A Q&A with Henrik Dillman, Coworks co-founder and CEO. The San Francisco–based company launched its platform to the public in late April. To date, the team has raised $2 million in Seed funding from investors that include Chalmers Innovation Seed Fund and ALMI Invest.
SUB: Please describe Coworks and your value proposition.
Dillman: Coworks is a freelancing platform built on social recommendations, where smart clients find great freelancers who are recommended by their friends. It’s an efficient way to get creative jobs done with proven talent. For freelancers, the benefits are threefold: they get a one-stop shop for managing their clients, jobs and payments, a way to grow their businesses and access to exciting new opportunities from the sources they trust.
SUB: Who are your target markets and users?
Dillman: Coworks is focused on four key categories within the creative services sector: writing and translation; design and illustration; photo and video; and web and apps. Coworks freelancers are experienced creative professionals providing a wide range of expertise and specialized skills. Most Coworks clients are marketing professionals or CEOs, founders, or operators of small-and-medium businesses.
SUB: Who do you consider to be your competition?
Dillman: Because of our focus on quality and our word-of-mouth social recommendations model, we consider our competition to be the old school, offline practice of asking for referrals from colleagues and friends.
SUB: What differentiates Coworks from the competition?
Dillman: There are many online freelancing services that focus on enrolling huge numbers of freelancers and driving prices down through intense competition. There’s a lot of offshore labor being brokered cheaply on those sites. At Coworks, we’re different in a few key ways. One, we’re focused on delivering a quality experience to both clients and freelancers. We connect users for creative freelance jobs using social recommendations. Two, we’re focused exclusively on the creative services sector. With this specialized approach, we’re inherently more appealing to a certain caliber of freelance professional, and the same is true on the client side.
In terms of advantages over offline methods, obviously the reach of social media makes old school word-of-mouth that much more powerful. If you’re looking for a quality freelancer, with Coworks it’s like you’re asking all of your friends who they know at once. The same goes for freelancers—they can get access to the opportunities within their extended networks on one centralized platform.
SUB: When was the company actually founded and what were the first steps you took in establishing it?
Dillman: I and my cofounders, Mattias Guilotte and Jonas Bergstrom, launched Coworks in April 2013; but our company was first founded in 2010, when we began building a trading platform for services, which was originally envisioned for a different market focus. The core platform deals with all aspects of commercial agreements, payments, billing, income taxes, sales taxes, and negotiation down to the nitty-gritty, for working collaborations between individuals on a global level. That took pretty much a year and $1 million to build.
The second step was inviting 500 founding freelancers. We screened 15,000 portfolios on Dribbble, Behance, Carbonmade, Krop and a few more places, and contacted the 500 freelancers we found most appealing and asked them to join. The response was amazing. We basically asked if they shared our initial take on the market: ‘There is no decent freelancing platform out there.’ And almost everyone did, so we invited them to help us build it.
SUB: What was the inspiration behind the idea for Coworks? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Dillman: As serial entrepreneurs, my co-founders and I have personally had a need for quality freelance talent time and again. It makes so much sense for a startup to use freelance talent. But, the challenge of finding good freelancers was obvious. The traditional online services were leading us into a mass marketplace flooded with literally millions of freelancers. So that wasn’t a good option. What we needed and wanted were personal recommendations. That’s where the idea for Coworks came from.
SUB: How did you come up with the name? What is the story behind it?
Dillman: It is obviously related to coworking. We’ve had so many coworkers online and it didn’t feel at all like remote outsourcing. We wanted to build something and find a name that felt friendly and coworkish.
Some people still think there is a huge difference between working online or offline, but that will pass, for sure. Most new companies have more coworkers online than offline and that is the idea we want to promote—hiring online is no different from having offline coworkers, only more efficient. You can still have just as rewarding a relationship with someone in Brazil as with an agency in your own town or the in-house agency on floor seven. By naming it Coworks, we want to inspire companies to build their online teams.
SUB: You just officially launched the company. Why was this a particularly good time to launch?
Dillman: Yes, we think so, because our product was ready. In terms of market conditions, I can’t say if it is particularly good or not-so-good timing, but we are growing as fast as we can manage. We still try to touch base with every new member and guide them.
Looking at a slightly bigger picture, I think we are pretty well-timed. People have learned from services like LinkedIn and Zerply how to use and evaluate recommendations. That is to our benefit. At the same time, there is no other freelancer service out there making good use of social recommendations, something we very much believe in.
Also, looking at the big picture, we know that two-to-three million buyers have now tried one of the mass market freelancing services and are eager to find something with higher predictability in quality and results. And, the work being done by Sara Horowitz and the Freelancers Union is doing a lot to show how freelancing is central to the new economy. We love their message that freelancers are first-class citizens deserving of the best tools for running their businesses as independent professionals.
SUB: What have the most significant obstacles been so far to getting to launch?
Dillman: Technically speaking, we were pretty much on top of things thanks to the platform investments we had already done. I think our biggest challenge has been to inject all our aspirations into a new brand and communicate this clearly. There is so much to do and so little time. Especially considering that we are entering an established market. You need to be razor sharp.
SUB: Do you plan to raise more outside funding in the near future?
Dillman: Yes, we are backed by solid Nordic VCs, but we have a U.S. agenda and we will invite U.S. investors during the fall. It is exciting to enter this market with a new concept because the product iteration loop is really fast and you are able to see the contours of your marketing equation early on.
SUB: How does the company generate revenue or plan to generate revenue?
Dillman: Coworks uses a freemium subscription model, which works slightly differently depending on if you’re a client or if you’re a freelancer. A user who’s a client, who opts for a free subscription, pays a fee to Coworks on a per-job basis, not for posting jobs, but when a freelancer’s proposal is accepted and work begins. The client fee is eight percent of the price of the job. Or, client users can subscribe to a premium membership, which costs a $69 flat fee per month, and then the service fee is waived for an unlimited number of jobs.
On the freelancer side, there’s never a Coworks service fee. With a free membership, the number of jobs a freelancer can complete per month is five, and up to ten proposals can be offered per month. Or, a freelancer can subscribe at the premium level for $29 per month and work commission-free on an unlimited basis.
SUB: What are your goals for Coworks over the next year or so?
Dillman: One of our first freelancers said: “I really like it—I haven’t seen a premium alternative before. Please try to avoid going down the traditional marketplace path.” Everything we do aims at maintaining a premium experience. And the rest will follow. We know that there are 29 million SMEs that need something like Coworks.
Coworks – www.coworks.com