How And CEO Leif Abraham grew to $604.8K revenue and 4.2K customers in 2019.

hello everyone my guest today is life abraham he's the co-founder ceo of a company called and co the number one freelancing software uh tool in the world which was acquired by fiverr back in 2018. he's also a partner at pre-hype adventure development firm in new york an investor in companies like row health he's also co-founded pay with a tweet which was acquired by the german company builder hands adventures back in 2013 served as director of product for west students in san fran where he worked with startups like artio and venmo has also worked as creative director at rga life was named one of the top minds in digital by ada week and earned numerous awards including two cain's uh uh lion grand prix and mtvo music awards he's also an advisor to venture capital firm urban.us and a number of early stage companies life you're ready to take it to the top of course all right man so you have obviously quite a background here so just to be clear today are you inside of fiverr working on an earn out are you doing your own thing again no no still on fiverr still running endco and we're still an independent unit within fiverr as well right so after the acquisition the entire team came over and we're still running encore basically the way we did before but with the you know support and you know infrastructure from five as well cool well okay so so by the way i paid about three invoices this morning from freelancers that i work with and used and they they send their invoices via and co so yeah you have a you have a guy that understands a product and uses the product so so walk me through is this what the product always looked like or was it different pre-fiber um i mean we've definitely done a ton of redesign since we joined fiverr but in general that's like the way you've seen the product now kind of has been also before we got acquired by fiverr so the way we look at the product really is that um is the category of freelancing software the way we define it right so if you're a freelancer you kind of have a very specific workflow of how you work right and that often is you know based off projects and if you work based of a project you for example your proposal first and a freelance contract that kind of then dives into your task management and client management then dives into your invoices and payments and so on and so that is basically that structure is something that we had built out over the span of like two years um and then you know uh yeah and then basically got acquired by fiverr like in year three like roughly within vr3 and so what was the revenue model right was it a pure play sas company or a transaction fee or what yep so the parser was a pure just sas subscription uh software that we had there and since we joined fiverr we made the product entirely free yeah now now it's easy to do that if you had trouble scaling revenue right you're just shutting down a stream that wasn't working anyway it's different if you were doing 20 million bucks in ar and you shut it off so help me understand what you actually shut off uh so obviously i can't share any specific numbers on that but um in general obviously like we were in the market for like a year year and a half with the product from there um and then like as we joined 500 meter product free it was less about hey we're shutting off this like revenue stream and more about a strategic play for fiverr right so and if you look at the market right now it's very much about land grab and so also by making the product free was is also just a strategic decision for us to be able to just grab more from the market right also focus more on the product and you know kind of like make the product even more awesome than it you know was before and um and then i have that focus point right and i think that was like the the main decision there and the other drivers really is that if you look at the freedom's market in general is it like 94 of freelance work still happens outside of online marketplaces and so the fiverr and the upwork and so are really competing within these existing six percent right now and obviously that's growing rapidly but what endcore is serving is basically all the work that you're doing outside of these online marketplaces and that's obviously the interesting thing because we are like the first piece of software that these freelancers use to basically take all that work that they basically have done like offline and through email and so on and moving it into an online system which is then also the first system where then you know transactions might happen online where you have you know your client interaction happen online et cetera et cetera and it's kind of like a first step to basically move that business into an online ecosystem so before you ever touch a market pre let's go back to pre-fiber story for a second again so on average what were freelancers paying you per month to access this suite of tools you'd built for them depending on when you sign up and what kind of plan you had it was between nine and 25 bucks a month okay so very much in kind of like small kind of smb obviously there's no big enterprise deals here right correct correct yeah interesting okay and then timeline wise you said you launched in 2015 or 2016. um we launched more in 2016 um but we launched a company in 2015 but like product-wise we were in market more within 16. okay and where was your head when you launched in 2015 i mean were you just leaving san francisco at this point or like why jump into the tool in the first place yeah so i joined this um venture firm called pre-hype in new york and um the way the partnership model there is also that every partner is technically an entity so you basically get parts of everything you're involved in and therefore technically i turn freelance just from like a legal structure perspective and so what happened there to me was that hey when you turn freelance tomorrow like where do you go right there's not like a place where i go or sign up and be freelance that didn't really exist and so how friends were running their business was basically this like patchwork workflow so i have my dropbox over here my spreadsheet over there i use like my small business accounting software like a fresh books or quickbooks or something and that's kind of how they created their workflow a little bit you know and like kind of using like zapier to stitch everything together in a way and um and that's kind of what like the what was kind of like this this like epiphany moment of you know why is it not this place where i can just sign up and be freelance and also just a tool that's specifically designed for the workflow of freelancers um and it's really just like starting with like solving the issue for for myself or ourselves like i did to take out my co-founder martin like the same issue how many people were on the team when you when you sold uh we were around 10 on the team okay and all remote or all in new york um it's like a close to 50 50. okay we're remote and then