Small Business Labs

Why Freelancers Need to Experiment with ChatGPT (and other AIs)

The history of technical innovation is consistent.

Initially, new technologies cause both economic dislocations and new opportunities. But the longer-term net effects of the vast majority of technical innovations are positive due to the creation of new opportunities and jobs.

We think that ChatGPT, and other forms of AI, will follow the same path - at least for the next 5-10 years.   

In other words, AI will create economic winners and losers, but the net economic and job impacts will be positive.  

We've been experimenting with ChatGPT for months and found it improves our productivity, cuts our costs, and frees us to spend more time on value added activities.

Even better, after working with ChatGPT, we're not worried about AI replacing us anytime soon (by that we mean at least for the next 5 years or so). 

The reason is that our work is helping clients discern signals from noise.

And while ChatGPT is great at generating content (noise), it's not good at discerning signals - at least for the kind of work we do.

Like us, many other freelancers will benefit from ChatGPT and AI.  

But there will also be freelancers replaced by AI. 

Workers doing low to medium-skilled knowledge work, especially in content creation, will be at the most risk. AIs will provide the most significant productivity gains in these areas, reducing the demand for freelancers to do this type of work.

We think all freelancers and independent workers should be experimenting with ChatGPT and, if appropriate, other forms of AI. 

The objectives of these experiments are to understand the following:  

1. Can AI can automate some or all of your work?
2. If so, can you use AI to automate some of your work, freeing time to provide additional or higher-value services?  

If the answer to (1) is no, your business is unlikely to be impacted by AI.

If the answer to (1) is yes, and (2) is no, you are at risk of being replaced by AI. You need to figure out how to provide different services or higher-value services.

If the answers are yes to (1) and yes to (2), you have an opportunity to benefit from AI.

The good news is that ChatGPT is a very approachable technology. 

Getting started doesn't require specialized knowledge or training - although getting proficient takes time and practice.  

ChatGPT is a game-changing technology for many jobs and industries.

Freelancers need to understand this technology - and how it will impact their business.  

The End of Dream Jobs Means More independent Workers

Two work and job-related articles jumped out at us recently.

The first is Buzzfeed News' The Fantasy of the Dream Job is Gone covers the growing number of layoffs in tech and finance. Key quote:

Layoffs at some of the country's most prestigious companies are the latest sign that no one's job is ever safe.

The second is Fast Company's From the Great Resignation to the Great Refusal—here's what the 5 'Great Rs' mean for the future of work. Key quote:

We are no longer centered on where we work, but rather on where work fits in our lives, and there is no putting this genie back in the bottle.

Because we study why people choose to be independent workers and small business owners, we spend a lot of time on how workers compare traditional jobs with independent work.

We've found the teeter-totter is a good metaphor for how workers compare and choose between traditional jobs and independent work.  

At a high level, workers choosing between the two balance the security, predictable income, benefits, and career paths of traditional work versus the autonomy, control, and flexibility of working independently.

The recent tech and finance industry layoffs and the massive pandemic-related layoffs have made it clear that no job - and the predictable income and benefits that come with it - is completely secure.

Also, the pandemic accelerated existing trends toward people wanting more flexibility, autonomy, and control over their lives and work.

Both of these shifts make traditional jobs less attractive - tilting worker decisions towards independent work.  This is true even for "dream jobs." 

And this likely means more people will choose independent work, and the recent surge in independent workers will continue.   

Mastercard on the Creator Economy

Mastercard's study - The creator class: How micro business is fueling the next wave of entrepreneurialism - provides an excellent overview of those identifying as digital content creators. Key quote:

Scaling up from a hobbyist to a full-time entrepreneur has never been easier, thanks to democratization around social media, as well as advances in payment technology, Web3 principles, and monetization models. 

We don't know what "Web3 principles" refers to, but we still like the quote - mainly because we agree that scaling a hobby into a business has never been easier.

The report chart below (click to enlarge) shows the primary motivations for becoming a creator. These are consistent with why people give to becoming independent workers or small business owners.

The report covers the challenges creators face. They are not surprising to anyone following the creator economy - burnout, inconsistent income, and lack of control. Key quote from the report:

The pressure to always be creating is intense, as 89% of creators report experiencing burnout. A similarly high percentage feel beholden to algorithms and platforms that are constantly shifting, as 86% of creators feel they do not have control over their content. Financial challenges — from rising costs to inconsistent income streams — are also pervasive for over eight in ten creators.

Our one quibble with the study is that it doesn't actually say how many income-earning creators there are.

The report says there are 22 million content creators in the U.S., but also says "nearly two-thirds of creators envision turning their endeavors into businesses."

This leads us to believe the study found about 7-8 million content creators who consider their content creation activities to be a business, with the rest considering it a hobby or potentially a pre-business.

