blatant blind spots within the industry. 

There are four clear blind spots that make up the “dark side” of the strategy consulting industry.

1. Diversity is embraced, as long as you went to an elite University
2. Faith in a simple model of top-down change in modern institutions
3. A belief that the scale of “impact” matters more than what you are doing
4. Work is thought the be the prime aim of life

#1 Diversity Is Embraced, As Long As You Went To An Elite University

If you walked into an office of one of the top consulting firms, you would be shocked at the cultural diversity. You would likely meet people from all over the world and from different ethnic backgrounds.

But that diversity is within a narrow context. Almost every person has some tie to an elite university from around the world. 

A quick LinkedIn search shows that over 1,400 people or almost 5% of current McKinsey employees went to one of Harvard’s several schools and over 15% of current employees, or 4200+ people are from one of five schools: Harvard, Penn, Stanford, London School of Economics or INSEAD. As a comparison, the total number of people that have some affiliation with the #11–30 ranked public schools in the US barely cracks 1,000 people (and many of them only made it into McKinsey after attending elite graduates schools).

The front-line consultants are almost exclusively from these types of schools whereas the administrative and functional employees tend to be from schools nearby the offices and less connected to top ranked schools. Meaning even once you are inside these organization, you still likely won’t have access to the best jobs unless you went to the right schools.

There is nothing inherently wrong with people from elite schools and in fact most of these people were wildly impressive. but this brings us to our first blind spot:

Blind Spot #1: An elite degree is the best proxy for talent and wisdom. 

This mindset narrows the view on the type of people who get access to work at elite consulting firms and ultimately, who gets to succeed in society.

I joined McKinsey from a “non-target” school early in my career and the biggest challenge for me wasn’t the work but learning how to embrace the beliefs and mindsets of people that had spent their entire lives operating within elite worlds.

#2 Faith in a simple model of top-down change in modern institutions

The clients of top consulting firms are senior executives, CEOs and Board members. These senior leaders, if not ex-consultants themselves, believe in a model of change that revolves around themselves as leaders that are able to design, implement and deliver changes that lead to positive outcomes.

One could say that the job of a senior leader in today’s modern organization is to constantly show progress, which used to be a simple equation looking at decreasing costs and increasing revenues, but now includes more creative options like stock buybacks, acquisitions or complex multi-year “transformation” programs.

This results in a glaring blind spot.

Blind Spot #2: Consulting relies on a a simple organization model which ignores complexity and unintended side effects.

Think about the “cobra effect,” the famous story of an Indian village paying bounties for snakes to eliminate the snake problem which only resulted in a job-creation program for entrepreneurially-minded cobra breeders.

This happens every day in modern organizations, but the unquestioned belief and short-term amnesia of most people involved means that the same types of initiatives get rolled out over and over again.

Every day across the world, a senior executive says yes to a presentation which gives a list of initiatives they can implement, each with a specific measurement of the “impact” they can expect to see, often down to a decimal point accuracy.

The plan gets enacted and a couple years later no one checks in to see what the unintended side effects might have been. In many cases all parties involved have moved on to the next opportunity.

This approach is contrasted with an understanding of the modern organization as a complex system and one that is subject to unexpected 2nd and 3rd order effects. 

Although BCG has acknowledged this paradigm, it is only written about at the fringe of their operations in their think tank, the Henderson Institute. Similarly, it wasn’t until Richard Pascale left McKinsey that he started exploring the potential for thinking about organizations within the context of chaos theory.

Ultimately, the customer of a consulting firms are senior leaders with control and power. Instead of pushing thinking on organizations and performance, consulting firms continue to focus myopically on frameworks, models and projects that can be designed and sold within the existing paradigm and are more a mirror of what organizations are already doing.

While I tend to agree with Tyler Cowen’s assessment that the consulting industry has had a positive effect spreading “managerial and technocratic expertise” globally, I think that consulting firms have failed to push business thinking in many “advanced” economies much further.

Most organizations today have a strong basic management toolkit, but lack a deeper understanding of how complexity plays a role in the types of initiatives that consulting firms typically promote. 

