On our seventh episode, we sit down with Freelancer, Escrow, and Freightlancer CEO, Matt Barrie. Matt shares the numbers on revenues, freelancers, jobs available, and turnover in his group of companies . He also shared his thoughts on cryptocurrency, what made him start Freelancer.com, and how acquiring competition made him a leader within his niche.
Matt Barrie is an award winning tech entrepreneur and CEO of Freelancer.com, the world’s largest freelancing marketplace with 35 million professionals globally. Matt completed over 20 acquisitions to grow his portfolio of companies, and he’s also the CEO of Escrow.com, a leader in secure online payments with over US $4.0b in transactions secured.
Connect with Matt: Linkedin
SKIP TO THE GOOD PARTS:
00:53 – 03:48 – Freelancer, Escrow, Freightlancer and StartCon in numbers
04:08 – 06:40 – Acquiring Escrow
06:54 – 07:21 – Using Escrow in almost every transaction possible, including shipping Zebras!
08:01 – 08:50 – Recent changes in Escrow
09:45 – 18:02 – Cryptocurrency on Escrow? + Other monetary & currency issues
18:55 – 21:42 – Working with VCs is a soul-crushing experience
21:42 – 29:17 – Stating Freelancer.com
29:22 – 30:30 – acquiring the competition
30:30 – 33:38 – Freelancer in the future
33:47 – 35:10 – Tips for running a business
35:10 – 37:06 – Thoughts on reviewing deals
37:06 – 38:29 – Fast50: Escrow’s quarterly domain name report
38:41 – 39:32 – Starting a business with Freelancer and Escrow
39:53 – 43:03 – How Escrow is dealing with potential issues and disputes
44:03 – 45:14 – Matt’s advice regarding entrepreneurship by acquisition
45:25 – 45:57 – Details on the biggest Technology Conference in Australia
Michael Bereslavsky 0:15 – Hello, dear podcast listeners. Today we are talking with Matt Barrie, the founder, and CEO of freelancer.com and escrow.com. Hi, Matt, thanks for joining us.
Matt Barrie 0:26 – Thanks for having me.
Michael Bereslavsky 0:28 – So I’m excited to talk to you because this person has been a client of escrow for quite a long time. And we’ve used Freelancer for a while. So I’m very familiar with your companies and your products. And I would love to start from numbers to give us some perspective on how big those businesses are? going to some revenues or other things about Freelancer.
Matt Barrie 0:53 – Yeah, sure. So I’m a public company, we’re listed on the Australian Securities Exchange. So the numbers are all out there. So the group consists of a number of companies. So the largest company is freelancer.com, which is the world’s largest crowdsourcing and marketplace, customer multiplies the number of users so we’re about 38 million people in that marketplace. Who have done about 16.4 million jobs? And these are jobs like building a website, design from your logo, all the things you might want to do to actually build value into your domain name. For example, copywriting, internet marketing, translations, right through to astrophysics, aerospace engineering, genetic engineering, biotechnology, manufacturing, walk your dog, steam cleaning your carpet, paint, your paint, house, whatever it may be.
Matt Barrie 1:36 – So there are about 1600 different job categories and growing on that site. And, you know, we’ve run that business now for a decade, and we bought about 23 or so companies, of which the vast majority of being competitors of Freelancer, we’ve merged into the business.
Matt Barrie 1:54 – As well, in the group, we have escrow.com, which is the world’s largest online escrow company that’s been running for 20 years, that was started by fidelity, in 1999, SoftBank put in 40 million US dollars back then. And we acquired that business in 2015.
Matt Barrie 2:09 – And it’s for buying and selling things of value across the Internet, and making sure that you get paid if you’re a seller, and making sure you get what you actually paying for if you’re the buyer. And then we have small companies in group one is called Freightlancer, which is a global marketplace for freight. And so we move typically very expensive and complicated equipment.
Matt Barrie 2:30 – So things like cranes, construction, equipment, mining, industrial, and so forth. It’s more in terms of the business that we do, for example, in US coal mines, various coal mines, you know, Sydney, Metro, you name it, the uglier and the more difficult equipment is, the more it’s in our sweet spot.
Matt Barrie 2:47 – And then we run the largest Technology Conference in Australia called StartCon that starts in growth and so forth. And we have a business called Warrior Forum, which some people in the domain space will know because it’s the world’s largest forum for internet marketing 1.4 million people, since 1997.
Matt Barrie 3:02 – In terms of the numbers as a group as a whole, the turnover is about at the moment, with the last six months was $400 million. So for the year, it’s probably going to be, you know, over $800- $900 million or so in terms of volume.
Matt Barrie 3:06 – It splits up between the different businesses, Escrow is a bit over half, I think about half a billion dollars a year at the moment, roughly in terms of volume per annum. And in the business, the group is basically nets out of that about 60 million bucks. So in terms of revenue, and we are profitable as of the last half. So that’s, in a nutshell, our business.
Michael Bereslavsky 3:37 – Nice. I can see up close to making a billion dollars in revenue across all the different businesses.
Matt Barrie 3:42 – In turn over. Yeah.
Michael Bereslavsky 3:45 – And in terms of revenues, if that’s similar?
Matt Barrie 3:48 – That $60 million in terms of revenues
Michael Bereslavsky 3:51 – Nice. Very important. They’ve done some research. And we found that there is an article that says that Escrow was acquired by you in 2015, for about $7.5 million dollars is that.
