Small Business Labs

Ecommerce's Post Pandemic Regression Toward the Mean

The Wall Street Journal's Amazon CEO Andy Jassy's First Year on the Job: Undoing Bezos-Led Overexpansion covers Amazon's over-forecasting of the post-pandemic growth of ecommerce. Key quote:

"Mr. Bezos and other executives had greenlighted a strategy, guided by a revered internal forecasting tool, that overshot the long-term projections for demand from Amazon. Instead, despite early ideas among industry observers about a permanent shift in consumer behavior, the pandemic-fueled growth in online shopping has slowed as in-person shopping has bounced back."

Amazon wasn't the only one who over forecasted the shift to ecommerce.

The Information's Welcome to the E-Commerce Winter focuses on the impact of the slower-than-expected growth of ecommerce sales on startups, VCs and investors. Their key takeaway is:

"Investors and founders seized on the idea that the pandemic would permanently transform how people shop and pay. Those expectations aren't exactly living up to reality."

The chart below (click to enlarge) illustrates the cause of the ecommerce winter. The ecommerce share of retail sales has fallen from a pandemic high of 16.34 in Q1 of 2020. to 14.3% in the last quarter.

And the trend line indicates that e-commerce's share will likely continue to fall, at least in the short term.

This is an example of regression toward the mean.

While regression toward the mean has a specific statistical meaning, the concept also applies to trends.  

With trends, regression happens after a shock (a pandemic, for example) accelerates a trend. After the shock ends, the trend tends to decelerate toward the original trend line.  

This doesn't always happen, but with ecommerce, it seems clear in retrospect that regression would happen.

Once pandemic restrictions were lifted and the probability of catching COVID decreased, people started shopping in stores again.

Also, because people were no longer couped up in their homes, they started spending more money on services and less on products.

This combination reduced e-commerce's share of retail sales.

Going forward, we expect e-commerce's share of retail sales to level off in the 13.8% range and then start growing at a pace faster than its growth rate from 2011 to 2020.

This pattern - regression towards the prior mean but starting a new trendline above the previous level - is also common.

And many of the trend shifts accelerated by the pandemic will likely also follow this pattern.

McKinsey Says the Metaverse Could Create $5 Trillion in Value by 2030

It's clear that the global consulting giant McKinsey believes in the Metaverse. Their Value Creation in the Metaverse study forecasts that the Metaverse could generate $5 billion in value by 2030,

They have four key reasons they think the Metaverse will become big fast.

1. There's a lot of investment going into the Metaverse. Key quote from the report:

"Corporations, VC, and PE have already invested more than $120 billion in the metaverse in the first five months of 2022, more than double the $57 billion invested in all of 2021 …."

2. Their research indicates much interest in the Metaverse. Key quote:

"Our survey of more than 3,400 consumers and executives found significant excitement about the potential of the metaverse."

3. Current market acceptance of metaverse-like services. Key quote:

"increasing marketplace readiness as users explore today's early version of the metaverse largely driven by gaming (with some games boasting tens of millions of active players) with applications emerging that span socializing, fitness, commerce, virtual learning, and others."

4. They believe that technology will soon be in place to support the Metaverse.

McKinsey thinks that companies should get aggressive with their metaverse activities in response to this opportunity. Key quote:

"Business leaders should develop a strategic stance by defining metaverse goals and the role they want to play; testing, learning, and adopting by launching initial activities, monitoring results, and examining user behavior; and preparing to scale by identifying necessary capabilities and embedding the metaverse in their operating model."

The biggest Metaverse impact, according to McKinsey, will be on ecommerce.

They estimate the metaverse "may have a market impact of between $2 trillion and $2.6 trillion on e-commerce by 2030."

They also think few industries will be untouched by the Metaverse and that most industries will be significantly impacted by the changes it brings.

The study report, which is 77 pages long, covers these topics in more detail.

Meaning Matters to Workers

PWC's Global Workforce Hopes and Fears Survey 2022 asked 52,000 employees about work-related issues and the Great Resignation.

One area they dug into is the factors employees consider when considering changing jobs.

As the report chart below shows (click to enlarge), pay is the most important factor.

But closely following pay are a series of intangible factors related to meaning. And after these, control and autonomy rounded out the top factors.

We found this chart interesting because these factors are similar to the reasons the self-employed give for becoming self-employed.

This isn't surprising. Everyone would like fulfilling work, the ability to be themselves at work and be creative and innovative.

And everyone would like to have work autonomy, control, and flexibility.

For many, becoming self-employed is how they achieve these work attributes.

But with the Great Resignation (or Great Realization, or Great Realignment, of whatever you want to call it), employers are starting to offer these work attributes to larger shares of their employees.

We see this as a countervailing trend relative to more people becoming independent workers.

More simply, if employers provide the benefits of independent work as part of their employee value proposition, fewer workers will likely choose to become independent.

We've been digging into this topic and will have more on it in the near future.

The Pandemic Accelerated Bleisure Travel

The trend toward combining business and leisure travel is not new. 

