So guys, I'm here with Mika Kaufman, founder and CEO of Fiverr, the company that initially started by letting you pay 5 bucks to get a freelance project done and now Pete you do a lot more. I know for probably, I know 8 or 9 years and adored what he's been doing with the company. And we have founded Fiverr in 2009, grew it like crazy, IPO ed in 2019, and continue to grow faster than Beller. Fueled by the pandemic that really is aligning with their core thesis about remote and gig work.
And, Nisha, we're gonna talk to them about a bunch of things. Mainly, we wanna help founder that are right now where you were 10 years ago just starting out with a new company. So thanks for being with us. Great to be Pete, and, thanks for having me. So you know, the one of the first questions that always jumped to mind is that at the beginning, you know, fiverr, the idea of $5 gigs was almost eccentric.
And I'm sure that when you went out to tell people about it and investors, it was not really the easiest story to tell. How did you ever get to that and I'm sure that many people told you it's never gonna work. What did you tell them? Well, so the best way to bypass this is to bootstrap And then you don't need to persuade anyone.
And that's actually what we've done for the 8 or 9 months that it took to build fiber, the initial product, including the launch in the 1st, I don't know, 3 or 4 months of operations, but we were self funded. So we didn't have to persuade anyone. The truth is that probably the first or 20 Pete.
I told, you know, this idea too, told me that this was either too crazy to work or just stupid, which, to be honest, just fueled me more to continue with it because I thought that people, you know, couldn't really envision what this could be. And it turned out that competitively, it also gave us a lot of room to grow before anyone understood, you know, the greatness of the basic idea But the five dollars was just a small portion of the innovation in this idea. What were the core thesis?
You know, we always state founders that they need to have, a unique view of the world, something that is contrarian that's gonna get them something they see that others do not. What was it that you saw that others didn't? Well, so, you know, fiber is my 4th company. And I think I was forming a thesis about companies in general that I think a fiber fell right into, which is I was looking for an existing market that was a very sizable Morgan.
In our case, it's a freelancing market, which has a high degree of friction and inefficiency that you can actually fix with software. It sounds simplistic or maybe not. But what I just described is describing what Amazon did for the movement from commerce to e commerce. What Airbnb did for hospitality what Uber has done for transportation and so forth. So taking large existing markets that have intrinsic inefficiencies and friction in solving or removing that through software.
And that was exactly the thesis behind fiber, which is we saw the labor market in general, but more specifically, the freelancing market, which is even to this Pete, very old fashion. It's based on word-of-mouth, recommendation for friends. You meet a freelancer on Starbucks. It's like a date. Right? It takes a lot of time.
And then you need to start negotiating a deal and figuring out if you want to work together and contract an invoice and figure out how to exchange information and how do you pay in milestones and so forth. And it's all hourly base. And we took that idea of high friction high inefficiency. And we said, can we solve this through software? And the approach that fiber has taken has actually taken this entire idea and compressed it into a very, very simple concept.
We made the experience of buying a digital service online as easy as shopping on Amazon. It's a catalog. You browse. You do a search. You find what you need. You click order. You're done. That level of simplicity never it before. And the $5 was a gimmick to start with, and it also created a single price point so that we didn't have to deal with multiple price points based on quality.
We knew that over time we're going to extend that, but it was all about simplicity and it was all about really removing that friction and inefficiency using software. That was it. I love this framework. I think that this framework that you just described is something that every founder needs to think of. Whether their product basically answers this framework. And I think there was also a bunch of other thing because usually, you know, the work, you also change kind of the pricing model.
The work was always around. I'll pay you by the hour, by the day, by the month. And that was kinda common mostly for suffrage rate that was what is to the Upwork? And then we're 2 separate companies. And you came and said, no. There's this price for the entire gig for the entire task. And that was a big bet that people will be able to put their gigs into the single price. Right?
You know, the reality is and this is really strange, and it goes again for the fact that this market is so old fashion. When most people think about hiring a professional to do something, they think in hours. They think I need this professional to work for me for a few hours. No. You don't. What you're actually looking for is to get something done. The getting something done is the objective. The objective is not hiring someone for a few hours.
So what we've done is we really productized services. This was a sophisticated issue, which is to create a SKU like system a true e commerce experience where you have a true catalog where you productize services, you make them into products, and now you come to fiber, you don't hire Pete, you buy products. Sure. These products are being performed by Pete, but you know exactly who you work with because of our reputation system and the way you look at profiles.
You know exactly what you're gonna get because this was predefined when you're gonna get it and exactly how much you're gonna pay. That level of currency never existed before for businesses. And this is why it was such an epiphany for everyone. And we said, you know, freelancers are smart enough to know what to charge, and they James the price. We don't. So they're sophisticated enough to know exactly what's it worth for them to perform that task. And that worked beautifully.
And certainly, you know, with our go to market strategy that started pretty much at the bottom of the market with microservices for micro businesses. And over time, increasing that to the more sophisticated types of services and businesses. It worked beautifully.