Matt Barrie 4:08 – The unfortunate thing about being a public company is I’m going to tell everyone the price, I paid for everything. And I’m a deep value investor, and I’m very patient in terms of negotiations. So, unfortunately, it means I kind of give away how much I buy these things for, but yes, I actually paid $7.1 million USD for escrow.com.
Michael Bereslavsky 4:25 – It sounds like an amazing deal to have Escrow what was already an established company at that time.
Matt Barrie 4:31 – It was doing 430 million US a year and payment volume at the time. So it was a gift in a way. But it was very patient. It was not a straightforward negotiation. It was complex to time. I think it was I think was a great, great transaction.
Michael Bereslavsky 4:46 – Yeah, it is. And currently how many transactions that you’re doing in Escrow a day?
Matt Barrie 4:54 – I’m not sure the numbers today and it’s very volatile. Because obviously, some things we sell are quite expensive. So you know domain names now can sell for $30 million a pop. So it does bounce around a little bit. But I mean, the volume per annum is about a billion.
Michael Bereslavsky 5:97 – Yeah. So it says on the website that you’ve done $2.5 billion in one you have 1 million customers
Matt Barrie 5:14 – It’s over. It’s actually over 4 million US dollars 4 billion sorry, US dollars in volume now. And yeah, there’s one point something million customers I’d maybe 1.5 million. I haven’t checked the stats on that lately.
Michael Bereslavsky 5:26 – And you know what people use it for like domains? cars?
Matt Barrie 5:32 – Domains a very large part of it. Because that’s where that the history came from, with escrow. com. But increasingly, we’re now in automotive, you know, boats, cars, airplanes, we’re generally gemstones, diamonds, we’re shipping containers, if you ever ship containers from China, it’s a great way to make sure that you actually get getting what you’re paying for the quality is there.
Matt Barrie 5:53 – Particularly as you order the second or third order, and they try to shove all the defects from the first order in the second and third and fourth orders, and so forth. We also do all sorts of complicated transactions involving, for example, selling zebras or space station they’re trying to finance called an Orion. And that’s trying to finance that with $10 million tickets, trying to get up in the fields first affordable luxury hotel and we’re taking deposits for that right now for 80,000 US dollars, you can get yourself a deposit on a ticket up to a space station information to get it in the air up in the space. Then, later on, you can balance and you can be one of the first people on staying in a space hotel.
Michael Bereslavsky 6:39 – That’s for escrow.com?
Matt Barrie 6:40 – For Escrow.com yeah.
Michael Bereslavsky 6:42 – See, I am into space hotels now it’s an interesting industry.
Matt Barrie 6:46 – Yeah, I’ll have I hope they get off the ground.
Michael Bereslavsky 6:47 – So you mentioned Zebra, how did that transaction go?
Matt Barrie 6:54 – It was it was from either from a zoo to a Safari park or Safari Park to the zoo and then we do a lot of animals were able to fish, or the dogs, because you obviously you check-in veterinary information, you know, make sure they’re healthy, make sure the shipping is appropriate. They arrive alive, let’s celebrate. So I escrow is ideal for transactions like this,
Michael Bereslavsky 7:15 – I mentioned that the transaction fee structure is probably different. But it’s the same for all products?
Matt Barrie 7:21 – It does differ a little bit based upon the value of the item being sold, the industry you’re in, whether you’re a wholesale customer or commercial customer versus a retail customer, and also how you’re paying for it.
Michael Bereslavsky 7:37 – Nice. So there was a recent change in Escrow about a couple of months ago, I believe that you changed the list of countries that you do business with. Yes. And I know that it affected a lot of clients. We’ve been hearing stories from people from Russia, Ukraine, all kinds of other countries on that list could no longer do transactions. Is that related to something of us regulation? Or can you explain it?
Matt Barrie 08:01 – That was a voluntary decision that we made internally, it’s just that globally, it’s 2019. And compliance in the financial system globally is becoming increasingly more complicated and more expensive.
Matt Barrie 8:16 – And we just decided that we would actually no longer service some of those countries because they’re deemed as high risk by the US banking system. I wish it wasn’t this way I mean, I escrow is ideal for actually transacting with is it’s unsure about the level of trust between two parties because we hold the money as a trusted third party in Escrow so the transaction can complete securely.
Matt Barrie 8:36 – Unfortunately, the amount of compliance involved in today’s damn world made it prohibitive to continue for now, who knows maybe in the future will increase our footprint, we are aggressively increasing our license footprint around the world.
Matt Barrie 8:50 – We are licensed in the US, we are licensed in Australia. We’re about to launch in another major market, which I won’t preempt today, but the announcements coming out imminently. And you know, we obviously work in pounds euros, US dollars, Australian dollars and so forth.
Michael Bereslavsky 09:07 – So you have different currencies and both to change currencies. Do you have service like that?
Matt Barrie 9:12 – No, we don’t currently allow you to do FX or something we may offer in the future. But we don’t currently currently allow it. We just we’ll just hold it in one currency.
Michael Bereslavsky 9:24 – And was it a large percentage of your business? The first list of countries or was it just like a small small share
Matt Barrie 9:32 – A very small share and the US is by far the dominant country. Overwhelmingly majority from from the US.
Michael Bereslavsky 9:40 – Okay, so negligible.
Matt Barrie 9:43 – Yes, negligible? Yeah.
Michael Bereslavsky 9:45 – And I guess if you have any plans to introduce cryptocurrency or any alternative ways.
