Hey all - on FRCTNL, I highlight interesting companies building for part-time workers. I came across one this week called Upside that I wanted to share. Upside caught my attention as solving the same problem as my last company Moonlight, but in a completely different way. So, I did a little written interview here for FRCTNL with Upside's founder and CEO ☒ .
Interview
What is Upside, and why did you start working on it?
Upside is the partnership platform for independent professional services (advisors, consultants, freelancers, small service businesses). Users build their own partner network and exchange referrals with their partners (and even get compensated for making referrals).
I’ve done my own consulting over the years and helped hundreds of others build their own consulting practices. Like most people, I’ve wanted to operate primarily via high-trust referrals so I don’t have to market my services publicly. There weren’t any products that helped consultants or freelancers power how they partner with others and get referrals, so I started working on building the product I wanted.
I also previously founded a freelance marketplace for web designers that got to $1M GMV, but had trouble scaling. The big insight for me was that most people don’t want to be on marketplaces. They want to graduate off of them and have their own channels for getting clients where they have a lot more control. So I thought, “what if you put all of the infrastructure that marketplaces provide and put it in each freelancer’s hands? What if you gave them more control to build their own personal partner network from their existing relationships?” That’s the product insight that sparked what we’re building at Upside. And the truth is, we’re enabling a lot of existing behavior that currently happens very informally. Freelancers, consultants, and agencies already have handshake agreements and rev share arrangements. It’s just pretty awkward for individuals to navigate these things on their own, and we make it all really simple and easy out of the box.
In Aggregation Theory - that there are aggregators like Amazon that build a central, controlled brand - and that there are platforms, like Shopify, that allow people to build independent businesses by themselves. Applying that here - I think Upside is turning traditional marketplaces into a "platform", like Shopify did for online selling. Why do you think Upside's model beats the "aggregators" like A.Team or Toptal?
At a high level, the biggest thing that makes us different from any aggregator or marketplace is who our customer is. The truth is that for any marketplace/platform, their customer is the client who’s looking for a service provider, not the service provider. Because our customer is the service provider, we give them a lot more control, ownership, and upside. They can build their own partner networks without feeling like they need to onboard them onto a new platform. While there’s a network aspect to what we’re building as we grow, our customers view us first and foremost as a SaaS product they can use to leverage their own network to grow their business. So we’re already seeing beta users who’ve been able to get new clients from their network using Upside, and many who are already making 5-figures in new income annually by making referrals to others.
The basis of Upside seems like it’s these referral agreements between service providers on the platform. So if users get clients from their partners via Upside, they’re paying a fee. How should freelancers think about this new business expense? Can’t this get expensive?
First, I’ll call out that referral partnerships are not new. It’s common for agencies or consultants to have rev share agreements with partners. For a lot of our customers who’ve been consulting for a few years, one of the first things they do is import their current partners and rev share agreements to Upside. And even when you think about marketplaces, the freelancer is generally giving up 10-20% to the marketplace. Second, business development is never free. It’s common for freelancers or consultants to invest 10-15% of their annual earnings in sales and marketing activities, even if that’s time invested in building a public brand, paying for networking events, or anything else. This is why partnerships with other service providers can be so attractive. When you get warm referrals from other people who trust you, the conversion rate is 4x as high and you can spend way less time on the “business development” work that most people dread. With Upside, we have some smart default agreements that people can use out of the box which can provide a strong incentive to their partners while mitigating the risk of paying out expensive referral fees. For example, one of the most common agreements on Upside is a 10% revenue share with a $5K cap. This means the most you would pay a partner for a referral is $5K. These are pretty typical practices for experienced consultants/service providers, but it can sometimes be a bit opaque how to do this right, which we handle out of the box.
Can you walk me through the flow - if somebody knows of a job and they want to make a referral, what are the next steps?
First, this person’s probably already built a partner network of 10-15 people using Upside who they trust. These are complimentary service providers who they trust and refer to when they don’t have bandwidth or something is outside of their wheelhouse. They’ve aligned on a referral agreement, and everyone has resources that make it easier to refer clients to each other (e.g. custom 1-pagers).
There are generally two ways people make referrals using Upside. One is just an immediate 1:1 referral via email (e.g. someone is asking me for a performance marketer and I have a go-to person for that service). With Upside, they can just quickly make an email introduction and bcc Upside. The other scenario is if someone is better for when you don’t know who the ideal person is for them. In these scenarios, it’s best to present the client with a shortlist. Users create shortlists by creating an Opportunity (like a mini-RFP), sending it out to their network, collecting pitches, and then sharing the shortlist of pitches to the client, who then requests introductions to select people.
Once introductions are made, we track and handle everything from there. We follow-up with any service providers who received referrals, figure out who won the client, and handle referral fee payouts. This last part is one of the most awkward things that our users are delighted for us to take off their plates. No one wants to bug their friend asking the status of the referral they sent over and figuring out how much they need to get paid.
My understanding is that Upside is entirely peer-to-peer - the company doesn't have to opt in or even know about the arrangement between freelancers. Do you think people should disclose when they make money on a referral?
It’s generally best practice to disclose, and we handle that out of the box. You don’t need to disclose the details of the arrangement. Simply telling a client, “quick disclosure: [partner name] and I have a referral agreement because they’re my go-to for this type of thing.” Ultimately, this is part of why it’s usually best to give the client a few options, so they don’t feel like you’re picking favorites based on who pays you a referral fee.
Skeptics might disagree with charging money for referrals. In your experience, do you think that putting these incentives in place could make a better experience for both companies and freelancers? I'm thinking of your "The Board" feature - you're basically asking the referrer to do work, right?
Not everyone wants to get paid for referrals. We actually have users with partnership agreements that ask that their partners pass the referral incentive as a discount to the clients. But at a high-level, while financial incentives can sometimes be awkward to broach, ultimately aligning incentives makes things more sustainable for everyone. While there will always be some people who will never want to introduce financial incentives into referrals, we’ve ultimately found that the bigger reason some people don’t do this today is the awkwardness of broaching a financial partnership with high-trust relationships, and they’re relieved that Upside as a platform can normalize it and make it easy.
Where can people learn more, and how can they try it out?
Upside costs $100/m and we’re currently in private beta. You can learn more here. We do screening calls to see if people are a good fit for our beta, and we also have a free playbook on growing your consulting business via referral partnerships, which goes a lot deeper on some of the things discussed here.
