Instawork: The Labor Marketplace We Have Been Waiting For

9Yards is excited to announce that we are partnering with Instawork on their $60M Series D led by TCV and with participation from existing investors: Benchmark, Craft, Spark, GV and Greylock. Read more here.

Independent contractors, or gig workers, have been steadily increasing share of the overall workforce since the 1980s. Today, they now represent 1 in 6 workers at large enterprises as nearly every industry relies on short-term workers — to meet seasonal demand, provide specialized expertise, or drive sales. For workers, a generational shift in preference towards flexible work continues to drive labor supply. In fact, over 70% of the 1099 workers surveyed in a 2020 study by ADP said they were working independently by choice and would continue to do so for the next few years. Despite the scale of demand on both sides of the market, the flexible labor force has been holistically underserved by technology today.

Historically, flexible labor has been served by the archaic and fragmented $500B global staffing industry, which is largely analog and rife with issues. Staffing and temp agencies are notoriously slow, burdensome for workers, and costly for employers. Incumbents still rely on an army of staffers to receive shift request emails from corporate clients and then call local workers to fill job requests. As a result, for the average staffing agency, the time to fill a job vacancy sits at more than 30 days while the job fill rate stagnates at a mere 46 percent. Meanwhile, margins are incredibly thin despite a healthy industry-standard take rate well north of 20%. Even with this suboptimal product offering, there are still more than 12,000 staffing agencies in the United States, with the top 10 collectively producing north of $10B in net revenue.

Enter Instawork. Instawork is the leading labor marketplace that connects thousands of businesses (aka “Partners”) with a vetted, flexible and skilled workforce of 4M “Pros”. Through Instawork, Pros can digitally register to share their unique work experience and skills to access a variety of available short- and long-term job opportunities that match their qualifications, interests, and schedules. The platform provides insight into each opportunity, including workplace reviews and hourly pay, which averages $20/hour in the U.S. market. Pros benefit from the flexibility. They can choose when and where they want to work and for how much on a daily, weekly or monthly basis.

On the opposite end, Partners leverage Instawork to quickly and consistently find high-quality, reliable Pros to fill available shifts and deliver valuable services. Partners upload labor needs through the platform, with specifications around quantity, skillset, requirements, licensing and more. Partners do not need to worry about operational issues such as discovery, reference checking, clock-in/out, payment, paperwork, and insurance — Instawork handles all of that. Moreover, Partners can review and favorite Pros to create a more reliable and consistent labor supply designed for their business.

Instawork’s technology brings an elegant solution that stands far above the crowd. The platform can fill 80% of jobs in an average of one day while being less costly than the traditional staffing agency. Compared to other modern labor marketplaces, Instawork wins on quality and reliability, with a skilled labor supply that is reinforced through a deep data moat that widens with network effects. Instawork now has defect rates (Pros not showing up for work) that are <5%, far superior than the 20–30%+ rates of their peers. As a result, Instawork’s business has accelerated dramatically over the past 2 years. Shifts available via Instawork have grown 8X in less than two years, with thousands of new Pros building profiles in its marketplace each day. Instawork now counts some of the largest, national organizations as customers, including Marriot, Sun Basket and Restaurant Depot.

The Next Great Marketplace:
As we look to invest in generational businesses, we believe that Instawork will become a marketplace that is spoken about in the same vein as Airbnb and Etsy. We believe that it is the category leader in an industry that benefits from a number of powerful marketplace characteristics:

• Fractionalized units (like gigs & shifts) tend to have high repeat usage on both the supply and demand side. Workers return to find their next job while companies return to fill their episodic labor needs. High repeat usage allows Instawork to extract significant recurring transaction fees on every shift, which leads to best-in-class marketplace take rates.
• When a marketplace business has strong repeat usage on both the demand and supply side, both sets of market participants have a high lifetime value, which in turn allows a business to spend more on CAC. In the near-term, thise enables Instawork to scale quickly and efficiently. In the long term, it allows Instawork to have strong bottom-line profitability.
• Instawork also benefits from a homogenous supply pool that reduces disintermediation. There are many different workers on the supply side who can deliver the service and therefore trust accrues to the marketplace instead of individual workers.
• Finally, Instawork also benefits from real data moats, often in the form of labor reviews or feedback. As a worker receives more feedback from more demand-side participants, the worker is able to get future jobs more easily, which creates stickiness for the worker. The reviews are also valuable for the demand side because they help create trust. This creates a virtuous cycle that creates a moat for the marketplace and strengthens the business as it grows.

For the last decade, we have watched the world of labor marketplaces evolve with the view that a very special and disciplined founder would be able to unlock the opportunity that we see so clearly. We are incredibly excited to partner with Sumir Meghani as he is exactly that. We look forward to working with him & his team in this next chapter of growth.