The latest studies suggest that the freelance market took a breather in 2021 after years of rapid growth. But Fiverr CEO Micha Kaufman, who founded the company in 2009 and saw it through its IPO a decade later, said there’s lots of growth ahead.
“[T]he beauty about our business is that as successful as it is right now, it's still at a pre-inflection point. This is why I've been doing this for about 13 years, and I'm more excited today than I was 13 years ago,” Kaufman told Protocol. Before starting Fiverr, Kaufman helped found Spotback.com, an Israeli news site, and Accelerate, a think tank.
Just before the start of the pandemic in 2019, the number of buyers using freelancers on Fiverr was up 14% year-over-year to 2.2 million. That number has been steadily increasing in the years since: The number of active buyers grew to 4.2 million by March 2022.
But Kaufman said the number of companies using freelancers only represents “a tiny portion of the addressable market” in the U.S. That may change as businesses’ attitudes about using freelancers for projects shift, along with workers’ interest in taking up freelancing full-time. According to Fiverr’s Freelance Economic Impact Report, half of freelancers saw an increase in demand for their services in the past 12 months. Kaufman said these changing dynamics will push freelancing into the mainstream in the coming years.
This interview has been edited for clarity and brevity.
Much of the conversation about the future of work deals with regular paycheck jobs. How does Fiverr think about the future of work?
I think we're in many ways the poster child of remote work because that's the type of marketplace that we power. And we work the majority of the week remotely as well. I think one of the interesting things that happened, and this was largely because of the pandemic and the fact that it forced everyone to at least give [remote work] a try, is the fact that more and more businesses are up to understanding that there should be less focus on people's time and more focus on people's output.
What happened throughout the global lockdown was a situation where businesses lost their ability to track when their actual team members or employees are actually working. And lo and behold, that was not a terrible thing. Activity didn't go down. It actually, in many cases, increased. And that lack of control over people's time was less and less important, and it was replaced with focus on output. And I think that this is what we've been advocating for many, many years.
The other thing is that I think that the pandemic has just created this pull-forward effect on something that would have happened anyway. This is not about these black-swan events. It's all about the fact that it's a generational change, what's happening in the workplace. It's driven by the younger population. So it started in 2010 when millennials joined the workforce. By the end of this decade, 2030, millennials are going to be 75% of the workforce, which means that the way they like to work is the way everybody's going to work because they're going to be the vast majority, and Gen Z has followed.
"What happened throughout the global lockdown was a situation where businesses lost their ability to track when their actual team members or employees are actually working. And lo and behold, that was not a terrible thing."
I think that the younger generation has brought this new way of thinking, and this is why stats show that by 2030, 50% of the U.S. talent is going to be engaging in freelancing, which is incredible, because this means that for companies, half of the talent is not going to be up for full-time hire. And that pushes companies to think differently about how to engage with talent in general.
Fiverr is creating this operating system that will allow or liberate access to talent and integrate that talent into the businesses’ workflows. It's as easy as using cloud computing these days. It's with a few clicks of a button. And we're seeing more and more companies adopting this change and taking steps to ensure that they can benefit from the flexibility that that gives them.
As companies start to get more and more on board with this idea of talent as a service, how has the number of companies using Fiverr evolved?
We've seen a massive increase in growth … If we look at just the past 12 months, there have been 4.2 million businesses around the world, about half of them in the U.S. … That’s about 2 million out of 31.7 million small- and medium-sized businesses in the U.S.. So it's still a tiny portion of the addressable market. The opportunity to grow is just massive, and we think it's the early innings of this market.
It always reminds me of the early days of ecommerce when ecommerce was still low single-digit percentage penetration. And it was obvious that this would become a force in business, but it was just a matter of time and educating the market. And once it happened, it actually went through an inflection point. And the beauty about our business is that as successful as it is right now, it's still at a pre-inflection point. This is why I've been doing this for about 13 years, and I'm more excited today than I was 13 years ago.
I want to talk about the Togetherr service that was just announced. It’s been described as “fantasy football meets advertising.” How would you describe it?
Talent doesn't want to work with the same brands over and over again. So they start departing from agencies and start to freelance on their own. Customers are coming, and they understand that they have a variety of different needs and they don't want the same agency to do everything because as talented as any agency can be, they don't have access to all the talent in the world. They have access to the talent that they employ.
"We're trying to provide all of the tools necessary to run your business so you can focus on the things you're really good at."
What we realized was that this presented another opportunity to disrupt the market by liberating access to talent in creating these on-the-fly dream teams that can actually do a project for you.
In essence, what we do is we understand the very little details or attributes of every talent and know how to connect those talents together to form groups that will work on your project and then get this assembled.
With the rise of remote work, workers have a less clear divide between work and life. Fiverr provides some tools to help freelancers manage their time. Are there any plans for growth in this space?
Absolutely, yes. We believe that much like the way we work, everybody else should have a reasonable balance. And, and by the way, that balance shifts throughout the years and how you build your career. If you asked me, I don't remember my 20s and 30s. I worked so hard. And I don't regret it because this was my decision. And it was important for me to build something very large. But this is not the only way to build your career. And everybody should choose their own path. And for us, what's really important is that people would not spend time doing things that they shouldn't be doing.
What do freelancers’ tool stacks look like?
If they use Fiverr, the ambition we have is that they don't need to use other tools to run their business … As much as we can take away from what's not necessary to do, we provide. So if you think about Fiverr as a platform, freelancers don't deal with anything that has to do with contracting, invoicing, figuring out how to exchange information and data files. There’s no need to deal with NDAs, no need to deal with storing and retrieving work. All of that is baked into the platform. So they get super detailed reporting about their performance. So they can figure out where they can do better.
We have products that allow freelancers to also manage their business, even if they have business outside of the platform. We have a product called Fiverr Workspaces. That product allows freelancers to send invoices, send proposals, get paid and so forth. We're thinking about this holistically. We're trying to provide all of the tools necessary to run your business so you can focus on the things you're really good at.
At what point do you think the company will reach that inflection point you mentioned earlier?
It's the $1 trillion question. It's very hard to say how general awareness progresses. And again, if I go back to my comment about ecommerce, it took ecommerce about two and a half decades to reach 10% of commerce. Why didn't it happen faster? Because it's a tectonic change. it takes time to educate people: “Why are you spending about a month trying to find a freelancer when you can go on Fiverr and, on average, it takes between five and 15 minutes?” Why? Well, it takes time. And the larger the businesses are, the slower they move. The slower they adopt new things. On the small- and medium-sized businesses, they're super agile, they're super flexible. They will use whatever the new thing is. And as we go up market, as we go to larger businesses, obviously those changes are slower. I don't think we're far from that point.
I was talking about the younger generation that came in. That younger generation that came in in 2010 is now 10 or 12 years into the workplace. They're becoming managers. They know how to use those systems. So I think that in many ways, we're probably closer than ever to that inflection point. And we're definitely pushing like everything we're doing, from creating awareness campaigns as Super Bowl ads or working with our community to spread the word.