And I have to say that, you know, for those listening, I think that these two frameworks, they're taking something that is big existing that has friction and efficiency in making it simple and frictionless by software, but then also productizing something that was not productized is critical when you wanted to really change an industry. Right? You take something that was, like, these services. They were kind of a mismatch of things and you productize them.
The combination of both of these principles is what it really James. To really create large companies. And I think that you can apply the same 2 principles to almost any successful new company. And then, you know, you talk about simplicity, you know, which is what I love most fiber, how simple it is. And I keep using fiber all the time for gigs that I need.
When people won't have an idea like that, which is like a big idea that's kind of life changing to an The number one question that I always get from people is what is the minimal thing that I need to build to take it out there? Like, you know, do I build a big thing? Do I build a small thing? Do I just put it out and see how it works? What was version 1? How did that look? How did you capture the essence of your insight and put it into an initial product, especially being bootstrapped?
That's a hard question, you know, and I'm not sure if there's a, like, a perfect answer for that. But the way I think about these things and it applies for both the idea of fiber, but Also, new ideas that we launch from time to time is I do kind of, reverse storytelling in my mind. So I say, you know what? If fiber's purpose many, many years from now, and this is when I was just beginning, was to become this everything store for digital services, this Amazon for services.
So this is how book number 1 ends. Great. But how do you write page number 1? And so, essentially, I was thinking about the components that we had to have in place for that to happen. And this meant, you know, tens of 1000 of different categories and vertical and metadata and the amount of data that we need to create these sophisticated algorithms that would do sophisticated matching and the type of support that we need and the rest of the search technology and all of that. And I said, great.
But these components appear in chapter number 6. How do you write the book backwards? You kind of start removing those, you know, heroes and villains that appear in later and you work back into page number 1 and try to remember what's the purpose of page number 1 at any book. It doesn't matter which book is it. The sole purpose of page number 1 is for people to read it. Gonna get to page number 2. That's it.
So think about what would be that point of engagement that will buy you time to continue engaging your audience and retain them over time they're willing to be patient to read your next chapter. That's it. So I know it's a a pretty general framework. No. It's a great framework. I love it. You're storytelling. I'm gonna use that a lot. After you did this process, what was the first product? Was it like a full marketplace? Was it like an initial listing of a few things? Was it for one domain?
Was it for many? How did you start? Let's take that general approach and apply it to fiber. So the first version of fiber was a full marketplace that had about 7 categories. Just for for the sake of understanding, now we have well over 450 categories, and we add about 30 categories every quarter. So about 7 categories, it was $5 only. So you could list anything within those 7 categories as long as it lists for $5.
What we've done is we've removed the pricing friction that comes in later chapters and went with a single price. Which made it very, very simple. It made it plain level, and it was a price. We said, you know what? You know, $5 is kind of the price of a frappuccino. Startup. So why is it important? Because if your coffee is not the perfect, you're not gonna be devastated. You're gonna throw it. Maybe get another one, maybe replace it by a different one.
But the risk of offering those services is very, very low, which meant that the screening process that we had to go through on the supply side was not very high, which simplified things very much. We didn't have to put a screening, you know, a marketplace integrity system in place for the beginning. Which you need for something that is 2000 bucks. Absolutely.
So by doing all these moves for simplifying things, we made this possible as a bootstrap business without losing the essence and the essence was a single click order of a digital service. We also knew that since it's a true 2 sided marketplace, there's an issue of supply and demand. What comes first? How do you generate it? Where should you focus your energy?
Now I'll just give the spoiler it always, always, always starts from supply with very, very, very few, you know, exceptions that are not worth discussing. So a lot of the initial product was all about supply. It was really to generate supply, and it was really constructed around that notion. And we had a really neat trick of how to do it. That is really great.
And and I think, you know, what I hear here is a phenomenal framework that we talk about quite a bit, which is that what you do when you don't know how to start is that you choose an area where you start. In your case, it was 7 categories with one price of 5 bucks. And you make sure that whatever you fix, whatever you don't change are things that are gonna be at the zone where they're never gonna be the problem.
So you you fix it at five bucks that you know, you didn't fix it at a thousand bucks. You could have said that we're only gonna start with a thousand bucks. That would have been a friction point. And now once you fixed it, that basic made it much easier to go out and test the model and know that that was not a problem. Now if you started with unlimited pricing at the beginning, that would have started complex, and you would never know what's the problem. Right? Exactly.
So we took those variables out of the equation, and that was important. Yeah. And that we always try to tell founders wherever you can take variables out so you know exactly what's working and what's not. That's phenomenal. How did you get the first, I don't know, 10, 50 gigs fulfilled? Was it, like, pushing people, word-of-mouth? How did you get that going? So I told you fiber is my 4th company, and I swore my self that we're not gonna pitch it to the media.
