Fiverr turns $5 gigs into a billion dollars

Micha Kaufman Photo; Amir Meiri

Ahead of a planned $1 billion Nasdaq IPO, Fiverr CEO Micha Kaufman tells "Globes" about the freelancers' platform that he founded.

"I remember Shai and I standing on the balcony in Binyamina and talking about the future of Fiverr. It seemed so off-the wall to people at the time. They thought we were crazy," says Micha Kaufman, who founded Fiverr with Shai Wininger in 2010. Wininger left in 2014 in order to found virtual insurance company Lemonade. Fiverr currently operates one of the world's leading gig (freelance) marketplaces for digital and creative services.

No one thinks now that Fiverr CEO Kaufman is crazy, at least not where his business is concerned. After raising over $110 million (Kaufman: "That's what we announced officially, but the real amount raised is much higher"), with a business that has 400 employees in Israel, a number of sites in the US, and substantial revenue growth, the company is planning a Nasdaq IPO at a company value of at least $1 billion, according to media reports.

In the first episode of the sixth season of "Another Podcast for Startups," we spoke with Kaufman about Fiverr's early days, how to get a winning idea and build a winning company from it, and the looming changes in the labor market, in which Fiverr is playing a significant role.

"Our vision is to change the way people work," Kaufman says. "The way we see it, the labor market is undergoing a huge transformation, so we built a platform that addresses the labor market and what we think it should look like in a fairly progressive way. "

Half of millennials are freelancers

The freelancers market is believed to account for over 30% of the labor force in the US and over 50% among millennials. Kaufman says, "This is amusing, because the word millennials didn't exist when we founded Fiverr." According to Kaufman, the market will grow at a dizzying pace. "We were shocked to discover that 90% of the work in this market is done manually and offline," he remembers.

"Globes": What do you mean?

Kaufman: "Assume that you want to employ a graphic designer. You ask your friend, who introduces someone to you. A minute later, you find yourself sitting with the designer on something reminiscent of a blind date and trying to figure out whether or not you want to work with that designer.

"After deciding to go ahead, you get around to the details: what you want the designer to do, how long it will take, and how much it will cost. When we examined these interactions in 2009, before we founded Fiverr, it was pretty awful for us. There are a lot of problems with this friction-filled situation, and it costs everyone a lot of time."

Kaufman believes that this is actually the key to Fiverr's success: appealing to an existing market and specifying a problem whose solution - a technological, one, of course - can make the market substantially more efficient and lower barriers. "Actually, all of these markets, which were classed as high-friction and low-efficiency, now involve a lot of money. Look at companies like Amazon, WeWork, and Uber. They all entered an existing market, not one they invented, and changed it.

"For me, founding Fiverr is like entering the ecommerce industry at the turn of the century, before the big players were there," he says. "Israeli entrepreneurs have the audacity to do this. They can succeed on an enormous scale."

How did the idea originate? With a little alcohol

Kaufman says that the idea was born in late 2009, "following the 2008 economic crisis. A lot of large companies like Uber and Airbnb emerged at the time." It was in an organized think tank containing a number of friend and entrepreneurs looking for their next project. "I was in the process of selling my third company, and I wanted to find a method for coming up with ideas," he recalls. "We talked a lot of nonsense, drank alcohol, and there were also a few useful ideas.

"Shai Wininger took part in the group. He was actually the one who started the idea for Fiverr. We talked about it, ended the conversation, and the idea never left us," he says.

Kaufman and Wininger devised Fiverr's initial platform themselves ("Maybe we got help from one freelance programmer, I'm not sure"), and the first system was online within eight months. "It seems ridiculous to me now," he says. "The product is not that complicated. There are a lot of open directories. You can set up something like this in less than a month now."

How did you get the idea of selling services for less than $5?

"This is what people remember about Fiverr, but it's funny, because it's just a gimmick. We wanted to make our message go viral, so this was an interesting way of creating a buzz. It was important to us for people not to think twice about buying from us, and $5 is the price of coffee at Starbucks; if it's too sweet, you throw it away. You don't stay in a bad mood all day."

What will the labor market be like in the coming decade, and what role will Fiverr play in it? After huge growth in the past decade, what is in store for a growing startup? What changes take place in a startup and its CEO in the process of growing from nothing to a value of $1 billion or more? All of this, and more, will be discuss in the first episode of the sixth season of "Another Podcast for Startups."

"Another Podcast for Startups" is a program for beginning entrepreneurs and people interested in entrepreneurship. In the podcast, we host leading figures in the startup and innovation industry in Israel, among them venture capital investors, entrepreneurs, and other professionals, and enable listeners to meet them directly. In some of the broadcasts, we also allow the general public to ask the guests questions.

The podcast is in cooperation with "Globes," with the support of Rise TLV.

"Another Podcast for Startups" is hosted by Tommy Barav, a marketing strategy consultant for startups and former marketing director at Argus Cyber Security and the MassChallenge program (the world's largest global accelerator), and Guy Katsovich, founding partner of Fusion LA, an accelerator for Israeli startups in Los Angeles.

Published by Globes, Israel business news - en.globes.co.il - on February 26, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Micha Kaufman Photo; Amir Meiri
Micha Kaufman Photo; Amir Meiri
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018