But that's a minor quibble, and we like the study overall and recommend it to anyone interested in the creator economy.

What is Synthetic Media (Hint: AI is Involved)?

So many new AI buzzwords, so little time.  

"Synthetic media" is media (text, pictures, videos, etc.) that is produced, in whole or part, by some form of AI technology.  

Synthetic media has been around for years. But not surprisingly, the publicity around ChatGPT and generative AI has dramatically increased the creation of synthetic media and the term's usage. 

The NBC News article AI-generated 'synthetic media' is starting to permeate the internet covers the good and bad of synthetic media. Key quote:

"The question some AI researchers say they are grappling with is whether AI-generated content is enhancing internet creativity or squandering it."

The article references the firm UNEEQ, which is "an artificial intelligence company, developing the most advanced autonomous digital human platform available for customer interactions ..." 

Their URL is digitalhumans.com. 

UNEEQ provides "personalized digital humans" designed to be used in customer service and support roles. 

These digital humans are AI chatbots with an AI-generated human as their user interface. These digital human chatbots interact much like humans do.

The picture below shows the digital human Kate answering a support question (the Bot, BTW, looks, acts and talks like a human). 

Generative AI - and ChatGPT in particular - has resulted in a seismic shift in the creation of synthetic media. And expect much, much more in the future.

For example, we used two forms of AI to write this article - ChatGPT helped with the first draft and Grammarly with editing.

And if we can do it, anyone can.  

What is Deinfluencing?

One of the hottest new buzzwords is deinfluencing - a form of online influencing where influencers tell people what not to buy.

TikTok, of course, is where most of the deinfluencing influencing is happening.  As the screen grab from TikTok below shows, the hashtag #deinfluencing recently had 268 million views.  

Time's TikTok's 'De-Influencing' Trend Is Here to Tell You What Stuff You Don't Need to Buy nicely describe the trend. Key quote:

"The growing trend is a direct response to the endless deluge of products that beauty and lifestyle influencers insist you simply must have."

But others have pointed out that most deinfluencers are, well, just influencers with a slightly different message.

Yes, they tell you what not to buy. But they also tell you what to buy instead. 

Key quote from the Financial Times article What de-influencing tells us about the state of the creator economy:

De-influencing is not a rejection of consumerism or social media. You can tell that by the fact that many of the videos follow up negative reviews with suggestions of things their followers should buy instead.

Buzzfeed News' Sorry, But The "Deinfluencing Trend" Is Just ... Influencing says:

Deinfluencing is a fun trend and TikTok buzzword, but the media's embrace of the term illustrates some misconceptions about influencers. It doesn't spell the end of the industry at all — it's just another version of the same thing.

Social media influencers are here to stay.  So is social commerce.  

And deinfluencing is just an evolution in how influencers use their influence to promote commerce.  

AARP: Almost Half of Older Workers are Independent Workers

AARP's Gig Work on the Rise Among Older Adults as Demand for Workplace Flexibility Grows covers the gig economy parts of a broader study AARP conducted on workers who are aged 40+. 

AARP found that independent work is the main job for 27% of American workers aged 40+.

The AARP survey question below explains how they defined gig/independent work:

"Q25: In your current job / main job / most recent job are you an independent contractor, an independent consultant, a gig worker, or a freelancer?"

This is a pretty narrow question. It only covers services and even then leaves out a few independent worker services areas. It also only covers main jobs, leaving out side gigs and second incomes.  

But AARP also asks a broader question that includes non-main job work activities:

"Q29: Please check the box beside each of the ways that you independently earn money on a regular basis."

As the AARP chart below shows (click to enlarge), 48% of workers aged 40+ said they regularly work independently.

Discovering this data point requires careful reading of the small print at the bottom of the slide (highlighted in blue), which says, "52% of respondents reported: I do not earn money independently."  

After some quick math, this means 48% - almost half - of the respondents earn money doing independent work. 

The gig economy data is just a small part of the broader AARP study. This once-every-five-year study looks at the overall attitudes and motivations of working adults ages 40 years.

It's well worth reviewing for anyone interested in older workers.

The impact of Recent Layoffs on Freelancing

Historically, job security has been one of the main attractions of a traditional full-time job.

But research (click on the chart below to enlarge) from the long-running MBO Partners State of Independence study shows a growing share of independent workers believe independent work is more secure than a traditional job. 

The study has also found that the share of traditional jobholders saying independent work is less risky than a traditional job is also growing, increasing from 18% in 2018 to 33% in 2022. 

Put another way, 7 in 10 independents and 1 in 3 traditional employees say independent work is more secure than traditional employment.

And the rash of layoffs in tech is reinforcing this view.  

Two recent articles on this topic caught our eye.

Vox's Tech Workers are Increasingly Taking Contract Jobs covers the recent tech industry layoffs. Key quote:

"Part of what's leading more people to independent work is that regular employment doesn't look so hot right now in certain industries ... All of a sudden, contract work isn't looking so bad."

