Need a Solid Startup Strategy? Try On-Demand Talent Tap into the sharing economy for talent you couldn't otherwise afford. But make sure to approach this decentralized workforce correctly.

By Tx Zhuo

Opinions expressed by Entrepreneur contributors are their own.


Sound the death knell! Another on-demand startup has shuttered its doors. After raising close to $65 million in financing and experiencing tremendous growth in the market, Homejoy, an on-demand house-cleaning platform, went belly-up.

Related: Is the Sharing Economy High Over?

To some, its demise marked the end of collaborative consumption. To others, it was just another sign that sharing-economy startups -- like 90 percent of their startup brethren -- fail.

But an individual company can't define the entire sharing economy. Each startup in this space is part of a larger trend toward flexibility in labor, propelled by the huge growth in 1099 (tax form) workers across almost every industry.

Just look at the numbers: Over the next the five years, the on-demand labor market is expected to grow by nearly 19 percent a year. Combine this with the fact that the sharing economy brings in an estimated $57.6 billion in spending, and you can safely bet that it'll be here for a while.

Borrowing some tools for your arsenal

The sharing economy provides access to talent you couldn't otherwise hire full time. Services like these can save startups time and money, allowing them to control burn and avoid premature hiring.

It also provides complementary functions to a startup's primary service. Postmates, for example, has partnered with companies such as Everlane and Threadflip to offer delivery programs. It's about tapping on-demand companies in strategic ways.

But using a decentralized workforce can be a challenge, if this strategy is not approached correctly. To better guarantee success and productivity, keep the following in mind:

1. Tell workers what you want.

You may know your business, but understand that the same can't always be said for a decentralized workforce. That's why transparency is essential when working with those outside of your organization.

Establish an onboarding process of sorts, in which you outline expectations and provide clear instructions and guidance. As you assign work, be as specific as possible with your needs. Your transparency not only promotes productivity, it also builds trust.

Related: 4 Reasons You Need to Embrace Transparency in the Workplace

2. Protect your brand's rep.

Consumers don't recognize the difference between a contract worker and a traditional team member -- both represent your brand. Yet as much as 80 percent of a company's market value comes from intangibles like brand reputation. So, if contract workers interact with your customers, consider your brand value carefully.

Why? Let's say that you outsource delivery. Customers will hold you accountable when they experience bad service. Hire with care, and vet candidates by talking with others. Be sure to monitor quality, especially during the early stages of your relationship.

What's more, treat external employees with the same respect as you would internal ones. Remember, how you act toward employees will reflect in how they act toward customers. They're a reflection of you and your brand.

3. Map out your business model.

Ask yourself whether an on-demand service provider is going to be a permanent feature of your business. If you plan to bring services in-house as you scale, write realistic time lines, goals and strategies into your business model.

Thinking about this up front helps establish road maps and metrics to plan for the next stage of your business. Consider having core elements, such as engineering, in-house sooner rather than later. Determine what needs to happen to make this possible.

4. Keep your laser-like focus.

With the wealth of labor and services available from a decentralized workforce, you'll likely find a host of tools you can use to expand or augment your business. But if they don't correlate with the purpose or stage of your company, consider them a distraction.

Use a decentralized service only when it truly makes sense. Manage your resources wisely. Otherwise, you're wasting your limited time on something that doesn't add value to the business.

The sharing economy has led to the creation of a diverse and thriving ecosystem of companies; you can get rides, food delivery, haircuts and everything in between.

Related: Why It's Smart to Treat Your Employees Like Your Best Customers

So, no, the sharing economy isn't moving toward its end. You're just witnessing its next phase, which is marked by experimentation. Through this, you'll see outsized winners -- just as you did with the dot-com era. Hopefully, the newer trend will have a happier outcome.

Wavy Line
Tx Zhuo

Managing partner at Karlin Ventures

 TX Zhuo is a managing partner of Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.

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