Matt Barrie 9:54 – This interesting question. I was an adjunct professor in cryptography for 14 years at the University of Sydney and I studied under Dan Boneh at Stanford University in Cryptography, and I don’t think that we will launch cryptocurrency any time soon. There’s a bunch of reasons why we wouldn’t do that.
Matt Barrie 10:12 – Number one, is that that commercial adoption of cryptocurrencies is not going up, it’s going down. Right. In fact, I saw a report it’s a few months old now. But there’s a report that said that merchant volumes through gateways are down on something 86% so right?
Matt Barrie 10:27 – So number one is the adoption is not there. Number two is US regulators around the world hate crypto. At some point in the future, I believe what will happen is the US Federal Reserve will come up with fed coin, and then they’ll ban or they’ll regulate to death, you know, other currencies.
Matt Barrie 10:45 – Now, you know, there will always be some currency out there that you know, from now and forevermore, that people will be using to buy all sorts of things on the internet. But you know, in the potentially nefarious things, but you know, we stay well away from crypto because the regulator’s hate it, I think it introduces a whole bunch of unnecessary headaches. And I just simply don’t think the volume is there in the markets we’re in, right?
Michael Bereslavsky 11:06 – Looks like Facebook and that group are pushing Libra to become the worldwide cryptocurrency,
Matt Barrie 11:12 – We will see whether it happens or not. Simultaneously with them announcing Libra every single regular in the world said “Hang on a minute, we need to talk about this before you go anywhere”. And I believe there’s a whole bunch of legislation that’s being proposed around the world to stop it.
Matt Barrie 11:27 – In the US. There’s a bill that legislation is being proposed to put up to bill around banning large technology companies from running financial services. And so banning the likes of Facebook and the app, Apple and Google and so forth from running financial services companies.
Matt Barrie 11:44 – You know, I don’t think Libra will make it very far. I think this will be the thing, you know, there was a famous saying, I think Peter Thiel, made this comment when he said as a startup, they talk about disruptive startups and disruptive technology. But disruptive kids get it too disruptive gets sent to the principal’s office, right?
Matt Barrie 12:03 – And you know, one of his compatriots, Sean Parker started Napster that was obviously incredibly disruptive. And of course, it got sent to the principal’s office. I think that Facebook may have pushed things too far by structuring Libra like they did to make it look like a global currency. Yeah, it looked like SDRs, basically.
Matt Barrie 12:23 – And, you know it looks like it was preparing itself to replace currency globally, globally? You got to remember, you’re in an environment now with this 17 trillion and negative-yielding bonds and, interest rates in many countries, the world either zero or below zero, the IMF, International Monetary Fund on their blog, and in fact, in talks is actively discussing the next recession, potentially going to negative 4% interest rates.
Matt Barrie 12:52 – Frankly, I think governments around the world have broken money. And I think that some sort of big resettle changes is happening now you can see it in the price of gold, for example, I don’t know and certainly can see it in the direction the price of bitcoin but I don’t think Bitcoin is going to be the winner. I think there will be I think the winner will be a digital currency. I think they’ll be Fed coin from the US. They’ll be people coins from China. There’ll be you know, the ECB coin in Europe, and so forth, which will be government-sponsored digital currencies, not crypto currencies that don’t need the whole crypto thing they don’t want to have 51% attacks will be it will just be a purely a digital currency that I think they will trump and I think regulation will just make it impractical to run a different currency.
Michael Bereslavsky 13:38 – That’s an interesting idea. But right now, they’re saying that most most currency most money is digital. So would be very different from, the current US dollar. But the images that us which is do something like a Bitcoin, or was it just something?
Matt Barrie 13:53 – No, I would be a cryptocurrency. But there is an active discussion with the International Monetary Fund, about having a two-tier system. I mean, ultimately, governments want to ban cash. And they want to ban cash so that the money is trapped within the system. So the monetary policy is more effective.
Matt Barrie 14:09 – And so they are actively talking about things, for example, what having a two tiered cash system, where physical cash, for example, decays over time, and digital cash, behaves a different manner. So to try and devalue, or even, they were talking about having a time expiring on physical cash. So you can get physical cash out, you have to spend a certain time or it expires. And in some regards, you’ve seen this already happened in India, when Modi, for example, canceled the currency and reissued a new currency, and he only had cancelled under the bed had to go and change it with the same type sites and time period, or it’s cancelled. Right?
Matt Barrie 14:39 – So you know, there are thinking about creating a two-tiered system with electronic currency and also with physical cash. And also the government’s would love to get rid of physical cash altogether because they can find out what everyone’s spending their money on how they get their taxes paid in real time, as a bunch of other benefits from that, but I don’t think it’s in the form of a decentralized crypto-like currency. And certainly no government around the world wants to lose control of the money supply, so they’re not going to do it in fashion. And no, like Bitcoin or Facebook is proposing.
Michael Bereslavsky 15:10 – That’s an interesting idea. See, now I was reading this book, Arima Theos recently, and one of the main ideas that he kind of postulates there is that the progress of human evolution, human technology, it goes based on what system is better at processing data. So the reason why, you know, like the economy expanding why the free market beats socialist, is just because the free market is better at processing large volumes of data, and introducing better pricing. And the idea, then is that more distributed systems are likely to emerge in the future. And that’s why it seems that something like something based on the blockchain is more likely, rather than a centralized monetary system.
