Total Picture Radio Interview Transcript
Michael Paolucci, Solvate

Peter: This is Peter Clayton. Joining me today for a special Innovation Channel podcast on Total Picture Radio is Michael Paolucci, the co-founder and CEO of Solvate, a venture-backed technology company based in New York City. Michael is customer number one at Solvate. He started with just two assistants who supported his other business operations while he was crossing the Atlantic and Mediterranean over 80 days on a small sailboat with a 56K satellite phone. No one knew he was even out of the office and Michael was sure they were onto something that every business could use. Michael, welcome to Total Picture Radio.

Michael: Thank you. Great to be here.

[00:00:38] Peter: Tell us about Solvate. Are you a staffing company?

Michael: No. We're different from a staffing company. We're different in a bunch of ways. I would say number one we really have a higher-end talent pool of vetted, independent professionals. I think what's going on, one of megatrends we're kind of riding is this idea that you can work from anywhere. The cloud has enabled information flow out of the office and now to be accessed from wherever people are. A lot of very smart people have decided they're going to leave corporate America. They're going to strike out on their own and they don't want to be a part of a staffing firm in the traditional sense. They don't want to be an employee to anybody. They want to operate on their own terms with their own clients.

So what we've done is we've assembled a large network of those people - a few thousand of them. People like a gentleman who was the brand manager of the Wii. Another person who was a McKenzie alum who worked at Google and ran the eBay account on AdWords for Google. These are people with very specific expertise, the kind of expertise that you would never find at a staffing company. Certainly the kind of people that are very hard even to hire full time on your own. They would be very expensive to hire on their own.

So what Solvate does is organize them so that they're very easy to access on demand. And to know that you're working with somebody who has been vetted by Solvate, who is under contract to Solvate, so we have them under NDA and non-compete and invention rights and all the kinds of things you would want. So in effect you might say we're closer to a professional services firm or an agency, or that you would get the quality or the expertise you might expect to find in engaging with one of those kinds of firms. But, let's say all the convenience of a staffing firm in that you can get somebody right now, immediately, who shows up on premises, whose work is guaranteed by us.

We're actually the contractual party. We actually give you the flexibility and the kind of control as if you were doing it yourself, as if you had found these people on your own. You're in total command of the engagement. That's what we mean by on demand. It's really new. There's nothing like it and we see a lot of companies making it a part of their daily operation.

[00:03:05] Peter: So Michael, the free agent nation is alive and well here?

Michael: Yes, indeed. The Gig Economy, as Tina Brown calls it. We don't see it slowing down. We feel like this is a way of life. There's a variety of reasons for that. I also feel like kind of in the down economy people have decided maybe they don't really believe necessarily in the ultimate value of that 401k to stick around the corporate environment. Maybe they don't need health care to quite the same degree they once did, as we're on the cusp of getting more universal health coverage.

It's become more possible for people to find them and work with them remotely. I would say social interfaces are a key aspect of this. We've all gotten very comfortable through things like Facebook and LinkedIn where we're socializing and networking professionally online. The interfaces that Solvate is building actually makes the experiencing of finding these independent professionals and working with them a social experience so that you can baby step into a relationship.

You might think of it like an eHarmony or a Match.com type of thing where there's kind of a mating ritual that goes on and people get a chance to get to know one another, build a relationship and then step into a billing relationship, all of which takes place on the Solvate platform, is very convenient for both parties to manage the billing, and in fact in many cases and all cases, we act as the trusted intermediary.

So the talent knows every time they do work on our platform they're going to get paid. We guarantee their payment. The client knows they're going to get the results they expect to get. We're guaranteeing the quality of what goes on and the quality of the people they're working with.

[00:04:51] Peter: So you act as the 1099 for the people who are associated with Solvate?

Michael: That's correct.

[00:04:57] Peter: Michael, you had mentioned earlier a couple of real rock stars that are part of the Solvate community. Can you tell us basically the types of skills and experience that I can find on this platform that I could perhaps engage for a project?

