Joe Fuller: The Covid-19 pandemic has accelerated a number of key labor market trends. Among them, more people are working online and more are freelancing. Individuals are choosing temporary engagements for a variety of reasons. Some prefer the flexibility. Others seek learning opportunities or work they identify with. And employers are looking to fill skills gaps and boost their agility. Competition for advanced skills and increasing worker demands for flexibility and purpose seem to point to a greater reliance on digital talent platforms. But workers also prefer the stability and benefits that go along with full-time employment. What does the future of the on-demand workforce look like?

Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Harvard Business School professor and visiting fellow at the American Enterprise Institute, Joe Fuller. My guest today is Micha Kaufman, founder and CEO of the online talent platform Fiverr. We’ll talk about how digital platforms like Fiverr are connecting workers and employers. We’ll also discuss what the Great Resignation means for the freelance marketplace. And we’ll consider how businesses can strategically tap the contingent workforce. Micha, welcome to the Managing the Future of Work podcast.

Micha Kaufman: Thanks so much for having me.

Fuller: Micha, perhaps we could start by you telling us a little bit about your background and what led to the inception and the launch of Fiverr, which was started in 2010, quite early in the development of contingent workforce marketplaces. And, really, Fiverr was a pioneer in the space. How did you come up with the idea, and what led you to launch it?

Kaufman: Fiverr is my fourth company. I actually started my career as a lawyer. I practiced law for quite a few years, specializing in IP law, which is patents, trademarks, technology transactions. And then about 20 years ago, I turned into full-time entrepreneurship. Being a freelancer myself—not very extensively, but using freelancers pretty extensively—had me thinking about the fact that this was a very large market that had a tremendous amount of friction. I mean, just putting two people to work together is super complex. And so this was the seed for the idea. We wanted to democratize access to talent, and for talent, the access to opportunities. And so Fiverr is an initial idea focused on digital services, because we wanted the things that could be done remotely and be delivered online to reduce all the complexities that come with physical services. So, essentially, we created what we call the “service as a product” model, which in its essence wanted to make the experience of buying a digital service from a freelancer as easy as shopping on Amazon. So thinking about that, this was actually easier said than done, because we needed to create a SKU [stock keeping unit] system for digital services that didn’t exist. So this was the go-to approach, which later on now turned into a horizontal market base that operates in more than 550 categories and across 160 different countries with multiple use cases.

Fuller: So let’s talk about the evolution of your thinking. As early of 2010, were you thinking of it using that Amazon analogy and thinking that expansively—that eventually you’d be covering such a wide category of work, even though you started with the focus on digital professionals?

Kaufman: Freelancing in general, back in 2010 and the years before that, used to be something people did on the side or in between jobs. This was not considered to be like a full-fledged career, and certainly wasn’t as democratized as in the way that it is today with platforms like ours. But what was interesting was that we felt that this was the start of an inflection point on that side, because millennials were actually joining the workforce at that period. And they were coming with a very different approach to work. Today, data shows that by 2030, half of the American workers are going to be independent workers, which is mind-blowing. It used to be about 20 percent in 2010. But we’ve seen that trend happening, and we thought that, from a timing perspective, this was the right thing to do. And we set up the site to be horizontal from day one. Yes, it wasn’t 550 categories. It was more like seven or eight.

Fuller: What are some of the other major changes that you’ve observed in the last dozen years or so since you launched Fiverr? Obviously, one is that the entire concept of gig work is more legitimized. People are not so coy about it. They talk about their side gigs. And obviously, Covid has accelerated some of these trends. But what are the other important fundamental changes you’ve seen in the marketplace?

Kaufman: I think that today people are actively choosing freelancing, not just as a viable career, but also as a lifestyle. It comes with a tremendous amount of flexibility and autonomy. And I think we’ve seen that highlighted throughout the pandemic. Organizations are changing from static into adaptive or agile organizations that are thinking very differently about their flexibility and how they think about merging or combining their full-time employees with flexible talent. And I think part of these changes you see with these newer waves of the Great Resignation we’ve seen from one side. But on the other side, you see skill shortages and skills gaps that companies need to fill in. And I think that also the range of services that are on demand by businesses has shifted over the years. We see programming, architecture, data science, growing in demand—things that weren’t on the platform in a meaningful way 12 years ago.

Fuller: When you look at the data reported by the professionals that offer their services on Fiverr, have you looked at that data longitudinally? And have you seen important trends—for example, about the ratio of the professionals that rely principally on Fiverr and contingent work for their incomes, as opposed to having the so-called “side hustle,” which seems to be very, very common among 20- and 30-year-olds?