Matt Barrie 16:03 – I do not doubt that, collectively, the world can come up with a better way, using the private sector to manage money unquestionably. However, the US government has the US military behind it. Right? And they will use that, right? I mean, look, I mean, the last time someone proposed something like this, they end up with a bayonet up their bum, right?
Matt Barrie 16:24 – So you know, that with Qaddafi, proposing a gold-backed dinar with African nations and so forth, right. You know, you see regime change happen around the world, anytime someone thought, you know, thought about getting off the US dollar for, you know, for the petrodollar system, right.
Matt Barrie 16:40 – So, you know, I mean, this is, this is the major thing, I mean, having the world’s reserve currency, having your own monetary supply that you can manipulate, and you can grow, and basically, effectively print money to kind of implement whatever programs you want to implement. No one wants to get rid of that. Now, could we build a better system collectively as a human race? No, no questions asked. But, you know, while these countries around the world have their own military, etc, and so forth, it’s completely impractical.
Matt Barrie 17:06 – You’d have to, you have to kind of get to this Utopia, where you’ve got this United Nations globalist government managing the world and then yet probably come up with the better system. But even then, it wouldn’t be decentralized, in my opinion.
Michael Bereslavsky 17:19 – Yeah, that makes sense. Well, I know that Facebook as a group, so I’m investing substantial money and loving the US Congress to try to help to prove that legislation, more friendly legislation to Libra. So we’ll see what happens.
Matt Barrie 17:35 – I highly doubt it’s going to go anywhere. Simply because you look at the track record around privacy and all the issues they’re facing now. This is the last company the US government’s going to let the money add up to it’s just not gonna happen in my opinion.
Matt Barrie 17:48 – Yeah, I agree. I think it’s not just as much as the US the threats even bigger in emerging markets. You know, if you’re living in an emerging market and your currency is devaluing every year as the government’s printing money hand over fist, right?
Matt Barrie 18:02 – The last thing you want is your general populace, transacting in a different currency control by Corporation, you won’t have any control over the economy, right? Politicians won’t be able to kind of implement whatever social programs or whatever pork-barreling they want to implement in order to buy votes. It’s just not going to happen.
Michael Bereslavsky 18:20 – Yeah, it certainly makes sense. So change it up a little bit. I want to dive into your VC background. So I know that before you started, Freelancer you worked for, for a VC firm, and you are responsible for some major decisions as well.
Matt Barrie 18:38 – I would say major decisions.
Michael Bereslavsky 18:40 – Yeah, some there are some serious acquisitions. Well, how would you position your experience and then see how does it help you to become an entrepreneur, and to start and acquire different companies?
Matt Barrie 18:55 – Yeah, I mean, I only work in venture capital for a very short period of time, let me tell you working in a venture capital firm, unless it’s your own money, is one of the most soul destroying experiences you can ever have. If you have any little bit of entrepreneurial passion in you, you will destroy it working a venture capital firm.
And I’ll tell you why. As a junior in these firms, you get sent 50 business plans a day, 100 business plans a day business plans coming everywhere, and you’re meeting with entrepreneurs every single day you’re meeting with them, right? And you fund two per year. Yeah, so every day you’re meeting entrepreneurs, and you’re disappointing them. Right? You meet with them, they pitch your idea, you think maybe this is okay, maybe maybe I should merge you with this other idea. Everyone thinks they have their original idea. Let me tell you, I saw the same idea. In a short time I worked in VC, I saw the same idea over and over and over and over again.
What’s different is the execution who’s going to get out of bed in the morning actually gonna make it happen, right? But yeah, you meet with entrepreneurs all day, every day. And, you know, you see a whole bunch of companies that you could be great. And you fund none of them, right?
The two deals you fund per year, do not come through the, you know, support at you know, contact us at VC fund dot com, they come because someone wants to come invest, they give a call to you know, the general partner, general partner goes, Okay, we’ll do a deal, etc, right now does not come from any very, very, very rarely will come from sort of like a junior, Junior analyst or whatever, looking at looking at deal flow.
It’s all-destroying because you go to all these entrepreneur bands and tech events, and everyone’s trying to pitch your time and not finding anyone. And so they’re saying to you are this guy doesn’t get it? Or Yeah, it’s a bit of a dick, or whatever it may be like because you can’t actually do much right? Now, if it’s your own money, and you’re managing your money? Well, sure, it might be a little bit different, right? And but again, you would still get a lot of people sending you plans in the way of your day, and you’re not responding to any of them. Right? So I much prefer to be an operator on the other side of the table. So mentally I could not handle being in venture capital.
Michael Bereslavsky 20:53 – Yeah, that totally makes sense. I can relate because it’s similar to what we do. I’m just on a smaller scale. So if you buy businesses, we buy mostly content businesses, online websites, as and if we get like 100 deals, 100 leads with traditional every month. So you might just buy one or two.We have to tell people that this just doesn’t meet our criteria like this is just not for us. But on the flip side, we also try to help entrepreneurs, we try to give them some advice on what they can do to improve their business. What we can do to grow with those are or maybe even who they can go to, to sell it. Yeah. But it’s certainly a lot about networking in this industry,right? So a lot of the deals are just done. Who knows who?
Matt Barrie 21:42 – That’s correct.
Michael Bereslavsky 21:43 – And you started freelancer, what was your original plan? What is your digital idea behind it?
Matt Barrie 21:42 – Yeah, well, I mean, this is a story I must be well told. But I’ll paraphrase it because because, you know, I can go for a long time. But basically, I had started a venture-backed business, building semiconductors, and fabulous conductor, basically, pattern matching chips that scan network traffic, high speeds, and yet put on a car to sell the chip for the car to sell the car, you have to make device drivers sell that yet applications and so forth.
