‘The American Dream Is Broken, and I Think We Have a Shot at Fixing It.’

Stephane Kasriel, the CEO of Upwork, thinks that work, as we think of it today, is in need of an overhaul. Nothing less than the American dream is at stake.

The cities where the best jobs can be found are crowded, the commutes are long, and the rents are outrageous. The jobs themselves are inflexible, and closed off to most of the world’s talent pool, so employers end up poaching workers from each other. Enterprising people who move to hub cities like New York or San Francisco live in cramped conditions, and pay handsomely for the privilege. Many can only hope to win the lottery of a successful startup exit to afford such luxuries as home ownership.

Meanwhile, there exist vast swaths of America where rents are affordable and life is comfortable. But the jobs just aren’t there, and haven’t been for decades. If there were some way to bring the jobs to those places, you’d ease the pressure of city life, revitalize local economies around the country, give employers better access to labor, and give workers a higher quality of life.

Distributed Podcast: Hear Matt Mullenweg in conversation with Stephane Kasriel. Read the transcript.

Changing the way we think about work

Upwork is the largest freelancer marketplace, and is valued at close to $2 billion, operating in 180 countries, and connecting millions of distributed workers with employers. Kasriel built and led a team of over 300 engineers located all over the world as Upwork’s SVP of Engineering before taking on the role of CEO. Prior to joining the company, he was a leader at PayPal, where he helped grow the company’s presence in France and subsequently led its consumer strategy. He thinks a lot about labor trends, and established himself as early as 2014 as an expert on the growth of the distributed work model with his book Hire Fast & Build Things, which details how managers can build distributed engineering teams in order to scale quickly and cost-effectively. He sees this problem as a collection of bottlenecks that are a result of our stubborn reliance on an outdated labor model.

Kasriel is an immigrant, and says that he long believed in the American dream — the idea that if you work hard, no matter where you’re starting from, you can achieve a self-sufficient, reasonably comfortable life.

Unfortunately, that’s not the reality for many people. Kasriel says that one solution to this seemingly intractable problem lies in fundamentally changing how Americans think about work. And that involves dispensing with the rigid view of work as a full-time, 9-to-5 endeavor where workers gather five days a week in an office to get things done, and are compensated with fixed salaries and benefits. Instead, he wants to make it easy for companies to hire contractors anywhere in the world, under flexible terms, and pay them by the hour or by the project.

The way Kasriel sees it, the Industrial Revolution brought people from farms to cities, where they could join assembly lines that produced goods. Fast forward to the 1950s, and you see the decline of American manufacturing and a move toward knowledge work that was no longer tied to machinery. The assembly line was largely replaced by cubicle farms and office towers, and the work that many Americans were now doing no longer required co-location of employees, a strict shift schedule, or even a long-term relationship between employee and employer. Kasriel says that there’s no longer a good reason for many companies to continue operating this way:

[When Upwork started], the idea of remote work done over an expensive landline and fax machine was crazy! Visionary, but way too early. Today, broadband is fairly ubiquitous in many parts of the country…a lot of the tools we use are in the cloud, and you can do videoconferencing pretty much for free.

Even with these advanced tools, many knowledge-work companies are still doing it the old way. Meanwhile, the high-tech revolution of the last 30 years has exacerbated the problem further, drawing much of the country’s talent into a few cities.

The average rent in San Francisco has been growing by about 7 percent per year for the last 45 years — so you compound that, it’s become outrageously expensive. What we see is that young people…when they move to the Bay Area, spend close to 70 percent of their disposable income on rent. And that’s despite the fact that they have a pretty lousy apartment and they typically have roommates. And that is more than twice as much as the overall U.S. market right now, right?

In addition to sky-high rents, you have overloaded metro systems that provide poor service and suffer frequent outages, long commutes to city centers in dense traffic, and a host of other urban discomforts.

How Upwork does distributed work

Upwork is comprised of 1,500 workers, 400 of which are full-time employees. Among full-timers who live in the U.S., most work in one of three offices. The rest work individually from about 500 different cities. Last year the company went public. Kasriel is less focused on revenue than on the gross sales — a number that he says can be viewed as a measurement of the company’s ability to create jobs.

For our Distributed podcast conversation with Kasriel, we visited Upwork’s Mountain View, California, office, where we were greeted by a remote receptionist, who was broadcasting her image onto a screen in the lobby. The receptionist role is actually staffed by two people who work from Illinois and Michigan, respectively. It’s a clever nod to the company’s distributed-work ethos, which Kasriel tries to uphold as much as he can.

We want to make the office as remote-friendly as possible because the one thing that really doesn’t work is if people in the office think that they are more important than people outside of the office. And I think in our case, we have so many more people outside of the office, and it’s a norm in the company, and we train people, and it’s a big value part of the company.

A lot of effort goes into maintaining the culture of remote-friendliness. For example, investing in high-quality videoconferencing equipment, training people in the office to be aware of remote workers on conference calls — so they can politely interject in conversations happening in the room — and training employees to think about transparency and access to communication no matter where workers are located. They also set up regular meetups for employees to have a chance to meet face-to-face.

These distinct practices aside, Upwork is structured like a normal tech company. But because they have direct access to hundreds of thousands of freelancers, they often leverage the power of their network to subcontract major service projects they perform for other companies. This flexible and scalable process enables Upwork to test the value of its own product.

Expanding the talent pool

Distributed work is growing in popularity right now, especially in the tech industry where the product is already online and good engineers are desperately needed. It’s often hard to recruit in the places where the companies operate.