We first covered it in 2009, and it wasn't new then.  

But now that travel is returning from the COVID-induced slowdown, it's clear the pandemic accelerated the long-term trend towards what the travel industry site Skift calls "that awful moniker bleisure travel".   

Skift's recent essay The Great Merging looks at the broader trend of work/life integration and focuses on what it means for travel.

Key quote:

"How we live, work, socialize, and travel has merged into each other, with profound implications for the global industry at the center of selling this dream. How will travel respond?"

Skift's provides data that bleisure travel has accelerated via the CEO of American Airlines. Key quote:

"For example, historically, only about 20 percent to 25 percent of the trips in the airline were something that we call blended, where somebody was traveling for both business and leisure. "Now, for about five to six months, about 50 percent to 55 percent of the trips in the airline are blended…."

This is a huge shift in a relatively short period of time.

Skift also points to the rapid growth of companies providing longer stay options, which cater to bleisure travelers, as evidence of the growing bleisure travel trend, 

These include startups like Sonder, Selina, Blueground, Habitas, and Life House. Many major hotel chains are also adding longer-term stay properties - Skift mentions Accor, Marriott, and Hyatt as examples.

As with most trends accelerated by the pandemic, bleisure travel's growth rate will likely slow from its current lofty levels. 

Reversion towards prior growth rates is common after an accelerating shock. 

But we agree with Skift that bleisure travel will continue to grow faster than in the past.  

BCG on Tapping Into Fluid Talent

The global "Big Three" strategy consulting firm BCG recently released Tapping Into Fluid Talent. It covers their view that companies need to turn to new and diverse talent sources - including various forms of nonemployee labor.

The BCG chart below (click to enlarge) shows the alternative talent sources BGC suggests companies tap.

As with a recent MIT-Deloitte study, the BCG report suggests that companies need to develop new work processes, procedures, and management systems to support the shift to fluid talent. Key quote from the BCG report:

"Support fluid talent with a new operating model. Companies that have experimented with fluid talent understand the need to adapt legal and procurement frameworks, rewire HR processes like performance management, build cross-functional project teams, and invest in change management. But to really unlock value from fluid talent, companies also need to rethink their ways of working and how they deploy and onboard talent."

This study again shows that the debate around whether or not nonemployee labor is an important and growing source of corporate talent is over. 

The focus now is on how to effectively build and manage workforces combining traditional employees and external talent.

This means greater of use of what BCG calls fluid talent.  

BTW, we already have too many buzzwords describing the various types of talent businesses employ.  So we hope "fluid talent" doesn't catch on.  

The Rise of Fairy Tale Farms

The New York Times article How 'Fairy Tale' Farms Are Ruining Hudson Valley Agriculture covers the growing trend of wealthy urbanites from New York city buying Hudson Valley farms as second homes.

This has raised the cost of farmland and made it much harder for those farming the land to find affordable places to live.  

It's also resulted in inexperienced, new farm owners wanting a working farm due to tax benefits and bragging rights when they're back in the city.

But they don't want to own a real farm. 

Instead, they want a "storybook version of a farm, minus the manure and the noise, and one that fits within their agendas and schedules."

Key article quote describing one farmer's discussion with new farm owners:

"... when she described rotational grazing practices to the owners, which involve moving clusters of animals around the pasture using portable fencing, they were put off by the idea, saying they preferred for the livestock to dot the landscape. "We walked around the property, and they were talking about their vision of, basically, a petting zoo.""

I grew up in a small town in Kansas and have owned two small farms for many years.

Here's my advice to new, part-time, urbanite farm owners:

1. Find an experienced and capable farmer to lease your farmland.

2. Lease the land under a crop or revenue sharing agreement. This aligns the farmer's incentives with yours.

3. Make sure the lease terms allow the farmer to make a reasonable profit. You're much better off in the long run if your farmer-partner makes decent money from your farm.

4. Leave all farming-related decisions to the farmer.  

The last point is very important, and not one many of the new Hudson Valley owners are following. 

Farming is hard, challenging, and complex work. And unless you're a real farmer, you have no idea what's involved.  

So leave the farming decisions to a real farmer.

The trend toward increasing numbers of small and part-time farms existed before the pandemic. We first wrote about it in 2007.

But it's been accelerated by the pandemic due to growing numbers of people wanting to move to desirable rural areas like the Hudson Valley.  

This is leading to even faster growth in the number of small farms.  

See our Small Farms section for more on this topic.

The Worker Classification Debate Comes to Professional Golf

The world of professional golf has been upended by the new LIV  tour that will compete with the PGA Tour and other existing tours worldwide.  

LIV is funded by the Saudi Arabian government, which is backing the new tour with $2 billion.  

Their pitch to attract pro golfers to their tour is straightforward.  They're offering what the Yahoo Sports article LIV Golf: How a new league is upending the entire world of golf describes as "Vast, phenomenal, life-changing piles of cash."

According to reports, they guaranteed golfer Dustin Johnson more than $100 million, plus any prize money he wins, to join the new tour (which he did).