This means that the people designing many of the biggest initiatives for modern organizations are people that are incentivized to ignore how the organization really operates.

#3 A belief that the scale of “impact” matters more than what you are doing

Much of the work of consulting is spending tons of time analyzing and identifying ways to “create value” withing an organization and then subsequently, spending an equally extensive amount of time on how to measure and prove it to the client. 

Typical measures include revenue generated, costs reduced, expenses avoided, number of people affected, number of people reached or increase of shareholder value.

With the sharpest minds in the world, this kind of impact is never too hard to find. You can always “massage” the numbers across hundreds of data sets or spend countless hours “cutting” the data in different types of charts, graphs and tables.

The goal is always to find the “levers” which lead to the biggest impact.

Even though many of these calculations factor in downside, the way they are framed is always to talk about them in the positive direction.

This is hardly controversial and I would argue having an optimism mindset in business is the right frame. However, there are some hidden costs when this mindset loses its connection with the underlying information and starts to lead to the ability of people to convince themselves that anything that leads to a change is worth doing.

Blind Spot #3 An unchallenged belief in the idea of “impact,” which is an abstracted view of doing good measured by the number of people impacted, profit generated or an increase in shareholder value and only appearing in the positive sense that tends to seduce millions of people into the belief that they are “having an impact”

This pervades the consulting industry and extends to the many modern institutions that former consultants tend to join after leaving consulting — large corporations, government organizations, non-profits, NGOs and other professional services firms.

It is the deep rooted faith in the fact that top-down action, orchestrated through well designed plans (typically in PowerPoint slides), is the best way to do good in the world.

I’ve noticed that many who go on to non-profits or other large institution with a strong mission tend to assume they are doing good no matter what.

This blindness leads to a bizarre reality where one can claim that they are taking a job because they “can have more impact” when it is impossible to ever prove such a thing in any concrete way.

Think about someone that gets a job offer from Google or Facebook. Despite a minor backlash against tech, this person will still receive much more praise and support than someone that simply lands a job teaching history at their local public school.

The school teacher is motivated by teaching 30 students but the future tech worker is more excited about the ability to reach billions of “monthly active users.” 

This corruption of the idea of impact undermines the prestige of many people who are having an impact at a smaller scale and it blinds us to the very real and common unintended side effects that are an expected outcome of large-scale change efforts. 

#4 Work is thought to be the prime aim of life

Many people find consulting jobs and the jobs available to former consultants to be ones that are interesting, intellectually challenging and socially engaging. No one would pity the consultant and their ability to find jobs that pay six-figures quite easily. 

Yet there is a trap.

People who work at consulting firms typically work long hours and the longer people spend in the industry, the more their life is centered around work. Where you live, where you eat and how often you see your partner or family are all choreographed around 24/7 work demands.

Over time it is taken for granted that everything is seen in the service of work. Leisure is solely a break from work. New connections are seen as part of building a network. Your clothes and watch and the brands you buy are part of your seriousness as a professional. The books you read are in service of your skills as a knowledge worker. 

Life strategy is career strategy.

Blind Spot #4: Jobs like strategy consultant set you on a career path that nudges you into orienting your life around work, a career and your “employabilty” above all else

There is the loss of hobbies and activities that your employer or coworkers might not look highly upon. There is the slippage of time you spend with your loved ones because everyone else seems to work late and why not you. There is the slow roughening of your personality to one that laughs less and can’t take a joke because your job requires you to “be serious” most days of the week.

To be a worker means that everything is in service of your job and your career and the money you can make.

When one identifies totally as a worker something like taking a year off to care for a loved one is seen as something that is too costly to pursue. Hiring a full-time nanny is the only economic option for raising kids and resting for the sake of rest is seen as laziness. Engaging in your local community or giving money to a friend seems silly when you could just get a job working on the same problem “at scale.”

The Philosopher Andrew Taggart calls this phenomenon “total work” and he sees it as something that undermines the whole point of existence:

What is so disturbing about total work is not just that it causes needless human suffering but also that it eradicates the forms of playful contemplation concerned with our asking, pondering and answering the most basic questions of existence

I have talked to people of all ages from 20 to 70 who wake up to this fact and are deeply troubled by how they let their life slip away from themselves. How, in fact, did they become workers above all else?