Michael: I should point out that they're all U.S. based. They're all people doing things where I would say the cultural importance of being U.S. based really matters. This is not the kind of work that you want to farm off of India. This is somebody to run your social media marketing campaign for you on Twitter.

So a good example of talent there would be, we have a young, 25 year old Princeton graduate who is on her way to getting her PhD in English, but on the side she's a social media manager for one of our customers who is in the arts and English space and is finding that this is just the talent that they need at the right price. All the way up to somebody that could build you an iPhone app.

We're the kind of people, we've probably built more iPhone apps than anybody else. We've done so many. You don't just get the developer who's going to build this thing for you. You actually get Solvate and our whole account management process to help you understand what's involved in building an iPhone app, how much do they cost, how long does it take, what kind of talent do you need to do it? Is it just one person? Are there different kinds of skill sets that you need? Do we need to assemble a team for you?

We build plenty of web sites, for example. You might think of that almost like an assembly line. I need a writer, I need a graphic designer. I need a front end programmer. I need these people to plug in together to cooperate to get this done. I could go hire an advertising agency to do that for me but I would be committing to that firm. I would be paying tremendous mark-up, probably two times the actual hourly rate of any of the people that were actually going to do the work on it.

At Solvate you assemble your own team with the guidance of your talent ambassador who is on our staff who will support you through the entire process, who brings that expertise that we've already built all of these things. We know the exact right people who have not only the requisite skills but the domain expertise. If you're building a website in the pharmaceutical industry, you probably want people who've already done that kind of work. So we assemble that all for you and make it very easy for you to choose who you want to work with and know what you're going to get on the other side of this process.

[00:07:34] Peter: Michael, talk to me about the cost of using talent on your network. Why don't we use the example of I need to have an iPhone app developed. Walk me through that and how much is that actually going to cost to have developed?

Michael: So 90% of the work done on the platform is on an hourly basis. We can certainly share with you, "Hey, this is how much iPhone apps generally cost. Here are some talent in different hourly price ranges that you're going to be working with." What you see in terms of the price that's listed on the talent is what you pay. And then Solvate actually takes a percentage of that from the talent.

So really we're serving the talent in the sense that we're bringing them the customer. We're guaranteeing their payment. We're taking care of all the paperwork so that they get a client that they know is going to pay up and all the sort of logistics of getting that mating ritual figured out or solved so by the time the two parties get together to actually engage it's just about the work. From the client's point of view they're not really paying any more. In fact, I would argue they're paying a lot less than many other alternatives to go out and find somebody with those skills to build those things for you.

[00:08:55] Peter: How do you go about vetting these folks? How do you vet somebody that's a final cut pro editor or somebody who's a C++ expert?

Michael: We have a peer review system. Ultimately only 20% of the talent that apply to be on the Solvate platform make it into the network. It's very important to us that we see third party recommendation. These are people who have really strong public profiles and have clear track records of performance publicly displayed as an independent professional. We're not looking for people who are in between jobs or out of work. These are people who have actually made a lifestyle decision, have struck out on their own.

If you've just made that decision at some point we'd love to have you in the Solvate network, but we really want to see that you're out, that you have your own customers, that you're building up a track record, that you're going to stick around. The value of the platform is the relationships that get formed. It's not just that I do one iPhone app and I'm done. These things need to be worked on over time. I think a lot of times people feel like they need to make certain personnel full time employees because they need that continuity.

What Solvate is presenting is that same kind of continuity without the overhead of the office and the payroll expenses and the long term commitment that has both sort of financial and psychological costs to having people kind of on the inside. I guess as Rupert Murdoch once said, "We need a few good men, and the fewer the better."

Our attitude is we want to help companies have their core group be as small as possible and then be able to leverage talent on the outside of their organization. I don't know if I'd call it virtual talent or just this idea that they have an organization that's external to their internal organization but yet have some continuity, who are plugged in, who understand the company's business, who are collaborating to build and care really about the company beyond just a hired gun who comes in to do one project and it's over.

[00:11:07] Peter: Let's say I'm an iPad developer rock star. I've got all the business I can possibly handle coming in the door right now. What's the advantage to me to team up with Solvate and have you work as the intermediary to my clients?