This distributed-company movement is the awakening of the tech industry [to the reality] that we are part of the problem. Part of the reason why jobs have been destroyed in plenty of places in the country while all the new jobs were created in a small number of areas is because of tech.

Kasriel argues that what’s needed isn’t just an updating of tools but a change of mindset, and he hopes the tech industry can lead the way. He dreams of a future where companies are able to tap into labor pools outside of major cities — and where small employers in particular can broaden their search, no longer having to compete against massive incumbents. Meanwhile, workers can live in more affordable areas and structure their schedules according to their personal preferences. He sees this as the ultimate win-win. “There are great developers and marketers and whatever else [outside of San Francisco],” says Kasriel, “and we can help these people get a better life by giving them a job where they are.”

Some state governments are looking to capitalize on the rise in remote work and are luring employees of distributed companies with experimental programs. On the heels of Tulsa, Oklahoma, offering entrepreneurs $10,000 to move there, Vermont Governor Phil Scott has approved legislation that will pay 100 people $10,000 to move to Vermont in 2019 with the Remote Worker Grant Program. A program in Utah, the Rural Online Initiative (ROI), has raised state funding to build worker-education programs and relationships with talent marketplaces, including Upwork. The people behind this program see it as a model for the rest of the country to revitalize rural communities who have been hollowed out by long-term economic forces. It’s not just rural areas that stand to gain, of course. Cities like Pittsburgh, Detroit, and St. Louis are poised for revitalization because they offer the urban amenities and cultural vibrancy that many people desire, but without the astronomical cost of living of Los Angeles, New York, or San Francisco. These once-formidable economic powerhouses already have the infrastructure to support growing populations.

On a global level, this process will have far-reaching geosocial effects, argues Kasriel. Currently, economies are still shaped latitudinally (a holdover Kasriel attributes to agricultural society), but the future lies in longitudinal arrangements. Companies will want workers who share their timezone. “If you’re offshoring software development, and you’re based in the U.S., you should be doing it much more in Chile or Argentina than in India. If you look at Europe, the real alignment should be in Africa.” This is already happening in France, which is busy outsourcing to Morocco, he says.

The moral argument for distributed work

Citing the U.S. labor participation rate at around 60 percent, Kasriel points out that we currently have a real unemployment rate of around 40 percent.

If you open up the aperture of [your hiring pool] and you’re willing to hire people that are super hard-working—probably more dedicated to you than any of your traditional workers will ever be because you’ve massively changed their lives—you’ll have much more diversity, much more social impact, and frankly, you can do something good for your company at the same time.

But if large American companies can easily access talent anywhere on the planet, won’t that drive down wages? “The economy is not a zero-sum game. In an ideal world, workers are better off and companies are better off,” Kasriel says. There are also bigger questions about the role governments should play to acknowledge and support the distributed freelance economy, for worker protections and universal healthcare. But Kasriel argues that broader access to global talent will allow more startups to succeed, creating a net increase in the number of jobs available. As distributed work grows, this will allow those workers to choose between more companies that are recruiting outside Silicon Valley, and those companies will be forced to compete for that talent.

It’s also worth remembering that monetary compensation isn’t the only factor on workers’ minds. Some people choose freelancing or distributed work because they really don’t want to commute into an office every day. Others want to spend more time with their kids, or need the extra flexibility to care for other dependents. Some lead a digital-nomad life, hopping from homeshare to homeshare around the globe.

Kasriel points out that distributed work is also beneficial for accessibility and inclusion:

It turns out that 42 percent of full-time freelancers…said they either have a physical or mental disability that makes it hard for them to travel to an office or to be in an office—veterans with PTSD and people with Asperger’s—like all sorts of physical or mental reasons why the traditional labor market does not work for them.

How to build a distributed company, and a distributed world

Today Kasriel is focused not only on promoting the benefits of distributed work, but on figuring out how companies with traditional employment arrangements can move toward a distributed model. He spends a lot of time working with enterprise clients and mid-size businesses, trying to persuade them to rethink how they approach their work. Upwork is currently building tools to integrate their online marketplace with enterprise staffing platforms. And he’s happy to share advice on how these legacy companies can make the jump.

I would say ideally start with allowing well-established people that already know the company in and out, and allow them to go work remotely…If you do start with people outside of the office, I would say at least for the first few, have some form of on-campus training for them where you bring them into the company, have them spend a few weeks with people just to build that social connection, understand how things get done, and then you allow them to go back and work remotely. But I think after that, you need to go big…figure out where you’re gonna be hiring a lot of people, and that’s a very logical place to say “We want x percent of these people, ideally more than 50 percent, to be anywhere in the U.S. or anywhere in the world.”

And when people really need to be in the same room, distributed teams can make that happen periodically.

When you are truly trying to figure it out and you are in the initial, early phases of a project — that’s why we do these meetups, right? If you really don’t know what you’re doing and you’re really trying to hash it out, then working synchronously rather than over messenger…bandwidth does help. So yeah, go fly across the country and go meet physically together for a couple of weeks while you figure it out.

In 2019, the office still feels like a given, a foundational element of modern knowledge work. It’s part of pop culture (look no further than the popularity of NBC’s The Office on Netflix, six years after its last episode aired), and is ingrained in the public imagination. But in the grand sweep of history, the idea that people need to gather in a shared workspace to perform their labor may just be a small blip.

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