The article also points out something we often hear in our interviews - because most independent workers have multiple sources of income, they feel more secure than if they were relying on a single employer:

"It's almost like diversifying your stock portfolio," she said. "Instead of working for one company, I'm going to work for several because if one of them doesn't have work, the other ones do."

The Information's Tales from the Shredder: How a Quarter-Million Fired Tech Workers Are Picking Up the Pieces focuses more on the human impact of getting laid off.  

Our favorite quote is from a laid-off tech worker that illustrates the lack of security of traditional jobs:

"They paid us well; they gave us good severance," he said. "But the experience made me feel like I was just a tool. If they need you, they hire you. If they don't need you, they discard you."

The choice between a traditional job and freelancing generally comes down to an evaluation of the pros and cons of each.

And anything that makes traditional jobs less attractive - like a lot of publicity about layoffs - makes freelancing more attractive, and means more workers making a choice will choose freelancing. 

Emergent Research (that's us) works with MBO Partners on the State of Independence study series.

Digital Nomads are Life Goal Champions

Independent workers (freelancers, independent contractors, gig workers, etc.) who are also digital nomads score significantly higher than independent workers in general and workers with traditional jobs in achieving their life goals.

The chart below (click to enlarge) is from the MBO Partners research brief Life Goals: Explore the Great Realization In Depth.

It shows that Independent digital nomads score the highest in 7 of 8 life goal categories. They tie for the highest score in the 8th goal, spending enough time with family.

Digital nomads score exceptionally high on getting the most out of life (79% report achieving this life goal), continued personal growth (74%), and ensuring their life has a purpose (71%).

In addition to scoring high on life goals, independent digital nomads have among the highest work satisfaction rates of all workers. Ninety-two percent of independent digital nomads report being highly satisfied (81%) or satisfied (11%) with their work and lifestyle.

No doubt, visiting new places, being exposed to new cultures, and meeting new people all play a role in these high scores.

Another factor is that most digital nomads report high work/life flexibility, autonomy, and control levels. Our research shows that independent workers who report having work/life flexibility, autonomy and control also report high levels of work satisfaction and happiness. 

See the research brief for more details.

Emergent Research (that's us) worked with MBO Partners on this study.

What are DINKWADs?

Regular readers know that two of our favorite topics here at Small Business Labs are new buzzwords and pet trends.

So we had to cover DINKWADs, a new to us buzzword.  

It stands for "dual income, no kids, with a dog."  

DINKs is an old buzzword. It was coined when yuppies (a 1980s buzzword for young urban professionals) started pairing up.   

DINKWADs adds, "with a dog."

The Insider's Meet the DINKWADs: The TikTok legion making everyone jealous with their double incomes, no kids, and a dog covers this new acronym and trend. Key quote:

"The allure of the DINKWAD lifestyle is solely based on financial and personal freedom from any responsibility," Ahmed said. Instead, Benfield and Ahmed love to travel and are both passionate about not having children. They have a beloved rescue mutt named Yvie instead."

The same type of quote appeared in the old DINK stories, but without the mention of dogs.

But since the acronym DINK was coined, the trend toward pet humanization has dramatically accelerated.

And now, pets - and especially dogs - have become viewed as family members and kid substitutes. 

And you can pridefully show you're a DINKWAD by wearing a DINKWAD t-shirt (available from Etsy).

We cover trends like this because declining birthrates have significant, long-term economic and social impacts.

Key quote from our article U.S. Birthrate Hits Another All-time Low:

"Declining fertility and birth rates have enormous social and economic implications. They lead to reduced economic growth, make it harder to pay for social programs (especially social security and Medicare) and cause economic dislocations due to changing demand patterns."

See our Demographics and Pet Trends sections for more on this topic.

Gig Economy Doctors

Locum tenens - "one holding a place" in Medieval Latin - is the healthcare industry's term for doctors, nurses, and other caregivers working in temporary roles.  

It's also the name of a temp staffing firm that places doctors and other healthcare professionals at hospitals and other healthcare facilities.

The company LocumTenens recently released The Future of Work: Redefining the Role of Physicians in the Gig Economy. 

As the study chart below illustrates (click to enlarge), 73% of doctors surveyed said they would be interested in local contract work, and 63% said they would be interested in a contract position that required travel.

The reasons doctors are interested in gig work are pretty much the same as others who say they are interested in gig work - better work/life balance and more flexibility, autonomy, and control.

And just as the pandemic has many questioning the role work plays in their lives, so are doctors, nurses and other healthcare professionals.   

