Small Business Labs

What the Crypto Winter Means for Web3

Crypto has had fraud and scam problems from its beginning. We covered these in-depth earlier this year.

Also, crypto markets crashed last spring, with Bitcoin prices falling to their lowest levels since 2020. Other crypto coins and token prices fell even more.

But the FTX cryptocurrency exchange's implosion and bankruptcy is an even more significant blow to crypto than prior acts of fraud and price volatility. 

This is because FTX was seen as a source of stability in the uncertain world of cryptocurrencies.  

Key quote from the New York Times article Here's the Latest on the FTX Collapse:

FTX's implosion sent shock waves through the crypto and financial communities. Numerous funds and crypto start-ups were entangled with FTX, which extended lifelines to other firms after the crypto market crashed in the spring.

So what does the crypto winter (some are calling it a crypto ice age) mean for Web3?

Axios' Web3 is in FTX's Blast Radius points out that:

Web3, at its heart, is all about using blockchains and crypto tokens as tools for organizing decision-making, governance, and financial incentives in every realm of human endeavor — from virtual world-building to social networking and from accounting to art-making.

But to accomplish any of this, Web3 and crypto firms will have to show that they can add value while at the same time significantly reducing the industry's fraud and scam problems.

We first covered Bitcoin in 2013 and blockchain in 2015.  

We also covered a wide range of potential blockchain applications in 2017. But it's five years later, and none have come to fruition.

We're not ready to give up on Web3. We continue to think Web3 technologies will eventually produce useful applications.

And just as many other technologies went through "winters" and successfully emerged - the Internet, A.I., etc. - we think Web3 will, eventually, work through the problems.  

But the promises will be less grandiose, and the applications grounded in reality.

Another Strong Month for New Business Applications

The October Business Formation Statistics were released by the U.S. Census last week.

And as the Census chart below shows (click to enlarge), there were 432,934 new business tax I.D. applications in October.  

Business applications took off in Q3 of 2020, and in 2022 they've run at a rate about 43% higher than pre-pandemic.

Retail trade, which includes ecommerce firms, and professional services, continue to be the top two applications categories.

Also continuing is the shift to solopreneur business applications instead of employer business applications. 

We're going repeat ourselves and point out that new business applications ARE NOT the same as new business startups.

Research by the U.S. Census and similar research by our firm indicates that about 18% - 22% of applications result in new businesses. So if you read that 432,000 small businesses were started in October, it's not correct.  

But by historical standards, 20% of 423,000 is still a lot of new businesses.  

The Polycrisis and Doomsday Scenarios

The recent Financial Times article Welcome to the World of the Polycrisis introduces the concept of the polycrisis. Key quote:

A problem becomes a crisis when it challenges our ability to cope and thus threatens our identity. In the polycrisis, the shocks are disparate, but they interact so that the whole is even more overwhelming than the sum of the parts.

The article is written by the noted economic historian Adam Tooze. His earlier article Defining Polycrisis - from crisis pictures to the crisis matrix includes the rather complex polycrisis chart below (click to enlarge). 

It highlights seven crises and a wide variety of sub-crises and how they are linked.

The combination of multiple individual crises, coupled with these crises amplifying each other, leads to a polycrisis.  

Not everyone agrees that the polycrisis is a new thing. 

Quartz's The Case Against Polycrisis points out that throughout history, the world has had many problems simultaneously.

But it's hard to argue with former US Treasury secretary Lawrence Summers who is quoted in the Financial Times article:

"This is the most complex, disparate, and cross-cutting set of challenges I can remember in the 40 years that I have been paying attention to such things."

While on the topic of crisis, the Washington Post's Asteroids! Solar Storms! Nukes! Climate Calamity! Killer Robots! covers doomsday scenarios.

These are even worse than the polycrisis in that doomsday scenarios would likely lead to the extinction of humans.