As David Whyte says, they should have listened to their bodies instead of their incentives:

“We might at first label the body’s simple need to focus inward depression. But as we practice going inward, we come to realize that much of it is not depression in the least; it is a cry for something else, often the physical body’s simple need for rest, for contemplation, and for a kind of forgotten courage, one difficult to hear, demanding not a raise, but another life.”

41k+ Sold! (Top 1% Book) The Pathless Path is Paul's book about walking away from a "perfect" job with a promising future and starting over again. Through painstaking experiments, living in different countries, and a deep dive into the history of our work beliefs, Paul pieces together a set of ideas and principles that guide him from unfulfilled and burned out to what he calls "the pathless path" - a new story for thinking about work in our lives. Learn More & Buy The Book Here

The post The (Real) Dark Side Of Management Consulting appeared first on Boundless by Paul Millerd.

The early positive impact of the emergence of two-sided talent platforms on freelancers has started to slowly erode due to three trends:

1. The “atomization” of the talent platform staffing process from one managed by highly skilled ex-consultants to one mostly outsourced directly to the freelancer
2. The proliferation of new talent platforms due to the zero marginal cost economics of a talent platform
3. The incentives of VC-backed talent platforms which prioritizes firm-level growth while ignoring the health of the overall ecosystem

I am going to walk through what I’ve seen as a former employee of a talent platform and now as a freelancer in the strategy consulting space. But first, let us jump back in time to the early 2000s.

Free Agent Nation Emerges

In the early 2000’s Dan Pink, after quitting his job at the White House, explored the trend of workers who left the default path and worked remotely, digitally or nomadically. 

He shared an anecdote from Bo Rinaldi, who was the head of a talent search firm, who shares unbridled optimism that was typical of the time:

“I believe in a talent-driven model,” he says. He has in mind something like the film industry. “In a temp agency, you test ’em and roll ’em out. In my model, everyone is a star.” The new realities of computers and networking make several of the old structures obsolete. “In the new metaphor of work, the loyalty factor is still very high. In the new metaphor of work, you have a smaller-team model and a greater sense of loyalty to the team than to this artifact known as a company. Companies do not exist. Countries do not exist. Boundaries are an illusion. But the team exists,” Rinaldi says. “The loyalty is also to you. This is the summer of love revisited, man!”

While these predictions may have not been fully realized (yet), they did describe an increase in opportunities for people bold enough to leave the default path.

Issue #1: Talent platforms have “atomized” the talent staffing process and outsourced much of the work to an unpaid freelancer labor force

The Talent Platforms 1.0 Companies Emerge

Around the year 2000, the original consulting talent platforms started to emerge. These companies, Talent Platform 1.0 Companies, offered projects to freelancers and in return asked for very little. If you were part of their vetted pool of talent and the right fit, just show up and start working.

These firms — a-connect, BTG, and Eden McCallum — were game changers for the few mavens that were already working independently and while these early consultants typically already had their own client base, were more than happy to trade off some of their earnings (or in some cases not at all because of a higher billing rate through the platform) for the work the firm did in helping source, vet and scope the projects. These firms helped solve a fundamental talent access and matching problem in an age where LinkedIn and Social Media didn’t exist yet.

These early talent platforms were “closed” platforms meaning that clients did not have visibility into the talent pool and the talent pool could not see the projects in progress or in the pipeline.

These firms were very hands-on, spending time building client relationships, sourcing and validating projects and scoping them so they were ready to go when the consultant was staffed. These firms employed highly-skilled ex-consultants and talent executives that understood how to staff projects and execute on complex consulting engagements. Both the clients and consultants were happy to let these firms capture 30–40% margins for all of this value that they offered.

The internal process was labor-intensive and depended on highly customized relationships with each client. These original platforms all explored opportunities for efficiency through having freelancers write their own proposals or debating easier ways for clients to submit projects, but they never really fit with the underlying business model.