Kaufman: We absolutely track this data. So we see a combination of people that want this as a side hustle or as a way to save money for a specific project, or as a way to supplement their nine-to-five job. And we see people that want to sometimes create their own business on the platform and sometimes create agencies on the platform. What’s interesting is that, from an algorithmic standpoint, our system needs to understand those motivations so that when we do liquidity management when we pair supply and demand …

Fuller: Can you give us some rough sense of what the mix is—the percentage of your professionals that are available through Fiverr that really rely on gig work versus those who are using it to augment income? And is that highly variable across the many different skills that you offer?

Kaufman: As a public company, we haven’t shared this data, so I can’t go into highly specific data. What I can tell you is that those cohorts are growing substantially over the years—not just by size, but by how much money they’re making. The way the platform is structured is that it allows you to create a brand for yourself on the platform.

Fuller: You’ve had a massive expansion in terms of the categories of workers that you make available to companies and others that want to hire freelance talent. Was that driven by the demand side—that you kept seeing adjacencies where clients were inquiring about services you didn’t currently offer? Or was it gig workers coming to you and saying, “Well, why don’t you have of a category that offers my talents to your customers?”

Kaufman: It’s definitely a combination of those two. And in addition to that, it’s the appearance of categories that didn’t use to exist many years ago.

Fuller: Like data science.

Kaufman: Right. Or aerial drone footage editing, or more recently, blockchain, crypto, NFT, and similar categories. So it’s a combination. I think that one of the great things about, again, how an ecommerce structure for a market base is set up is that it allows us to understand, from a data perspective, very quickly things that customers or areas where customers are searching and not finding good enough answers, which gives us indications that these are areas where we may need to create a category or split a category into more-specific categories. And sometimes we see a concentration of new services being created that gives us an indication that the category is missing. On average, it takes us just a few weeks to set up a new category, populate that with enough supply, high-quality supply, and make it available to the market. So it’s a very rapid process. In the past few quarters, we’ve launched about 30 new categories every quarter. So it’s a very high-pace system where we can address the market needs.

Fuller: Can you tell us a little bit about how you weigh that decision to create a new category and how you go about attracting talent that can serve that category?

Kaufman: Absolutely. In the category-creation and vertical-creation process, we have a vertical management team, and these are the main experts that understand these different verticals and understand the different trends that exist—both within Fiverr and outside of Fiverr—in the market to identify where we have a need to create a category, rename categories, split categories, and so forth. Fiverr has always been in a situation where we essentially have more supply than the market actually needs. So supply comes to us 100 percent organically, and that also applies for new categories. The way the market is structured makes it very easy for new sellers, new talent, to come into the market and understand the benefits of using our system to the extent that they don’t need to compete on their work; they just need to show up and come up with their offerings.

Fuller: Have there been any instances where you launched a category that just didn’t work, and you took it down?

Kaufman: It’s pretty rare, but it happens. It happens. Sometimes it’s about the way we name the category. Sometimes it’s not identifying the needs accurately enough. These are pretty rare, I should say.

Fuller: Micha, can you tell me a little bit about how the professionals that make up the talent pool that Fiverr offers has changed over time relative to where they’re located, how they put forward their skills?

Kaufman: We’ve had talent coming to us from pretty much all over the globe, more than 160 different countries. And what was really important was to start seeing these various pockets of talent within specific countries and also specific backgrounds, because understanding that talent is global—and so is the demand for talent—made us think that we can create opportunities for people that didn’t have access to these types of opportunities. And we always take this actual true example of this graphic designer that joined Fiverr from Boise, Idaho. It’s a pretty small place, so when you think about physical access to opportunities from businesses that require that type of talent in their vicinity, those opportunities are very, very small. But thanks to the global nature of the platform, that graphic designer started providing service for companies from Japan and Australia and Europe. And the way we’ve structured our talent catalog eliminated the majority of biases that exist in how people choose to work with other people. So, for example, we found out that women freelancers on Fiverr are actually making close to 10 percent more than men. And there’s no explanation for that, because it stands in contrast to what’s happening in real life, unfortunately. But a lot of that has to do with the fact that we are not putting that part of their profiles as prominent, but we’re actually putting a spotlight on their professional experience and their portfolio and their notable clients and their customers’ reviews and ratings. And so color and religion and gender and other aspects of your personality usually do not come in your way of success. And that’s actually a beautiful thing, and a way to make a more inclusive and diverse type of talent and work. And I think that this is becoming more and more of an important factor for a lot of our customers.

