On Oct. 3, Upwork celebrated its debut as a public company. The firm’s shares, offered at $15, surged more than 50% on the first day of trading, eventually settling at about $21 a share, giving the firm a market capitalization north of $2 billion. The IPO may be the catalyst for a new chapter of growth and accountability in a two-decades-old saga concerning the transformation of work. (This Buzz is a departure from its typical view of emerging companies. But I felt that it is buzz-worthy for what Upwork’s IPO means for the ecosystem.)

History. Upwork is the world’s largest freelancing website measured by the volume of work completed through it, a metric the firm calls “gross service volume,” or GSV. It matches clients that need work done to a global network of freelancers, and makes money by taking a cut (ranging from 5% to 20%) of all project volume that is transacted via its platform. It offers additional services to large enterprises, such as payroll/compliance, reporting and proactive sourcing/curation. Currently, all of the work that is completed via Upwork is done remotely.

The financials. In 2017, Upwork generated $1.37 billion of GSV (i.e., it paid more than a billion dollars to freelancers), an increase of 20% over 2016, netting the firm $202.5 million of revenue. (Unlike staffing firms, money paid to freelancers is not included as revenue, except in very limited circumstances where Upwork itself is responsible for the outcome of a statement of work.)

Growth accelerated in the first six months of 2018. As of Oct. 19, the firm was trading for roughly 10 times its 2017 revenue. (For comparison, according to research by SIA, half of staffing firm sales are for 0.6 times revenue or less, though as noted above, the comparison is not quite apples to apples given that staffing firms include workers’ wages in revenue per GAAP.) Upwork is not yet profitable.

The big question. What remains to be seen is whether the IPO holds broader significance for stakeholders around the ecosystem, or whether this transaction will become quickly forgotten business news.

For investors, it provides some much-needed benchmarking and transparency. For the legions of firms formed in Upwork’s image, it’s a validation of the overall model that you can provide more economic opportunity for millions of workers and better value to clients if you use technology to remove location from the hiring equation. For now, at least, the firm’s valuation suggests investors are bullish on its long-term cash-flow generating potential.

For the staffing industry, it should serve as a wake-up call that work is not insulated from digital intermediation, that new business models and digital delivery channels are both a threat and an opportunity for incumbents, and that regardless of which lens one chooses to view these kinds of firms, probably the worst thing to do would be to ignore it. New era. Though Upwork and its brethren have challenges yet to overcome (such as hiring friction and regulatory scrutiny), the firm’s IPO could foreshadow the dawn of a new age of digitally intermediated work.