split between where um between new york um and then argentina uh portugal australia okay remote it's remote yeah yeah got it and and just and you guys had raised i believe what two million from thrive in 2016. yeah we raised close to five million dollars all together oh you raised okay five all equity or was our venture debt or is something else built in it was all all equity ross um interesting and and was all all the raise was uh the last raise was the last raise the two million from thrive in 2016 or or there was a three million after that uh the last race was from existing investors so there was thrive and uh and the other existing business i guess sorry the actual year that you raised last round was that 2016 or was it later 2017 uh that was that wasn't 17. oh it was in 2017. okay got it interesting okay so the team of 10. so walk me through there's a look there's a lot of founders that are maybe a year two years in their company they raise some capital they have a growth channel but maybe for whatever reason they want to be part of something bigger um how did you communicate the acquisition to your team um obviously i think that's a in general that's that entire process is obviously exhausting number one that's the first one but i think the other i know that i want to sell right and the reasons for you as a founder will always be different than the reason for investors for example and there might be difference for even you know um like how employees think about did all employees have some have some kind of equity do they all have options or no yeah of course of course yeah and so for us it was really the sense of uh like we basically really communicated to the team that it's happening when it was really clear that it's happening they obviously knew that we had talks and whatnot because it's a you know it was a small team at the time and specifically the ones that were in new york we're definitely aware that we have these talks right then we had to float we had to fly the television for a five-hour space and whatnot and so people were aware but i think it's also very important for you as a founder to make sure to not you know make people immediately start thinking of okay you know what would it be if this accident would happen you know what that mean for me et cetera et cetera and some of these questions about this these distractions pop up etc that you don't really want to push on your team yet because obviously that process takes multiple months there you know a lot can still go wrong even in the last days of negotiation et cetera et cetera and so i think it's also important to like keep your team you know focused on the work and focused on uh uh you know their job basically and not to have them be distracted by the potential outcome that might come sure and like life walk me through kind of the acquisition channels you so between 2015 up to 2018 i mean how are you gaining freelance customers what were some growth hacks maybe you've doubled down on yeah so uh very heavy word of mouth which was driven by content but when we say content not just like blog posts and whatnot and seo but really what we did was we always try to launch something we call um like a content stunt within every basically like every six weeks and that basically means something that is talk worthy enough for us to either get some pr to have some you know viral effect value on something like give me an example of one of those potentially opposed to like a product content so on and so we did for example we did a study called slash workers which was basically a study on uh um you know people having basically multiple professions and so on we did a study on um remote working called anywhere workers which we've done together with remote here and so also tapping a partner into that you know kind of amplifies the audience you have you know once you launch these these things we've done things like um uh like a legal search like so does a legal service called uh called williams and hendrix which basically helps you send demand letters to clients that haven't paid you um and it was actually like an extension that was built into the product of encore and it's even existed today and you know we even charge for these letters being sent like how successful were these kind of content stunts in other words what were you able to scale kind of total user base to before obviously the acquisition yep so before the acquisition we got to close to sixty thousand users and then six or six zero six zero six six zero and then since the acquisition we've grown that by about six hundred percent and so um we're now close to 250 000 users that's great and just to be clear can people use you for free or were all those six thousand paying you um so in the past though there was always also a free plan so there were also freezers attached to that so it was a mix of free users and paying users i see so only i don't want to talk about current fiber because i'm sure you can't talk about some of the private kind of company stuff but pre-fiber the six thousand people you signed up with these content stunts how effective were you in converting the six thousand actual paid customers how many pages you have from those yeah in the past we had uh like so back in the day we had uh conversion rates of six seven percent from from uh free to paid interesting okay so can i mean can i take six thousand times like you know obviously seven percent and kind of back into that would be about 420 customers uh it's about sixty thousand by the way six zero so yeah six sixty oh sorry not six thousand you're right sorry four thousand two hundred customers so you could take some numbers out of that stuff okay well the reason i'm asking is because so i wanna actually understand how you did that right so you you know where you put the paywall in any of these kind of freemium kind of tools is really critical seven percent conversion rate i'd say is pretty darn effective 60 000 to 4200 paid at 12 bucks a month where did you put the paywall and how did you experiment with it i think in general it's not just about where you put the paywall but what value you add for for paid users right and so um and in terms of value add at the time back when we were paid there were things like um you know lower payment fees if you accept online payments the ability to kind of like white label the product more to bring your own branding and more and not having like you know out calls of of encore within the within the experience things like that and i think obvious and i honestly think that these are most often better conversion drivers than uh than for example limits like limits are good to bring someone to like to force someone to the moment of having to make a decision but i think what will really bring people over the hump is the value that you provide on the other side and so i think for me it's always it has to be a combination of the two if you only do value then what was yours was it number of being right invoices sent once you hit a limit then you have to pay like what was your actual