The article has a list of the top 10 doomsday scenarios:

10. Solar storm or gamma-ray burst.

9. Supervolcano eruption.

8. Asteroid impact.

7. Naturally emergent or maliciously engineered, pandemic plant pathogen affecting staple crops.

6. Naturally emergent or maliciously engineered pandemic human pathogen.

5. Orwellian dystopia. Totalitarianism. Endless war paraded as peace. The human spirit crushed. Not a world you'd want to live in.

4. Cascading technological failures due to cyberattacks, reckless development of artificial intelligence and/or some other example of complex systems failing in complex ways.

3. Nuclear war (may jump soon to No. 1).

2. Environmental catastrophe from climate change and other desecrations of the natural world.

1. Threat X. The unknown unknown. Something dreadful but not even imagined. The creature that lives under the bed.

Since we're forecasters, we don't worry about doomsday scenarios in our work. If one were to happen, we'd be out of business.

But the polycrisis - whether new or not - is something we deal with daily.

And we agree with Larry Summers. This is the most complex set of issues and problems we've seen in our decades of doing forecasts.  

What the Department of Labor's Worker Classification Guidance Means for Independent Work

Last month the  Department of Labor (DOL) announced it's releasing new guidance to help determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.

The announcement got a lot of press coverage, most of it saying the new guidelines will make it much harder for companies to classify workers as independent contractors. Examples include:

• Wall Street Journal's Biden Rule Would Add More Gig Workers to Company Payrolls
• New York Times's Biden Proposal Could Lead to Employee Status for Gig Workers
• NPR's Labor Department proposal could change gig worker and company rules

But - and this is a big but - the new guidance basically returns the guidance to where it was under the Obama administration. Key quote from the Wall Street Journal article on the proposed guidance:

"It would replace a Trump-era rule—completed just days before the Biden administration took office—and return to an approach favored by the Obama administration."

In other words, the guidance is reverting back to what it was between 2008-2019. 

In case you weren't following independent work and the gig economy between 2008 - 2019, it grew dramatically. So going back to an approach favored by the Obama administration is unlikely to have a major impact on independent workers. 

Bloomberg's Uber, Lyft Shares Fall on Possible Changes to How Gig Workers Are Classified also points out:

"Companies had anticipated the Biden administration would reinstate the Obama-era guidance on the classification, and the proposal didn't come as a surprise, according to Tom White, an analyst at DA Davidson & Co. "It has no immediate changes to anything related to how companies operate their business," White said. "It's a proposal that in some ways can be viewed more like a conversation starter."

So don't expect significant near term changes in the gig economy based on the new guidance.

But having said that, all the press saying it will have an negative impact on the gig economy, will have an impact.  And that impact will likely be companies - and their lawyers - choosing to be more conservative about the use of nonemployee labor.

But this will be a relatively minor impact.    

The legal issues around worker classification, the DOL's role, and why the new rules aren't going to have a major impact are too long and complicated for this blog post. So we're not going to cover them here.

For those interested in more depth on this topic, we recommend the Independent Contractor, Misclassification, and Compliance blog. 

Their article THE LABOR DEPARTMENT'S INDEPENDENT CONTRACTOR RULE HAS LITTLE IF NO LEGAL IMPACT BUT IS LIKELY TO CAUSE ANXIETY FOR MANY STAKEHOLDERS covers this topic in-depth.

The article's title, in our opinion, also nicely sums up the impact of the new guidance.

Ford Targets VanLifers With Their New Transit Trail Van

Ford recently announced the Transit Trail, a variation of their popular Transit commercial van targeted at VanLifers and others wanting a camper van.

The Ford Transit Trail's design makes it easy to customize and add things like shelving, cabinetry, and beds. 

Car and Driver magazine describes the Transit Trail as:

Essentially a factory-built camper van base, the Transit Trail comes with key elements that vanning aficionados want, such as swiveling front seats, an onboard AC inverter, an over-cab storage compartment, dual alternators, and a fuse panel, all backed by Ford's warranty.