And LIV’s chief executive reported they offered Tiger Woods “mind-blowingly enormous amounts of money” to join. Woods, so far, has turned LIV down.

Professional golfers are not employees of the PGA.

They’re independent contractors who earn the right to play in PGA tour events.  

However, PGA pro golfers need special permission from the PGA to play in non-PGA tour events. And the PGA is not granting permission to PGA Tour pros to play in LIV events.  

Because of this, several pros have resigned their membership in the PGA, including Dustin Johnson. More are expected to follow, drawn by the large amounts of money offered by the Saudis.

This is also leading to questions about how professional golfers are classified and what rights they have as independent contractors. Key quote by pro golfer Rickie Fowler from Yahoo Sports What Dustin Johnson’s leap to Saudi-backed LIV means for golf:

“Are we independent contractors or not?” Rickie Fowler asked prior to the PGA Championship. “I feel like there needs to be some clarity between if you’re an independent contractor or ... basically an employee.”

The work-related issues pro golfers face are, obviously, very different than those of the average independent contractor or gig worker.

But at the core of this dispute is an issue that often comes up with independent workers, which is how much control an organization can exert over independent contractors.  

And this will, like other gig worker classification issues, be decided by the courts.

But it's an interesting example of how all professions and industries are being impacted by the changing nature of work.  

This dispute introduced us to a new buzzword - sportswashing.  The Washington Post has a good article on this topic.  

What is the Internet of Plants?

Emerging Tech Brew's Behold: the internet of plants covers the rapidly growing precision agriculture industry. Key quote:

"And just like bamboo, these companies are growing fast: According to Pitchbook, the precision agriculture market reached $7.8 billion in 2021 and is expected to nearly double to $13.9 billion by 2026."

According to Pitchbook, precision agriculture companies fall into four categories:

• Farm management software: Software and other devices that help with farm operations, including data collection.
• Robotics and smart field equipment: Advanced machinery that helps automate or optimize fieldwork.
• Field IoT: Internet of things sensors and software used to monitor and analyze crops, water, weather, and pests.
• Drones and imagery analytics: Tools used to gather crop health information, such as disease and pest detection. They also utilize predictive analytics to help guide decisions and maximize productivity.

The Emerging Tech Brew article covers several interesting ag-tech startups. But our favorite is SupPlant, which recently raised $27 million in funding. Key quote on their products:

"The company uses five different sensors—deep soil, shallow soil, trunk, leaf, and fruit—placed in and around a fruit tree to gather real-time data on plant stress, growth patterns, weather conditions, and soil water content. The data gained from one tree is then extrapolated to all trees within an average of 20 acres, giving farmers insight into ideal crop irrigation for the days ahead."

   
Precision farming means less use of water and fertilizers, higher crop yields, and better land management.  And due to the disruptions being caused by climate change, all of these benefits are needed.

See our small farms section for more on ag tech.  

MIT and Deloitte on Managing Workforces Comprised of Employee and Nonemployee Labor

MIT and Deloitte recently released Orchestrating Workforce Ecosystems, which is the 3rd year in their ongoing study of how corporations are managing work across organizational boundaries. Key quote on the project:

"This research finds that as organizations increasingly rely on both internal and external contributors, successful leaders are recognizing the complexity of these workforce ecosystems and adapting their management practices to support these new systems."

In other words, organizations are figuring out how to build and manage teams that increasingly include nonemployee participants, such as freelancers, independent contractors, and other forms of nonemployee labor.  

MIT and Deloitte identify the most advanced firms at managing workforce ecosystems of employee and nonemployee labor as "Intentional Orchestrators."

As the report chart below shows (click to enlarge), Intentional Orchestrators comprise 22% of the firms sampled in this study.

According to the report, Intentional Orchestrators have five common characteristics. They are far more likely than other organizations to:

• Closely coordinate cross-functional management of internal and external workers.
• Hire and engage the internal and external talent they need.
• Support managers seeking to hire external workers.
• Have leadership that understands how to allocate work for internal and external contributors.
• Align their workforce approach with their business strategy.

Our big takeaway from this study is that the debate around whether or not nonemployee labor is an important and growing component of corporate workforces is over.

As the chart above shows, only 18% of organizations surveyed aren't taking steps to improve how they integrate and manage external talent as part of their workforces.

The vast majority of Organizations (82%) are now focused on effectively building and managing workforces combining traditional employees and external talent.

See the report for more details.

New Business Applications Continue to Surge

So far this year, new business applications - which are applications for a federal tax I.D. and tracked by the U.S. Census - continue to be at historically high levels.

Business applications have averaged about 420,000 per month through April in 2022 (click on the Census chart below to enlarge).

Although this is down from their all-time high in 2020, applications are still 40% higher than before the recession.

Most applications (about 70%) are from firms the Census calls "applications other than high propensity" (grey in the chart).

These are applications from businesses that are unlikely to have employees, such as freelancers, independent contractors, and other types of solopreneurs.

"High propensity applications" (yellow in the char) is Census speak for firms they think are likely to hire traditional employees.