After business school, intrigued by the emerging gig economy, I worked for a-connect. Growing up a digital native, I was shocked that they were not more aggressively “opening up” their platform to embrace a two-sided platform approach, enabling clients to submit projects directly and enabling the talent pool to bid for projects directly through a technology platform. 

I realize now, this kind of shift would have undermined the goals of the firms, whose success was dependent on building long-term relationships with clients and offering a world-class talent experience during projects.

Transparency! Talent Platform 2.0 Companies Show Up To The Party

While there had been some platforms that had embraced the two-sided approach from the beginning (freelancer.com, ODesk, Upwork etc..) none had emerged in the strategy consulting space until around 2012 when MBA & Company (now Talmix) and then Hourly Nerd (now Catalant) stepped onto the scene.

This was a big shift and now I realize why the initial talent platforms could not make the shift so easily.

This shift was not simply increasing the visibility of projects and letting freelancers directly compete for projects. It was a shift from the structure of the talent platform as a hands-on talent agency to a hands-off technology company.

It meant a major difference in the types of employees these new talent platforms hired. Instead of experienced ex-strategy consultants who could help scope and manage complex projects, these new firms depended on people that had some understanding of talent and a deeper understanding of how to use technology.

As two-sided talent platforms evolved, the customized talent approach was thrown out the window in favor of building a process that would make it as easy as possible for clients to post projects and for freelancers to bid on those projects.

What this meant most literally, was that freelancers and clients took a much more active role in the matching process, communicating directly on the firm’s talent platform. 

This was a shift from a talent-agency model to a technology company, a shift happening in most industries today. While one of the barriers to entry for a talent platform 1.0 was the availability of high-quality talent within the firm, the barrier to entry for a talent platform 2.0 company is only the technology, which operates on close to zero-marginal-cost economics.

Issue #2: The lack of a “winner take all” platform means every additional platform created more work for the freelancer

In a market with few players, network effects start to take over and result in a winner-take-all zero-to-one dominant player. For example, LinkedIn is the resume for any modern business worker. Instagram is the place for sharing photos. Google is beyond dominant in search, it is the verb used for searching. 

However, no winner has emerged in the consulting talent platform space and this is bad for everyone. As Peter Thiel offers in Zero to One:

“Customers won’t care about any particular technology unless it solves a particular problem in a superior way. And if you can’t monopolize a unique solution for a small market, you’ll be stuck with vicious competition.”

I can’t even keep track of how many talent platforms have e-mailed me a link asking me to sign up for their network. Here are 25 platforms that I have engaged with on some level:

Eden McCallum, GLG Strategic Projects, UpWork, Catalant, TalMix, PeoplePerHour, 10eqs, Business Talent Group, genioo, High Point Associates, a-connect, ex-consultants agency, expert360, mindbench, Consultants 500, localsolo, Sparehire, flexy, PwC talent exchange, comatch, Barton Partnership, LinkedIn ProFinder, Deloitte Open Talent Network, BBEcosystem, expertPowerhouse

Just last week I even received an e-mail from one of the Talent Platform 1.0 companies, Business Talent Group, announcing that they were opening up their platform:

While the emergence of the first few platforms was incredible for the early freelancers 

The high number of platforms leads to a few problems:

1. First, there is no incentive for the freelancer or client to use any platform over another. Harvard professors Feng Zhu and Macro Iansiti call this “multi-homing” which occurs when “users or service providers (network “nodes”) form ties with multiple platforms (or “hubs”) at the same time.”
2. Clients are incentivized to post any project, no matter how likely they are to pursue that project. Clients can access experts and freelancers and get “free” consulting through initial pitches and conversations without the need to start an actual project
3. A large amount of unpaid “busy work” for freelancers who wish to be in good standing and aware of the new projects appearing on the platforms. This work increases with the proliferation of platforms.

As a talent platform 1.0 freelancer, you didn’t have to worry about being a member of multiple platforms. This was due to the fact that the platform only approached consultants when the project was “real” and the fact that we could only ask freelancers to help us pitch to a client so many times without actually enabling them to win a project before losing their trust.

