Commonly, media attention focuses on the platform initiatives that are growing exponentially, which makes us forget the number of proper functioning platforms that have already been integrated into our daily habits. Those platforms that do not grow exponentially, though they keep steadily recording positive growth figures –some for over a decade. An effort other platforms still have to proof themselves capable of.
A couple of moths ago, I visited the (until recently) traditionally Dutch Werkspot, where I spoke extensively with CEO Ronald Egas. We had met last year during a Tegenlicht Meetup about the sharing economy. Now, as one of the questions that concerns me today is ‘labour in the platform economy’, the time was ripe for a more comprehensive discussion. Werkspot.nl is a platform where you may post a description of your project and where 7,000 professional handymen (yes, mostly men) may send you their best bid. Reference the video to see the interview, listen to the podcast, and/or read my most interesting findings and thoughts below.
No sham constructions
Internationally, there are many ongoing discussions, and court cases, regarding the responsibilities platforms should have toward the people who earn money through their platform. Platforms basically don’t want to profile themselves as employers, which is ‘understandable’ from a profit and growth perspective. For a platform like Uber, this is an interesting discussion. The driver is, after all, completely dependent on the platform. He makes himself dependent by making an investment (i.e. buys a car), to which he is bound for a couple of years, and he is particular vulnerable to one-sided changes in the terms and conditions executed by the platform. I assume, the discussion about (the impoverishment of) labor relations through platforms will become a trending topic. Along with the labor market generally becoming more and more flexible. This discussion will be partially fueled by the high costs and risks involved for the employer.
I do consider Werkspot exempt from this discussion: Handymen may only register themselves on the platform if they have also been registered with the Dutch chamber of commerce (i.e. no fiscal challenges), and Werkspot is in most cases a (minor) addition to existing business, thereby avoiding excessive dependency on the platform. I prefer to view Werkspot like a smart marketing and sales tool for handymen, who would rather spend their time on what they do best: fixing things.
Revenue model in its infancy
Currently, about 7,000 handymen are affiliated with Werkspot. According to Ronald, tasks acquired on the platform are usually a last minute addition to their regular business. Handymen pay Werkspot an annual fee to be allowed to post a certain number of bids on consumer requested tasks. This way they are at the very forefront of the requesting process. The price of each bid is relatively low, because Werkspot doesn’t know the quality of each project request and accordingly has no clear picture of the handyman’s final revenue. I think that were they to put more effort into the collection of qualitatively high prospects for the handymen, the price per lead could be raised considerably. If this, based on the same number of handymen, would result in greater revenue for Werkspot is doubtful, though I think this strategy would convince more handymen to sign up. As of now, it is still quite complicated for a handyman to acquire a job on the platform. The consumers post a, due to lack of knowledge, improper or incomplete job description on the platform. Consequently, only about 5 handymen reply to each query. Chances that you will end up with the job are 20%, in which, for convenience sake, I’ve neglected to account for the risk of a task being postponed or being awarded through any other (legal or illegal) means. The question is how much effort handymen will make to write a proper proposal with these low success rates. Right now Werkspot could provide better suited leads for the handymen, which might reduce their browsing efforts, the price for a lead could be raised, and more handymen could be expected to join the platform. In the end, this is the bottleneck in the platform’s growth, according to Ronald. There are sufficient job proposals, yet the supply of handymen generally lags behind.
From loose crowd to community
This leads me to my point that Werkspot could grow even more from loose handiwork crowd to a real community. To increase the added value for handymen, they could also make other features available besides ‘sales and marketing stuff’. I’m talking about pension schemes, insurance, collective procurement, and maybe even an internal sharing platform. The greater the added value of Werkspot to the daily life of the handymen, the more attractive the platform becomes to existent and potential handymen subscribers. Great for long term business, but also beneficial to one’s own pocketbook. It is still important to work with the right partners: those who share the same values and won’t reinvent the wheel. So, focus on the core and search for the best partners you can find. This way you may accelerate in the short term, and also build a durable model for the future.