As the chart illustrates, the share of solopreneur applications has steadily increased over the past decade.

Retail continues to be the industry with the most applications. This has been the case since the surge of applications started in 2020. Professional services comes in second, consistent with its position since the pandemic began.

As we pointed out earlier this year, only about 20% of applications for tax I.D.s result in a new business starting.

But the continuing surge in business applications means a corresponding surge in new employer small businesses, and solopreneurs.

We expect to see business applications continue to decline over the next year. Reversion to the mean is common after a major economic shock.

But we also expect new business applications and new business formation to continue to be higher than before the pandemic.

The Top Earning Pet Influencers on Instagram and TikTok

Veterinarians.org's article How Quickly Pet Influencers Can Pay Off Your Mortgage covers the top-earning pet influencers on Instagram.  

They used Influencer Marketing Hub's Instagram Money Calculator to rank the pet influencers by dollars earned per Instagram post (click on the chart below to enlarge).

Dogs and cats dominate the list, with only 3 other animals making the top 20.  A fox came in 4th, a hedgehog 14th, and a raccoon 20th.  

We were pleased to see Grumpy Cat continues to be a strong performer, coming in 5. We first covered Grumpy Cat in our 2015 article Cats Drive 15% of All Internet Traffic.

Staying in the top 10 pet influencers is not easy, and Grumpy Cat is a grizzled - and still grumpy - 10 year influencer veteran.

All About Cats also recently covered pet influencer earnings on TikTok, and they too have a top 10 list.  Their chart is below (click to enlarge)

Only Jiffpom appears on both lists.  He's number 1 on Instagram and number 2 on TikTok.  Like human influencers, it seems most pet influencers focus on specific platforms.  

Influencer marketing is a major part of and a precursor to the rapidly expanding Creator Economy.   

See our creator economy section for more on this fast-growing solopreneur and small business segment.  And see our Pet Trends section for more pet and pet businesses.  

HBR on Digital Nomad Visas

Harvard Business Review's How "Digital Nomad" Visas Can Boost Local Economies covers the advantages digital nomad visas provide to both digital nomads and the countries they travel to. Key quote:

"... digital nomads invest their time and money in the local economy, without taking local jobs, and build bridges with local knowledge workers — a win-win for both remote workers and local communities."

The article also points out the rapidly growing trend of companies allowing their employees to work from anywhere, at least part of the time:

"More and more companies are offering their employees the option to "work from anywhere," whether in their home office, in another state, or even halfway around the globe." 

This is in line with the findings from our digital nomad studies.

In 2021 we found that the number of American digital nomads with traditional jobs increased by 42% in 2021, growing from 6.3 million in 2020 to 10.2 million in 2021.

This was on top of the number of digital nomads with traditional jobs almost doubling in 2020 compared to 2019.

In response to their growing numbers, countries worldwide are offering special visas for digital nomads.

This mainly started with smaller countries and countries heavily dependent on tourism. But over the last couple of years, larger countries like Spain, Italy, and Germany began offering digital nomad visas. 

Below is the article's comprehensive list of countries with digital nomad visas and related requirements (click to enlarge)

       

Because of the rapidly growing number of digital nomads, corporations need to put in place policies and program to support these workers, and protect themselves from regulatory and legal risks. See our HBR article Your Company Needs a Digital Nomad Policy for more on this topic.  

And for more general information on digital nomads, see the MBO Partners report Digital Nomad: Advancing the Next Wave of Working or visit our digital nomad section.

Why Traditional Jobs are Becoming More Like Freelancing

The COVID-19 pandemic has accelerated a longer-term trend toward firms offering freelance-like flexibility and other benefits to at least some of their employees. 

Two trends are the main drivers of this shift. 

1. Workers are reevaluating what they want from work

The pandemic has caused people to rethink their jobs, personal interests, and how work fits into their larger life goals. And many want more work autonomy, control, and flexibility - attributes associated with freelancing and other forms of independent work.

Also, traditional jobs have lost one of their key selling points. Workers no longer see them as being as secure as they used to be.

This also is leading workers to prioritize work that fits their values and allows more control over how, where, and when they work - including the ability to work remotely - instead of focusing on job security.

And companies are responding. 

A great example is Unilever's U-Work program, which the company describes as:

"U-Work gives employees the freedom and flexibility associated with contract roles with the security and benefits typically linked to permanent positions... People in U-Work don't have a fixed role. They work on varying assignments and, between assignments, are free to do other things that are important to them. "

While programs as extensive as U-Work are rare, many firms are increasingly incorporating some of these features to improve their employee value proposition and attract and retain talent.

2. Work is being taskified and projectized

While not a new trend, the taskification of work has been accelerated by the pandemic. The new book Work Without Jobs describes this as "deconstructing jobs into their component parts and reconstructs these components into more optimal combinations that reflect the skills and abilities of individual workers."

This taskification of jobs leads to greater workforce agility and flexibility, which is growing in importance due to the pace of change and competitive pressures. 