We're not gonna go through these, you know, useless spikes of, you know, attention coming from the wrong people. We're not gonna spend $15 on it because we really built this flywheel effect where we thought that this would be extremely sticky and viral because of its very unique approach. The history, the the 1st few days looked as followed, the 1st day we've opened up the, the marketplace. It's user generated. So it was empty. So we had to create a few services ourselves.
I was offering a few things. You know, my co founder was offering a few things, and we had, I don't know, a page or 2 of listings. And then we wrote to 5 or 6 friends, and we said, guys, please, don't post it to anyone. Just look at it and tell us what you think. And this was it. The 1st day we had, like, 200 uniques, which, I mean, we only told 5 people. Just from just from the friends.
Yeah. Which meant that they couldn't help themselves And from those people, we already had a few transactions, which was pretty amazing. We wanted to start creating the supply. What we've done is really to go to all kinds of different services and sites and just randomly post things about fiber, say, hey, guys. You need to check it out. Go to a site where you post videos of themselves and say, oh, you could be an amazing spokesperson. You should check it out. In this took off like fire.
One of the reasons was the way we constructed it was almost like a bait to post something you were willing to do for five bucks. I can tell you where the inspiration came from, but I think that that was a major part in starting the supply. I don't know. You would agree with me that everything I've learned about business in the past 20 years boils down to at least for market basis is supply brings demand. Supply generated demand. It's a law of business.
And so that created this flywheel effect where the actual supply people were offering stuff, and they were posting it saying, hey. I'm offering this on fiber. And then people came in and got this, oh my god. This is what I got for $5 on fiber. And then this flywheel effect went super, super fast, and it grew organically at the beginning.
And then this was, I think, like, two and a half weeks after we launched, I got a request to give an interview to Wall Street Journal, which is, I mean, that's not typical for 2 and a half weeks company. Well, I know, but for a small startup, that is not even looking for money Morgan funding. It wasn't very useful, but I say, you know what? We didn't pitch anyone, but if they come to us, that's fine.
And what's funny is Wall Street Journal is a media outlet that doesn't generate that much traffic, but they have a ton of syndication. And what happened was that this story hit the Yahoo on page. It stayed there for, I think, 2 minutes. And then it went to the home page of Yahoo Finance where it stayed for another 2 hours, and then it went wherever stories go to that.
Within those 2 minutes plus 2 hours, everything collapsed, but, I mean, everything first servers went down and luckily enough, and and this was almost 11 years ago. So we were already on the cloud. Which was good because we were able to resurface pretty quickly.
Then we had an issue because people were registering, and we sent them an activation email So all the major email providers blocked us because they saw a domain that never sent emails and all of a sudden sends tens of thousands of emails, but we had no emails whatsoever. And then PayPal closed our account because they've seen an inactive account becoming super active. So essentially, we had no servers, no emails, and no PayPal. For a split second, this looked like the end of this company.
We managed to hack ourselves out of it that was kind of the beginning of it, and then media started picking it up. But for the 1st, let's say, 5 years of the company, we didn't spend single central marketing. And, of course, this is clearly everybody's dream, but if you try, you can't really create a framework out of being picked up by what through journal, you just need to be great and lucky at that.
But if you need to think, you know, from all the companies you've done, what do you think is, like, the framework to think about getting your first customer I don't know, the first 100 customers. Is it worth the amount? Is it going to your friends? Is it, you know, clearly, we don't believe in putting a lot of money into that. You know, can't get your customers without putting a lot of money, you probably have a problem. How do you think about that?
It differs between different products because some products have intrinsic complexity built into them, and it's really, like, the only way to do it is to go through sales process and port. But what I would say is that it's Flint. At the beginning, you don't have to automate everything. It's okay to do high touch at the beginning. Before you actually build to scale, you need to get you know, to that basic product market fit. You need to understand.
I always tell other founders that what we have in common is that we build products that we have a very clear understanding or at least assumption of how customers are going to use them. And then customers come and they use them the way they want to use And so that level of understanding at the beginning is more important than scale. One of the things that I've done is I've spent the first, I don't know, 3, 2 5 months at the beginning of the company doing customer support.
That was my role, my main role other than, you know, being the CEO of the company. I was doing most of the support. The beginning. And the idea was to have open dialogue with our community to understand, you know, what they like, what they dislike, what is missing. And I think that that level of understanding, you know, really, really contributed to how, you know, we moved from version 0.9 to version 1 and 1.1 and and so forth.
You know, I would say instead of obsessing about scale at the beginning, obsessed about figuring out your value creation to your customers. The only way to do that is to interact with them. Is to listen, to have conversations, and that will give you so many clues on how to scale. And when this happens well, then you can figure out, you know, the best mechanism of doing that. And it's fine spending marketing dollars as long as your unit economy makes sense.
I'm not against it at all, but I think for us, at least, the grassroots effect was extremely important for the growth Morgan so because we were starting at lower prices, and the margin was such where you know, we couldn't afford to spend, you know, to throw endless amount of dollars, out there. I love that. I think that speaking to your customers and in your case, both sides of the marketplace, Beller the demand of the supply is something that I sadly see less and less founders doing.