Key quote from healthcare consulting firm Oliver Wyman's HEALTHCARE WORKERS MOVING TO GIG WORK IN RECORD NUMBERS:

"COVID-19 has battered the healthcare workforce. Historically known for their resilience, the pandemic has left doctors, nurses, and other front-line workers not just exhausted, but bitter, traumatized, and questioning their passion and commitment to a calling they once loved. In search of greater work-life balance and mental wellbeing, many are considering major changes to their work-life, from moving to gig work to leaving the profession altogether ..."

One of Oliver Wyman's recommendations to hospital executives is "strategically utilize gig workers".  

We think they will accept this advice, and the healthcare industry will see steady increases in the number of gig doctors in the coming years.  

Independent Workers and Their Life Goals

Since the pandemic, people have been reevaluating work's role in their lives. And for many, work-life balance, the ability to pursue passions, and health and wellness are taking center stage as top priorities.

MBO Partners' study Life Goals: Exploring the Great Realization in Depth explores the life goals of independent workers (freelancers, gig workers, self-employed, etc.) and how successful they are at achieving them.

The key finding of this study is that independent workers outperform traditional jobholders in achieving their life goals.

The study chart below (click to enlarge) illustrates the top 3 life goals reported by a survey of traditional and independent workers.

As the chart shows, independent workers outperform traditional workers in all 3 of the top categories.

Independent workers scored higher in all areas except financial goals. They scored lower than traditional workers in earning a steady income and being on track for retirement.  

Interestingly, they scored statistically the same for the goal of creating wealth. This is likely due to both types of workers scoring low on this achieving this goal.

One goal that caught our attention was continued personal growth. Almost two-thirds (64%) of independent workers reported achieving this goal versus 54% of traditional workers.

Based on our interviews with independent workers, the need to continue to upskill and adapt to changing demand associated with independent work is likely why independents score higher in this area.

Of course, not all independent workers are successful at achieving their life goals.

The study found that about one-third of independent workers score poorly regarding life goal achievement. In most cases, this group reports not having the work/life flexibility, autonomy, and control that more successful independent workers have.

MBO Partners collaborated with future of work expert Connie Steele and her firm, Flywheel Associates, on this study. Flywheel Associates provided input, guidance, and survey questions from their annual State of Work and Career Success study.

Emergent Research (that's us) also collaborated on this study.

See the report for more information.  

The Lifestyle Employment Contract Versus Freelancing

Mercer's study, Rethinking what we need from work, found that "employees are more focused on securing their financial, physical, and emotional health and well-being than by achievement and climbing the ladder."

Because of this, they are proposing firms shift to a lifestyle contract to attract and retain talent (click on the Mercer report chart below to enlarge).

The new contract suggests 6 areas employers should focus on if they want to win the war for talent:

1. Step up efforts on retention
2. Align to shifting workforce needs
3. Focus on financial health
4. Reimagine well-being at work
5. Accelerate diversity, equity, and inclusion
6. Build a more flexible future

When you look under the hood at most of these areas, Mercer suggests employers offer greater work flexibility, autonomy, and control.  

These are, of course, key reasons workers choose to pursue independent work and freelancing.  

We've long viewed the choice between having a traditional job and freelancing as a competition.  

And most traditional jobs offer much less work flexibility, autonomy, and control than freelancing does. And we've long wondered why more firms don't provide at least some of the flexibility, autonomy, and control freelancing offers.  

And perhaps, they will.  

One of Mercer's focus areas, financial health, is where traditional employment has always had an advantage over independent work.

And because of this, it's a good area for employers to double down on in their competition with freelancing for talent (and their competition with other firms).  

Before the pandemic, we were seeing a trend of employers offering more flexibility, greater work/life balance, higher pay, and better overall financial support.

However, there is much talk - especially in the tech industry - about cutting back on these changes. And if we have a recession, there will be more talk.

Our hope is that more companies will adopt some form of the lifestyle employee contract.

Either way, we think the appeal of freelancing and independent work will be sufficient for their numbers to continue to grow.

Skift's Travel Industry Megatrends

Skift is a travel industry analyst firm and one of our favorite sources on travel trends. Much of their content is behind a paywall, but they also produce free content (we subscribe to several of their newsletters).  

We follow travel trends because of our interest in remote work and digital nomads. We're also active travelers, so we like travel trends.  

They recently released their 2023 Travel Megatrends report. It covers 22 travel and travel industry trends.

Two trends jumped out at us. 

Blended Travel Comes of Age covers the growth of travel that includes work and leisure. Key quote:

"The pandemic has led to a permanent change in how we live our lives between work and the personal. No longer just a trite category called "bleisure," the idea of blended traveling is front and center for every major travel company now. How new strategies focused on the blended traveler will emerge more clearly in 2023, as the industry recognizes the whole traveler holistically." 

As the Skift chart below shows (click to enlarge), the share of business travel that includes a weekend has increased substantially since the start of the pandemic.

Because of the growth of blended travel, the entire travel industry is trying to figure out how to serve this market segment better.