The Transit Trail is also off-road ready with four wheel drive, an uplifted body, and large tires.  

Buyers can customize the Van themselves or get custom conversions via the Ford Pro network of upfitters and interior installers.

The Transit Trail starts at around $65,000, but Ford claims that due to the design and features of the Van, customization is much easier and cheaper than other options.  

As their video below shows, Ford is targeting VanLifers- digital nomads that travel, live and work in RVs, vans, or other vehicles converted into roaming residences.

This is a large and growing market segment.

According to the 2022 MBO Partners study, The Aspirations and Reality for Digital Nomads, there are 3.1 million VanLifers in the U.S.  

This is up from 2.6 million in 2021 and 1.9 million in 2020.

We expect the VanLife segment to continue to grow.  And one reason is the growing support ecosystem for VanLifers, including companies like Ford releasing products making it easier to be a VanLifer.  

See our Digital Nomad section for more on this topic.

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

There are Millions of Aspiring Digital Nomads

The digital nomad trend has long attracted lots of press and a strong social media following.

Popular digital nomad and #VanLife blogs, videos, and Instagram accounts have created a spectator sport inspired by idyllic pictures and videos of happy digital nomads in exotic locations. 

This media coverage, combined with the shift to remote work, and the desire by many to travel, has resulted in millions aspiring to become digital nomads.

Each year, as part of the MBO Partners digital nomad study series, we ask adult Americans who aren’t digital nomads if they plan on becoming digital nomads over the next 2-3 years.

In 2022 the results project to 25 million saying they will and 48 million saying maybe.

This is a 12% increase compared to 2021 in the number of Americans saying they will or may become digital nomads over the next 2-3 years - and a 33% increase compared to 2019.  

We call this group "armchair digital nomads."  

The reason is our studies indicate only about 8% to 11% of those saying yes or maybe will follow through and become nomadic.

The vast majority will continue to follow the exploits of other digital nomads instead of becoming one themselves. 

However, this data shows how extensive the interest is in this lifestyle.

It also shows how the shift to remote work, especially for traditional jobholders, is making the idea of becoming a digital nomad even more popular.

Which is one reason why we are forecasting continued growth in the number of digital nomads.  See The Aspirations and Realities for Digital Nomads for more on the digital nomad trend.

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

Independent Influencers Driving the Growth of Social Commerce

Social commerce happens when consumers - and business buyers - discover and purchase products through social media and content creation platforms.  

And as McKinsey explains in Social commerce: The future of how consumers interact with brands, it's taking off in the U.S. 

As their chart below shows (click to enlarge), social commerce is expected to grow from $45.7 billion this year to $79.6 billion in 2025.

Social commerce is being driven by social media and content creation platforms such as TikTok, Instagram, Pinterest and others.  

These platforms have added shopping features that allow in-app shopping, including purchases.  

And independent influencers and content creators leverage these platforms to reach and monetize their audiences.  

McKinsey covers two types of independent influencers that are part of the social commerce sales and marketing mix:

1. Key Opinion Leaders have large numbers of followers and fans and are either celebrities and/or experts in their field. Highly professional, they are also skilled marketers that can sell millions of dollars of products in minutes and make new products trendy overnight. Think Kim Kardashian or Mr. Beast. 
2. Microinfluencers drive social commerce through organic, word-of-mouth recommendations to their networks. Many receive commissions or are paid directly by the brands. But some get free products or early access to new products.  

We first covered social commerce in 2014. Back then, social ecommerce companies, such as Stella & Dot, recruited independent workers to be brand ambassadors and commission salespeople.

In most cases, the business models were similar to multi-level marketing companies such as Tupperware. And these independent salespeople mainly marketed to their friends and families.  

But thanks to the rise of the creator economy, many consumer companies - and a growing number of B2B firms - have influencer programs designed to incent independent influencers to help sell their goods and services.

These programs also allow independent influencers to extend their reach well beyond friends and family. which means they can build larger and more sustainable businesses.  