And I think that while it is you know, you get one by one conversations. You can't talk to two thousand people at the same time. The value you get out of it is something that almost nothing else can give you. And even if somebody else sits down and summarizes this conversation for you, like, they do the conversation, then you get just a summary.
It's never the same as early on feeling your customers are actually experiencing and what their drivers and their emotional drivers and what are thereafter that you can only get by speaking to them. Listen, I'm doing a few conversations every week, and they'll run them. They're with members of our community. They could be businesses. They could be freelancers or agencies.
They could be using one of our products or a number of them, and the idea is really to understand the faces behind those accounts understand their motivations, how they found out about us, you know, what they use, how well we're communicating with them, things that they don't like, are obviously more important than the things that they do like. I'm having these conversations every week. It doesn't stop being Morgan I love it.
When I ran companies, that was one of the thing I kept doing even as a CEO. There's just no other way to get this information. That's great. And so when we think about a marketplace, you know, you're running into a certain marketplace, do you think about growth? So, you know, did you have, like, you know, one team work on supply and one team work on demand, of course? And then when you think about kinda supply side.
So, you know, there's this, famous view of, I think, the category, table that eBay used to have. And then other marketplace have where start thinking about what categories do I need to fill? How many suppliers do I need in each category? If I'm doing an artist, do I need different types of artists? Do I need the, you know, one style, 2 styles? Do I need 5 at each style? How did you basically think about scaling your marketplace, like that?
That's a pretty complex task in general because it changes over time. And in our case, it has a an additional complexity because it's hard to understand capacity when you're in the retail business. If you have an e commerce platform, you have inventory on Beller, and your sole purpose is to get rid of that But what is the inventory of a freelancer? Is there a time? But it varies between people. Some people want to, you know, spend 3 hours a day doing this and some are willing to work 10 hours.
Some are individuals and some are small shops, agencies. How do you measure capacity? How do you balance that? How do you do liquidity management? Those tasks were really, really complex. But, again, I think the approach was that we wanted to build the catalog from a standpoint where we started very general with 7 or 8 categories that eventually most of them turned into vertical. Underneath those verticals, we created categories. Underneath those categories, we created subcategories.
Underneath those subcategories, we created metadata. But to do this, you need to have scale because you can't start with the structure because you can't feel it. It's too big. So as we were growing, We were focusing on this. Now most market bases and Pete, again, there is very few exceptions. And if you're both supply constrained and demand constrained, You're in trouble. Most marketplaces are one side constrained. As an example, Uber is supply constrained. Right?
It needs as many drivers as it can get to have availability and to service you fast. The same probably goes for Airbnb. They need more hosts. Fiber is the opposite. It's demand constrained. The reality is that freelancers came to us organically. We never acquired supply. We've actually had plenty of it at the early days Morgan than we could dove provided work for. And over the years, it was great.
So we weren't at capacity or close to capacity or not, and we knew that our freelancers Morgan least most, I'm overgeneralizing because, again, these are individual stories. Some are part James, some are full time, but most of our freelancers could take more and they wanted to. And so it was more focused on the demand side. And on the supply side, it was really about creating the right catalog structure. And right now, the level of depth that we have in our catalog is amazing.
You can look for a voice over artist So that's pretty obvious. Right? It's voice over, which underneath music and audio and so forth. But the level of granularity that we have is not just done. You can say if you need a female or a male voice, what language, you need English, what type of accent do you need? What age range do you need? What should they specialize in? Is this narration Morgan movie, or is it radio advertising?
It goes to that level of granularity, but you can get to that only when you have a lot of millions of different services on the cattle So this was structuring over time as we had, you know, more and more millions of services, we could go into that level of of debt. And you had to build that mapping because, basically, there was no way you could basically import the mapping of all services in the world. Exactly. Exactly. That's the productization of services.
That's the SKU system that we've built. At the end of the day, is there today somebody who's head of inventory where you saying we don't have enough. We don't answer fast enough. We don't have enough service providers in this field or that field, or you just let the market gonna live on its own.
No. We definitely have, vertical managers that manages those, verticals, and they're responsible for ensuring that the liquidity of each category is in a good shape and they're also responsible in identifying new categories we need to open or verticals now we have more assets. We have industry stores. Like, we have a gaming store where we collect, you know, different services from about 20 different categories into one store that is dedicated for game developers.
One of the things that I always wanted to ask you, I remember hearing that one of the biggest indications that eBay was really gonna turn into a huge company. And some other companies was the minute that they started seeing that some people left everything else they did and took the platform to be their main job. How did that happen in fiber? Was this an indication as well? Is this something that founders need to look at when they're thinking about their product market fit?
Yeah. I mean, if you have a service that can actually become someone's you know, main business. Absolutely. I think in our case, you know, again, given the roots that where we started with microservices for micro businesses, it took us time before we could actually, you know, generate enough income for people to, base their sole income on fiber. That happened maybe 2 or 3 years into, the company, but the signs, the signals for that Pete obviously there.