Michael: I would say that probably the true iPad rock star is so good at doing that and he's not necessarily the greatest marketer of his own services, nor does he have time to do those kinds of things. We think of ourselves in some ways maybe like Hotels.com is to the hotel industry. I mean, even the very best hotels have empty rooms sometimes.

This is not a perfect marketplace. Not everybody knows the instant somebody's done with a project and is now available to start another one. Those people find benefit being on a platform that layers in work on top of work that they already get from existing customers. Of course, working on the Solvate platform is safer because they know they're going to get paid. According to a freelancer's union survey, 40% of freelancers report that their biggest problem is actually getting paid for the work. That takes a lot of effort and it's a lot of brain damage. That's not the kind of thing usually that creative people want to be doing. It kind of breaks their spirit to feel like, "God, I did all this great work. Was there some problem? Now I've got to chase this guy down to get paid."

They're operating under our insurance policy, so that's another benefit to them. We make it really easy for them to effectively invoice their client. They're logging their hours in our system. The client sees that transparently update in their interface while the work is unfolding. This kind of transparency promotes good communication between the parties. It leads to less fractious relationships.

We find that if you're going down a road that I didn't really want you to be going down, on the Solvate platform because the client, for example, has to authorize hours in advance, maybe the client chooses to authorize 20 hours in advance at a time. They can see the work that's going on. It's all annotated so I know what's actually happening. That heads off problems before they start. So you might think of us like CAA - Creative Artist Agency - for certain kind of creative talent. We deal with a lot of the headaches that really talented people just don't want to deal with on their own.

[00:13:41] Peter: Do you do their taxes - when it comes to insurance is this liability insurance? Do you have a healthcare umbrella policy that you can offer? Tell us a little bit of sort of like the back office stuff.

Michael: Some of that is in the works. We don't offer healthcare today but it's something that's on our road map. We'd love to embrace this lifestyle and sort of become the one-stop shop for everything they need, including tax advisory services. We certainly promote best practices and do a lot of webinar type content in order to share information from successful freelancers about the things they do to operate their businesses.

We have dedicated account management for our talent, just as we do for our clients. So anytime talent have issues and questions they can get a person on the phone here that they have a relationship with and know that they're getting answers to things. Certainly things like, "Boy, I'm not quite sure what to do with my taxes." There's actually Solvate talent in the network who do things like taxes. We would refer talent to talent and help them work with one another.

[00:14:50] Peter: I spent some time on your website this morning and so there are basically three pricing plans. I got the free plan because I'm just an individual looking for talent to do things, right? Then you have also an enterprise version and you have a version for recruiters. So tell us about the different pricing plans.

Michael: The basic package is the do-it-yourself-er. That means come on in and you pay nothing per month. You find talent and it was priced just the way I said a moment ago. There's no mark-up to it beyond what you see. We take the rate from the talent. Then you can buy the next level of service which puts a talent ambassador on your team who is a dedicated account person who will actually go and source and staff your projects and help you build your organization for you. So that only costs $100 a month. It isn't anywhere close to what you'd actually pay a recruiter to go out and do this, but because we're doing this on a certain scale it works for us.

The more we can stimulate usage, we want to do that. In fact, you get a free month of the talent ambassador even for being a do-it-yourself-er just because we want to orient you with the system and sort of introduce ourselves. Then if you want to keep doing it yourself you can do that.

Then enterprise takes it to the next level so that larger organizations can have multiple parties interfacing from their end and to manage their team of talent collectively under one account structure. That would be something we would sell into HR organizations at larger companies who see this as sort of across their institution a way that they would manage a contingent workforce.

[00:16:35] Peter: That's pretty cool. As you said, if somebody says, "I need to have an iPad app built or an iPhone app built or an Android app built," they really don't know what the hell that means, right? Who do you need? Is that one person? Is that ten people? How long does that take? What's involved in building an iPad app or an iPhone app that's actually going to get used and going to get accepted by Apple and be part of the store and be successful, right?