The other trend that caught our eye is The Anywhere Traveler Puts New Destinations on the Map. Key quote:

"Millennials now surpass Boomers as the largest sector of the U.S. population, giving rise to a new class of "anywhere travelers." This group has a strong passion for experiences that take them to less obvious destinations. These habits, in their own way a new form of balancing overtourism, will put new destinations in focus."

We like this trend for several reasons.  

First, It illustrates one set of impacts due to the aging of baby boomers. Aging boomers will have many economic and societal impacts, and these, in our opinion, are being underestimated.

And second, the Anywhere Traveler will increasingly be a remote worker or digital nomad.  

The other 20 trends are also interesting, and the report is well worth reading for anyone interested in shifts and trends.

Digital Nomad Programs for Families

Digital nomads traveling with children are not unheard of. But because of the challenges of traveling long-term with kids, there are relatively few digital nomad families.  

That's why we found The Florentine's Digital nomad community Boundless Life expands to Tuscany. It covers the firm Boundless Life, which describes itself as "Your family's complete solution to living around the world."

This includes, according to Boundless Life, "Forward-thinking education, furnished homes, coworking space and a wonderful community of like-minded families."

Their education program jumped out at us.  

As far as we know, they're the only organization that provides schooling for kids (ages 1-12) as part of their remote work/digital nomad service offering.  

Boundless Life offers 3-month summer and 6-month programs in Portugal, Greece, and Italy. The picture below (click to enlarge) is from their website. It provides more details on their locations.

The schools are taught in English, with the programs based on the Finnish curriculum, which Boundless Life describes as "world-renowned." Not knowing anything about Finnish schools, we checked with several local school officials. They confirmed that Finnish schools are highly regarded.  

Boundless Life is another example of the rapidly growing array of programs and services targeted at digital nomads.  

These services aim to reduce the challenges associated with being a digital nomad. This makes it easier to become a digital nomad - which is what Boundless Life does for nomads with kids.

The growth of these services is one of the reasons we are forecasting the number of digital nomads to continue to grow over the next 2-3 years.  

See our Digital Nomad section for more on this topic.  

Wunderman Thompson's 100 Trends to Watch in the Coming Year

Wunderman Thompson's Future 100: 2023, which is one of our favorite annual trend reports, was released this week.

It's one of our favorites for several reasons.

First, since a global marketing agency produces it, the production values are outstanding. It's well-written, and the pictures and illustrations are fun and often intriguing.

Second, who else puts out a report with 100 trends? It's almost too much to go through.

And finally, the report includes 10 consumer trend categories covering everything from beauty to work. Click to enlarge the chart below.

We always have our favorite trends from this report.

This year they include The Artisan Wave, Situationships, Non-Linear Work, and Deepsea Tourism. See the report for descriptions.

And we're always interested in their top 3 destinations. This year they are Morocco, Kyoto, and Tanzania. We've been to all three and they're great places to visit.

If you're interested in consumer trends, this report should be on your reading list. It's free.

Accounting Rules Favor the Use of Freelancers by Corporations

According to The Harvard Business Review's February magazine article How Financial Accounting Screws Up HR, accounting rules and practices mistakenly favor using nonemployee labor instead of employees.  

The main reason is the treatment of employees as a fixed cost. Key  quote: 

"...a number of rules have been prompting a major effort by companies to move work to nonemployees. One involves treating wages and salaries as fixed costs. Such costs are a big worry for investors because if business and revenue decline and those costs can't be cut, the profitability and value of the business collapse in a hurry ...

Why wages and salaries are ever considered fixed costs in the United States is a puzzle given that virtually all employment there is "at will," which allows companies to end it unilaterally for any business-related reason. 

The other accounting rules favoring the use of nonemployee labor the article points to are:

• Using per-employee statistics as key performance metrics: Using nonemployer labor reduces the number of employees, which improves per-employee metrics like sales per employee, profitability per employee, etc. 
• The use of nonemployee labor can increase a firm's reported gross margins: Direct labor costs are included in a firm's cost of goods sold. This reduces a firm's gross margin, a metric investors closely scrutinize. Nonemployee labor is much easier to categorize so it's not included in the gross margin calculation than employee labor costs are.
• It's generally harder to get approval to hire an employee than it is a contractor: This is not an accounting rule, but a common financial practice at most corporations.

Based on our corporate consulting work, our work with investors, and our experiences working at corporations, we agree that accounting rules and practices are tilted towards the use of nonemployee labor.

And many corporate decision-makers do not fully understand the impacts of these rules and practices on resource allocation and hiring decisions.

So shining a light on these issues is important.   

But even if the accounting rules and practices are changed - and we think they should - the use of freelancers and nonemployee labor by corporations will likely continue to grow.

The reason is simple.