And we saw Morgan people making more money, you know, every year. And that was for us at very important KPI. And I love that. I know him quite a few people that are now making quite a bit in 5 and that is always fun to hear. There's 5 year millionaires. There and there's a lot of them.
And when we think about your demand side, so you're one of these companies that went through a fairly unique transition because I think when you just started, a lot of the, I mean, you'll tell me, but I think a lot of the demand was consumer in nature. Then as you grew, it moved to small businesses, then to medium businesses. And today also serve enterprises, which is basically a transition that not many companies managed to do. Beller a bit about that. I'll give you my, theory on this.
And this goes back to our go to market strategy. The go to market strategy said, we want to occupy the entire market, but we need to start somewhere. And it was either starting at the top, middle, or bottom of the market. And, you know, when I look at many companies, like, you know, business history. There's very, actually, very new examples of companies that have been able to go down market without compromising their premium business.
So if you start from the premium side of business, going down to small size of business is really, really hard. It's hard because it's not your DNA, but it it's hard because it might alienate your premium market. And what we've done is the opposite of that. We said we're gonna start at the bottom of the market with microservices for micro businesses.
You say almost consumer, you're right because all of them or the vast majority of them are businesses, but when you're a solopreneur, you act as a consumer more than as a business. Right? So we started there, and over time, we went to larger types of businesses with more sophisticated products, but that also allowed us to do market education as we were going upmarket.
And that was buying us time because as we were very successful at the microservices that fueled our efforts in going up Morgan and gaining you know, the market trust. The other around going from the upper market down is really, really hard. Now I think in a sense, I'm looking at the business of Uber. I think that Uber went down Morgan. Right? It started with limos and black cars and went into the equivalent of a attack right?
I think that that was very much at the expense of the black car business. So that's exactly what I'm saying when you go down Morgan, there is a price to be paid on And we thought that the strategy of going upmarket made more sense. No. It definitely worked.
Although I I have to say that over the years, I looked at admiration because the theory was that if you're starting with these very niche services, you know, some of them are almost even, you know, funny services, and they write me a song, Then being able to later on take your brand and serve enterprises or very serious, it's always gonna be very problematic.
And I've looked at that, on how you basically kept that business so that there's still room on your platform for the people that are providing this or looking for these niche services, but at the same time, you've added layers of trust and layers of seriousness to the brand that are now enabling enterprises to use it, and that is a very tough motion. That's not a very trivial motion. You're right. It's not. And it's from a perception standpoint.
It is complex because you're, basically, you're reinventing your image in the eyes of your potential customer. And so you qualify yourself to cater for larger types of customers, which is not obvious when you focus on a specific segment I think that is one of the beauties of creating a truly horizontal marketplace. Right? And by the way, sure, there were, like, I'll write you a song, but don't forget that every business owner or every member of a business is also an individual.
They're also a private person, plus private needs. Like, a true customer, true consumer. I think the misconception was that, you know, a lot of people were drawn to the more you know, colorful types of services that were offered on fiber, not knowing that they were the very, very small minority of business.
They generated noise, but they didn't generate as much business, but the noise that they were generating drew a lot of tension to the business side of what we were doing, which was always the majority of our business. So from that perspective, you know, moving up Morgan was not that hard, but changing the perception of the brand, making it more accessible for larger types of customers to sitter was something that just took time and took storytelling. Right?
We had to change that over time, and we had to prove that we were able to cater to these customers. So to your point, it was creating trust system and it was bringing much more high quality supply creating much more professional categories and so forth. Sadly, I never knew you when you started the business and when you raised money, you know, when I think about by now, I know you fairly well.
When I think about what is the one thing that stands out for me that would have made me invest in a heartbeat is the fact that you think and you mentioned it here as well in storytelling. And I wanna dwell on that for a second because I think that one of the most phenomenal things that you've managed to do storytelling wise with fiber is that you've really created a movement. And so freelancing was not new, and using freelancers was not new. And paying people was not new.
And all of that was not new, but you basically took all of it. And from the early beginning, you managed to turn this into a movement. So that people felt proud to be part of this. On both sides, they felt proud to be consuming services like that, and they felt proud to be providing services like that. It something that you thought about from the beginning? You know, many times we tell founder, you've gotta think about the movement you're creating early on.
How would you recommend young founders to think about that? Well, it's much like asking me, what do you need to do to form a company culture? My very simple answer is you need to care about if you care about it, you will build it. And to your question, yes, it was intentional, and here's why. When you think about, you know, both small businesses and freelancers, if they have something in common is they're lonely. They're alone.
If you're a freelancer, you spend a lot of your time in your home, in your pajamas, you know, in coffee shops, you don't attend an office every day where you engage with people socially, or you have knowledge transfer. Because you work with people and they can teach you something. They can mentor you. And the same goes for small businesses. So what I said at the beginning is I don't want anyone to be a username on 5 I want them to be community members. What does it take? How do you do that?
