On top of all the other changes it has brought, 2020 may prove to be the year that made freelancing go truly mainstream. Over the past twelve months, freelancers of various stripes have collectively earned $1.2 trillion, contributing to roughly 5% of the US GDP. Since the beginning of the COVID-19 crisis, 47% of hiring managers said they were more likely to hire “independent professionals” in the future.
One of the major platforms serving freelance workers belongs to the Israel-based company Fiverr (NYSE: FVRR). Essentially, the site allows skilled creatives to establish profiles advertising their talents, their work history, and their rates, and then connect them with individuals and businesses in need of their services. Last year, some 2.4 million customers across 160 countries paid for services through the platform.
The casual, gig-based nature of Fiverr does not appeal to everyone, but there are many who swear by it and make a good living from it. Since its inception, the site has been used by an extraordinary 5.5 million businesses and has facilitated over 50 million transactions. In the wake of the coronavirus pandemic, these figures are likely to increase. Fiverr’s share price, for instance, more than tripled in the first half of 2020 as companies and workers rushed to move operations online and to rethink their workforces. For this reason, Fiverr estimates its total addressable market in the US alone as roughly $100 billion.
It would be a mistake to attribute Fiverr’s growth over the past six or seven months to mere good luck, or to the very specific changes wrought by this pandemic. The overlapping areas that Fiverr’s business model addresses — remote working, freelancing, and the burgeoning gig economy — long predated COVID-19, and are likely here to stay. The company has certainly benefited from recent turbulence, but it has responded to this windfall by investing in marketing as well as developing new services to be launched in the coming years.
One of these anticipated services, Fiverr Business, will allow established companies to offer third-party services to one other in an efficient manner. “This is going to be a long-term investment for us, and we are just at the very beginning,” said CEO Micha Kaufman in an earnings report earlier this year.
Perhaps the biggest source of uncertainty surrounding Fiverr’s future is whether or not it enjoys an economic moat. The offerings provided by other freelancing platforms such as the California-based Upwork (NASDAQ: UPWK) may seem a little too close for comfort. However, Fiverr typically appeals to users looking for a one-off project rather than building longer-term relationships with clients, whereas Upwork focuses on the opposite. Furthermore, the two companies have their own internal cultures and network effects, meaning reputations aren’t easily transferred from one platform to the other.
Even with Upwork at its heels, Fiverr is well-positioned to take advantage of any future developments that leave people searching for alternative sources of income. The company benefits from an ambitious, innovative CEO in Micha Kaufman. It has demonstrated that it can adapt to and make the most of economic crises. And behind all that stands the Fiverr platform itself, a popular, reliable site that appeals as much to small businesses looking for low-cost, quality services as it does to freelancers hoping to pick up some extra cash.
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Contributing Writer at MyWallSt
Jamie is a contributing writer for MyWallSt.