Michael: Yeah, exactly. You want to deal with somebody who's already done it before, so he's not learning how to do it on your nickel. Anytime people make an investment in a new direction, especially working with somebody they haven't met before, it's great to have an organization kind of holding your hand through the process and making sure that you're going to get what you expect to get with your investment.

The other things that we're working on that I think are pretty exciting is a part of this social interface that is sort of evolving. The next iteration of it is coming out later this summer. It really will allow you to put up information about your company. And allow the talent to come to you. So I'm actually the co-founder and chairman of a different company called Slew which is an astronomy website. We built telescopes all over the internet and we've hooked them up so people can control them. Slew doesn't always know what it's supposed to do. It needs good ideas from people. It's always interested in promoting what we're up to and trying to engage people, particularly people who have a natural affinity for the subject matter, in this case astronomy.

So what we're going to enable is people to come in and actually build profiles and start to engage talent to come to them and say, "Wow, that's really cool. Have you thought of this?" Or allow the clients, before they actually have a specific project, maybe you're announcing, "We're about to launch an iPhone app, what else should I do?" Maybe somebody who markets iPhone apps will plug in a say, "Here's what you should do. Now that you built it these are the nine places you need to promote that." So it's trying to make it much more of a two-way engagement, much more of kind of a consultive process.

You're really now, I think, getting to the point where it's not just about, "I have a project and I have to sort of proactively go through the system but I'm building an organization of people who are configured to plug in on demand and engage with me over time." We think relationships will develop out of this and work will develop. It will be great for talent and it'll be great for clients.

[00:19:18] Peter: One of the things that I saw on your site that I thought was really unique, I've worked with companies like Elance. And to your point before, you can go into Elance and say U.S. only and you're still going to get like bombarded with people from India who say, "We can do this project." But one of the things I found really interesting is you have sold a community where it seems like the people who are working through you really kind of get together and talk shop.

Michael: Yeah, exactly. That's why we think we're in a position to build this sort of social environment and feel like it won't turn into a spam fest because this talent is already highly vetted before they get here. They're all people who have customers, who have work. Nobody's really desperate. It's really about coming in to work on the things they want to work on.

In fact, the vetting is two way. We vet clients as well. It isn't just anybody can come in and sort of plunk down a project that maybe nobody wants to work on and maybe it's not interesting to attract the kind of talent that can help build that thing out. So what we've learned on some of those other platforms is they're tremendous time wasters on both sides. There's a lot of false starts. There's a lot of clients who come in and posture that they're interested in doing something. People make proposals and bids. Nine out of ten times it doesn't turn into anything. So we feel like the art of it is making sure it's kind of a closed community of serious people who want to get things done.

We are there as kind of a proxy for both parties all the way through, to make sure everybody's for real, nobody's anonymous. You're dealing with your peers effectively. That's part of what I was talking about before in terms of the way we vet the talent. We want you to have a great public profile because we want affirmation that you have some skin in the game, that you have something to lose by doing poor work. It's going to affect your professional reputation. Obviously Solvate has a reputation of its own to protect, but we want everybody at the table to feel like success is the ultimate goal, not just getting paid on any one project.

[00:21:38] Peter: You're based in New York City and you're opening a sales office in Austin, Texas. Is that correct?

Michael: That's right. We just hired a great executive who is over at the ladders. We figured A, it's just a great community down there. We have a tremendous amount of talent in New York City where we're based. We feel like the same phenomenon will occur in Austin and what we're doing for the people in New York we'll do for the people in Austin, which is to offer them up a nationwide marketplace for their services.

The trick of Solvate is of course you're always welcome to search and look for people that work across town and maybe you want to go have a meeting or two to collaborate on a project, but most of the work takes place among parties who've never met and are not going to meet. In order for everybody to feel comfortable in doing that it's all about the interfaces, the mating ritual, the transparency, the accountability of the experience so that no matter what happens you know, "Hey, Solvate's accountable for this. I'm going to go forward."

[00:22:41] Peter: Is most of your talent right now in the New York metro area?