The first thing is put it forward. Like, start from the basics. Pete the place where you allow, you encourage, you empower people to have a conversation. And the reality was that a lot of that conversation wasn't with us. We connected them with each other. And that was just the beginning. And after that, what we said is, you know, let's go to a whatever city in the world.
London, New York, San Francisco, and so forth, and close a bar and just invite local community members to have a drink with We've done this, I don't know, 5, 6, 7, 8 James, and it started gaining traction. And all of a sudden, we got requests for so many different places in the world saying, Hey. Can we do this? And the actual answer is no. We can't. It's a startup, and we can't be, you know, everywhere. And so the community reached out to us and said, you know, we do it ourselves?
I said, Hector, you can. So we put together this operating system that allowed them to find venues and invite each other and have those meetings. And very soon, we had hundreds of them every year. Before COVID 19, we had about one event every day in some place in the world where it's self Morgan, you know, we thought at the beginning that this was just going to be freelancers, but the reality is that both freelancers and small businesses come together. They talk about stuff.
They talk about entrepreneurship. They talk about starting. They talk about growth. They talk about how to develop. And some of them are experiences. Some of them are less and this is where this exchange happens. That creates, you know, so this is one part that the other part is just care. You know, if you care to have a community, you will have a community.
If you care about your customers, if you don't call them users, if you call them what they are, either community members or customers or freelancers or whatever, but just don't call them users. If you understand that this is your constituents, these are the people that you work for. It's not just your shareholders. It's your community that depends on you. That relies on you for every day. It's their home pay. It's where they spend the majority of their days.
You can't break it gives you a sense of responsibility. And also you understand that forms relationships. If you go to our editorial team here, they know so many people by name. They know their story, and we have millions on the platform. And even though that is the case, we have so many personal you know, anecdotes and people that would share their story with us. It's extremely powerful. So it starts at maybe it ends with caring. Yep. Carrying is definitely the key.
Let's jump for a second Flint pricings. I'm sure you've been asked gazillion times. How did you choose $5 and not anything else? But what I wanna ask you is actually two things. But the first thing is when you chose 5, did you test other numbers, or was it just 5, and that's it? And do you have, in retrospect, any thoughts about what would have happened if you chose another number? The initial idea was to go with 5. And, again, I've alluded to it.
We thought that this was a price where people would not, you know, dwell on for too long. You know, it's maybe it's too expensive. No. It's 5. Come on. Like, it's not maybe 9, you would consider maybe 20, Beller that 5 was a safe number. And we did have a debate on potentially, you know, going with other prices, but we ended up with this one. And I think in hindsight, obviously, I think it was smart. It's hard to say what would have happened with the different prices.
I think that this was a sweet spot in terms of pricing and it definitely worked out for us really well at the beginning. And so you went with that without testing and things. You had your conviction about it and you went with it. Well, you know, it's really hard to piss when you have nothing. I mean, now we did this stuff in 5 minutes, but when you have zero traffic and zero track and nothing. It's like testing stuff in a lab.
It doesn't really give you, you know, the right signals that would help you make any And many times founders do need to take their, you know, when you contest these things, you need to take your core belief and go with it. And then if it doesn't work, you can change but you need to go all in as if you know what you're doing. Absolutely.
And on that, one of the stories that I loved that you told me once is that while you were always knew that one day you're gonna go up on pricing, when you go upstream, I think that I remember you told me that one of the indication that it was the right time was when you started seeing in the numbers that some users were basically charging providers freelances were basically agreeing with customers to charge them four times 5 or 10 times 5.
And that was a good indication that it's time to start looking up. Yeah. That's true. I mean, we were noticing this, and this was actually an indication that we were too slow to make that transition, but it was a great indication. You know, one of the complex things that we had was breaking the $5 internally. Not thinking about, you know, that that wouldn't scale, but how do we actually scale it? When you have a market base that is $5 only, how do you scale beyond that?
If you have done relatively little vetting of the supply. How do you allow yourself to scale without risking quality and satisfaction? And this was the most sophisticated portion of it. And I think that that was cracking this, you know, figuring out how to do this was one of the smartest thing that we've done again in hindsight.
But seeing those signals where the market itself found ways to overcome the price limitation was definitely one of the, you know, bigger motivations for I love it because many times our customers basically, they find the hacks in our products because they know how they wanna use it. And sometimes when we are not there yet, they're basically telling us by their behavior where the real product market fit is.
There's a very known trick to figuring out new categories that you need to open up on your catalog, and that is to open a a category called other. Essentially, what happens there is you start seeing concentration of things that doesn't fit anywhere else. So that gives you a sense of what's missing, and that's a very known trick. But, again, this is listening to how you know, your customers are hacking your own system to find ways to run their business.
In a way, it comes back to listening to your customers. Right? You can listen to them by talking to them. You can listen to them by looking at what they're doing. And so when you change the prices, what was the one thing you knew that you just had to get right? And the second question on that is how did you deal with the internal change for the company? I mean, when you changed it, the company was already a fairly large company.