Walmart, for example, has created the Walmart Creator Program. Key quote from the program's landing page:

Walmart is where you shop to save. Now, it's where you create to earn. Walmart Creator is a platform designed to help you monetize your content, grow your business as a creator, and keep you inspired every step of the way.

Selling merchandise (referred to as "merch" in the creator economy) has become one of the most popular creator economy income streams. And its popularity - both with creators and consumers - will likely continue to grow.

Generative A.I. - Tech's Newest Next Big Thing

Step aside crypto, Web3 and the metaverse. Generative A.I. is being touted as tech's next big thing.  

So what is generative A.I.?

The New York Times article A Coming-Out Party for Generative A.I., Silicon Valley's New Craze defines it as:

"... the wonky umbrella term for A.I. that doesn't just analyze existing data but creates new text, images, videos, code snippets and more."

The venerable venture capital firm Sequoia's excellent white paper Generative A.I.: A Creative New World describes it as:

"Up until recently, machines had no chance of competing with humans at creative work—they were relegated to analysis and rote cognitive labor. But machines are just starting to get good at creating sensical and beautiful things. This new category is called "Generative A.I.," meaning the machine is generating something new rather than analyzing something that already exists."

Image creation is the generative A.I. application that's getting the most attention.  

The New York Times article covers the startup Stability AI. which recently raised $100 million.  

They built Stable Diffusion, a popular open-source image generator - which is software that turns text prompts into images. The image below was developed using Stable Diffusion.

The picture is derivative, but we think it's quite interesting.  

But generative A.I. is not just for art and images.  

According to Sequoia, generative A.I.'s top application areas include writing code, copywriting, gaming, media/advertising, design, and social media.

Sequoia also says that "generative A.I. has the potential to generate trillions of dollars of economic value."

Our firm uses machine learning tools and a few other types of A.I. in our work. But we haven't worked with generative A.I.

However, we're planning to start by becoming a user of one of the generative A.I. text creators - likely Jasper.

We'll let you know how it goes. And maybe with a post written by a generative A.I.  

The Number of American Digital Nomads Increased 131% Since 2019

The 2022 MBO Partners digital nomad report - The Aspirations and Realities for Digital Nomads - reports that 16.9 million Americans describe themselves as digital nomads.

This is an increase of 9% in 2022 and a 131% increase from 2019 (click on the study charts below to enlarge).

The shift to remote work is the primary driver of this growth. This has unleashed traditional jobholders from their offices, more than tripling their numbers since 2019 and reaching 11.1 million in 2022.

In addition to the pandemic-induced shift to remote work, several other factors are driving the growth of digital nomadism:

• Many organizations are allowing their employees to become digital nomads: Corporations have been hesitant to allow their employees to become nomadic. This is changing, and many companies have announced plans and policies that enable employees to become digital nomads. And, as this study's data shows, many are doing it.
• Countries and cities worldwide are vying for digital nomads: Towns and countries have discovered that digital nomads provide more economic benefits than traditional tourists. Because of this, many are creating incentive programs and special visas to attract digital nomads. 
•  A growing support industry is making it easier to be a digital nomad: The size of the digital nomad market has reached the size and scale that a wide variety of products and services are tailored to their needs. Digital nomads also benefit from products and services targeted at remote workers.
• Remote work technology and methods continue to improve: The shift to remote work has resulted in massive investments in remote work tools and technology. Firms are also learning to productively utilize remote workers and effectively include them in their teams. Digital nomads - intensive users of remote work technology - benefit greatly from these advances.

Despite the considerable increase in the number of digital nomads since 2019, growth slowed in 2022 to 9%. 

This was not surprising.

With the pandemic easing, life and work started to return to normal, and more workers were expected to show up at the office - at least a few days a week.

Also, the number of American digital nomads has reached a size where the growth rates of 2020 and 2021 were no longer sustainable.