So it’s again gigabit network traffic is 2001. There are no gigabit networks really out there. It was a really complicated business, great technology. But you know, too early to market, Product Market Fit was wrong, had a great team but it had a bunch of VCs. VCs are fighting each other and another fighting with us.
After six years of running this, I’ve got to about two and a half million in revenue raised I think $30 million or so. And I left. I couldn’t deal with everyone bang their heads against the wall and the VCs fighting each other fighting with me. So I walked out. And you know, it’s one of those dark moments and entrepreneurs journeys where you were crushed, you put six years into really, really trying to make this thing work. And it didn’t work didn’t set the world on fire. Ultimately, the company sold to Intel.
So ultimately, in 2013, seven years later it’s sold, so I’ve been atone for my sins because it finds itself. That was the moment it was like, what do we have what I’m gonna do like I can I realized at a very early age, I’m fundamentally unemployable.
That’s why I became an entrepreneur. So I could run my own business and start my own things rather than work for someone else. And basically, what happened was, you know, I was like, What am I going to do? I thought, you know, I took some time to decompress, I went skiing. I rode my motorbike around the block a few times to kind of get out some steam. And after many, many, many months, I thought, okay, I’ve got to do something to get active. So I thought I just helped my mom build a website for her business. She has a wholesale business, doing arts, crafts, textiles, glues, paints, I told her in 1995, build a website, if you build a website, in 1995, she’ll be a pioneer and eCommerce is now 2007. So she doesn’t have a website.
And 12 years later, I build her a website, I didn’t realize you had 10,000 products, I need to take 10,000 photos of the products, had to fill up descriptions had to fill in whatever, all that sort of stuff. And as part of this, I needed some data entry done.
So I thought I’d fill in a spreadsheet with rows of information, name of a shop, phone number, address, etc. 1000 rows, I pay $2 per row, pay $2,000, I get a little brother or sister of a friend of mine to do the job, I would have loved to have the job when I was at school, because I could work at home with a computer get $2,000 good money, and so on.
But after four months of trying to get people to do the work, I’ve got soccer practice, this job is boring. I know it’s boring. This one gave you the job. I’ll do it myself. It wasn’t boring. So I’m paying you. I just didn’t get anywhere. And I just got really frustrated. I talked to him to the internet, data entry online or Chief Data Entry or whatever it was.
And I found this website called Get a freelancer. And it looked like Craigslist, it looks terrible, right? gray and horrible. And what I do, I posted a project I think back then it cost me $5 US I posted the job and then went to lunch and forgot about it. And I came back later a few hours Three hours later and I had 74 emails in my inbox 2000, 1542, 300, 200, 100. The first thing I thought was there is no way that 74 people want to do this job. I can’t find one person like, this can’t be real. Stop chatting some better, I think it was mind blowing. The second thing is why someone bidding $100 I put in $2,000 why would someone bid $200? And I realized people from emerging markets, etc. And for some people, $100 is 10 days work for 5 billion people. It’s 5 billion people we want $10 or less. Right? And it was 2000. You can do it like two days, right?
So for some people, you know they want to do it for that price. I did I put the job out there. It was done. Three or four days, it was perfect. I didn’t have to pay until the job was done and came back and my mind was blown. It was just like, oh my god, this changes everything. Right? There is an army of people out there, what they’ll do any job I can think of. I can do it inexpensively. I can pay on a credit card. I can sit at home and just build companies using freelancers.
I just thought this is just game-changing right? In 2007. This was not obvious. Yeah, there was a bunch of companies that are out there kind of doing bits and pieces. But the average person the straight, this was not obvious. So I said to you in 2006. Did you know you can get someone in Bangladesh to build your website for $50? The average person the street said, Where’s Bangladesh? Do they have computers, they speak English. Now everyone knows can go online and get stuff done. Right? But back then, it was not obvious, right? And I thought this is good. This solves all my problems of sitting at home, I’m too embarrassed to go back to all the 70 people, I hired my last company and try and get a new company and the other one hadn’t done so well until later on.
I can literally hire an army of people I can afford it. I should build a company with this. That’s what so the company should I built with this. I said this business, this actual website is pretty good. What I try and copy this website and build my own website like this. So I started a company called video.com. I had freelancers, I’ve got a freelancer the copy, get a freelancer, I could do programming, but I couldn’t do design.
So I was hiring Francis for all sorts of things. I got some traction, in terms of the forget how it worked. I got going, I read a little business plan, I wrote a pitch deck, I did some financials, how much money do I need to raise to start this business, etc and so forth. And yeah, back in 2007, it was still before the whole Y combinator phenomenon. So you couldn’t know But no, I call it a phenomenon is it put four people in a room, room feet and noodles about four months later MVP trying to get to market quickly and so forth.
Back then it was more of the mindset of raise 5 million in Series A, hire 20 people have your own servers, all that stuff. And so I did the back of the plan for the spreadsheet, I needed, I needed $4 million to start this business. I thought who wants to raise the money from because I’ve walked out on my VCs last time. And you know, and coming had been hugely successful. And you know, in the valley, they say it’s a badge of honor to kind of you know, have a failure and because you’d like the lesson, etc, etc.