Taskification also results in more project-based roles instead of the steady, regular, ongoing employee roles of the past. And these new project-based roles look a lot like freelancing.

Companies are even building internal employee gig marketplaces. The internal gig talent marketplace company Gloat describes these marketplaces as:

"... the internal talent marketplace is a two-sided platform that harnesses the power of AI to align employees (and their skills) to projects, gigs, mentorships, and full-time roles within their organization."

This is much like the descriptions provided by online freelance marketplaces like Fiverr, Upwork, and others to describe their services.

So, in essence, internal gig marketplaces turn traditional employees into employee freelancers - at least part of the time.  

Over the past couple of decades, many traditional jobs took on some of the negatives associated with freelancing - they became less secure, with reduced benefits and less predictable schedules and income.  

But labor shortages, coupled with the trends described above, are leading companies to increasingly provide traditional jobholders with the benefits of freelancing instead of just the negatives.

An important point to note is this shift mostly applies to knowledge workers, and especially those with specialized skills.  So not everyone is seeing the benefits of this shift.

The Rapidly Growing Secondhand Apparel Market

Online consignment and thrift store ThredUp recently released their 2022 Resale Report, which focuses on the resale of apparel.

The key finding is that the U.S. resale apparel market is expected to double over the next 5 years (click on the report chart below to enlarge). 

ThredUp, who produced this forecast, is hardly an unbiased source.

But resale sales are currently booming, and second-hand goods sales were growing before the pandemic. 

Also, the trends driving the growth - sustainability, reduced costs, an opportunity to make money - continue to be strong. And added to these are inflation and ongoing supply chain issues, both of which make second-hand goods even more attractive.  

So doubling over the next five years seems like a reasonable forecast to us.

Another indication that the growth forecast is reasonable is that many traditional retailers, including LuLu Lemon and Ikea, are launching resale programs.

Sales of second-hand goods is a popular activity for many independent workers. The report claims 73 million Americans sold second-hand goods in 2021.

Most of these folks don't see this activity as a business. But many do, and many more are likely to join them in the coming years.

The Growth of the Multi-Earner Trend

Morgan Stanley's Goodbye Gig Economy. It's a Multi-Earner Era describes the long-term trend towards people having multiple sources of income instead of relying on a single traditional job.

Key quote from the article:

"The concept of working multiple jobs isn't new. But what has changed is the desire to eschew or supplement traditional employment, as well as the ability to do so cheaply and at scale using platforms that reach large and growing audiences."

The article has an interesting taxonomy describing the various online platforms used to earn money today. They call it the X to Earn Ecosystem:

• Create-to-earn platforms include everything from YouTube and TikTok posts, to original music, art, and more.
• Sell-to-earn platforms represent two categories: merchants selling or re-selling products via large marketplaces and small businesses using platforms to run or amplify their businesses.
• Deliver-to-earn platforms focus on delivery, takeout food, and other staples.
• Rent-to-earn platforms make it easy for owners to rent their vacation rentals and personal car rentals.
• Invest-to-earn platforms represent two categories—traditional and crypto investing.
• Gig-to-earn platforms are among the more established in the segment and include such areas as ride-sharing, task sharing, and professional outsourcing.
• Play-to-earn platforms, also known as P2E, have been growing in popularity, in part out of enjoyment but particularly because players are rewarded in a variety of cryptocurrency tokens for their participation.

The article also points out that many of the multi-earners hope to be able to leave their traditional job and focus on X to Earn activities. Key quote:

"An average of 40% of people earning across all X-to-Earn categories surveyed suggested that they aspire to leave their full-time jobs in the coming six months to focus on these income streams."

We've long covered the trend towards multiple sources of income.

In 2014, in conjunction with Intuit Corporation, we released Small Business Success in the Cloud. As part of that study, we discussed career portfolioists, which we described as:

"Successful cloud-adapted freelancers will bring together multiple income streams to create a career portfolio."

The chart below (click to enlarge) is from that study.

The proliferation of X to Earn platforms has made it cheaper, easier, and less financially risky to generate revenue from various activities.  

And as we know from economic theory, when things become cheaper and easier, their use tends to grow.

That's certainly the case with multi-earners.  

The Hollywood Model and Freelance Teams

A.Team is a new startup that helps companies easily and quickly assemble teams of vetted specialists to design, build, and bring digital products to market.  

Their focus on teams is referred to as the Hollywood model, which is often touted as the future of work. The 2015 New York Times article What Hollywood Can Teach Us About the Future of Work describes this model as:

"A project is identified; a team is assembled; it works together for precisely as long as is needed to complete the task; then the team disbands." 

A.Team is already described as using the Hollywood model and even has Hollywood celebrities as investors. Key quote from the Forbes article Tech Talent Startup A.Team Raises $55 Million From Investors Like Adam Grant And Jay-Z: 

"Like a Hollywood producer that brings together talent to make a movie, A.Team's business model is based on matching top-tier talent with worthy projects. That means vetting and restricting who gets on its platform, soliciting the right client work, and creating community through content, connections, and conversation."