But the outlook for continued growth is excellent.

People want to travel, awareness and interest in digital nomadism are growing, and the shift to remote work will continue to be a powerful enabler.

See the report for more information, including digital nomad attitudes and motivations, challenges and demographics.

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

Academic Study Suggests Self-Employment May Lead to Better Cardiac Health

Harvard Health Publishing's Can self-employment promote better cardiovascular health for women covers an academic study that found self-employed women have higher cardiac health and fitness levels than women with traditional jobs.

Key quote:

The study found that self-employed women reported 34% lower odds of obesity, 43% lower odds of high blood pressure, and 30% lower odds of diabetes than those working for a salary or wages.

The academic study - Exploring the relationship between self-employment and women's cardiovascular health - also points out prior studies that found a positive correlation between self-employment and improved cardiovascular health and general health.

The study suggests that the work flexibility associated with self-employment is the reason for better health outcomes. This is consistent with the findings from other studies.

One of the key findings from our ongoing, 12-year study of the independent workforce is that the vast majority of full-time independent workers consistently report that they believe they're happier and healthier because they work independently.

For example, in 2021, 87% reported they were happier, and 78% said they were healthier. This is consistent with prior years.

While our data shows independent workers perceive they're happier and healthier, a growing number of academic studies are showing their perceptions are correct.

The Rise of the Enterprise Metaverse

The metaverse has gotten a lot of attention lately. But almost all of it has been focused on potential consumer metaverse uses and applications.

But industrial and enterprise metaverse applications are starting to get more press.

A number of tech companies are building industrial metaverse applications. Key quote from The Information's Microsoft Forms New Team to Target' Industrial Metaverse':

"Microsoft isn't alone in trying to convince industrial customers to get on board with the metaverse. Magic Leap, a much-hyped AR headset startup, has shifted its focus to corporate customers from consumers. Nvidia has placed similar importance on developing simulation software and last month launched a set of cloud services that developers can use to build metaverse applications. 

McKinsey's Digital Twins: the foundation of the enterprise metaverse, covers the growing use of digital representations of processes, physical assets, and products.

This allows firms to test new ideas and innovations in the metaverse, which is cheaper and faster than physical testing.

For example, auto manufacturer BMW is building a "digital twin" of the car company's factory in Regensburg, Germany. This will allow BMW to virtually test changes in the plant's configuration and workflows digitally before implementing them in their physical factory - saving BMW time and money.

And IBM even has a digital twin exchange, allowing companies to browse, purchase, and download digital twins provided by their digital twin partner ecosystem. 

Using virtual experiences for training is already a big business. And the use of digital simulations of industrial processes has been done for decades.

So it's no surprise that industrial uses of the metaverse are starting to crop up.

The Rise of Blended Travel

The global lodging giant IHG's Crowne Plaza hotel chain recently released The Future of Blended Travel. Key quote on blended travel:

"The convergence of business and leisure behaviors was once remarkable. Not anymore ... as post-pandemic travelers increasingly adopt seamless blended travel behaviors and attitudes."

The key data is illustrated by the report chart below.  It shows the majority of respondents to the study's survey plan combine business and leisure travel over the next year.

The report lists 4 key trends as driving the growth of blended travel:

1. Reworking Work: Travel to a hotel or resort in a warm, exotic overseas location or an exciting city as a base for remote flexible working has boomed over the past two years.

2. Hybrid Living: Increasing number of business travelers are planning to extend their work travel with leisure days to get the most from their trips. Key to this is the flexibility and ability to work while traveling – whether it is a long-haul trip or a weekend visiting family – that's enabled by new working practices.

3. Upskilling and Side Hustles: Upskillers and Side Hustlers are using the power of travel to fuel inspiration, feed curiosity and enable networking and connections.

4. New Care Economy: More than ever before, families want to travel with children and grandparents. Multi-generational travelers seek out destinations that cater to all ages.

