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Is AI reducing the need for freelance talent? Far from it, according to Erica Gessert, the CFO of Upwork, a platform connecting contingent workers with employers. On Morning Brew’s After Earnings podcast, she shared her thoughts on how AI is driving the creation of new jobs and skills, and how Upwork itself is using the technology.
This interview has been edited for length and clarity.
You have strong free cashflow, some great cash equivalents on the balance sheet. The market doesn’t seem to be fully getting it. And I’m curious if you think these AI fears of job replacement are overblown.
If you just look at our growing profitability profile and free cashflow profile, by any measure, we certainly feel the stock is undervalued…The reality is it’s been a relatively tough operating environment over the past six quarters…When money’s expensive, companies are focused on profitability and so they’re just spending less. And we see that with our enterprise clients.
Upwork’s been holding up much better, but it’s against a backdrop of, you’re right, a narrative out there that AI may come in and replace people’s jobs. Now what we’re seeing is sort of the opposite…We see it as a human-plus-machine future. Our freelancers are coming on, they’re adopting the most relevant, most recent tools and technology to help get work done.
What story do you need to tell so people understand these nuances in your business as it relates to AI?
We need to make sure that people continue to understand all the ways AI is enabling work today…The growth of AI jobs themselves is absolutely enormous. And we see no end in sight; on the lower end, data labeling and other things like that. On the higher end, prompt engineering and the building of AI models themselves. We serve many enterprise clients to help develop and build their AI needs…So there’s an enormous industry that is going to be the next wave of growth for human capital workers…Our freelancers…go to where the puck is and develop new abilities and talents as new technologies develop.
I noticed last year you had a 20% jump in R&D investment, and I was curious reading that, because I couldn’t picture in my mind what R&D would look like at a company like yours.
A lot of the AI solution enablement that I’ve talked about is a big part of our R&D spend.
We are developing an AI companion [called Uma] and AI enablement through our platform…A client can come on, have a conversation with our companion, and say…“I want to write a pitch deck for a VC I’m pitching to about my new online healthcare business.” Uma will identify the talent, help him build a website, help him build a pitch book…and she can identify the talent pool and even put together a project plan…Imagine the future whereby all this will get done in minutes rather than having to work over several days.