Freelance teams are not new. We started Emergent Research two decades ago using this model - and we still use it today.

Also, large freelance talent marketplaces like Fiverr and Upwork released teaming services several years ago.  There are also many niche firms providing project teams.

For example, Communo provides creative and production teams for marketing and media projects. There are similar firms in a variety of fields.

We find A.Team interesting for several reasons.

First, as the A.Team chart below shows (click to enlarge), their focus is on larger, longer term projects (they call them "missions") that use highly skilled labor.  

Others are also doing this. But A.Team illustrates that the appetite for high end freelance teaming continues to increase.

We also like their stated focus on building community among their freelancers. Again, others are also doing this. But so far, few have cracked the code of making freelance communities genuinely effective. We'll be interested to see if A.Team figures it out.

BTW, we think A.Team should sign Mr. T as their celebrity spokesperson.  No doubt we're not the only ones suggesting this.

Most Retirees and Pre-Retirees Plan to Work in Retirement

Longevity and the New Journey of Retirement was recently released by the consulting firm Age Wave and the financial services firm Edward Jones. The report covers:

"... how the journey of retirement unfolds, the patterns of people's experience in retirement, and the keys to thriving along the way."

The report is quite comprehensive and covers a lot of ground in its 43 pages. And the entire report is well worth reading if you're interested in or thinking about retirement.

But we're most interested in work in retirement, so we'll focus on that.

As the report chart below shows (click to enlarge), 59% of retirees and pre-retirees (aged 45+) surveyed said they plan to work during their retirement years.

As we've pointed out, the highest self-employment rates are for those aged 60 and older. There are many reasons for this.

Older workers tend to want more work flexibility than younger ones. They also often have developed the skills and networks that make flexible self-employment viable. And age discrimination means self-employment may be their only choice.  

Given the size of the baby boom generation, this means a growing number of new independent workers as this large cohort continues to retire.

Interestingly enough, we dug through our archives and found a 2011 Age Wave report called Retirement 3.0. Key quote from that study:

"A productive, purposeful and challenging new chapter in life - blending work and leisure - with opportunities for personal reinvention and continued social engagement."  

So this trend has been in place for some time. And yes, we've been following this trend for too long.

See our Baby Boomer section for more on aging boomers and retirement.

HBR on the Promises and Perils of Web3

Recently Web3 has replaced Web3.0 as the preferred way of referring to Web3.  

Although we've actively followed Web3 for years - we first covered Bitcoin in 2013 and Blockchain in 2015 - we don't know when or how this name change happened.  

But we see this change as an excellent example of the constantly swirling world of Web3 world, which the Harvard Business Review article What is Web3 describes as:

"... the confusing, contested, exciting, utopian, scam-ridden, disastrous, democratizing, (maybe) decentralized world of Web3." 

HBR's What is Web3 is the opening article in a Web3 series by HBR. The chart below (click to enlarge) shows the other articles in the series.

The series covers both the potential positives and negatives of Web3.  

We're not going to attempt the summarize the series - the opening alone is about 4800 words.  

All the articles cover the promises of Web3, which can be summed up as democratizing the Internet, freeing us from Big Tech and exploitative capitalism.

They also cover the potential perils, including failure to accomplish the promises while significantly increasing fraud, scams, and other illegal activities.

Interestingly enough, these promises were pretty much the the same in the early days of the PC.  

Apple's famous 1984 ad is an example.

These promises were also made when the Internet first came out (Web 1.0) and when social media arrived (Web 2.0).

And, like these other technologies, the reality of Web3 will likely be neither as utopian as the promises, nor as dystopian and perils.  

Overall, we consider ourselves Web3 optimists and we think it will create new opportunities for businesses and users.   

Because of this, we liked articles 4 and 5 the most. They talk about tangible applications of Web3 tech.

But the others are also well worth reading because the perils are real. The recent collapse of stablecoin cryptocurrencies is a good example.  

We also suggest Wired's Paradise at the Crypto Arcade: Inside the Web3 Revolution.

It's another long article covering the potential good and bad of Web3.  

Keeping Up With The Metaverse

Activity around the metaverse continues to grow. And keeping up with it continues to get harder.

But as the activity grows, so does the coverage. And we found two recent sources on the metaverse to be quite informative.

Wunderman Thompson's New Realities: Into the Metaverse and beyond report is 80 pages long. It covers data from consumer surveys on the metaverse and details how corporations are participating in the metaverse.

The industries covered include retail, finance, health & wellness, food and drink, entertainment and sport, beauty, and government.

And the coverage of corporate metaverse early adopters is excellent.  

The report chart below (click to enlarge) illustrates where consumers are on the metaverse - 74% say they are aware of it, but only 15% can explain it.

Wunderman Thompson is a leading global consumer marketing firm. Because of this, the report is well worth reading for anyone interested in consumers and the metaverse.

Insider's article Insider's Guide to the Metaverse: How to play, make money, and party in 7 of the most popular virtual worlds right now is also quite interesting.

