Perhaps some small glimmers of hope here, but, I suspect this will be a long slow-burn investment that may go to zero if freelancers eventually are displaced by AI.

I'm not sure what fair value would be for the Escrow business, but I currently don't place any value on the Freelancer business. Unfortunately, I don't think this is an industry that affords itself to sustainable long-term profits.

There is incremental value here for each new user or freelancer who joins (network effects), however, given the connectedness of the global freelancer economy, users/freelancers will simply shop around, and thus the unit economics of this model becomes a race to the bottom.

It is an interesting case study highlighting that network effects are meaningless if barriers to entry are low and the network effects aren't protected on other grounds (i.e. trust, value, etc.).

Red flags:

• Unprofitable
• Gross profit margin is low (~27%) and continuing to fall, reflecting that FLN's take rate continues to decline
• Flat top-line growth for multiple years
• They have significantly reduced their workforce.
• AI (Chat GPT etc) displacing demand
• Very difficult unit economics
• Low barriers to entry and high levels of market competition