Instead of the recruiters validating projects, I now perform that work, trying to make sense of the 5–10 automated e-mails I received per week notifying me of new projects. Occasionally I receive a personalized e-mail, but most of the time I receive standardized e-mails that rarely vary and in fact, tend to be similar across firms. See if you can tell these apart:

Even if the project seems like a good fit, you realize quickly that many of the projects fail to leave the initial aspirations of the client inputting the project into the system. In other cases, you may “pitch” and never hear back or just be rejected without explanation. Over the past couple of years, I’ve “pitched” about 250 projects for 10+ different talent platforms and have actually worked on 6–7 projects totally less than $20,000 in gross fees.

As the crowd of freelancers increase, the focus of freelancer shifts to figuring out how to “hack” the platform so you can get projects. When I was first started to freelance, another freelance friend encouraged me:

underbid on projects just to get the positive reviews so you get recommended for more projects.

As the number of talent platforms increase, the value to the average freelancer on these platforms decreases. This is shown in the following chart, where I highlight the “Freelancer Value Ratio” which is my rough approximation for the chances of winning any project divided by the amount of work that freelancer does across all platforms.

I spent a couple of hours combing through UpWork’s IPO filing and financial reports to see if I could confirm this hypothesis. Trends on average freelancer earnings or distribution were noticeably missing from all of the reports. The closest I could come was assessing their trailing 12 months data from their filing:

• # of freelancers doing projects: 375,000
• # of projects: 2 million
• Overall Project Fees: $1.56B
• Average freelancer earnings (before UpWork fees): $4,160
• Average project fee: $780 per project

The mature state for a “successful” talent platform is still an overall talent ecosystem which generates more revenue and has many more projects than before but is a worse scenario for the average freelancer due to the amount of increased work due to the increase in platforms and the competition from the increased talent supply.

Issue #3: VC incentives undermine the health of the overall ecosystem

The talent platform ecosystem has been heavily influenced by the venture funding model of the talent platform 2.0 companies. Even Business Talent Group has taken funding to try to reinvent itself as a 2.0 company.

I’ve already shared how the entrance of these new types of firms increased the number of projects available at first and how that benefit tends to disappear with the emergence of more platforms and freelancers. So the benefits to the average freelancer decrease over time. 

If we look at the motivators of the individual freelancer and the incentives of a VC-backed platform, we also see a big difference in what each cares about:

The platform is motivated to grow the firm and develop strong relationships with as many clients as possible. They are aligned with clients over the long term, but not with the individual freelancer. As long as there are enough people that can do the projects, there is no incentive for the platform to care about the success of any individual freelancer.

This alignment is clear if we look at Upwork’s S-1, the filing from the largest talent platform’s IPO last year. It’s first two points in its strategy are “Increase Spend from Existing Clients” and “Attract New Clients Through Marketing Efforts.” 

The only mention of freelancers in the strategy is its goal to “Remain a Preferred Platform for Freelancers” with an action to “continue to invest in new products and features to help freelancers grow their businesses by finding more work and increasing their earnings.”

Thee typical freelancer wants to earn more but is not motivated to make the platform as much money as possible. Most self-employed types are motivated by designing a life that gives them flexibility, the stability of income and community & connection. 

While some people working at the platform may take interest in these motivations, the survival of the platform is dependent on meeting the goals of the client, not the freelancer. If the number of freelancers was fixed, this would be a trade-off worth making.

Based on these incentives, the behavior of people working within the talent platform is always going to shift towards pleasing the client and investor.

It would not be reasonable to expect a VC-backed talent platform to prioritize relationships with freelancers, focus on building a work-class talent experience or sharing in the upside with the freelancers. Nor would the freelancer want this (at least in the short-term).

If they don’t keep growing, keep winning clients and scaling, the platform will die. 

However, given the short-term behavior of the firm and the lack of strong relationships with the firm, the incentive of the freelancer is to explore all possible ways to meet their goals without having to use any platforms.

