ITHACA — In 1980, America laughed at a comedy about three female employees who lived out their fantasy to get even with their boss. The movie’s title captured the image of the 9-to-5 day with workers confined to their cubicles and taking orders from an autocratic executive. Today, we still laugh at the movie, but […]
ITHACA — In 1980, America laughed at a comedy about three female employees who lived out their fantasy to get even with their boss. The movie’s title captured the image of the 9-to-5 day with workers confined to their cubicles and taking orders from an autocratic executive.
Today, we still laugh at the movie, but the idea of the 9-to-5 workday is on life-support. Blame it on millennials (18-34 years of age), who are now the largest generation in the workforce. A PwC survey of 44,000 millennials found that they are most concerned about a balanced lifestyle, the smart use of technology, and opportunities for growth. A study by Bentley University concludes that 84 percent are always connected, even checking their work emails after hours. This cohort seeks flexible work options, but they insist on not compromising the quality of their work. Finally, millennials are not lazy; quite the contrary, they are ambitious, and they want to have ownership over their careers.
The gig economy
Welcome to the gig economy, sometimes called the “1099 economy.” The designation describes a workforce where temporary positions are common, and corporations contract with independent workers, typically for short-term assignments. Form 1099-MISC, Miscellaneous Income is the form businesses and nonprofit organizations have to complete and file with the IRS when they pay someone $600 or more per year in non-employee compensation.
A study by the Freelancers Union reports that 34 percent of today’s workers rely on Form 1099 payments issued by upstarts such as Uber and Airbnb, established corporations, and through online, skill-based platforms designed for independent contractors. Intuit forecasts that the number of Form 1099 recipients will rise to 40 percent by 2020. Going solo seems less risky today for young workers, and the concept is now embraced by established corporations looking to complete a project without the regulatory baggage surrounding permanent employment. This is a complete turnaround from the 1980 release of the “9-to-5” movie, when executives were likely to think: “If freelancers were that good, they would have a job.”
According to the Freelancers Union’s figures, the gig economy currently embraces 54 million workers. If Intuit is correct, that number will jump to 70 million workers in just four years. What’s driving this growth is the introduction of skill-based platforms. Flash back a few years ago before these platforms appeared. Workers had to pound the pavement looking for buyers of their services. Once they connected and completed the assignment, they had to deal with business matters such as collections. Business development and operating the business are not only time-consuming and a limit to production, but they also can be overwhelming to a solo business owner.
The concept of an online marketplace is to bring a wide variety of buyers and sellers together and simplify the business transaction as well. The business model is simple: The seller describes the offering and sets the price, the buyer makes a decision to retain the freelancer, and the online-marketing company processes the transaction minus a sales commission. For the freelancer, it’s nirvana: Decide when you want to work, decide which jobs you want to take, set your own price, and feel free to be creative without the guardrails imposed by corporate oversight.
Meet Sean Carney
Concept is one thing, practice is another. To understand how the process works, meet Sean Carney. He grew up in Queensbury, New York, a small town north of Albany. At the age of 22, Carney recently received his undergraduate sheepskin from Ithaca College, where he majored in integrated marketing communications. His minor in communications studies focused on public speaking and rhetoric. Carney decided to use his interest and proficiency in public speaking to make money while in college.
“I was looking for a way to earn money to pay my expenses at college,” he says. “I was both good at and enjoyed public speaking, so it was natural to think about doing voice-overs. In my freshman year, I heard about Fiverr, an online platform that offered me the opportunity to market my talent. I started recording voice-overs with them in 2013 and committed to full-time the following year. Over three years, I have completed more than 4,000 gigs, working with clients from all over the world. In fact, 50 percent of my work is now global. I am available seven days a week; on average, respond to the client within two hours; and record a professional voiceover within 24 hours of receiving the request. Clients have asked me to record radio commercials, explainer videos, reviews for a business or product, podcast intros, app videos, voicemail greetings; in short, anything that requires a voice.”
