The gig economy and rise of the freelance class is a giant, multifaceted elephant in the room when it comes to how the recent pandemic has and is shaping the global economy. Over two million US workers joined the freelance economy in 2020, with full-time freelancers now generating $1.2 trillion in income and making up 36% of the country’s total workforce.
While freelance, part-time and remote work has been exploding in a number of sectors, traditional skilled workforces such as accountants, lawyers and doctors have just begun adoption to the trend.
One area where skilled workers are beginning to accept a transition to freelance and contract work, is in accounting and financial work. Paro is an example of a platform that gives a traditional risk-averse population of skilled professionals access to a wider market of companies looking for fractional or on-demand CFOs.
The company uses machine learning and AI technology, in conjunction with a vetting process which includes questionnaires, testing, interviews and background checks of candidates, to select and place finance professionals in the right fit for them. These jobs range from traditional bookkeeping and audit-prevention roles, to more complex problem solving and strategic growth planning positions.
In addition to its freelance marketplace, the platform provides infrastructure tools aimed at helping professionals start and grow their own businesses, improve their marketability and eventually earn more than they could at a traditional full-time firm. The company has about 1,000 contractors on its service, double its size from the third quarter of 2020, and states that 20% of freelancers on the platform have billed between $100,000 and $500,000.
I spoke with Paro founder and Chief Strategy Officer (CSO) Michael Burdick about Paro’s journey, the role of skilled professionals in the freelance gig economy and the company’s vision for the future. Burdick previously worked as a consultant for Deloitte and attributes his time working for the Big Four accounting giant as what led him to ultimately found the company.
“What I so desperately wanted going into Deloitte, was to express my talents on my own terms, to have that flexibility, choice, freedom and autonomy. That’s why I set out to create and build up our own premise that business professionals should have the peace of mind to work on their own terms.”
Burdick says that despite the finance and accounting sectors being made up of a relatively risk-averse and conservative population, the COVID-19 pandemic has helped remove trepidation and prove remote work is actually possible.
“It’s very scary, especially if you have the safety of a full time job and know how much you’re going to be making. However with COVID, everybody has been forced into this giant social experiment, where they have to figure out how to work remotely. And everybody had this eureka moment like, ‘Oh wow. I can actually do this; it’s possible,’” he said.
“People still didn’t have a means to leave and feel safe to leave, like the full-time income that they received from the Big Four for example, and going on their own because there was no platform for them to do that right and to have that income predictability.”
“No platform solved for that, and we have, so that’s number one. What we do right out of the gates is show them that they can make a significant amount of money on their own. Our managed marketplace is, you can think of it as like Match.com for finance accounting professionals connecting with mid market companies.”
On-demand, fractional CFOs
“I think there’s fractional CFOs. You can almost think of it as a mega trend for just having an on-demand subject matter expertise, right? Like all of this is labor driven and worker preference driven right going back to my Deloitte example,” Burdick said. “It’s something that’s being unlocked via the freelance economy. People are able to work on their own terms.”
“I liken it to the rise of the ‘Business-Professional-Creator’ class. There’s a lot of like pieces out there about the Creator class in general, but not about business professionals specifically. You think about what someone needs in order to be successful,” Burdick said, mentioning the ways Paro tries to enable this group’s success.
“Leaving the Big Four for example: going out on their own and starting their own firm, their own practice, or working on their own terms. It’s not just the money element, which we’ve solved via our marketplace, but it’s also just a ton of infrastructure tools to start, build and grow their own business.”
Nearly 25% of Paro’s talent has worked for the Big Four according to the company, with 1-in-5 having worked at top banks (JPMorgan Chase, Morgan Stanley, Bank of America, Deutsche Bank, Barclays), and 1-in-7 having worked at Fortune 500 companies.
Burdick says that fractional CFOs are part of a mega trend, with companies looking for on-demand subject matter expertise, which is being unlocked by the freelance economy, worker preferences and wage inflation in high end skilled professional roles.
“There’s an abundance of venture capital money out there, which is driving up the prices for, you know, the highest quality professionals out there, which makes it so that nobody can really afford the perfect fit CFO for themselves. So there is the potential there, where you actually can save a substantial amount of money by tapping into the ‘perfect fit’ subject matter experts, when and where you need them,” he said.
Speaking of venture capital, Paro recently completed its own $25 million Series B fundraise in July led by Madrona Venture Group. The round brings Paro’s total funding to $43.5 million through six rounds and will be used to fuel international expansion, develop marketing and sales and continue building out the platform’s product and AI systems.
Machine learning and the potential to price skill sets
Burdick says that while Paro is a convenient marketplace and service for accounting and financial professionals to start and earn with gig work, he sees endless potential with the products’ back-end data and machine learning systems.
“Our vision is making it so that business professionals are empowered to work on their own terms. Part of that has to do with making more money through the freelance economy than they could anywhere else, including a full time job, so the power of AI and data to democratize pricing and access to skills is exponential. It’s crazy,” Burdick said.
“If you know exactly how much your skill could be priced at, you know, ‘I’m amazing at, you know, creating pitch decks for e-commerce companies’, that should receive you know a 3x multiplier, versus just somebody who can create pitch decks, you can actually price a specific skill.
“I think a lot of this has to do with the so-called ‘atomization and quantification of skills’. You’re essentially democratizing the pricing of how much a specific skill is worth to a company’s specific problem.”
“You really unlock a whole world of potential or making that perfect fit, match right based upon what the company’s requirements are, how much they’re willing to pay and what the business professional can provide. We’re investing a ton on the AI in the product.”
Burdick says that moving forward, most of his bigger goals for the company include harnessing the power of the platform’s data and tapping into the potential for AI to improve outcomes for business professionals.
“How can you increase your win rates or position yourself to win a specific project? Everybody wants those feedback loops, so we’re using AI to help improve outcomes using natural language processing to automate components of business development and proposal building,” he said.
“It’s also using AI to inform pricing. I used this example before, but if you have a skill set that’s very niche or it’s in demand all of a sudden, we want market pricing to dictate what you should set your price at.
Bigger goals centered around artificial intelligence
Burdick says Paro’s focus on determining real market value is one of the most important ways Paro differentiates itself from competition, which includes companies like Pro Business Plans, Preferred CFO, Toptal, Pilot and Ignitespot.
While other marketplaces only focus on the volume of jobs matched, Paro is priming itself to break down the walls around market pricing and increase transparency when it comes to evaluating the price of a skill.
“A lot of the platforms out there, the psychology behind it is: maybe you’re not winning a ton, so you lower your rate. You actually undervalue yourself, because that’s just human nature,” he said.
“We want to make it so that market pricing is based on standard microeconomic theory, which dictates that if you have an in-demand skill, where there’s low supplier, high demand or wherever there’s a market imbalance, you can increase the pricing. We want to use AI to help inform that.”
Doubling down on his vision for Paro’s AI capabilities, Burdick says another large goal is to use the technology to inform and optimize users about career earnings and longer term skills they can acquire to increase their marketability.
“How can you earn more? There’s the traditional sense of career progression, sort of a stepwise function where you get a promotion, take on more responsibilities which increases your salary. In the freelance economy, that is just an exponential, clear line where every single project is a learning opportunity.”
“We are going to use AI, to inform where you should invest your time and energy to increase your marketability of skills,” Burdick said, summarizing his biggest goals for the company and trends he predicts.
“This is just a huge market opportunity in general, if you think about $100,000-plus earners. Being with one company for the long haul is not what people want, and I think that’s going to be the exception to the rule in five years. I think it’s very much going to be that $100,000-plus earners are working with multiple different companies and on-demand.”