Matt Barrie 27:55 – I don’t know if that’s strictly true. Certainly, in Australia, it’s not true in Australia, it’s like the two years are going to meetings. And the first thing out people’s mouths would be what happen at sensory? Mentally, it’s exhausting two years of ever on every single business setting someone saying what happened to your last company? Like, it’s just does your head in? It really does.
And so. So I thought and I did like a research. And there was hundreds little companies trying to do this, though about a dozen that had some traction, but not a lot. And so no, I thought no one’s gonna fund me to be number 13. So I thought maybe I should try and buy rather than build. And that’s where I went back to a bunch of these websites. And I said, are you interested in selling? And I end up buying Get a freelancer, it’s a very long story cut short. And let me tell you to 18 months to close that deal that I bought it. And then along the way, I bought the page number seven, number six, number five, number four. And then ultimately, IPO the business four years later, I raised $2.5 million to buy, Get a Freelancer he was doing 1.1 million in revenue, it was slightly profitable, had 500,000 users 5000 biggest websites in the world. I didn’t raise a single cent of operating capital. Right? I raised 2.5 million just to buy the website that’s it. IPO at 4 years later, and I opened at 1.1 billion US market capitalization.
So I thought it’s…
Michael Bereslavsky 29:17 – Regarding acquisition and the funds that was it… So you’ve done about 15 different acquisitions…
Matt Barrie 29:22 – 23 acquisitions,
Michael Bereslavsky 29:25 – Was funded just from the freelance revenue?
Matt Barrie 29:27 – Cashflow
Michael Bereslavsky 29:30 – Nice. And have any specific criteria for those acquisitions, somebody just goes and acquires all the biggest ones,
Matt Barrie 29:38 – Great businesses I can buy low, sell high. That’s it.
Michael Bereslavsky 29:42 – That’s felt true. Looks like it’s worked out quite well. So now it’s the rest pretty much just big players you and Upwork, right?
Matt Barrie 29:50 – That’s right.
Michael Bereslavsky 29:51- Who’s bigger?
Matt Barrie 29:53 – Well, look, we’re both public. So you can see the numbers. We have more users, more projects being posted. They have bigger revenue, bigger turnover, it’s kind of different in terms of demographics, and so forth. But you know, I think, you know, it’s a very, very, very big space as the human labor market. 5 billion people need a better job. You know, it could be a $5 trillion market, who knows it’s room for everyone. You know, I did try and buy Odesk actually, before they merged with Upwork. In fact, that’s kind of one of the reasons why they did merge. But, you know, it’s a huge space. And we’re certainly out there punching out other ways. So
Michael Bereslavsky 30:30 – what do you see in the future for Freelancer? Do you think it can grow and grow further grow more companies?
Matt Barrie 30:37 – I mean, the whole way the world works is changing. I mean, look at Uber, Uber transformed the transportation industry using 2 million freelancers. 2 million freelance drivers, we have 38 million people on our website, I would say that we’ve got many more than 2 million drivers out 38. Man, you can build Uber on top of freelance, right? You know, no one comes close to us in terms of a number of users, we have people in every everywhere, there’s electricity, and there’s internet, we have people.
And we’re really transforming the way everyone does work. If we can help you turn that spark of idea into reality. If you’re an entrepreneur, I’m sure many of your listeners are ideas about building businesses. Yeah, startups. So wherever you are even just developing that domain names, you can now do it.
If you just go to a freelancer. com, you post a job for free. Just see the bids that come in. It’s incredibly affordable, you just pay for on your credit card, you can hire an army of people to turn any dream you have into reality. And we even have a co-pilot service, we’ve got someone who is your technical co-founder, or your VP of engineering, and they’ll write the technical specs, they’ll run the weekly sprints or the reporting to you that help the team manage the whole thing for you if you’re not technical. So it’s got a freelancer. com and just try it. But you just post projects for free. It transforms you if you’ve never tried it?
Michael Bereslavsky 31:48 – Yeah, so that’s it. I’ve tried quite a few times both the freelancer and actually many of the websites that you bought before as well. The now notion to Freelancer I wonder if you have any tips or advice for our listeners in terms of how to choose the right people that you’re hiring on Freelancer?
Matt Barrie 32:10 – Well, we’ve got people, we’ve got people that do that for you, we’re going to recruiter service, which I think is $9. And we’ve got a team of experts who have the very, very best freelancers who will find them for you and guarantee the placement. And addition to that I mentioned the co part service without actually getting a co-founder. So we’ll help you do all that. Right. $9 is nothing to get some advice in terms of finding someone, I’ll tell you, you can have with yourself.
We rank people according to a reputation system. So the more feedback you get, the more jobs you do, the more you get paid, the higher your feedback, etc. We also look for the portfolios, look for their profiles and so on. But if you haven’t tried it, you should try it because it absolutely changed my life. Right when I tried to get a freelancer years ago, and just how would you change your business? If you could hire an unlimited number of people?
And it didn’t cost you very much? How would you change what you did? Everyone has dreams, aspirations and things they want to do in their life. Right? This you can get it done now. You’re only limited now by your own imagination. We have all the people they’re affordable, I got people to help you, on the way. Right? Very, very, very inexpensively. So it’s just, it’s mind-blowing what you get done.
Michael Bereslavsky 33:20 – Yeah, absolutely. You have a really wide variety of services and people you can hire for Freelancer. So you’ve done quite a few acquisitions, and you must have people coming to you with different deals all the time. Have you had a framework? Do you have criteria of what you look for what you look at?
Matt Barrie 33:38 – I do buy low sell high.