Carney is now a top-rated seller on Fiverr, as determined by a 100 percent positive rating from his clients. He spends about 20 hours a week recording in his home studio, using a professional microphone and sound-editing software. His Fiverr user name is YourHighness. “I earn anywhere from $4 to $500 for my work,” notes Carney, “and have been successful enough to pay for my clothes, food, transportation, books, meals — all my expenses at college except tuition … My customers are mostly small, web-based companies … I have gotten to the point where I am no longer reluctant to say “no” to a gig if I am too busy.”
Carney’s first love is radio. He was a station intern for the Regional Radio Group in Queensbury and served as the station manager at WICB in Ithaca. His goal is to stay in Ithaca, which he calls a millennial center. “I can see myself managing radio stations and one day owning a group,” avers YourHighness. “But I also have no plans to quit Fiverr.”
Fiverr
Fiverr is the brainchild of Micha Kaufman and Shai Wininger, who collaborated to found the company in 2009. Both are inveterate entrepreneurs. Wininger, in addition to Fiverr, founded the Ananas Group in 1991, Trimus in 2000, Handsmart Software in 2003, Mobideo Aerospace in 2005, and Lemonade, Inc. in 2015, all high-tech ventures. He is also an angel investor. Kaufman co-founded Invisia Ltd. in 2003, Keynesis in 2004, Spotback.com in 2005, Accelerate in 2008, and Fiverr in 2009. In addition, he finds time to write for Forbes and WIRED magazines and was a faculty member at Technion–Israel Institute of Technology where he taught computer and Internet law in the MBA program. Kaufman earned his law degree in 1997 and practiced as an attorney until 2003, specializing in intellectual property and patents. Both Wininger and Kaufman are Israeli citizens.
They created Fiverr to provide an online market for small services, originally priced at $5 per gig. The company started by attracting amateurs and people who were moonlighting, before going up-market to attract professional freelancers. Fiverr’s website allows sellers to package their offerings, structuring the scope and price of what they are selling. The buyer is free to browse and buy at his/her convenience utilizing a seamless process. Most of Fiverr’s buyers today are small to mid-size companies looking for a variety of services. In effect, Wininger and Kaufman turned the labor market into an e-commerce business, or as the founders have been quoted as saying — “the eBay of world services.”
The company’s growth has been explosive. “In just six years, we’ve experienced triple-digit, annual growth and processed more than 25 million transactions,” says Sam Katzen, public-relations manager at Fiverr, “one-third of them since last year. Today, Fiverr reaches out to 190 countries while handling more than 1 million transactions a month and adding 4,000 new services daily. The staff includes more than 250 employees located in Tel Aviv (headquarters), New York, Chicago, Miami, and San Francisco … The original pricing model of $5 per gig has changed: the company now has processed sophisticated jobs for $10,000, taking a 20 percent commission on each transaction. Fiverr clearly has a compelling story that attracts millennials: 76 percent of our freelancers are in that … [cohort].” Sellers in the 55 to 64-year age group only represent 2 percent of sellers, but this cohort is currently growing at a triple-digit rate.
Fiverr has been very successful in raising capital to sustain its growth. Wininger and Kaufman launched the website in early 2010. In May 2012, the co-founders secured $15 million of funding from Accel and Bessemer Venture Partners in addition to the $5 million contributed in the early stage. In August 2014, the company announced that it had raised another $30 million in a Series-C round of funding led by Qumra Foundation Capital. In November 2015, Fiverr issued a Series-D round that attracted $60 million led by SquarePeg Capital, bringing the total to $110 million.
Kaufman, in a Nov. 12, 2015, interview with TechCrunch magazine, described today’s e-commerce marketplace as the “Wild West.” He sees a market that is still immature in which 97 percent of freelancing is still happening offline. Fiverr’s strategy is to gain market share rapidly while the opportunity is there. Kaufman assumes a number of startups will break apart, followed by consolidation through mergers and acquisitions. The capital raised will be deployed to accelerate the company’s growth.
Workin’ 9 to 5, what a way to make a livin.’ The words may have been scripted by Dolly Parton, but the music is being sung by millions of millennials like Sean Carney. Victor Hugo is credited with saying that nothing is more powerful than an idea whose time has come. Welcome to the gig economy.
Contact Poltenson at npoltenson@cnybj.com