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Talk of the Town: Marketplaces and the Freelance Economy

This week, we noticed that VCs and business blogs were paying attention to marketplaces, networks, and new ways to work. Could that be the big market of 2015?

To kick things off on Monday, Charlie O'Donnell of Brooklyn Bridge Ventures wrote on his personal blog what he's learned about marketplaces since investing in Chloe & Isabel in 2010, and what he thinks makes a good deal today. First, you have to be able to keep providers on the platform for the long term, the model shouldn't be susceptible to the provider and customer to go around it. He's taken an interest in startups that are sharing revenue with the provider as a way to incentivize them to continue doing business through the platform.

The next important piece is having a balance between acquisition effort, volume of sales, and the percentage cut. For example, you can take a smaller chunk of a provider's earnings, granted that you have a high number of transactions and don't expend much effort for it. These seem like crucial points to consider for any founder considering a marketplace model.

Also this week, Benchmark Capital led a $30 million, oversubscribed round into Elance-oDesk. A big vote of confidence in the freelancer economy. The CEO of the company stated that now we get hired for our skills, moreso than our education or experience, as there's a need to be flexible with fast-changing trends. Elance-oDesk is democratizing that notion to make work opportunities available to people around the globe, and that's what the VC firms are betting on.

In a post written by Simon Rothman of Greylock Partners, he calls this labor force the "uncollared workers". Independent workers that offer their time or assets on marketplaces. (Are you noticing a trend yet?) His firm has estimated that in 2015 this uncollared economy could be worth $10 billion.

These "jobs" and the startups creating them, are growing fast. Along with that, of course, comes criticism. And it remains to be seen how that will shake out for the workers. Rothman argues that in a decentralized workforce, the benefits of transparency, data, technology, and worker control will come out on top.

We don't know about you, but we'll be watching this space closely in 2015.