By Eddie Lou, co-founder of OneGoal, CodaPet, and an active angel investor.
In 2022, the U.S. gig economy included about 58 million people, which equates to more than a third of American workers, according to research by McKinsey. It has risen to be popular because it can offer a range of benefits for both workers and clients. For workers, gig or freelance work can provide flexibility, autonomy and the ability to earn income on their own terms. For clients, it can offer access to a diverse pool of talent and the ability to scale up or down quickly as needed.
On gig economy platforms, freelancers create profiles that showcase their skills and experience, and clients can browse these profiles to find the best fit for whatever project they need a freelancer to complete. In my experience as a board director and investor in many future-of-work marketplaces, payment is typically made through the platform, which might take a cut of the transaction.
As the gig economy continues to grow, I’m seeing two types of work-related digital marketplaces emerge: creator marketplaces and labor marketplaces. While both types of platforms connect individuals with work opportunities, there are some key differences between the two. From my perspective, it’s important for startup founders to become familiar with these marketplaces and how they can connect with gig workers. Finding great talent can be hard and expensive. By learning how to tap into the gig economy, however, you could find the talent you need.
Creator marketplaces focus on connecting individuals with influence and creative skills to businesses or individuals who need to access that influence or skill. These platforms are often used by freelancers who specialize in graphic design, writing, video production or other creative fields. Some examples of creator marketplaces include Cameo and Patreon. (Full disclosure: I’m an investor in Cameo.)
One of the biggest advantages of creator marketplaces is they allow freelancers to showcase their work to a wide audience while helping them build their portfolio and attract new clients. Additionally, these platforms often offer tools and resources that can help freelancers manage their projects. Some creators can earn a significant amount of money annually as they gain more clients and demand. The amount earned depends on various factors, such as the number of subscribers, the type of content produced and the pricing strategy used.
While people have the potential to make attractive earnings, there are also some downsides creators in these marketplaces might face. Primarily, it can be difficult to earn money if you don’t have influence or while you’re trying to build your influence. In my experience, these platforms are also often designed for creators who already have a following or fanbase, so without an existing audience, it can be challenging to attract new fans and generate income.
Labor marketplaces focus on connecting individuals with more traditional forms of work. I’ve observed that these platforms are often used by people seeking temporary or part-time employment.
Examples of labor marketplaces include TaskRabbit, Uber and Instacart. Clients are oftentimes consumers, and workers typically sign up to perform specific tasks or services. Additionally, for security and safety, some workers might be required to undergo a background check or meet certain qualifications before they can start working. Similar to creator marketplaces, payment is often made through the platform itself.
Labor marketplaces also exist for those seeking certain professional skills. Examples of these include Toptal, Upwork and Freelancer. On these platforms, professionals sign up for short-term jobs or projects. I’ve seen that some people charge between $50 and $200 per hour and that many clients are companies versus individual consumers.
One of the biggest advantages of labor marketplaces is that they offer a flexible way for people to earn money. Workers can choose when and where they want to work, which can be especially beneficial for those with other commitments such as school or family. These marketplaces also make it easy for a freelancer to work for several clients at a time.
Similar to creator marketplaces, however, there are some downsides for workers in labor marketplaces. One major issue is that lower-skill workers might not always receive fair compensation for their work, especially in lower-skill labor marketplaces. Another potential issue is that labor marketplaces might not offer the same level of income regularity as traditional employment, which can lead to periods of low or no income. Additionally, workers may not receive typical company-sponsored benefits, such as health insurance or paid time off, and they could be let go without warning if demand for their services drops.
The Lesson For Founders
Startup leaders can consider engaging in work marketplaces for expert- or task-related projects that don’t require a full-time budget. You can begin testing work marketplaces with short engagements. However, be sure to read the reviews of the freelancers before starting an engagement.
Looking forward, I believe the future of work continues to place an emphasis on flexibility. Creator and labor marketplaces cater to different individuals who earn money and desire flexible work hours and different types of clients. To me, there is no doubt that both creator and labor marketplaces are here to stay as a part of a growing gig economy.