When trying to untangle why job growth in the U.S. continues to lag while other factors of the economy improve, some suggest that it may be the result of an expanding economy of freelancers.
The Freelancers Union claims that about 42 million people, a third of the U.S. workforce, are employed as freelancers. A 2013 CareerBuilder study found that employers looking to hire temporary workers increased 10 percent from 2012, and research from Economic Modeling Specialists found that freelance positions accounted for 15 percent of national job growth from 2009 to 2013.
A major reason for this is a growth of online marketplaces that connect freelancers with companies looking to hire them.
One of these, Fiverr, is gaining popularity for its model of freelancers offering services for a starting rate of five dollars each. Micha Kaufman, who co-founded Fiverr in Tel Aviv in 2010, spoke with the International Business Times about his company and how it fits into the global freelance economy.
International Business Times: So what is Fiverr?
Micha Kaufman: Simply put, Fiverr is a marketplace for services. What’s unique about Fiverr’s approach is that it is the only mobile marketplace online today that has been able to offer services as a product. It’s not about hiring the freelancers, it’s hiring the service they provide.
IBT: What about competitors like TaskRabbit, eLance and oDesk?
MK: Other freelancing models pit freelancers against each other, with a focus on the cheapest price rather than quality and providing customers the best services. Rather than a bidding system which focuses on the lowest price and cheap labor, Fiverr allows individuals to offer their services as products, to become entrepreneurs and create their own brands.
IBT: Where did the idea for Fiverr come from?
MK: By 2020, 50 percent of the U.S. workforce will be freelancers. This is an amazing change, and these people need a home. In this new economy, people can actually work on things they are passionate about.
We started in early 2010, which was actually a great time to start a company like Fiverr because it was right around election and there was a lot of talk about unemployment, education and people being underpaid. We saw that as an opportunity to ride the wave of change that is happening in the job market.
IBT: Why use five dollars as the starting price point?
MK: When we started we had this vision of something affordable and small enough for providers to do jobs on a repeated basis. No one is going to work a full day or even an hour for just five dollars, but they will slice their time to have it make sense.
Providers that get positive reviews are given options to provide additional services for an added value. If you do well, the system continues to promote you and increases your ability to offer new services and new prices. The platform offers incentives and promotes people that are performing well and offering high quality services.
IBT: How much has Fiverr grown since it was founded?
MK: Most of the data is kept private, but Fiverr has millions of users. Over 3,000,000 services are offered on Fiverr and it’s growing by about 4,000 per day.
IBT: What is Fiverr’s business model?
MK: Basically, what we do as a platform is take 20 percent out of the transaction, but we only take it from transactions that are successful. If for any reason whatsoever a transaction doesn’t go through, we don’t take anything. So we have a vested interest in everyone being happy.
IBT: Why did Fiverr start accepting bitcoin? How many people are using it?
MK: Bitcoin hasn’t penetrated the market, but there is something interesting about bitcoin as a concept. It’s acknowledging the fact that there is a very interesting and disruptive technology out there. Just look at the type of investors putting money into bitcoin, it’s some of the best in the world. We want to be innovative and ahead of the curve, and the implementation is so simple that it didn’t make sense not to.
Still a minority of our users use it, but we are curious to see how it goes.
IBT: What’s in store for Fiverr’s future?
MK: Mobile is going to play a huge role in the success of every industry and especially for Fiverr. [We are] getting to more languages and allowing sellers to increase the size of their business and offer services for more prices. We are focused on accelerating growth and reaching more people that are not aware of Fiverr yet.