It came with a certain ethos, and that was, I'm sure, a pretty big change for everybody also working in the company. So the one thing that matters was quality. If you want to increase your prices, he needs to coincide with quality. He needs to go hand in hand, and that was our focus. The focus was how to ensure that once we allow sellers, freelancers to increase their prices, quality would go hand in hand with that.
That was the core of that product creation that we've done to allow that to change. And, obviously, as the company grows and as you catalog grows, there's other functions that you didn't need to have before in your customer care, in your fraud department, in your marketplace, integrity, in your Morgan so forth. I think that, you know, the market was right for that. Our community was ready for it. And Pete transition was very luckily for us. It was very smooth.
As you do that, obviously, you need to change the way you measure your business. You know, you move from a single price point to multiple price points. You need to start analyzing cohort behavior in a different manner. But I think, again, this was gradual. So for us, it was an evolution of the business, and it wasn't like an overnight change. We had time to get ready for it. Let's talk for a second about speed. I mean, fiber is known as a company that's been moving very fast.
And, you know, as we just heard from you, you know, the company basically made so many changes over the years, you know, from consumer ish to small businesses medium enterprise from 7 categories to hundreds of categories from a single price point to multiple price points.
And at the heart of all of it is iteration and speed, which is essentially, you know, the critical secret weapon of all startups, And so, like, when you think about what made the company fast at the beginning, other than great founder, what were the tricks that you were using to keep moving fast even when things are going well. Again, I think the same applies for today. I mean, it's it's your mentality.
If moving fast is one of the things that is important for the organization and your team understand that they will apply that practice.
You know, beyond that, it's giving the infrastructure to move fast, which means that, you know, you need to invest enough in in infrastructure in the tech stack to allow your team to develop things very fast, to test them very fast, to put hypothesis, to test, to create your AD system, ABT system to create your deep BI understanding and data and how you internalize and integrate your data learnings into your product All of these are, to me,
essential ingredients to be able to move fast because just moving fast for the sake of moving fast doesn't give you a lot. If you don't learn anything from it. And so I think the mentality of, allowing, you know, teams to move fast but also fail fast and move on, not dwell over it, not spend too much time on it, but also understand, you know, how to run tests. It's not enough to have an idea for tests.
You need to understand that sometimes we brand tests that on a local level perform well, but on a global level, perform poorly, meaning that you can actually achieve better results, whatever that result should be click through conversion, whatever, but there implication on cross category purchase or on retention or on whatever might be terrible. And sometimes when you're too myopic in looking at specific stuff that you're testing, you're missing the larger picture.
And it's very true to marketplaces because marketplaces are a extremely complex creatures, you know, by nature. So putting this infrastructure, putting this, you know, methodology in place allowed us to move fast. And, also, it's how you structure your team. You know, do you work waterfall? Do you work squads? Do you work task forces, guilds? Whatever your format is in how do you empower those James? Which areas do you focus on? There's not a one answer for it.
It's having a moving fast mentality and not changing that when the company grows. Understanding that there's, you know, the company would need to continue making big bets knowing that some of these Pete are going to fail. But if you can have 1 or 2 big debts every year that gives you dividends, they outperform all your failures combine. Right? So you need to adapt mentality of integrating those learnings very fast, and we develop our own methodology of how we retrospect.
Stuff, how we learn from everything we do, and how we share that knowledge across the organization to make sure that we don't do the same mistakes over and over and over again. You know, this is really key, I think, that the ability to fail fast and to try things. And how do you keep, you know, as as somebody that run large companies Beller, and that was always my biggest concern.
How do you keep a fail fast mentality and not being afraid of failure when it's already thousands of Pete, and it's more Katea, and you don't know everybody in person. How do you keep it? I mean, I know you have one of the best management teams around. Many of them are people that work with me in the past, and so I know how great they are. You manage to collect some of my most favorite people in the world. But other than having these great leaders, how do you maintain this?
And it's so much tougher when it's a large company. It is true, but I think there's 2 important principles. One is you need people to know that nobody here knows where the next big idea is going to come from, and that might Pete them. Meaning, you need to create this environment where you empower people to speak up and share their ideas and understand how this machine actually works. When I greet new team members and recently, I've been doing that a lot.
One of the things that I'm telling them is there's no one in fiber who's a black box. You guys don't have input and output. You need to understand the larger picture. You need to understand how this machine actually works and it doesn't matter what your role in the company is because that's the only way where you can be impactful. I always give the example I actually give 2. One is the example of Amazon Prime. You probably know the story.
Amazon Prime was invented by an individual contributor in the company. Is a company of 1,200,000 Pete. And this guy who was not even a, you know, a team manager or a a top executive you know, came up with this idea that turned into this incredible product. And the same goes for fiber, you know, we've done a hackathon a few years ago, and we called people to pitch ideas, and we said, we're gonna picked 10. And 2 or 3 out of the 10 we picked was pitched by the receptionist.
