Back in 2003, long before Micha Kaufman knew that he was going to start Fiverr, he was chatting with someone across the world in Siberia to figure out how to encrypt files on hard drives.
Micha had an idea. But he didn’t have the technical skills to develop it, so he found a freelancer in Russia to work on it with him and without ever meeting the man, built a business from the ground up. After the recession hit in late 2007, freelancing boomed, and the gig economy was born. Losing their jobs, people turned to side-hustles to make extra money on a remote basis.
The problem was, freelancing was an inherently high friction industry, and when it moved online, none of that friction was reduced. For example, when a freelancer wanted to find a job, they had to bid on a project. Afterward, the client and the freelancer would exchange messages or have meetings, decide on the scope of work and payment, do the work, and then make revisions. This was called on-spec work, and it tended to be off-putting with freelancers sometimes spending more time on deciding the conditions of employment rather than actually doing it.
To Micha, this had posed a difficult problem. From his first company, he already had experience working with someone remotely, so he understood the pains they had to go through to find work and decide on how it got done. When the stars aligned and freelancing began to see an increase post-recession, Micha saw an opportunity to solve the issue that had surrounded freelancing for so long: friction.
Thus, when Micha started Fiverr, a lot of the focus went into eliminating friction for freelancers. To do this, they wanted to emulate the ease of the e-commerce experience and bring that to contract work.
For example, on Amazon, your query would be met with a variety of products to fit your description. After that, you could further refine or narrow your search until you found what you wanted.
That ease of shopping for products is contrasted by the confusing world of independent work. Freelancers would bid on jobs, and each new bid would try to undercut previous ones. It’s was freelancers call “the race to the bottom.” This reverse bidding process took money out of the hands of freelancers, and it also made it harder for clients to find someone who would be the right fit for their job.
Seeing the difficulty of this process and the ease of the e-commerce experience, Micha and his co-founder created a new framework called SAP – service as a product.
How could services be turned into products though? There were so many different aspects like conditions of service and the traditional fluidity of freelance work that made productization a formidable challenge.
SAP made finding a freelancer like shopping for a product. For example, a freelancer would write 350 words for five dollars. The five dollar price point that made Fiverr so unique would prevent people from undercutting each other because the base price was the same. Prospective clients could shop around for someone that fit their needs, provide details on the work, and then get what they wanted within a set amount of time.
The five dollar price point that became sort of a gimmick in the early days also put some people off. And it made sense; they would spend all this time working on a project and only get five dollars. This created quite the challenge for Micha and his co-founder: how could they create enough supply to drive demand and where could they create this supply?
They implemented a myriad of strategies to try to solve this.
The first was reducing friction. As mentioned before, through productization of services and using a minimum price point, Fiverr could entice freelancers. There was no more bidding on projects, and smaller freelancers attract more clients by adding more features.
The second was onboarding. In order to attract more people to the platform, Fiverr made it easy to make an account. There were no extraneous fees; sign up was incredibly quick. In fact, in the early days, they used email registration but the volume became so large that they eventually put everything on the website. Ease of signup was a crucial feature that attracted freelancers.
Reducing friction and simplifying onboarding wouldn’t be enough. Micha needed one extra push to entice freelancers.
Micha Kaufman decided that the best way to do this was to get people interacting and loving his platform. By building a community of freelancers, he wanted to encourage creativity, education, and discussion.
For instance, Fiverr offered offline events for freelancers on the platform. At these events, clients could talk to freelancers and trade best practices.
Another way that Fiverr built their community was through online interactions on their forum. For many freelancers who spent their whole day in front of the computer, communicating with others in a similar predicament would create a melting pot of different opinions and advice. By building this forum, Fiverr also built a lively and open community.
Using the forum, offline events, SAP, and easy onboarding strategies, Fiverr exploded onto the marketplace. In the beginning, adoption was massive. Within a few years, the platform had spread to over 190 countries and attracted millions of people.
Growth came fast, and Fiverr began to see their marketplace shift and evolve. And as time went on, they had to rebrand to change at the same pace as the freelancers on their platform.
Ultimately, the community that they built actually helped them develop some newer schematics to accommodate the change in both consumers and services on their platform.
The Evolution of a Market
As the marketplace’s focus shifted, Fiverr had to change their approach to freelancing. Consumer-oriented creative services were beginning to morph into more professional entrepreneurship oriented ones. Because reverse bidding was eliminated, services like voice over and graphic design began to flood the market when people realized that they could monetize their talents with a bottom line.
Noticing these trends, the company began to add more features to accommodate full-time freelancers and make the company more focused on them. To adapt, Fiverr remodeled their five dollar only price point to introduce add-ons. For example, you could pay five dollars for a quick jpeg logo design, but if you paid ten dollars more, you could get two more revisions and a vector of the logo.
Fiverr also recognized that most people learned about healthcare from their employers, something freelancers did not have the luxury of. Because of this, they partnered with Stride health, a company that provided education on the different healthcare plans, and helped people map out which one worked for them.
What Fiverr attempted to do was to give freelancing on their platform the characteristics of a job versus a side hustle.
Building a Brand
There are some other results of a shifting marketplace. Not only has Fiverr had to change their features, but they’ve had to change their corporate brand to accommodate the newer services on their site.
For example, they partnered with the New York Yankees to create a campaign called “The Game Changer”. The campaign focused on giving five entrepreneurs, small businesses, or freelancers, the opportunity to get an ad on the Yankee stadium by sharing their stories. They would also give Fiverr credit to these people. “The Game Changer” would give many full-time freelancers the opportunity to get a ton of exposure.
These promotional strategies displayed Fiverr’s resolve to support freelancing and the gig economy. The evolution of the company had also brought along their newest rebranding strategy: Fiverr Pro. Fiverr pro would give established freelancers on the platform the opportunity to get direct access to clients. These hand-vetted businesses would have a dedicated place to show off their portfolios and leverage their experience to get higher selling prices with more professional companies.
This is not to say that Fiverr has strayed from their original purpose, but a side-by-side comparison of 2010 Fiverr and 2018 Fiverr would show a company that has had to rebrand to cater to newer services on the platform, while still supporting the original freelancers who got it going. As for the future, parts of the business might have to continue to change in response to an evolving marketplace, but the one thing that won’t is supporting freelancers.