Michael Bereslavsky 33:41 – In terms of total specifics, any industry any niche in business or size?
Matt Barrie 33:47 – Yeah, I’ve got some advice on this. So if you’re running a business, if you have a direct competitor, with a very, very, very similar business model to you, that you can translate.
So for example, you know, we charge 10% of the freelances, for commission. And if we have a direct competitor, charging 10%, or 12%, or seven and a half percent, it’s very, very, very similar sort of model. And you can translate the financials, you take their business, their numbers, he translate to your numbers, you should buy every single one of your competitors, every single one.
The ones you don’t buy will golf and IPO, they’ll get funding from VCs, you have competitors, right? Buy every single one of them. If you want to buy a business, which is completely different from the company you’re running, don’t do it, you’re probably going to fail.
It is extremely challenging to buy a completely different business and run two businesses at the same time. Trust me, we bought escrow.com, we run Freelancer completely different businesses, right? And it’s very, very, very difficult to do that. Right? So I strongly suggest that if you have direct competitors, yeah, buy them all, kill competitor, find the right price, you can probably do it if you’re really smart, cheaper than what it cost you paying Google or some other channel for advertising, right? But if you’re going to buy a completely different business, don’t do it, it will be most likely very, very difficult for you to do.
Michael Bereslavsky 35:10 – How do you review deals, to just look at the numbers and see if that makes sense. Do you use your gut feeling or other things?
Matt Barrie 35:19 – The gut feeling has a lot to do with it because you also have the potential of what you can do and how you would use it. And can I use my existing businesses distribution channel? How different is what we’re doing from their business and so forth? How would I manage it, and who’s going to run it? and so on. But yeah, it’s a combination of things. I mean, you know,my appetite for acquisitions at this point is low. Because in the financing space, we kind of bought everything and the stuff we haven’t bought is now public, public company.
So that’s kind of very difficult. And in the Escrow space, because it’s such a heavily regulated business, that all the competitive competitors of Escrow are not operating legally. To operate in the US, for example, is a state by state licensing regime for payments, financial services. So money service businesses technical work, in some states called escrow and you get money transmission licenses are you get some extra licenses, there are 50 states for the not require licensing there six territories, you need 52 Financial Services licenses to operate in the United States of America.
Nobody has more than one or two licenses in our space. Right? We have 48 licenses. So you know, it’s just everyone’s operating illegally. That’s out there offering escrow services to domain namespace. And the risk involved in us trying to buy those businesses is too high, because would assume all the prior activity risks. And if you haven’t done proper idea, I think some domain escrow services say hey, come to us because we don’t check it with IDs and stuff like that. That’s illegal operations. So so we use this businesses unscalable ultimately, they’ll be shut down all the regulates, I mean, pay safe stop stop service, about a year ago, Payoneer tried for two years they shut down about a year ago, you know, one by one by one they’re all closing, because they’re not operating legally.
Michael Bereslavsky 37:06 – And do you know how much is the Escrow the main transactions are actually websites with existing businesses versus just domain names?
Matt Barrie 37:16 – Well, we don’t sell shares. So that requires another form of license to sell shares. Because if equity is need to join, control Escrow license in some states.
Michael Bereslavsky 37:26 – Yeah, and it’s an established website like content maybe,
Matt Barrie 37:31 – Yeah, so we publish all that data in a thing called the fast 50. Report, sorry, not the fastest to the quarterly domain name report that we published in Escrow.com. So if you go to Escrow.com’s homepage, and then you, there’s a link to download the latest quarterly report, and we have data in there, the number one way you can raise the value of your domain name is by building content out on it, right, and it’s not hard to do, the first thing you do is put a logo there, right? And then trademark trademark the name, right? And then you start building some content and so forth, the more you have an operating business there, right, you raise the value, all that stuff you can do on Freelancer com, very, very, very inexpensively, right? You can do that scale, we have our co pilots, if you can come to us with the domain Port 500 domain names, you can say I build content and all hundred domain names. And I co parts will help you simultaneously build the content and all hundred domain names, right? So we can do that for you. Right? So the fastest way to raise the value of your domain portfolio.
Michael Bereslavsky 38:29 – Yeah, it’s great that anyone could just start the business by using your companies. But by going and starting, you know, and setting up an account on freelancer, hire some people to get some things done, and then sending it for Escrow.
Matt Barrie 38:41 – That’s right, we’ve got an escrow offer a part of our API, which means that on every single domain in your portfolio, we will do the bidding of a management for you and it cost nothing extra on top of this the base escrow fees. So you can say $50,000 Buy It Now or you can say Make me an Offer. And you can accept offers, can offer, reject offers, etc.
Yeah, no one’s going to click to purchase a million dollar domain name. They’re all going to negotiate and we do all that stuff for you in software. So literally, you can go to escrow. com, go the API section, get escrow offer, you can put on every single one of your domain names. And today, you can start getting negotiations happening on those domain names. It’s a way to basically start monetizing your portfolio at least getting offers in you have to take the offers, you can just look at it and go Okay, don’t don’t accept it. You gotta run down and just make the offer. Right?
Michael Bereslavsky 39:32 – And just,yeah, the API is quite useful.The hardest part of running Escrow must be dealing with potential issues and disputes. So I know you have a process for that. That eventually goes to third party arbitration. Is that something that that happens often?
Matt Barrie 39:53 – No. Very, very, very rarely. It’s only happened a couple of times since another business?
Only a couple times?
