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by Derek Loosvelt | June 23, 2021

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Shahar Erez is the CEO and co-founder of the startup Stoke, a tech-enabled management platform that makes it easy for companies to work with non-payroll workers like freelancers and contractors. Since the onset of the pandemic, freelancing and contract work has been on the rise. Which is largely why Stoke has been on the rise. In 2019, the startup closed a $4.5 million seed round of financing, and just this month it announced a $15.5 million round of financing.

Recently, we spoke with Erez about his startup, the shift to contract work, what the phrase “The Great Resignation” really means, and the pros and cons of freelance careers. Below is an edited excerpt of that conversation.

Vault: What led you to found Stoke?

Erez: Previously, I worked in various management positions at Hewlett Packard, VMWare, and Kenshoo. Most recently, I worked as the chief product officer at Kenshoo and was asked to lead its marketing team. At Kenshoo, I learned how ill-adapted organizations were in dealing with non-payroll workers. Through discussions with other C-level executives, I discovered that was the case at just about every other company, too. And since it was clear that the percentage of non-payroll workers would continue to rise, I decided to build a platform that made it easier for organizations to work with freelancers and gig workers—based on the understanding that there’s a huge difference between how companies deal with employees and non-payroll workers in terms of payments, compliance, hiring, day to day management, and more.

The phrase “The Great Resignation” has been thrown around A LOT lately. What does it refer to exactly?

The pandemic served as a wake-up call for millions of workers. Employees felt less engaged with their companies and teams while working remotely, which reduced their ‘loyalty’ and made them see that there are infinite options out there—some they never even considered. And now that it’s time to go back to the office, they’re re-evaluating their options. This is leading to a record number of people quitting their jobs.

But while it’s true that the pandemic made people stop and re-evaluate their careers and work/life balance, leading them to decide they want to change their paths, it’s a mistake to simplify the situation and conclude that it was all caused by the pandemic. This trend is actually fueled by several factors and has only been accelerated by the pandemic, not created by it.

One factor is the changing generation (millennials, Gen Z, and Gen alpha). Another is the freedom that technological advances offer to workers (the ability to work anywhere, anytime). And a third is the growing skills gap in tech companies. These factors are also feeding the booming freelance economy, as technology enables more people to become their own bosses and achieve more freedom to choose what to work on and who to work with. In fact, a new study by UpWork states that one in three Americans is already freelancing some portion of their work.

Do you think this shift to contract work is temporary or more permanent?

The pandemic only accelerated existing trends, so I don’t believe this shift is going away. It’s possible that we’ll be experiencing a huge spike in resignations now, since people who decided not to resign from their jobs during the pandemic will be quitting their jobs now. However, the driving forces behind this change aren’t going anywhere. The new generations (Gen Z and Gen alpha) will only increase in percentage of the total workforce. Technology will continue to advance and allow us more freedom than ever before. The skills gap in tech companies will continue to rise in the next five years as emerging technology increases demand for skills not enough people possess—AI, machine learning engineering, cybersecurity, data science, SaaS product management, digital marketing, etc. This means companies need to quickly adapt their workforce strategies to the new reality, which includes that many workers are preferring to be self-employed. 

Why has freelancing become so attractive?

Many people believe becoming a freelancer will give them more freedom to manage their careers and work/life balance. In addition to freedom and flexibility, which are the main motivations for many workers, many tech workers also wish to become experts in very specific niches and the freelance model better supports this career path. After all, it enables freelancers to work with different companies and products on very niche projects. And as technology continues to advance, niche experts will become more valuable and more tech experts will shift to become freelancers. Not to mention this model can significantly increase their revenues. Those freelancers can earn more since they’re paid for results rather than time spent.

What are the cons of gig work and freelancing?

First, as a freelancer, you need to build a reputation for yourself to keep customers and get interest—and establishing this reputation can take time. This takes a lot of time investment and can come to feel like a second job in some cases. Another challenge too few take into consideration is the admin work—tax calculation, taking care of insurance, collecting payments, etc.—that employees don’t need to handle. Freelancers must also build financial plans to account for busy and slow periods, which can be unpredictable. Building vacation time into your plans will also be critical, as PTO doesn’t exist when you work for yourself.

What recommendations do you have for people (young and experienced alike) who’d like to quit the 9-to-5 (or 9-to-9) and start freelancing? What are some best practices for freelancers?

You need to have a skill you can offer to become a successful freelancer. So, my advice for young professionals is to first find what you do best (and enjoy most) and invest as much time and as many resources as you can to become great at it. Your skill and expertise is your ticket to a successful career as a freelancer, so if you’re not sure what you’re good at and enjoy doing, or if you lack experience, then consider being an employee until you do. When it comes to more experienced workers, you need to see what the market demand is for your skills and experience. If there’s demand—great. If not, you also need to invest time to shift your expertise to areas in demand.

If your talent is in demand, then you should start building your reputation and network. Getting freelance jobs early on can be very challenging and you’ll need to develop your personal brand and work on your networking skills to get your first few projects. Even then, you need to be ready to continue and invest in your reputation. The next important step is to understand your market worth, which sometimes takes years. You’ll need to experiment with different pricing strategies, so see what makes sense for you and your customers. One last point you should consider is the many hours you’ll need to invest in admin work. If you’re not equipped to handle it, you need to find a solution in advance.

How do you see employers changing their hiring practices and cultures to accommodate a shift in the mindsets of students and young job seekers, particularly the Gen Z audience?

Companies are becoming more diverse, increasingly going remote, and relying more on freelance workers. They’re trying to offer more flexibility—a benefit of freelancing—to full-time employees, since they know that’s what today’s job seekers expect. In addition, some companies are now hiring remote talent to overcome the skills gap and take advantage of talent living in different time zones/countries. But this is not enough. Unfortunately, most companies don’t comprehend the magnitude of this change and are taking smaller steps than needed. Companies need to embrace the freelance model and learn to build an agile workforce with both employees and freelance talent. They also need to change their cultures to work with more remote workers to focus on the talent and impact of each worker and not be limited by geography.

Is there anything else important for students and job seekers to know about “The Great Resignation,” gig work, or anything related that we didn’t ask?

The workforce is changing, and young professionals can gain experience and become experts without joining the workforce as employees. Avid learners can learn most of what they need to know over the web. However, freelancing is hard, as you have no one to look after you besides yourself. You need to understand your reasons for being a freelancer and consider whether there are some advanced companies that can offer you the best of both worlds—freedom at some level with the (somewhat) safety of being an employee.

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