The seven virtual worlds covered in the article are Axie Infinity, Cryptovoxels, Decentraland, Roblox, The Sandbox, Somnium Space, and Star Atlas.

Most are games, but all are described so that metaverse novices (and non-gamers) will understand how the operate.  

The metaverse is already a big industry (most definitions include online games) and is growing very fast. 

But despite its size and growth, most small businesses don't need a metaverse presence today. But over the next few years, the metaverse will, in some way, impact most companies (especially consumer businesses).  

So we think it's worth starting to pay attention to the metaverse.

What is the Ownership Economy?

The VC firm Variant recently released The Ownership Economy - A primer on the state of Web3.  

Variant defines the ownership economy as:

"... the products and services that will define web3—and the next generation of the Internet—are those that transform users into owners. We call this the ownership economy."

The essay points to crypto tokens (also called social tokens) as the main method of transforming users into owners.

Crypto tokens are a form of cryptocurrency. Because of this, they have many features that make them a better choice than traditional equity for sharing ownership. Key quote from the essay:

"Tokens have a richer and more frictionless design space. They can be distributed programmatically, with the potential to reward participants versus those who buy-in; they are effectively free to deploy, and they can transfer value in the same way we transfer information—instantly, to anyone, anywhere in the world."

So, in theory, anyone who uses a digital product or service could buy, or be given, crypto tokens that provide ownership in the product or service - or at least some form of participation in the value created by the product or service.  

We've covered several examples of how this works in prior articles:

1. What are Social Tokens (also called Creator Coins) and Why You Should Care covers how creators use tokens to engage, build, reward, and monetize a community of fans and customers - and provide a way for the fans to benefit from being a fan financially.  
2. The Rise of Crypto Clubs covers how tokens are being used to create new member-owned social and business organizations. And because the members are also owners, they benefit financially if the organization has financial success.

The hope of the ownership economy - and Web 3.0 - is that the financial rewards generated by the Internet will become much more decentralized and democratized.  

In more simple terms, instead of VCs and company founders becoming billionaires while users get nothing, the wealth created by goods and services will be broadly shared with users.

This is hardly the first-time technology democratization claims like this have been made. So far, these claims have failed to materialize.

And although the four words most wrong in forecasting are "this time is different," this time could be different.

The essay's primary focus is to educate startups and founders on potential ownership economy opportunities.

The essay chart below (click to enlarge) shows the wide range of firms currently working in this area.

Many terms in addition to "the ownership economy" are used to describe how technology is empowering new ways for people to become entrepreneurs or solopreneurs.

These include the passion economy, the creator economy, the empowerment economy, the freelance economy, and - of course - the gig economy.  

But no matter what you call it, it's clear technology is creating more opportunities for people to become self-employed and owners.

The Shrinking American Middle Class

Pew Research's How the American middle class has changed in the past five decades reports that the share of adults who live in middle-class households fell from 61% in 1971 to 50% in 2021.

As the Pew chart above shows, while the middle-income share was falling, the upper-income tier increased from 14% in 1971 to 21% in 2021. Also rising was the share of those in the lower-income cohort, from 25% to 29%.

At first blush, these numbers don't look so bad. After all, increases in the upper-income cohort explain 63% of the decrease in the middle class.

But the Pew chart below tells a more troubling story.

In 1970, middle-income households accounted for 62% of U.S. aggregate income. But by 2021, their share had fallen to 42%. 

Meanwhile, upper-income households increased their share of U.S. aggregate income from 29% in 1970 to 50% in 2021.  

The main driver of the share growth is that the income of upper-income households increased by 38% more than the incomes of middle-income households - and by more than 50% faster than low-income households.

Pew didn't go deeper in this study, but a prior Pew report - Trends in Income and Wealth Inequality - reported that the top 5% of households saw the most rapid growth in household incomes.

In other words, much of the share growth in aggregate income by upper-income households is attributable to the fast-rising incomes of the top 5% of U.S. households.

Widening income inequality has a variety of social, political and economic impacts. Growing political polarization is one example. 

And an economic example is the growth of both dollar stores and luxury retail. 

Another is the rise of side gigs and the gig economy due to the increased need for supplemental income by lower income Americans.  

The trends driving inequality continue to be in place, and we expect income and wealth inequality to continue to increase.

Decision Making Lessons from Investment Biases

Fidelity's article  6 biggest pitfalls for investors covers human instincts and emotional biases that often undermine investment success.  

These include "aversion to loss and ambiguity, following the crowd, and focusing on information that's recent or confirms what we already believe."

Key quote describing the impact of these biases:

"Our brains evolved to protect us from all kinds of primal dangers—saber-toothed tigers, earthquakes, dodgy-looking strangers from the other side of the river.

Trouble is, the instincts and mental shortcuts humans developed to manage life-and-death scenarios aren't all that helpful when navigating the twists and turns of the economy or riding out a rocky stock market.

In fact, these tendencies aren't just unhelpful—they can be harmful. They often prompt us to make decisions that seem rational but are self-defeating."

