TLDR; Product-market fit in one of your product offerings doesn’t equate to product-market fit in all of your product offerings.
This week, I had 3 things on my mind …
Growing our sales organization (Joe, our sole account executive, is currently slammed with inbound leads and an outbound experiment that we’re running - more on this in future posts)
Cash management (we were over-exposed to a couple of customers - problem solved but had me on edge)
Our full-time engagements (we need to polish this product offering)
Rather than give light summaries of all three items, I’ve written a deep dive on the problems with our full-time offering - and how we’re solving them.
First, some context on our full-time engagements
Full-time engagements are our most valuable type of freelance offering. The unit economics are 3x better than part-time engagements, and 5x better than our hourly engagements.
However, this week, we uncovered a problem with them …
But first, a little background on why companies would want to hire full-time contractors … it’s a pretty simple value proposition. From time to time, it makes more sense to hire full-time contractors instead of an additional W2 employee.
For example, lots of banks are currently hiring contractors in their distressed asset groups. These hires will be extremely busy for the next 12 months but most likely won’t be long-term staff of the bank.
Alternatively, companies will hire full-time contractors to backfill leaves of absence (maternity, mental health, etc) or for special, short-term projects.
Lastly, some companies prefer “contract to hire” arrangements where they can “try out” new team members before committing to bringing them on the payroll.
The problem … product-market fit
I wrote in my last post that we found product-market fit when we pivoted away from a software-only product to a sales-enabled product.
This is true, for the most part.
We are REALLY good at placing hourly and part-time freelancers with our company clients. I checked the data earlier this week, and we’ve had a 100% success rate on our part-time placements for the past two quarters.
However, we aren’t that great at placing full-time freelancers. Our close rate on full-time opportunities is low, and the failure rate is higher than where we need it to be.
In short, we don’t have product-market fit with our full-time hires - which brings me to the point of today’s update …
Don’t let yourself be fooled.
It’s possible to have product-market fit in some of your products and not others.
We have product-market fit in our hourly and part-time tiers, but we still have work to do with our full-time offering.
This becomes immensely important when we consider hiring more salespeople to grow our full-time engagement offering - we can’t do grow until we’re confident that we have product-market fit.
Pro-tip for my kids: Don’t try to scale a product before you find product-market fit. It’s kind of like starting a dumpster fire with your cash.
What are we doing about it?
Iterating!
To my attorney’s dismay, we’re iterating how we structure our full-time engagements (which means updated contract agreements - sorry Ethan).
In the past, we made the mistake of structuring full-time contracts to feel like W2 hires.
Moving forward, we’re coupling a freelancer’s hourly rate with a monthly guarantee.
For example - Rather than paying $15,000 per month for a full-time senior analyst (the old way), we’re going to run the contract at $93.75/hr with a 160-hour-per-month guarantee (the new way).
This will give freelancers both the comfort of predictable earnings and upside when the job calls for late nights.
Additionally, we’re iterating on how we vet and select freelancers for full-time contracts. We’re implementing ways for freelancers to self-select whether or not they prefer numerous inconsistent clients or one consistent client.
A note about change …
Before we made the iteration described above, we interviewed both freelancers and clients to learn about what they like and don’t like about hiring full-time contractors.
I did my best to ask non-leading, open-ended questions. A few examples:
For Freelancers
Have you worked on full-time contracts in the past?
What did you like about it? What didn’t you like about it?
How was the compensation structured? Did it work for you?
Why did the contract end?
For Employers
Have you hired full-time contractors in the past?
What did you like about working with them? What didn’t you like about working with them?
How did you structure the contracts? Did you like it? What could be better?
Why did the contract end?
Good questions lead to good decisions. It only took two employer and two freelancer interviews for us to get comfortable that we were making the right decision.
That’s all of this week! Let me know in the comments what you want to read more about.
✌️📤
Tyler
Founder @ Bullpen
Excellent detail and insight. I would love to read more about your marketing process - how employers find you, where do you market and advertise, etc.