value metric um so back in the day we had a limit on invoices correct um and then and then i think there were also some limits around expense tracking and so on but they were like pretty high yeah very interesting and then look i mean back to my point earlier it's easy to make a tool free if it doesn't have significant revenue right 4 200 customers at a 12 month price point is about 50 grand a month right so it makes total sense i mean it's not like there was a massive opportunity cost five are cutting off that revenue it's worth way more to use you guys more as a onboarding engine to key fiber than it is to try and make 12 bucks a month per user correct and i think that's that's definitely a good point in terms of that um did you push back though i mean did your team push back and go wait they're killing our revenue we spent so much energy getting 4 000 customers hey if you like if you build a product i think one big thing out of this is that you want to rescale right and i think scale is something that from a selfish perspective as like as a like as an entrepreneur is that you want to see you know basically in theory millions of people use your product right like that is i think something that really makes you excited right and obviously you want to build a business and obviously you want to grow that and whatnot and you know charging can be a growth driver just from the perspective of being able to reinvest it and so on but obviously like one big thing is you want to like you want to reach certain skill you want to like reach a certain relevancy for people right so and i think that is that is i think something that specifically i think also for the team you know was very exciting in terms of joining fiverr and then also and so and then i was like one big thing of terms of how we like of how we grew so one were these these like content stunts that we've done and the other thing we really like distribution partnerships and so one big thing of also why we started talking to fiverr was from a perspective of distribution partnerships and so back in the day for example we did something with um envato um it's like one of the like biggest like creative asset marketplaces where we like buy fonts and things like that and so they have this subscription offering called never elements and so if you subscribe to embody elements you were getting an encore membership for free with it right but um basically in the background there was a deal of how we would still make revenue on that you know through and valto and they were kind of subsidizing it and so on interesting and so and so those types of deals were like very effective for us in terms of user acquisition right and um and that was the reason of also why we also realized from hey when you try to like when you try to acquire freelancers right you kind of really want to bulk acquire as much as possible you want to go into places where you can basically just like you know grab multiple people at once and don't try to pick people up one by one through facebook ads sure no that's a very ineffective way to do that and so yeah so that made a ton of sense so like for running short on time here last question though because i think this is a very sensitive topic for a lot of people but very few people will talk about it i'm gonna see if you'll talk about it um you you raised five million bucks of capital right you're doing call it 600 grand in terms of run rate right assuming a conservative 1x liquidation preference in order for common holders which would include early you know your nine or whatever eight early employees to see anything after the waterfall you've got to sell for at least you know 10x ish more than 6 million bucks how did you make you know did you yes or no and then if yes how did you make sure that common shareholders saw something from the waterfall on the exit so first i cannot share any of those details but uh respect for your quick breakdown um so in general obviously hey uh yes you gotta sell you know for a price that works for everyone otherwise it doesn't work out right well actually you don't have to that is a big piece you we're going to do a deal with fiverr because they're our biggest distribution channel they're going to make it free you know we've raised 5 million we're not going to sell for a 10x and 50 million you know it's hard to get customers at 12 bucks a month to get scale you could actually say we're gonna sell the company you guys will have full-time jobs with fiverr but your equity is basically worthless there's nothing preventing you from doing that in theory of course of course of course of course but again i cannot share anything on the details and how the deal was and so on but yeah look i'm making i'm obviously because you're not going to share here making assumptions that there was no waterfall happening right and and so like i wish people would talk about this more because it's very difficult decisions and everyone you know always does what what you do which is unfortunate because i think actually if people talked about it you could come up with solutions where actually there is some return for common holders that are early employees who maybe took lower salaries because they were offered equity early on so we'll see what happens how many of the how many of the ten are still with fiverr um uh nine okay so you so only one has left yep okay right good so either they're you know they like the new salaries they're excited about the product they're excited about the growth right that all makes good sense very good let's wrap up with the famous five number one what's your favorite business book um i would say belski's the messy middle number two is there a ceo you're following or studying um i really enjoy uh death trainer from intercom number three what's your favorite online tool for building the business um i really love asana number four how many hours i sleep to get every night uh six seven okay and what's your situation married single kids married with kids oh how many kids kid one okay and how old are you 25 yes sir hey you cut out sorry how old are you uh i'm 33 my kid turned five yesterday okay okay so life you're 33 last question what do you wish your 20 year old self knew what was that sorry what do you wish your 20 year old self knew well my 2012 news sorry what's something you wish you knew when you were 20. oh um everything is going to be fine guys everything is going to be fine again built as company and co really support freelancers back in 2015 was a sas model call it 12 bucks a month did what he calls content stunts something that was newsworthy product hunt worthy once every six weeks excuse me use that to drive 60 000 users convert about seven 77 of those to paid to call it 4200 there obviously you can back into a run rate they raised 5 million bucks team of 10 across remote locations and sold the fiber back in early 2018 when their the product was then made free now obviously scaling up upwards of 250 000 uh folks on the platform using it life thanks so much for taking us to the top of course thanks man