Fuller: Well, the beauty of any marketplace is that people get to assess a product or service that’s on offer and its fit with what they want. And how it got there and who’s providing it is in the background, not in the foreground. And, of course, in traditional recruiting, who that is and where they’re from and what they look like is automatically in the foreground and too often very unfortunately obscures the type of value someone can create. Many of our listeners, of course, will be very familiar with the traditional staffing agencies or temporary help agencies, the Adeccos, the Manpowers, the Kelly Services. How do you think about Fiverr’s positioning relative to that more traditional solution? And are you a complement to them? Are they a competitor of yours? How do you conceive of that part of the marketplace?

Kaufman: There are very clear differences between our approach and staffing or temp agencies. First is—and we’ve talked about this as the ecommerce approach—the fact that you can have talent on demand based on your needs, which gives you tremendous amount of flexibility to scale up or down your business, your needs, your expenses as much as you like. The second is the fact that we’re very focused on digital services. And I think that now with the vast openness for remote work, I think that, more and more, companies are seeing the benefits of that. And maybe lastly, I would say the flexible investment on the part of the business—the scalable, the immediacy, the availability—to fill in critical skills or new in developing skills. So we’ve talked about crypto and NFT. These are cutting-edge fields, where the only way to fill them in is to get immediate access to people that are already experts in that field. And I think that this is where a marketplace or a platform like Fiverr bridges those gaps.

Fuller: One thing that’s been oft identified as a challenge for companies that want to take advantage of gig talent is that they don’t really know how to manage it—that project managers and executives and companies, they’re very familiar with how they manage a traditional supplier. So I’ve hired a consulting firm or an ad agency or something and know how to do that. I know how to manage a worker that works for me, where I provide them their performance review, they’re part of the company, they have a lot of informal knowledge about how the business works. Even if it’s just remotely, I can still manage by wandering around. But that companies are still early in their understanding of, “How do I take an individual or group of individuals that are only going to be part of this project team–or however it’s constructed—temporarily, who aren’t employees, who don’t have that general knowledge of our company, our strategy, our history?” Are you seeing companies get more adept at taking advantage of the types of services you offer? And where are areas that you think companies have to think about improving to get the most value out of the professionals that Fiverr makes available to them?

Kaufman: What we’ve seen recently is more companies that are thinking how to divide between their core competencies and everything that is on the periphery of what they’re doing. And so companies are thinking about their fixed expenses versus variable expenses, and really focusing their fixed expenses on core-competency teams. And then the rest, they learn how to integrate flexible talent that they can scale up or down based on their changing needs. What we think is that, over time, what’s going to happen is—think about this: If by 2030, half of the talent in the U.S. are going to be independent, that means that incredible talent is not going to be available for full-time hire. This is a huge mind shift in how you think about integrating talent into your workflow. When you think about cloud computing and how it started, 10 or almost 15 years ago, it resembles how we think about talent, because 15 years ago, companies used to own their computation power. The disadvantage of owning your computation power was that it was very expensive. It was hard to set up, and it was getting old very, very fast. Think about that in the context of talent. But beyond that, cloud computing provided leverage for small and medium-sized businesses, because it allowed them to get the same computing power as the largest and most-successful companies, because they were paying for it based on usage, which they could afford. Think about that in the context of talent and how the static full-time workforce—which is slow to hire, lacks flexibility, is hard to keep up to date with the latest skills—is very similar to that challenge. The way we’re thinking about that is really to build this infrastructure that would make access to talent, but also integrate talent into the workflows of each organization as simple as what we have now with cloud computing.

Fuller: It’s a really interesting challenge because, as you well know, it’s part of the service model that Fiverr offers. It’s really hard for companies of certain a size and scale or in a certain industry or location to get world-class talent in certain emerging areas—let’s just say digital skills, generally—because they’re not preferred employers, or there isn’t a big pool of available labor. As the market has started to grow and become more prominent in terms of the employment base, it’s attracting the attention of regulators who are concerned about everything from working conditions to also the fact that in many countries, essentially the entire logic of tax and benefits and retirement is rooted in the model of full-time employment. And if suddenly you’ve got double-digit percentages of workforces not in that model, well, how do I tax their paycheck? And how do I ensure that they’ve got healthcare coverage? And how do I find them if I need to find them? What are you seeing in terms of the development of the public sector’s interest in the contingent work marketplace? And what concerns do you have, if any, about how they might intervene in the market in a way that inhibits its growth?

