The Hidden Risks Of Platforming

Freelancing talent platforms are not as safe as they seem.

Yesterday I shared a great framework (by Venkatesh Rao) to understand the different professionals that compose the "freelancer group". While there's a lot to talk about the distinction between independent contractors and consultants (which I'll do), today I'd like to expand a bit on what it means to be a "platformer".

Credits to Venkatesh Rao, image from "The Art Of Gig".

Platformers are freelancers who get work and projects mostly from demand-aggregation platforms.

Over the last decades, freelancing talent platforms multiplied. There are a lot of them around - those who have contacted me in the past include Eden McCallum, UpWork, Catalant, GLG, Business Talent Group, expert360. Just to name a few.

I'm not going to do a deep dive into how those platforms work, why no clear winner has emerged in the consulting talent platform space, and how (and if) it is possible to transform them into a real source of value for freelancers. For those of you interested in it, Paul Millerd wrote this great long-form post on those topics. Recommended reading.

Instead, I'll share what I see as hidden risks of platforming. Yes, the main idea of platforming in the first place is to reduce your risk, accepting a lower return and independence as side effects. My case is that there are huge hidden risks that are rarely considered, leading many new freelancers to take this path:

  • It doesn't mean you won't need to go after new business.
  • It's detrimental to your long-term success, however one defines it.
  • It might get you stuck in a depressing and short-term survival mindset.

A few words on each one of them.

Choose Your Hard

Making online platforms your primary source of work doesn't mean you won't need to go after new business. Those platforms, at least based on their current business model, won't do the work for you. You will have to screen and pitch for most projects, in every single platform you work with.

While I couldn't find statistics on it, acquaintances told me they might need to pitch for +100 projects to land 2-3 interesting ones. Often times the description of the project is not accurate enough, or you send proposals and never hear back. Apart from the low margins and frustrating experience (more on this in the next point), this takes a lot of time and energy.

So learning to market and sell yourself is hard. But landing good and profitable projects via online platforms is also hard. Choose your hard. There's no free lunch.

What Does "Winning" In Platforms Mean?

It's up to you (and only you) to define what success means for your work. Choosing which game you want to play, rather than playing the one that's proposed to you, is key for anyone who wants to survive and thrive as self-employed. Still, I struggle to see how relying on platforms can be positive to your long-term success, however one defines it.

From a financial perspective, you lose on both performance and security. Being forced to compete with the platform, you don't set your own rates and mostly sell time. Security-wise, your survival depends on that of platforms. If you never market or sell yourself you won't have the capabilities to do so when you need, and the low-margin work makes it very difficult to build a saving cushion.

Sometimes I hear that platforms are a good choice if you prioritize "flexibility". Well, guess what: it's 2023, and independent consultants are free to structure their own engagements. My consulting practice is 100% remote and with many of my clients the work is asynchronous.

There's No Next Step

Finally, a hidden risk for platformers that few people talk about is the lack of a compelling future.

Some consultants might use platforms in emergencies, to solve short-term cash hiccups. That happens, and doing so to ensure survival is a valid and conscious choice. The problem appears when you're entire freelance practice is built around platforms.

After a series of conversations with platformers, I noticed that several of them couldn't answer the question: "What's the goal for your business in a few years' time?" It was as if they were stuck in a short-term survival play. There was no clear vision for the future.

I'm sure there's not a single reason for this, but I feel like the dehumanizing concept of a platform plays a big role.

You are a cog in the machine, and rarely have real interactions with clients or peers. From a social perspective, you are invisible. Your branding is entirely based on ratings and comments on the platform, which means you don't invest any time or attention into exploring interests and revisiting your personal identity.

Do you know someone who's been platforming for +5 years? If yes, please put us in touch - I'd love to hear their thoughts on this.

Thanks for reading. You can get more specialized and actionable growth insights for micro consultancies in our newsletter. Every Tuesday, you get one idea from Danilo, one quote from other experts, one number you need to hear, and one question for you to level up your consulting practice.

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