Transcript: Shai Shafrank | Empathy | Takhles Episode: How Did Fiverr Break the $5 Barrier?

Takhles: the problem that held a huge opportunity

Eyal David: [00:00] So, takhles: how did Fiverr break through the five-dollar barrier? Shai Shafrank, former Head of Product at Fiverr, describes what a strategic shift looks like at a company that is already successful. This is a short clip from the full episode.

Shai Shafrank: [00:07] Right, and that's really the place where I think, as product, you run into both a very big business opportunity and a very big problem. Usually we're either doing some kind of opportunity hunting, or we're looking, well, to solve problems, but here there really was a problem that contained a huge opportunity, because this model was the core, it was the essence, right? And that was also what made it hard to change. The marketplace was called Fiverr, that's a five, and you walk into the marketplace and everything is priced at five, like, it makes so much sense. But on the other hand, the seller can't sell the way they want, and the buyer can't buy the way they want, and there's so much friction. And I understood, like, not just me, the company in general wanted to move up market, and it said: it's nice that there are all kinds of people in all kinds of third-world countries doing dances, but we want to sell serious things here. We have to move up market, and also, it's nice that people sell logos they made in half a minute that look like garbage to other people who don't understand, but we want quality people, we want quality deliverables, we need to take this marketplace up market. But, we're called Fiverr, and it's not that people don't know us, and it's not that this brand is worth nothing, we're one of the most famous gig-economy consumer companies in the world, at this point it's exploding, so what do you do? And there were lots and lots of concerns. I can tell you, for example, that before, before me, there was a project that Likhai did, led it, custom offers, right: if you're messaging with the seller, they can send you a quote at any price. There were tons of concerns, like, hide it, make it gray, make it small, put it on the side. No matter how much we hid it, it made more money than the entire marketplace, because that's what people needed.

Eyal David: [01:56] So the signals said, we have to do it, but reality said, it's impossible. I'll add one more thing, like you're saying, there was a lot of ping-pong, I really remember it, all kinds of features that were sort of going to break the five dollars and give the seller that freedom, but they weren't full on, and it was clear that you had to rip it off like a band-aid and make a much bigger move.

From "I will do something for something" to service is a product

Shai Shafrank: [02:15] Right. And then I think the move started, and here I, there are a lot of people involved in these processes, and also ten years have passed, right? So I remember things the way I remember them, and surely everyone remembers things the way they remember them, I don't want to take credit from anyone, right? But a conversation started about, so what are we going to be? So what is Fiverr? Right, Fiverr was "I will do something for five dollars," and I remember the deck I made, again, maybe someone made it before me too, I know, but I remember saying, okay, "I will do something for something." What does that mean? What's left? What's the core of the company now, when there's no longer "I will do something for five dollars," but "I will do something for something"?

Eyal David: [02:54] Wait, "I will." "I will" is the thing we were left with, and that "I will" is a very, very significant thing, because what does "I will" actually mean?

Shai Shafrank: [03:02] It means that a seller, it means that a freelancer, takes a service and says up front, here's what I'm going to do for a certain price, and that didn't exist. It doesn't matter if that price is 5, 10, 50. You want to work with a freelancer today? Go, write to them, do a brief, do a negotiation, agree on hours, days, this, this, this, this, this, and in the end somehow you'll manage to settle on some pricing and you'll do hiring. A nightmare. We don't want hiring, we want one-click. One-click purchase. And then basically I, it was very clear to me that the story had to change. The story isn't what you can do for five dollars, but how you can buy a service the way you buy a product. As we called it back then, service is a product. Right, back then there was the whole product-as-a-service thing, right? We said, no, service is a product. How can I, the one-click, that, I just read the press release,

Eyal David: [03:57] So Micha is quoted there, saying, it's like buying a flat TV online, right?

Shai Shafrank: [04:04] Ten years. Flat screen TV online. Yes, ten years. And like when I asked my daughter, my daughter said to me, what's a "pelephone"? Why don't they call it, it's a telephone, it's not a "pelephone." What do you want? So no, it's a "pelephone," right? We're buying flat TV screens online.

Eyal David: [04:17] Tell me, and what was it like? Did you, like, decide you were going for it, put your work aside for a second, make a deck?

Shai Shafrank: [04:25] So I didn't, what I remember is that I'm having this conversation I just described with anyone who would listen.

The metrics behind the move

Eyal David: [04:34] But nobody appointed you.

Shai Shafrank: [04:34] No, no. It was clear to me that there were, we had, why were there metrics? We need to raise the spend, right, how much people spend in the marketplace, we need to raise the quality. How do I raise, like, the satisfaction, the retention, right? In the end you want, and by the way, you understand, you need not to screw up the conversion, which is also a whole story, right? When everything is five dollars, it's like... especially when we're before a fundraising round, and right, that's also what we promoted at the start. Yes, we're a company, a company, I can prove it, we want to show that we're growing, and all the metrics always need to go up. Yes, nobody ran away. And I, I, as product, understand that these are the metrics, and I do whatever I can to make it happen, and I pitch. By the way, today really, pitching is part of what product people do. We require them to prepare.

Eyal David: [05:18] That was a Takhles episode from Product Builder. Want to hear the full conversation? Look for it in the feed, and don't forget to follow us.