Yeah. So we have we haven’t we have? The way it works is it’s a regulated environment. So the regulator sets up the rules.
The rules are we have to have an internal dispute resolution process, which we do. And then the party if they choose to could elect to go to an external arbiter, for example, a triple-A or Jams or NetOps or what have you, right. Sometimes that’s arbitration. Sometimes we go to a local court in California, and we’ll file something to get a judgment from it from a judge on a particular issue. But that’s only happened two or three times since we got in the business.
And in terms of going to external arbitration, that’s happened less than half a dozen times, to my knowledge, right? Since we had the business, right. So it happens very, very, very rarely, in most circumstances, because we’re holding the money. Yeah, disputes can get resolved quite, quite easily. That’s the advantage of Escrow.
So where escrow.com competes at the very, very low end of cheap domains. We compete with Buyer Protection, right. So things like bait paper buy protection. But the problem with Buyer Protection is an insurance policy, I’m not sure if domain names are covered. Number one is certainly not all different product types and services are covered by that policy. Number two, there are limits number three, if something goes wrong, it’s an after the fact, filling an insurance claim form was it described perfectly support, supporting documentation. And it takes weeks to months to get a resolution on that, right?
So you really when you’re using something like a Paypal, you’re really risking everything right about whether it’s going to work or not. With escrow, we preemptively make the transaction secure. It’s simply I agree to you with you for a price that you’re selling a domain and to me, we lock it into escrow.com. If you want, you can be complicated around the deal, you can say lease to purchase, maybe I’ll pay you payments over 10 years or five years. Maybe there’s some sort of special deal structure may be pay you 20% now 30% later, whatever it may be, you can upload a contract, that’s fine. But in most circumstances, I agree on a price with you. We put the deal terms into Escrow. Escrow then says send us the money, we take the money, we put it into escrow with trust. So it’s legally legal contracts protected. That’s the most secure way of holding funds legally. We then say okay, it’s fine to ship the merchandise, there’s an inspection period by which you could say no, I don’t agree with the deal. And if for any reason, within that inspection period, or you the transaction goes through, right, and then we release the funds.
Michael Bereslavsky 42:26 – if domain names it’s Janet Western forward, but disputes might occur these websites, let’s say people are buying a website or an online business that makes revenue and then, they have an inspection period, and the revenue is much lower. So that’s a very common reason for disputes. And yes, I can say that we’ve done 100 transactions, and we had probably one or two that and a topic some sort of dispute now did not go into arbitration, we were able to resolve it. But the potential of going into arbitration, and having someone who might not know anything about the domain names, and a set of the sub done by, by charges by a regular course. So they might not be you know, well informed enough to really understand the issue.
Matt Barrie 43:17 – Yes. Well, that’s why you choose to, you can use our internal dispute resolution service, right? Which is an alternative? Well, it’s all the whole terms of condition page, I go through a cut by line. But if you go to Escrow.com, and you go check out the terms and conditions, there is an internal dispute resolution process. And if both parties agree to be bound by that, then we can make the determination and we do know about the space. If you don’t, and you want a third party, that’s fine as well, we act as a completely neutral party in disputes. You can choose one of the arbitration services listed, or ultimately if you want to go to court. And that’s just how it gets done the real world, right? If you’re just not using escrow.com, and I’m meeting you in the straightaway signing a contract, you can go through all the mechanisms, you know, arbitration, you get the courts, you can do whatever or Alternately, you have advantage, you can go through us if you want to go through us.
Michael Bereslavsky 44:03 – Yes. And so final question, what advice do you have for our listeners who want to follow your path into entrepreneurship by acquisition? What’s a good industry to get into? How to find a good industry? And how to raise capital to go and buy your competitors?
Matt Barrie 44:21 – Okay, well, I have a video on YouTube around raising money. It’s called ‘How to not get screwed in a venture financing?’ If you search for Matt Barrie, and that title on YouTube, you’ll find it is a couple of videos, make sure you get the latest one on that. I go through an intricate detail a process of how to raise money and why the best place to raise money is by saying something useful to a customer, as opposed to taking investors on it. But if you take investor on it, it tells you kind of the traps and pitfalls and so forth. So that’s a good starting point there. I published a number of essays on LinkedIn on these topics. From time to time, you can follow me on Twitter, @Matt_Barrie, mostly talking about macroeconomic policy and, you know, the stock market and price of gold and oil and you know, bonds and so forth there. But you know, through those channels access to the content I produce.
Michael Bereslavsky 45:14 – I think I will include all those articles and links in our show notes. So thank you for joining us, Matt, and wish you good luck in going further and consolidating your main businesses.
Matt Barrie 45:25 – I just have one more thing to add, which is, we also run the biggest Technology Conference in Australia for startups, growth, technology and so forth. And it’s also one of the biggest in the region. Come down to Australia, November 22, 23rd. We have about a hundred speakers, a bunch of speakers in Silicon Valley comes down. It’s an incredible event. StartCon.com check it out. Be great to a bunch of domains is in there. We’ve got Escrow.com they’ve got a bunch of other businesses there. It’s November 22-23rd. And it’s summertime in Sydney. So you’re thinking about what to do at the end of the year, come down to Sydney, Australia.
Michael Bereslavsky 45:57 – Excellent November 21st and 22nd in Sydney. Thank you very much for joining us today and discussing some really interesting topics.
Matt Barrie 46:08 – Right. Thank you for having me.
Michael Bereslavsky 46:10 – Thank you. Bye
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