The main trends driving the use of nonemployer labor - the need for greater business agility and flexibility, the challenges of hiring in-demand labor, the greater productivity and efficiency of nonemployee labor in some instances, and the desire by many skilled workers to be independent - significantly outweigh the accounting impacts.  

What is Nature Tech?

PWC's A surge in nature tech investing defines nature tech as:

...  nature-related technologies that help companies understand, mitigate and adapt to the twin climate and biodiversity crises ...

The World Economic Forum's 5 ways nature tech can bring integrity and scale to nature-based solutions defines nature tech more broadly as technology that supports nature-based solutions (NbS).

Which begs the question, what are nature-based solutions? The World Bank defines these as:

"Nature-based solutions are actions to protect, sustainably manage, or restore natural ecosystems that address societal challenges such as climate change, human health, food, and water security, and disaster risk reduction effectively and adaptively, simultaneously providing human well-being and biodiversity benefits."

The PWC article uses as an example various technologies that help honeybees thrive despite pollution and climate change.

These include measurement, reporting and verification (MRV) technologies that help beekeepers better understand hive conditions and site their hives away from pollution sources, bee hive heaters for cold weather, and even robotic queen bees to direct drone activity.

As the PWC chart below shows (click to enlarge), while not huge by VC standards, nature tech funding is growing.

 

Its clear nature needs help these days. So it's good to see nature tech funding is increasing.

Crypto's Winter and Generative A.I.'s Spring

The Washington Post's 'Crypto winter' has come. And it's looking more like an ice age starts with:

A year ago, the crypto world was booming, with prices for Bitcoin and Ethereum at all-time highs, celebrities stumbling over each other to promote expensive digital art, and logos from blockchain companies gracing sports stadiums and Super Bowl ads. That era is over.

And it's true. 

Thanks to a long list of frauds and criminal schemes - topped off by FTX's collapse - the crypto hype cycle is over. For now.

And replacing it is a major new hype cycle for generative A.I. 

Generative A.I. - an umbrella term for A.I. that doesn't just analyze existing data but creates new text, images, videos, code snippets, and more - had already established itself as tech's latest big thing.

But with the launch of ChatGPT, the hype around generative A.I. has reached a fevered pitch.

The Guardian's What is A.I. chatbot phenomenon ChatGPT and could it replace humans? does an excellent job explaining what ChatGPT is. Key quote:

ChatGPT is a prototype dialogue-based A.I. chatbot capable of understanding natural human language and generating impressively detailed human-like written text.

In addition to answering questions in a human-like way, ChatGPT also scans the Internet for information and data related to the topic.

For example, we asked ChatGPT what a technology winter is. Here's its answer:

A technology winter, also sometimes referred to as a "tech winter" or a "capital winter," is a period of time when investment in, and enthusiasm for, new technologies and startups cools off ... Technology winters can have significant impacts on the technology industry, including reduced innovation and slower adoption of new technologies. However, they can also be followed by a "technology spring" or a period of renewed growth and innovation.

Not a bad answer.

A.I. has gone through multiple technology winters, with the first happening in the 1980s and an extended winter running from the mid-1990s to the mid-2000s or so.  

Yet now, A.I. is widely used in business and science - and it's experiencing yet another technology spring.  

We expect Crypto, despite it's current problems, will also eventually have its own new spring.

VC Firm Forerunner on Consumer Trends

Forerunner Ventures is one of the most successful consumer industry-focused venture capital firms.  

They were early-stage investors in many well-known consumer brands, including Warby Parker, Bonobos, Dollar Shave Club, Jet (now owned by Walmart), and others.  

Forerunner recently released a consumer trends report they call The Dinner Party.  

Their premise is that the past several years dislocations have resulted in consumers needing to deal with mounting uncertainty and personal and societal adversities. 

Key quote from the report:

"The consumer has been upended by the change in every aspect of life and is facing mounting adversity. We are all searching for varying degrees of purpose, direction, and resilience to get back to solid footing and a path towards a brighter future."

The study identified eight psychographic consumer personas, which Forerunner calls "consumer archetypes". 

They also identify six broad consumer trends. These are:

1. Sick-care Evolves to Well-care
2. Money Matters
3. Choice is The Future of Work
4. New Age Activism
5. The Need for Community is Real
6. Sustainability Moves from Transition to Table Stakes

All are supported by interesting data from their consumer survey and well worth reviewing.

But one set of data jumped out at us.  

As the report chart below shows (click to enlarge), 61% of their survey respondents said they prioritize money over convenience, and 66% said they prefer DIY vs. paying to outsource.

       

This is a significant consumer shift away from the past decade's on-demand service revolution that provided consumers - for a price - the ability to outsource many aspects of their lives.

Key report quote on this shift:

We imagine this marks the beginning of a pendulum swing to a place of balancing price and value with urgency and convenience ... opportunity exists to provide relevant tools and resources for people who are now actively looking to do more with less, or re-engage in activities and experiences that help harken back to a simpler life.

