Gimme Five: Fiverr in the Freelancing Economy
$5 gigs. Feel free to get weird.
What would you do for a Klondi five bucks?
Fiverr was founded in 2010 with a simple premise: allow freelancers – or really anyone off the street – to post products and services starting at $5. The price point was arbitrary but had some advantages: enough to make it worth doing an individual task, but not enough that it would matter if things fell apart. Brent Messenger, Fiverr’s global head of community, commented that even if the seller didn’t deliver on the advertised good, they assumed buyers would consider $5 an amount not worth getting upset over.
What started as a novelty website offering little more than customized singing birthday videos has morphed into a serious attempt to serve the needs of the growing freelance economy. Price points now range into the tens of thousands, and Fiverr’s top sellers are reportedly grossing in the millions. The company has seen success from this growth as well, having raised $111M to date.
Fiverr shares a lot in common with traditional marketplace platforms: there are rating and review systems, easy management of multimedia advertising and content for the seller, integrated payment options, and other features that customers have come to expect online. According to Messenger, Fiverr differentiates itself from other freelancing and job listing platforms in two ways. First, by having the sellers list their services rather than have buyers post job requests, both buyers and sellers can be confident in the quality of the outcome through the standard repetition and review process. Secondly, Fiverr encourages ‘atomization’ of the offerings: creating one or several ‘base’ services, with numerous upgrades and add-ons. This compensates for the lack of a customized deal negotiation process by allowing buyers to simply select the number, degree, and quality of services they prefer and checkout through an online merchant process. Both of these features are designed to maximize convenience and efficiency, which is at a premium in an industry where volume is hampered by a lack of standardization.
To some, this represents a shift toward some future model of work, where companies don’t exist, only projects, and only temporarily. Certainly, with the rise of models like Uber, this vision seems more attainable. But that future is still likely many years away: according to Fiverr, 97% of the freelancing market still occurs offline. The company’s primary challenge going forward is to bring that segment of the economy onto their platform. Toward that end, Fiverr has recently purchased the SaaS company AND CO, whose main product is a freelancing assistant that helps with time management, invoicing, and other back-office tasks. To pull more demand on its main platform, the company has made all of the premium options on the software free and has linked the program to its website. And the potential rewards for getting this right are massive: Upwork reports that 55 million workers in the US freelance, representing over $1 trillion in earned revenue – with that number expected to continue to grow. Internationally, countries like India have some 15 million freelancers earning a combined $400M. Fiverr is continuing to make bets on this future vision of the economy by making investments in gigs, but it remains to be seen if they’ve bet right.
Thanks for this post Will! I’ve never heard of Fiverr before, but it obviously has been making a very successful run at making its presence known in the freelance market. From the sounds of it, it seems that the company has been able to navigate a pretty impressive pivot from a gimmicky site offering what amounts to $5 dares and silly activities with little quality assurance to a genuine platform for serious professionals. I’m guessing that the company had to dramatically change the nature and demographic of both sides of the platform in order to make this change happen, so I am curious how they thought about navigating that change to become the platform it is today.