Feng Zhu and Grace Gu found exactly this behavior, often referred to as “disintermediation,” when they studied a talent platform:

One of us, Feng, and Grace Gu, a doctoral student at Harvard Business School, saw this effect in a study of an online freelance marketplace. As the platform improved its reputation-rating system, trust between clients and freelancers grew stronger, and disintermediation became more frequent, offsetting the revenue gains from better matching.

On several projects I’ve pitched for freelance platforms, I make the initial pitch via the platform, have a call with the client to scope the project and then send a proposal and contract I write myself. 

It is easy to think “I do all the work, so why am I giving 20% of all my fees, for the length of the project, to this platform?”

Part of this neglect may be because the gig economy is not that big compared to the enormous opportunity within companies.

Catalant has already explicitly made this shift towards helping clients leverage their internal talent more efficiently rather than leveraging external experts. Their founder Rob Biederman shares:

Initially, Pat and I saw the opportunity to make external experts available with senior-level experience available to our clientele. The combination of the right experience and a fair price point was attractive to a wide range of companies, particularly smaller companies. But, as the company evolved, we’ve seen the potential to make great talent — both internal and external — more accessible and more efficient through new technologies.

Perhaps the freelancer is the ultimate sucker, hoping that these talent platforms will magically morph to align with their motivations for being self-employed.

As long as full-time employment is the default option for knowledge work and new VC-backed platforms continue to enter this space, it may never be a thriving ecosystem for freelancers.

Three Ideas For The Next Evolution Of Talent Platforms

As a freelancer, I want these talent platforms to succeed. The introduction of firms like Catalant and TalMix have been a net positive in my life. However, as the number of firms has proliferated, I can’t keep track of the number of requests to fill out profiles on new platforms or e-mails sending my projects of doubtful reality.

#1 Focus on Niche Talent Pools & Problems

Gigster and Toptal are two companies that have kept ownership of some of the talent staffing process and been very focused on specific segments of talents and types of projects. Both companies are highly selective for the types of people they allow on their platform. Gigster claims to only accept the “ the top 1% of the software engineering labor pool” and TopTal claims to hire the “Hire the Top 3% of Freelance Talent.”

In addition, they are very focused on the types of projects and talent pools they operate. As seen below, Gigster has mostly focused on technology talent and has grouped its “solutions” across six specific types of problems that companies typically solve:

By limiting the talent pool to a specific type of talent and focusing on a specific number of projects, the company learns what works, helps to scope more complex and higher-priced projects and develops relationships with a very specific talent population. 

TopTal focuses even more explicitly on specific talent archetypes:

These firms are making clear operating decisions. By being highly selective on the types of talent and retaining control over more of the talent process (rather than outsourcing it to the freelancer), they are able to charge premium fixed fees to clients ($100k — $1 million) and pay their freelancers incredibly well, sometimes up to $300 an hour.

Some firms have attempted to copy this, allowing consultants to “advertise” their own services. For example, I have several services listed on my Catalant platform:

In their research of what enables platforms to thrive Professors Marco Iansiti and Feng Zhu find:

“ Lasting competitive advantage hinges more on the interplay between the platform and the network it orchestrates and less on internal, firm-level factors”

Is this is true, how have Gigster and Toptal created enormous value? I believe it is because when you have many individual freelancers making decisions on how to pitch projects, they are likely optimizing around their life principles rather than the overall health of the platform.

By “owning” more of the talent process, Gigster and Toptal are likely reliant on a different internal talent profile than the talent 2.0 companies. Instead of having technology adept salespeople, Gigster and Toptal need people who know how to manage complex projects and scope them with high-value clients.

In the strategy consulting space, only firm that has made an attempt to launch a productized offering is Innosight X, which recently launched.

They have tried to package their services around specific projects with specific timeframes and deliverables.

By focusing on productized offerings, the platform will be able to learn from its projects and continuously improve its current offerings while adding new ones and not compromising on pricing.

The key shift that is enabling a company like Gigster to be valued at close to $1 billion is that they have decided not to outsource all aspects of the consulting process to the freelancer and consultant. They are taking advantage of the innovations of talent platform 2.0 companies with the personal touch of the talent platform 1.0 companies.