While we like most any trend description that includes the word "harken," this trend is a major shift in consumer thinking - and a trend we fully agree with.

Forerunner has a strong track record of spotting, and successfully monetizing, shifts in consumer behavior. Because of this, we pay attention to their trends' work.

See the report for more details on the consumer archetypes and trends.

The Atlantic's 2022 10 Breakthroughs of the Year.

It's future trends season, and we'll be covering some  of the many 2023 future trend lists and related forecasts in the coming weeks.

We're starting with The Atlantic's recently released its inaugural edition of their 10 Breakthroughs for the Year.

The list is below and quite interesting.

It contains "breakthroughs" that are nearly or already commercialized (generative A.I., vaccines, lab-grown meat).  

The list also contains breakthroughs that are likely years or decades away from practical applications (reversing death, synthesizing life, small nuclear reactors).

But all of the breakthroughs are potentially society-changing, and most get little attention from the media.

The 10 Breakthroughs are:

1. The Generative-AI Eruption: A new dawn in how we build
2. The Power to Reverse Death (Kind Of): Organs revived in dead pigs
3. The Power to Synthesize Life (Kind Of): Mouse embryos "born" without sperm or egg
4. The Vaccine Cavalry Is Coming: Novel therapies for malaria and all influenza strains
5. A Snapshot of the Beginning of Time: Images of the first galaxies in the universe
6. 'Unheard of' Advances in Fighting Cancer: Miraculous treatments and an at-home test
7. The Obesity-Therapy Surge: Weight-loss medication that actually works
8. Cracking the Case of Multiple Sclerosis: And learning something important about the phenomenon of "long viruses."
9. Legal Lab Meat: A regulatory first
10. New Toys for the Green-Energy Revolution: Smaller nuclear reactors and bigger geothermal breakthroughs

In case you were wondering, the reason the recent fusion announcement by the Lawrence Livermore National Laboratory is not included is the news was released after this article was written. Otherwise, it would have been a shoe in the make the list.

They also have an accompanying podcast on the Plain English podcast with Derek Thompson (the article's author) for those who'd rather listen to the story.

There's way too much here to cover in a blog. So read the article or listen to the podcast (we did both) for more information.  

One-Third of U.S. Business Use independent Contractors

The U.S. Government Accountability Office (GAO) recently released Nonstandard and Contracted Work Arrangements, a study looking at nonstandard work arrangements by U.S. companies.

As the study chart below shows, 33% of firms responding to the 2020 Annual Business Survey reported they used contractors, subcontractors, independent contractors, or outside consultants.

These results are not surprising.

IRS data shows that there's been a long-term shift to contract labor by small businesses. And many studies show that a majority of big companies use contingent labor.

Echoing those studies, the GAO also sampled annual financial reports submitted by S&P 500 companies in 2021.

They found that 89% of the companies in their sample mentioned using contractors in their annual reports.

The shift to nonemployee labor by firms large and small has been going on for years. It's a trend we are forecasting to continue.

Why Firms are Adding Digital Nomad Policies

According to the 2022 MBO Partners Digital Nomad Study, the number of digital nomads in the American workforce surged 131%, to 16.9 million people between 2019 and 2022.

And as the study chart below shows (click to enlarge), the biggest surge in digital nomads came from traditional job holders.

The shift to remote work unleashed employees from their offices and desks, allowing many to become nomadic.

Unlike regular remote workers, who tend to stay in one place or shuttle back and forth between their home and a vacation retreat or a relative's house, digital nomads travel and explore while working.

This, unfortunately, can lead to legal issues, cybersecurity challenges, and tax problems.

And these issues can be expensive for firms and their employees.  

Fortune's 'Stealth workers' lying to their bosses about where they work are costing companies tons of money provides multiple examples of how firms can get into trouble by allowing their employees to work anywhere they want.

The biggest issue is that digital nomads can easily and accidentally create a new "permanent establishment" for their employer in the state or country where they're working.

That exposes the employer and the employee to the new jurisdiction's tax, regulatory, and employee compliance rules and laws.

In addition, since many digital nomads travel without their firm's knowledge, their employers may wind up breaking employment laws and regulations without any awareness that they are doing so.

The answer to these issues is to create a digital nomad policy. And all firms with digital nomads - which is most larger firms - should have such a policy.  

The Wall Street Journal's Work From Anywhere! (Well, Not Really) covers several companies that have added digital nomad policies. Key quote on Airbnb:

"Airbnb, which has as much skin in the free-range game as anyone, touts employees' license to "live and work anywhere." In practice, company policies keep roughly two dozen countries off limits. Stays in foreign countries can last no more than three months, and employees still need permanent addresses. So, not anywhere."