That is the level of understanding within the company of how the machine works. I think this is the first thing that is very important. The other thing is don't kill people when they do mistakes. Don't fire them. As long as there's learnings, as long as people are not just stupid by doing the same mistake over and over again, which is about sign if they do. If they do a mistake in good faith because they wanna do something good, you need to empower them.
You take the learnings out of it, and that would make them, you know, better executors. I completely agree. Those 2 are essential for that. You know, mental. Yeah. Completely. We I used to have this framework of what I call the good failures and bad failures. The good failures are places where people gave it everything. They worked well. Didn't make any, obvious mistakes that they should have avoided. And then eventually, it didn't work in the Morgan, like, you know, 9 out of 10 products don't.
And then bad takes is if there were politics or bad quality or anything Beller. And for good failures, the ones that are just everything went well, but at the end of day, it didn't work. I used try and treat them almost like successes because people worked hard and did everything they should. And then if you don't do it like that, then people will not innovate because the easiest thing, if they believe that not failing is the best way to get promoted in the company. They're never gonna innovate.
Totally agree. Before COVID nineteen, we used to have this event every 1 or 2 quarters where we gather the entire production team, and then we would bring champagne, and then we would celebrate failure. We would bring for that, and people would share their stories of massive failures with a lot of pride, obviously, including what are the key takeaways from it, but this was really, really powerful. So two last questions.
The first one, we have diseases about marketplaces becoming stronger by injecting fintech services into them. I know I've read that you guys are thinking at it, how do you think you can serve both sides of your marketplace, you know, the freelancers and the customers by putting in fintech services? Is this something that you're planning to do? As as a public company, I can't talk too much about the future as you know.
But in general, you know, what we said is, you know, we see our role as being very broad in providing support for our community, both the supply side and the demand side. And over time, we have been, you know, offering added value services that go beyond the core transaction making of the marketplace. And we've done so in a very successful manner. And so I do believe that we can do that. I think that because of the scale of our market base.
We are also in a unique place to offer things that where we can make them cheaper more affordable just because of scale. So definitely things that we are looking into. Last question. I mean, you're basically sitting in this phenomenal place where, you know, the COVID basically, you know, made the case for your thesis. You grew, like, 6 acts how do you think about, you know, the future of work? It kind of feels right now as if we're at this turning point where work is not gonna be the same.
You know, people moving off cities wanting to work remotely, going to live in the middle of nature and continuing to work, you know, in their big company or his freelancers. Is this really a turning point or do you think it's just a blimp, and it's gonna go back to what it was before. I think it's a milestone in a movement that started in the beginning of the 20 tens. So here's my view of what's going on in the past decade and in this decade.
I think you know, the 20 tens have been the decade in which freelancing became mainstream. What I mean by that is freelancing used to be something you would do in between jobs. But this is no longer the case. You know, people choose freelancing as a career path. They choose it as a lifestyle. It's no longer something you're forced to do. And you know, the cohort that have changed that were millennials.
Millennials, you know, joined the workforce in 2010, and that movement created this massive change in from less than 30% of the American workforce freelancers are more than 40% of the American workforce right now. The 20 tens were all about changing how people viewed work. Let's think about what this does to the 2020. My view of it is because so many talented people don't want to be full time higher.
It means that businesses need to figure out how to integrate this flexible talent into their workflows. This is to me what this decade is going to be all about. This is where fiber is going. Now we're creating this operating system that allows that to happen. I think that COVID 19 has created an acceleration point to a direction of vector that was happening before that. It did accelerate.
And to your point, it made the case for what we were preaching for 10 years, which is the average time that it takes to find and hire a freelancer anywhere is about 30 days. It's a long process. The time that it takes a customer, a visitor, to fire dot com, to take their credit card in place in order the average time 15 minutes So that simplicity captures it because it's the trade off of 30 days by 15 minutes. Once you went through that process, you're not going to go back.
And so I think that because of the global lockdown back in March, offline didn't exist. So everyone was moving online, and I think that we were in a perfect situation to capture that both on the supply and the demand side. But this was just an acceleration Flint, and I think that that created an awareness in both sides of the marketplace that this is indeed friction free, extremely efficient, and it just works well.
So I think that, you know, we're gonna see a lot of development around, you know, what people call the future of work, which I think it's here. It's not really the future. And we're obsessed about trying to figure out how to help shape that. That's kind of my view on what we're gonna see in in the current decade. That's great to me. That that was a phenomenal discussion. And I think there's tons of frameworks here that start of founders would enjoy.
Thank you so much for taking the time to join us on this podcast, and I'll continue, watching from the sidelines as be all probably the most meaningful company in the future of work these days. Thank you so much. You've been listening to the NFX podcast. You can rate and review this show on Apple Podcasts, and you can subscribe to the NFX podcast on Apple Podcasts, Spotify, Google podcasts, or wherever you get your favorite podcasts.
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