Michael: Actually 50%. There are 2,000 people in the network. Half are from the city. And clients are all over the U.S. The talent's all over the U.S. I think that just happens by virtue of the fact that we're here, we go to events here, we've built up an early fan base of people here. We'd love to be in all the major tech hubs really. It's a great place for us to be. Certainly a business in Saint Louis probably can't access the same degree of media advertising and finance the kind of talent that comes out of New York. So it's great for organizations like that to be able to get this talent without having to retain a huge advertising agency and pay the big mark-up and all that.

[00:23:29] Peter: When I signed up for your service this morning, about two hours later a gentleman named Sam called me up and said, "Hey, I want to do a test drive. Thanks for..." I thought, "Wow, this is really cool." That's so unusual. I can't think of any other service I've ever signed up for and had in a couple hours somebody call me back and say, "Hey, can I do a test drive and show you around and tell you what this is all about?" That's really great service.

Michael: Well, I'm glad to hear Sam is doing his job. But, yeah, I feel like it's all about layering the premium service on top of a fairly automated process, making it easy for people and delivering that professional services agency-like experience but again, that sort of command and control. I think we all hate working with firms where we're on retainer. You don't get the bill until the end of the month. You never quite know what that PR firm's doing for you. You feel like you better try it and then you're kind of 45 days into it and not much has happened. Then the bill's going to come.

I've been in that cycle and I feel like the more the client is in control of the relationship and can see exactly what's going on, it keeps everybody honest. What you see is what you get. The person you retain is the person who's going to be doing the work for you. It's not like it's going to get delegated down to some junior guy where who knows what he's actually doing on it. I think that's just smart business and it's how I've, as you said at the outset, I was running a company. That's how I operated Slew.

We actually never had - this is the astronomy company that was referenced in my sales trip - we never actually had an office. I had talent from all over. It was very flexible. There was no overhead. I didn't feel like I had people to burp and feed. It was highly motivated individuals there on demand who had skills for me. They were strong people on their own. They're kind of all maybe alpha types here, but everybody's got their own agenda. I just think that's a smoother way to run.

[00:25:40] Peter: Is there any specific skills or talent that you're really looking to bring into the fold right now? Like user interface designers? Is there anybody out there right now who has a skill set that you could really use?

Michael: We're always looking for user interface designers. The world cannot seem to get enough of them. iPhone developers and boy, that work never slows down. We would love to see more Java programmers, back end programmers. I think sometimes we've gotten a ton of creative services people because they're more out there. They're more socially active. They run into us. But, boy, there's no reason that really skilled IT professionals can't operate this same way.

In some cases an IT professional might go to a staffing firm and be doing a series of onsite gigs. It'd be a better way to exist where you could operate from home and come by maybe your company's once in a while, but be able to work on your own. I would welcome those people in. But we'd love to see this concept scaled to supply chain management. Any kind of professional services type of work should be done on this platform.

We embrace people to come in, index themselves according to our lexicon that's available, and if you don't see the kinds of services there now, please tell us the things that we don't know and we'd love to put them in our services lexicon. That sort of feeds our SEO engine and drives people into the site. We'll add them and try to market behind what you can do.

[00:27:18] Peter: Well, Michael, thank you very much for taking time to speak with us today on Total Picture Radio.

Michael: Thank you, Peter. I appreciate it.

[00:27:23] Peter: We've been speaking with Michael Paolucci, the co-founder and CEO of Solvate, a venture-based technology company based in New York City. We welcome your comments on our interview with Michael. Please join our Facebook group, Total Picture Radio, to voice your thoughts and opinions. You'll find Michael's interview, including a complete transcript, in the Entrepreneur Innovation channel on Total Picture Radio. That's TotalPicture.com.

While there, please sign up for our newsletter. And remember, you can subscribe to TPR on iTunes. Just do a keyword search for Total Picture Radio. Join me on Twitter @PeterClayton. Thanks for tuning in to TPR, the voice of career and leadership acceleration. Our interviews can link your company with your clients, prospects, employees and passive candidates.