The Staffing Stream's Implement a Successful Digital Nomad Policy with These Best Practices provides a good starting point for creating a digital nomad policy.

And our Harvard Business Review article Your Company Needs a Digital Nomad Program goes into more detail on why they are important.  

The digital nomad trend will likely continue to grow. 

Because of this, firms of all sizes need to be aware of the risks associated with digital nomads - and have policies to mitigate these risks.

Deloitte on the Canadian Gig Economy

Deloitte's The Gig Economy is Here to Stay provides an overview of the Canadian gig economy.  

The chart below (click to enlarge) contains the key data: about one in three Canadian workers use the gig economy to generate income.

This is similar to the workforce share of gig economy workers in other developed economies.  

Deloitte provides four broad trends driving participation in the gig economy. These are:

1. Older workers are delaying their retirement.
2. Younger workers (Gen Z and Millennials) are seeking more flexible work arrangements.
3. Worker perceptions around long-term employment are changing.
4. More people are looking to supplement their income with alternative work.

We certainly agree that these trends are helping to drive the growth of independent work and the gig economy.

See Deloitte's report for more information on the Canadian gig economy.

The Creator Economy has a Middle Class - Thanks to Traditional Jobs

If you read about, participate in, or study the creator economy, you'll quickly learn that while a small share of independent creators earn a lot of money, most earn very little. 

Harvard Business Review's The Creator Economy Needs a Middle Class nicely covers this.

The HBR article's author, venture capitalist Li Jin, was also recently quoted in Fast Company's Web3 investor Li Jin thinks a Universal Creative Income can help bolster the 'passion economy' on this topic. Key quote:

"The creator economy follows this extreme power law curve where a very small sliver of creators were able to make a living ... Most creators exist in this state of precarity and are barely earning anything ... the vast majority of creators were just kind of scraping by earning a little bit of income here and there."

And data from the 2022 MBO Partners State of Independence study backs this up.

This study asked independent digital content creators (freelancers, self-employed, etc.) about their creator economy earnings.

The results fit with Jin's assessment of creator economy income. Key quote from the study:

"32% of Independent Creators make less than $5,000 annually, while only 10% make more than $100,000. About one-third (36%) report making between $5,000 and $30,000, while 22% make $30,000-$100,000."

In other words, about two-thirds of independent content creators (68%) report earning $30,000 or less from their creator economy work.

But the MBO Partners study also surveys Americans with traditional jobs.

And it turns out that about 17% of traditional job holders report they work in the creator economy. This equates to about 25 million Americans.

About half (47%) of this group report working full-time in the creator economy, with the other half (53%) saying they work part-time.

The chart below shows the reported income distribution for full-time creators with traditional jobs.

There isn't a standard definition of the middle class. But Pew Research defines "middle class" households as those earning $52,000 to $156,000 annually in 2020 dollars for a household of three.

This is not a perfect comparator with the MBO Partners data above. The MBO Partners data is for a single job, and the Pew data is for a household of 3 (many of which have two incomes). But it's a good enough comp for a blog post.

And according to Pew, in 2021, 29% of American households were lower income, 50% middle income, and 21% upper income.

After adjusting for the two income issue with the Pew data, this is similar to the MBO Partners data on full-time creators.

So there is a creator economy middle class. But its members mostly have traditional jobs.

We'll have more on the creator economy in the near future.  Emergent Research (that's us) worked with MBO Partners on this study.

The Number of U.S. Independent Workers Continued to Surge in 2022

MBO Partners released the 2022 edition of their ongoing State of Independence study series. Emergent Research (that's us) works with MBO Partners on this study.

The key finding is that the number of independent workers (freelancers, gig workers, independent contractors, etc.) reached 64.6 million, up 26% over 2021's 51.1 million.

As the study chart below shows (click to enlarge), the number of U.S. independent workers is up 57% since before the pandemic. This is despite a pandemic-induced decline in 2021.

What is also quite noticeable in this chart is that the total number of independent workers grew relatively slowly between 2015 and 2019.

This raises the question, has the pandemic - and the related shift to remote work - resulted in a growth inflection point for independent work?

We believe the answer to that question is yes. And there are both supply and demand reasons why.

On the supply side, workers are seeking to take greater control of their destiny, exercise a sense of agency, and build strong connections between their work and personal purpose.

On all these fronts, working as an independent - either part or full-time - can be a path to empowerment and self-realization. And more Americans are choosing this path.

On the demand side, firms of all sizes are increasing their use of independent talent to access specialized skills and improve business flexibility and agility.

But while we think we've reached an inflection point, independent worker growth will likely not continue at the torrid pace of the past two years.

We're forecasting that the growth rate will slow to 5%-7% next year. This is still quite fast by labor market standards.

We'll be covering other key findings in the coming weeks.

See the study microsite for more information. And click here to download the 2022 MBO Partners State of Independence report.