LAJ ARTICLES

Gig Economy: Elvis has entered the building

future of work 1099 v W2 v something new 1 87

I have been involved in ‘work’ for three decades, not only as a participant but also as one of the early investors and salespeople in Professional Services. This includes companies such as Insperity, TriNet, Workday, Xero, NewTek, Slack and several that were acquired along their way. I have also acted as a broker, agent, consultant to some of the largest, and smallest, acquisitions in the category.
Gig Economy…
is a peculiar term. It confuses me and I remember when I was a kid trying to figure out if I was a Dr. Pepper person, as it turns out, I was not. Each passenger hearing an elevator pitch will synthesize ‘Gig Economy’ uniquely experiential.
Creating a Gig Economy company is a discontinuous innovation into a system that has not yet been systematized. It is an ideology in waiting, assembling, sequencing all the political, economic, legislative, employer, employee, health benefits, taxing authorities, IRS, State agency and behavioural variables to move into its favor.
Gig Economy is a light that gets bent two ways:
Retail: Small irregular transaction: Growth is constrained because it doesn’t capture a unique value for the identities of users on either side of marketplace. Both sides of market enroll using existing social credentials, they add a little info to complete the minimal viable profile. I think of the model as merchant processors with an edge. Contracts are small, little frequency of engagement, difficult to reliably forecast earnings, usage, etc., marginal retained value.
Enterprise: Larger ticket. Forecastable usage. Enterprise level vendors are on the periphery of the market leaders, rerouting those clients they can convert onto a new, alternate path. The new entrants are building out the front, middle and back-end pieces and processes in the wild, establishing costs, pricing discipline and underwriting. They must anticipate and manage regulatory, legislative and headline risk, lobby and erect higher barriers to entry to keep distance from competitors in an industry whose time has not yet come, but is very close.
Ideal Platform services only companies that are managing a large contingent workforce.Rigid client selection enforces pricing controls
Risk Transfer: Fortune 1000 Companies that have a large contractor workforce would pay a premium to transfer some compliance risk to a 3rd party provider
One vendor with a multi sided, hierarchical platform: Single sign on for remittance, payroll, hourly flags and compliance, distribution of policies and procedures, messaging and push notifications, tools for non desk bound workers, scheduling, time and attendance, expense management, Worker’s compensation, General Liability and medical procurement.
Large enrollment fee: Installation, integration to other employer systems and orientations are an ideal opportunity for a large, mostly intangible, one time fee. This helps finance a ‘best’ sales organization that is well compensated. Commissions are a form of profit distribution
Must not be reduced to a premium payroll company:
Bundled invoice: The secret sauce to present one all-in bundled invoice to each endpoint of the platform.
Recruiting: Right now it’s largely employer mandated for contractors to enroll. Soon the reservoir will be filled with applicant opt in coming from colleges, etc., The platform can assist the HR departments of their enterprise clients by sourcing candidates thru reliance on third parties patched into the platform
Robust profile: Workers complete an exhaustive, robust profile, a ‘contingent worker ‘LinkedIn
Social Currency: will become more precise. Social resumes will become much mor comprehensive and the strength of a person’s network, work history, demo/psychographics will be utilized for credit worthiness, banking and various other forms of collateral. This can all be rolled up inside the freelancer end of the marketplace
Grey and Blue Collar: Many of the enterprise freelancer marketplaces have focused on knowledge workers, a great segment but risks giving up beachheads to non desk bound freelancers
Manufacturing is back: A worldwide trend that will become more pronounced is the repatriation of manufacturing sovereignty. Countries such as India will restrict sellers to only those goods that are manufactured, assembled, sourced regionally unless there is no internal capacity. This will have a significant impact on US manufacturing jobs.
Absentee landlords return: As regional companies of all types have been acquired, the CEOs and executive management that once had proximity to their workers were relocated to the coasts. I expect the return of manufacturing to have an enormous resurgence in the middle of the country. This is where the labor pools are, the cheap real estate and the buildings.
Regulations that have constrained business growth will be eased
Mediation: New enterprise entrants will supplant formerly held by unions, buffering between employer and employee
Freelancers will fragment their labor and skills amongst many employers.
Velocity: If all jobs on an avenue pay $20 an hour you will see more job hopping without compromising the quality of a resume
Brute Force Sales v ‘The Easy Way’: One of the errors that new entrants make is to rely on brokers to find them clients and get to top line benchmarks. However, this compromises client selection and ability to forecast renewals. Also reduces the vendor to an installer and tangles ownership of the account. Brokers are mercenaries
The end?

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