These are the types of platforms that freelancers will want to work with.

Note: Some People have mentioned to me that TopTal and Gigster are not as great as I’ve made them out to be. Regardless, I think their business models are worth highlighting as a counter-narrative to the outsource all tasks approach typical of the talent platform 2.0 companies.

#2 Find ways to create a “virtuous cycle” with freelancers

Many freelancers are used to offering help to others without expecting anything in return. However, most are sensitive to organizations which don’t operate from a principle of generosity. 

Given that I’ve written quite a bit about talent platforms, I’ve had several talent platforms reach out to me and have conversations with their leadership team about what they can do better for talent. It seems that many explore the idea, but never really take any action. The ideas I’ve offered include:

• Make it easy for freelancers to refer project and share in the commission
• Open up office space or help solve “life design” problems for the freelancer
• Build customized product offerings around a limited set of freelancers 
• Consider having a paid tier of access for projects for freelancers where the talent platforms are more hands-on in vetting, scoping & staffing projects

An easy “quick win” for talent platforms is to figure out reduce the number of projects that never turn into anything. The talent platform 2.0 companies rely on the unpaid labor of freelance consultants to screen projects and submit pitches. The incentives of the platform are to get clients to post as many projects to the platform as possible, as there is no labor cost to the unpaid freelancers submitting pitch after pitch for projects that may not exist. At a minimum, the platform could show information on what projects actually get staffed. As long as another freelancer gets the work, I’d still be pretty pumped. But how many of my project pitches disappears into the gig economy black hole of never started projects? 

There are many other things the talent platforms could do, but they all fall under the category of things that would help the freelancers lives while also building more brand loyalty and trust with the platform. How do you build a platform that is able to meet its goals while also creating a community freelancers want to be part of.

It is my hypothesis that this virtuous cycle will be foundational for the talent platform 3.0 companies that will win in the space.

#3 Embrace the generosity and human touch of talent-owned platforms

Umbrex is a talent platform for strategy consultants founded by a freelancer himself, Will Bachman, who wanted to build a community of independent professionals where groups of people could share potential projects (and share in the upside) and get together for personal development and community gatherings.

As a member of the network, I have found it to be a dramatically different feel than the technology-based talent platforms. Bachman is transparent about the fees he takes for projects (which are usually negotiable), his willingness to share a cut with freelancers who refer projects and authentic in operating from a position of generosity and compassion in how he constantly thinks about supporting freelancers, finding tools for the community and bringing people together. 

If a technology talent platform wants to succeed, they will have to build in the humanity and generosity that are foundational for talent-owned platforms.

For a vision of what might be possible, we can look to New Zealand, where Enspiral started as a collection of independent freelancers and has emerged into a platform for building companies, social ventures and consulting projects.

New Zealand’s Enspiral Network has also created an inspired model of freelancer collaboration and community. What began as a coworking space among like-minded people in Wellington six years ago has evolved into a new-fangled cooperative linking freelancers and social enterprises in a global network of mutual aid and collective action.

Despite some success in launching companies within this platform such as Loomio and innovating on how to collectively make decisions and run a firm like this, the model isn’t perfect.

“Our freelancer co-op model is still underdeveloped,” cofounder Joshua Vial explains. “We face many unsolved challenges such as recruiting leadership, providing income security, managing quality, securing sufficient working capital, resourcing work ‘on’ the business and supporting people without managing them.”

Paul Millerd writes about the future of work from the self-employed perspective and is fascinated with how our relationship with work will evolve in the future. He works with talent platforms and consulting firms who want to work with the gig economy more effectively and to help them with their positioning and strategy. He also writes a weekly newsletter where he explores the topics in more depth.

41k+ Sold! (Top 1% Book) The Pathless Path is Paul's book about walking away from a "perfect" job with a promising future and starting over again. Through painstaking experiments, living in different countries, and a deep dive into the history of our work beliefs, Paul pieces together a set of ideas and principles that guide him from unfulfilled and burned out to what he calls "the pathless path" - a new story for thinking about work in our lives. Learn More & Buy The Book Here

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