The same biases also can lead to bad business decisions.

The six biases in the Fidelity article are:

1. Avoiding losses at all costs: Loss Aversion
2. I am the greatest: Confirmation Bias
3. Getting stuck on the first thing you see: Anchoring Bias
4. The breaking news problem: Recency Bias
5. There's safety in numbers: Herding Bias
6. The devil you know: Ambiguity Bias

See Fidelity's article for more details.  

We spend a lot of time identifying and analyzing how our biases impact our forecasts and the advice we give our clients.  

We've also covered our advice on dealing with biases in the past. But the key points are worth repeating. These are:

• try to base critical decisions on hard data
• get multiple perspectives on key decisions.
• identify and understand how your views and beliefs may be impacting your decision making
• be open to change and accept that even strongly held business views and beliefs will need adjustments over time.  

We've written a fair amount about decision-making biases in the past. These are consistently among our least read articles.  

But this topic is simply too important not to cover.  

McKinsey on the Metaverse

The metaverse is a hot topic, so it's no surprise that the influential strategy consulting firm McKinsey generates a lot of content on the subject.

They recently released Your Guide to the Metaverse, a 3 part podcast series:

1. What is the metaverse—and what does it mean for business?: provides an overview of metaverse, including the fact that a broadly accepted definition of the metaverse doesn't yet exist.
2. The promise and the peril of the metaverse: covers early use cases, ways it could change business and society, and potential downsides.
3. Innovative and practical applications of the metaverse: the title is pretty self-explanatory.

The series is available on McKinsey's At the Edge podcast, and the series provides a nice introduction and overview to the metaverse.

They also have transcripts of the podcasts on their site (click on the podcast titles to view the transcripts).  

As we pointed out in our article Working in the Metaverse Deja Vu, this isn't the first rodeo for the metaverse.  

Back in 2007, the virtual world Second Life was hot, and many (including us) were forecasting that use of virtual worlds would become popular and widespread by 2017. 

We were wrong.

A big reason for this was that the technology wasn't ready, which is something we should have realized at that time.  

The technology still isn't ready, but it's gotten much better.

And we believe that over the next few years, the metaverse will start to reach the potential we envisioned over a decade ago.

BTW, the picture is from Venture Beats' article CES 2022: Eyeing an enterprise metaverse.  It covers potential enterprise metaverse applications.  

The Sea Change in C-Suite Thinking About Gig Workers

The global HR consulting firm Mercer recently released its Global Talent Trends 2022 study report.  

One of their findings is that 60% of C-suite executives surveyed expect gig workers will substantially replace full-time employees at their company within the next three years.  

More broadly, the Mercer study found that firms and executives are working to increase their talent agility and flexibility to respond to economic changes more quickly.

And the use of gig workers - freelancers, independent contractors, and other forms of nonemployee labor - increases a firm's agility and flexibility.  

This data illustrates the sea change in c-suite thinking about gig workers over the past 5-7 years.

In 2015, few senior executives knew much about their firm's use of gig workers.  

We know this because, in 2015, we started a research project to find out how c-suite executives viewed nonemployee labor. We ended the study after interviewing c-suite executives from about a dozen corporations.  

We ended the study because none of the executives interviewed knew much or cared much about their firm's current or future use of contingent workers.

The use of gig workers and other forms of nonemployee labor simply wasn't considered important enough for senior execs to focus on back then.

But as the Mercer study shows, now there's a lot of c-suite focus on their firm's use of gig workers.  

BTW, while we agree that most organizations will increase their use of gig workers over the next three years, we doubt they will substantially replace their full-time employees with them over that timeframe.  

Three years is not enough time for most firms to accomplish such a significant workforce shift.  

We think this is an excellent example of people overestimating future rates of change.

This is a common issue with asking about the future in surveys. Most people - and even c-suite occupants - underestimate how long substantial changes take.  

In the technology world, this is referred to as Amara's Law, which states:

"We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run."

But it also applies to other types of change, especially second-order effects from technological change - which includes the rise of the gig economy.

Hotel Group Selina Joins with TechnoArt to Create a Digital Nomad Support Program

Selina, a hotel group that includes coworking hotels and startup incubator TechnoArt has created a new startup program targeted at digital nomads.

TechnoArt@Selina is a new 12-week innovation and incubation program designed to help entrepreneurs start their companies.  

What makes this program unique is its support for digital nomads. 

As part of the program, entrepreneurs gain access to the coworking facilities at Selina's global network of more than 100 hotels. So program participants can continue their travels while participating in the program.

They also gain access to these communities, whose members are primarily remote workers and digital nomads. This provides a rich resource for startups building tools and services targeted at distributed workers.  

Also, according to Globetrender's article SELINA CO-WORK HOTELS AND TECHNOART CREATE DIGITAL NOMAD INVESTMENT FUND, participants can apply for venture funding through the program.

Coworking is a natural extension for hotels. And Selina is taking this even one step further with this project.  

And with the continued rapid growth of digital nomadism, the timing for this effort looks quite good.