Looking for someone to edit your cover letter and resume? Or a voiceover artist to create a customized Barack Obama impersonation? Or a user to provide feedback on your website based on first impressions? Then perhaps you should take a gander at Fiverr, an online marketplace that lets users buy and sell creative services starting at $5 a pop (hence its name).
Since its launch in 2010, Fiverr has grown to 150 employees across offices in Tel Aviv, New York and Miami. In August, the company announced a $30 Series C funding round bringing its total external financing to $50 million.
We caught up with Fiverr co-founder and CEO Micha Kaufman recently to chat about the future of the ‘gig economy’, how Fiverr applies the e-commerce model to services and the company’s obsession with growth.
Tapping into the ‘gig economy’
Ever since the onset of the financial crisis, talk of the ‘gig’ or freelance economy hasn’t stopped. Proponents of the movement see it as a glimmer of hope for the modern worker, while others are more skeptical of its implications after testing out the world of ‘micro-entrepreneurship‘ first-hand.
According to a recent survey commissioned by Freelancers Union and Elance-oDesk, 53 million Americans – or 34 percent of the US workforce – are working as freelancers. In this particular study, ‘freelancers’ were defined as “individuals who have engaged in supplemental, temporary, or project- or contract-based work in the past 12 months”.
However, a similar report released a few months later by MBO Partners, which focuses on people who pursue independent work regularly, showed that about 30 million people are now working as independents.
The situation seems to be different in Europe – and not only because there is less data to work from.
According to research conducted by Professor Patricia Leighton from the IPAG Business School in France, who was commissioned by the European Forum of Independent Professionals, 8.9 million Europeans were considered ‘independent professionals’ in 2013. Here, they are defined as “highly skilled self-employed individuals who work for themselves but do not employ others”. Compared to the US, the number seems quite small. However, it’s actually a 45% increase from the 6.2 million independent professionals working in the region in 2004.
Because this group of workers tends to be subsumed into self-employment or SME data, breakdowns of the freelance economy vary depending on definitions of an independent worker in a study.
Generally, though, the trend is that the number of people in this group is increasing both in Europe and the US.
“When we first started in early 2010, we were looking at this space and noticed that most of marketplaces out there were big databases of freelancers… which seemed to be complicated and full of friction,” recalled Kaufmann (pictured right).
“So we said, ‘Maybe this is an opportunity for us to create something that’s going to take away most of the friction and really allow us to think about it – not as a labour marketplace – but as something different’,” he continued.
“Productization of services”
Kaufman and fellow co-founder Shai Wininger, who were friends for 10 years before starting Fiverr, looked to what was happening in e-commerce for inspiration. In particular, to companies such as Amazon, eBay and Alibaba.
“The idea came from the fact that we were both using freelancers or outsourcing some of our tasks and realizing what a painful experience that was – the friction, the turnaround time, the back-and-forth and the negotiation,” said Kaufman.
“We came up with a concept that we called SaaP – which stands for Service-as-a Product. What that means is that we allow creative, talented people to package their skills in the form of a product, a very well-defined product.”
“The same way that people look for TVs and know specifically what they’re looking for, we want to apply to services,” he added. “When you think about a specific service and look at specific attributes of the service – let’s say with voiceovers – it seems pretty straightforward… but are you looking for a female or male voiceover artist? Are you looking for a voiceover for a video or your answering machine? Do you need studio quality or home quality? Eventually, you come up a very specific project that the freelancers can price as they like.”
Then, the product goes onto the Fiverr platform – or catalog – where customers can browse, search, and buy in a familiar e-commerce experience, he said.
With more than 100 categories and a eBay-like landing page, it’s certainly clear that Fiverr took some cues from the consumer marketplace giants. Users can also rate sellers based on quality of their services as well as see average delivery times, like on Amazon and eBay.
The story behind the name
At the time of Fiverr’s launch, the service billed itself as a place to buy and sell gigs for $5, which the company’s name reflects.
“Every service went for $5. It served as a way to spread the idea, but we knew that it was only the starting point to come up with something that would keep the interest of a lot of people worldwide,” Kaufmann admitted.
“It was just a way to start, and I think it gave many people, who were not freelancing before, to explore their talents and see if they could stand a chance at making money off something they were passionate about.”
Now, services start at $5 and can be priced higher depending on the nature of the tasks, ‘extras’ and delivery time. Fiverr takes a 20% cut of the seller’s revenue once the transaction is successfully completed.
For some services, such as adding a YouTube tab on a Facebook fan page or “making a frog talk and say anything you want”, a $5 price tag seems relatively reasonable. However, as a freelance writer myself, it’s hard to imagine quality copy for a 900-1000 article that was done for $5.
Earlier this year, one of Fiverr’s advertisements, which emphasized low-cost and suggested that paying $100 for a logo could be “too much”, sparked a backlash from some graphic designers.
Subsequently, Paris-based designer Sasha Greif, founder of Folyo, a startup operating in a similar space to Fiverr that aims to connect startups with selected freelance designers, published a Medium piece examining how some designers offering logo work for $5 were modifying templates instead of producing original work.
In an interview with The Next Web, Kaufman touched further on the pricing aspect of Fiverr and said: “There’s always going to be a need for a graphic designer that charges $300 per hour. There’s always going to be a need for people who are more frugal and need to do it on a budget, and it’s the same on the side of the supply. So I think this discussion is a little bit biased. We’re giving freedom to the sellers, they get to choose what they’re going to do.”
The future of Fiverr
All this discussion of a new, modern worker in the past few years has resulted in a proliferation of online platforms hoping to get a slice of the pie.
There’s US-based Elance-Odesk claiming more than 8 million freelancers from over 180 countries in its community as well as Sydney-based Freelancer.com reporting a sales jump in Europe and claiming 14 million users across 247 countries on its site. On a smaller scale, there’s Berlin-based Twago, which reportedly has 255,000 freelancers and agencies on its platform, as well as San Francisco-based TaskRabbit, which recently pivoted to focus on an errands marketplace, is also competing in a similar space.
When asked about Fiverr’s user numbers, Kaufman declined to disclose the exact number, but said “it’s in the millions”. Most of the users come from the US, UK, Canada and Australia, he said, which isn’t surprising especially if we consider the aforementioned stats of freelancers in the US and Europe.
Although most of the customers on Fiverr are small and medium-sized businesses, Kaufman said that the company has seen an increase among Fortune 500 firms using the platform.
So what’s next?
“Basically, it’s growth, which is what the company’s obsessed with… We’re really focused on growing the community and expanding internationally,” he responded.
It’ll be interesting to see whether Fiverr has what it takes to catch on in the European market, which seems to be lagging in this space.
Updated 23 December 2014: An earlier version of this article stated outdated user numbers for Freelancer.com. The company now has 14 million users and not 10.5 million users.