One of the issues raised in regard to FVRR as a hyper growth opportunity has been its lack of a recurring revenue characteristic. A further critique has been that gig workers can readily contract directly with corporations thereby cutting out the middleman. Lastly was the argument concerning absence of a moat.
Today FVRR announced a program which addresses all three issues.
Fiverr Announces Subscriptions, New Feature That Enables Long-Term Relationships Between Freelancers and Customers
This is a suite of features which allows freelancers to establish long term relations with employers and of course conversely. The obvious advantages of this kind of system militates against migration of workers to other services and reduces the proclivity to cut out the middleman.
As recounted here a few times FVRR has shown very high revenue growth rates with good margins in the past few quarters. IMHO the steps to establish subscription services bodes well for continued future growth and renders FVRR more similar to the SaaS growth model we have all come to know and love.
Thanks for sharing this arnie. I’m a big user of FVRR but haven’t invested until today (very small initial position) because of the subscription concerns. Looking forward to see how this impacts the company and sustained and growing revenue.
I wondered if they would offer some kind of carrot to push people this way…what I found was:
Initially, Subscriptions will be available to top freelancers in eight categories across the Fiverr platform, including Social Media Marketing, SEO and Voice Over. The feature enables freelancers to offer their services for 3 and/or 6 months and at a discount, if they choose so. Over time, the feature will be rolled out to other categories across the platform.
If they roll this out with a discount on fees for booking longer time periods…I will double my position. They need a way to incentivize this and make it lower friction than just working offline with a contractor.
If they roll this out with a discount on fees for booking longer time periods…I will double my position. They need a way to incentivize this and make it lower friction than just working offline with a contractor.
In contract engineering in the US, the agency has an employer/employee relationship with the engineer and a supplier/customer relationship with the company who needs the work done. Then client/customer company signs a contract with the agency that if they hire the worker as a direct employee within the next N years, they will pay a “finders fee”. That fee was typically 20-25% of a year’s salary for the type of employee. Decent-sized companies would not be stupid enough to risk being caught poaching an employee with a contract like that in place. If they made a direct offer to the worker, they paid the agency finder fee.
Across country borders and with a “matchmaker” relationship, it is harder. They will need attorneys in each country where the employer is to write similar agreements to pay a finders’ fee for grabbing the employee.
This “carrot, not stick” approach seems to be a carrot based workaround. Perhaps the nature of the matchmaking relationship doesn’t have “stick type” legal protections across borders. Probably depends on the country.
I’ve also noticed them focusing a lot more on businesses …providing account managers and that’s an interesting shift from just a small business or consumer accessing a freelancer but instead providing a company with an actual account manager that helps him to find the best freelancers and supports communication (I haven’t used this feature myself yet but that’s my understanding of how it works from their website)… That could be a way for them to increase the average project and lifetime customer value.
This could also be another way for them to embed subscription revenue as a company would be more likely to pay a monthly fee if they know they have a dedicated FVRR rep helping them with their projects ongoing.