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How Fiverr’s Founders Are Creating An Online Marketplace For Freelancers

By starting small and specific, Fiverr’s entrepreneurs built a freelance marketplace worth millions.

How Fiverr’s Founders Are Creating An Online Marketplace For Freelancers
[Screen shot: courtesy of Fiverr]

Micha Kaufman and his friend Shai Wininger got to thinking six years ago. What if people could hire freelancers the same way they bought stuff on eBay or Amazon? And what if all those services started at only five bucks?

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The entrepreneurial friends, both based in Tel Aviv, had each started and run a handful of online businesses over the years and decided to give Fiverr a shot. Rather than worry about funding or belabor the design, they made the website themselves. “The basic product was something we hacked, and it looked like it,” says Kaufman. “It wasn’t pretty.”

They didn’t advertise or pitch to investors. Instead they sat back and watched. It took a few weeks. A few friends told their friends who told their friends. “It was like fire,” says Kaufman. “It took off really fast.”

Since its 2010 launch, Fiverr has expanded beyond $5 services, with freelancers offering work upward of $8,000. And the services run the gamut across 120 categories and nearly 4 million jobs–ranging from coding to business card design . . . and even a personalized “Happy Birthday” music video.

Fiverr has grown from two to 130 employees. In August, the company scored its fourth round of funding–$30 million–that it’s already pumping into growing the marketplace. “We are obsessed with growth,” says Kaufman. “The mission is to get to as many people as possible and make Fiverr a household name.”

But back when the business was just starting out, what were some of the key steps to getting Fiverr off the ground successfully?

Start Specific And Grow From There

Kaufman and Wininger wanted to make it easy for people to commit to buying and selling services online. They realized that starting from a low price point–$5–made the exchange less risky for both the freelancer and the customer. “We wanted to take away the friction of price negotiation,” says Kaufman.

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Most freelancers would raise a brow at such a low rate. What can you actually get for five bucks? But the founders had a hunch the price would give freelancers “a way to slice their skills thin enough.” They were right. Freelancers began signing up in droves. While the $5 focus was a great launching off point, after nearly a year of growth, the founders realized they needed to give freelancers a way to expand their services and rates.

Think Of Service Like A Product

One of the main objectives of Fiverr’s founders early on was to think more like an e-commerce company rather than an HR firm. The founders saw sites like Elance and oDesk taking on more of a human resources role–supplying people looking for freelance services with software and tools to manage the freelancers they hire for jobs. They wanted to simplify that process. “How can we make ordering a service as easy as ordering a book on Amazon?” says Kaufman.

They started using an SAP, or service as a product, process. Rather than having freelancers bid for projects, they asked them to define their skills through a product with a fixed price. This product was then added to a catalogue. Customers could then browse this catalogue of services and choose what they wanted, rather than sorting through freelancer profiles and bids. “We are thinking like a catalogue company; not like an HR agent,” says Kaufman.

Build A Community First

When Fiverr was starting out, the emphasis was on getting as many freelancers to sign up as possible. The founders took a page from Amazon and eBay–focusing on building a robust community early on before exploring more ways to diversify. They decided to hone in on no more than eight categories, including graphics, writing, and design. “We realized pretty early in the game that building that community becomes one of the key engines of success,” says Kaufman.

Make It Super Easy

One of the most important ways to get users on the site quickly was to make the process of signing up as simple as possible. Rather than having to complete a detailed profile and upload lots of documents, freelancers could sign up in five minutes by created a login and posting a service. “It was important that we simplify this concept to a degree . . . that people aren’t going to be hesitant to participate,” says Kaufman.

Don’t Worry About Funding Early In the Game

Fiverr has raised $50 million in funding since its launch, but don’t let that impressive figure fool you. The founders weren’t worrying about seeking funding when the company first started out. Instead they were looking for ways to grow the business through its users. “We really wanted a business that would grow organically and not something that you would fuel by pouring money into the machine,” says Kaufman.

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That focus on simplicity, ease of use, and getting as many people involved as possible is what ultimately made the company attractive to investors. “The current investment was a vote of confidence from investors,” says Kaufman of the latest $30 million raised. “It’s really about the global share of talent.”

About the author

Jane Porter writes about creativity, business, technology, health, education and literature. She's a 2013 Emerging Writing Fellow with the Center For Fiction.

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