Kaufman: When you think about the current laws and practices around labor, they’ve been around some since the 1940s and ’50s and haven’t changed all too much since. And yet, 2020 brought on not just a global pandemic, but a global reckoning about what work in the future should look like. And I think that one of the highlights of that is portable benefits, which I think is an area where the policies need to adapt to work for the people and offer them choices, not the other way around. We largely and loosely use the term “gig economy” or “gig workers.” But I think that, within that spectrum, there’s probably at least two groups. One is skilled labor, which are professionals specializing in very specific things, and more general labor, those who are providing the work have much less control over what they’re offering and how they’re pricing it and where they’re offering it and when. And I think that we definitely fall into the skilled portion. People build their own brands. So I think that level of freedom is extremely important. At the same time, I think that the regulators should think about how to provide and support the lifestyle of being independent. And that comes with affordable medical insurance and. It is moving pretty slow.

Fuller: It’s a real dilemma, because many—both regulators and legislators I’ve spoken to—they do fail to make the distinction you were talking about and trigger these debates about who’s actually a gig worker versus who should be treated as a full-time worker. What do you think the future holds for Fiverr and for the marketplace more generally?

Kaufman: I’m actually thinking that in five or 10 years, “full-time employee” in the sense that we know today is not going to exist. And we know that incorporating freelance talent into companies’ workforces and having them integrated into the workflows will increase productivity and ultimately their bottom line. But we need to make it easy and help them understand and implement that change. And we know that getting great talent today is becoming harder and harder, and we’re trying to make it simpler. One of the areas that kind of concerns me a little bit is the fact that the changing landscape of the workforce also needs to trigger some policy changes in terms of how we think about internet connectivity across the U.S., as an example, or the fact that, if the most popular job in the U.S. is truck driver, and we’re moving into autonomous driving, what would happen with all of that cohort? Are we forward-thinking about how to repurpose or reeducate or give access to newer opportunities for those cohorts? So I think that, from that perspective, when we think about this idea of this new workforce, we’re thinking beyond just providing opportunities and connecting talent with opportunities or businesses with talent. But we’re thinking about the other aspects, the 360 of it, which is thinking about professional education and thinking about financial management and time management and career advancement.

Fuller: Our research at Harvard Business School certainly is consistent with what you just said—that employers are going to have to start thinking beyond just, “I employ someone full time. I employ someone part time, I hire a vendor that employs someone full-time or part-time.” That there’s going to be more gradations than the type of work, more flexibility and more distinctions between the type of work that and the expectations of workers. And the companies that are adept at managing that and getting there faster will be able to track more talent on more reasonable terms and, therefore, gain a competitive advantage. How do you think Covid has affected all this? Because it certainly has changed a lot of workers’ expectations, certainly white-collar workers’ expectations, of what their lives are supposed to hold and what a reasonable expectation of their employers are. So what the employer can reasonably expect of the worker has been redefined. Do you think this is going to enable the type of reset that you’re talking about? Or will companies just regress to their old thinking as soon as they’re able to make easy and comfortable to go back to the way they manage human assets in the past?

Kaufman: Companies are not going to go back into their old habits. I mean, we’re creatures of habits, human beings, and it’s natural that some of the benefits of the old way of doing business is—and will remain—with us. But there was something very fundamental that happened during the pandemic because of the remote work. And that was the loss of control over people’s time. Think about how basic is that? How basic is that versus the notion of coming first to your office and going last as a way to show your investment versus the fact that right now, when people work remotely, as an employer, you have zero visibility into when they actually work. And that’s actually pretty profound, because that forced companies and businesses to focus on output rather than on time. And that is a huge difference in perception. And it’s definitely a huge move to our direction. Because when you think about the way our market base is structured, you don’t pay people by the hour. You don’t pay for their time at all. You actually buy a well-defined project or product that is being defined by this professional. And they also define what is the amount of time that they need to deliver it. And what is the price of that project? And this is what you pay for. So you pay much less attention on how much they’re actually spending. You actually don’t care, as long as it’s within your deadline and it’s within your budget. That’s great. Think about that in the context of how you work with your employees, with your full-timers. At the end of the day, what do you care when exactly they work? As long as the output that you’re trying to achieve is being met. And I think that change, that loss of control, was something fundamental that has changed the way businesses are thinking about managing talent going forward. And I think that this is why we’re also seeing that, while keeping people remote, while not having control over their time, work actually happens. And output actually is being achieved. And if that is the case, you can continue with it. There’s no reason why you should go back. So I think that this is definitely making a huge case for what we’ve been preaching for the past 12 years.

Fuller: Well, Micha Kaufman, founder and CEO of Fiverr, one of the defining companies in the whole space of creating the gig economy, it’s such a pleasure to welcome you to our podcast. And thank you for joining us.

Kaufman: Thank you so much, Joe. It was a pleasure being here.

Fuller: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.