A key reason we like this study is we vastly prefer the term "blended travel" over "bleisure travel", which we first reported on in 2015. 

No one seemed to like the term bleisure travel - Skift even called it "that awful moniker".  But it's been commonly used.  Hopefully, blended travel will replace it as the term of choice.

We consider the blending of travel and work an important social and business trend.  It's a driver behind the growth of remote work, the growing number of digital nomads, and even the shifting patterns of where people live.  

It's a trend worth following and the Crowne Plaza report is well worth reviewing.  

Measuring the Size of the Creator Economy: It's Deja Vu All Over Again

There's a relevant Yogi Berra quote on almost every topic. 

And we immediately thought of his deja vu quote while reading the Observers' Data About the Creator Economy Varies So Widely No One Knows How Many Influencers There Are.

The article covers the range of estimates of the size of the creator economy. Key quote:

Analysts can't even agree on how many social media creators there are. While a widely cited SignalFire report claims there are 50 million creators, Adobe counts six times as many, at 303 millions, and other reports cite numbers in between. Neither report outlines its criteria for determining the calculation. 

This is the same problem the gig economy has had for over a decade.

According to the article, the main reason for the large variation in creator economy size estimates is that the studies use very different definitions of who is part of the creator economy.

This is also the same issue the gig economy has faced. And because of this, estimates of the size of the gig economy still vary quite a bit.

Because we study emerging trends (hence our name, Emergent Research), we regularly run into these market sizing problems.  

And we'd love to say we have a solution.  

But we don't.

Simply put, markets driven by new technologies move too fast for statistical agencies to keep up - or for independent analysts to agree on definitions.     

So our recommendation to those interested in the size of the creator economy is to develop their own creator economy definition that fits their business needs. Ours is:

Independent workers (self-employed, solopreneurs, etc.) who earn money by creating and distributing digital content. This includes writers, artists, entertainers, videographers, influencers, educators, thought leaders, and others who monetize their knowledge or skills by creating online digital content.

We use this definition because we study independent workers who earn money via their independent work. Using this definition, we found 7.1 million independent workers made money creating and distributing digital content in the U.S. in 2021.

This is much smaller than the 303 million creators Adobe found.

The reason is that Adobe's excellent study used a much more expansive definition of creators, and included people who don't make money and those who work in the creator economy as part of their traditional job. It was also a global study, while ours just covered the U.S.  

Once you have a definition, you can easily compare studies, understand their differences, and glean information relevant to your needs from them.

Everyone wants a standard set of definitions and a standard, widely used dataset on the creator economy.  

We can very confidently predict this won't happen anytime soon, and maybe not ever. So developing your definition - or finding one that fits your needs - is the best path forward.

The End of Men, Again

It seems like every few years, there's a new wave of "end of men" stories, books, and publicity.

The latest wave includes the book Of Boys and Men by Brookings Institute's Richard Reeves. 

We haven't had a chance to read the book yet, but we listened to Reeves being interviewed on the excellent Plain English podcast.  

Key quote from the podcast's landing page setting up the interview:

"American men have a problem. They account for less than 40 percent of new college graduates but roughly 70 percent of drug overdose deaths and more than 80 percent of gun violence deaths."

We first discussed the end of men trend in 2010, and a popular book by the same name came out in 2012. The same issues - men not doing well in school and struggling with addiction and violence - were at the center of that book and our post.

In 2016, the end of men trend popped up again. This time the driver was the growth of "deaths of despair" and men.  

And in 2021, there was a flurry of articles on the declining share of men enrolled in colleges and universities.

None of this is meant to detract from Reeves' book or research. While the topic keeps popping up, solutions to the problem remain elusive.

Reeve suggests holding boys back a year in school, allowing them more time to mature. His recent Atlantic article, Redshirt the Boys, nicely summarizes this policy proposal.

The problems of men and boys have been widely known and chronicled for several decades - and they are getting progressively worse.  

Redshirting may or may not be a solution to the problem. But it seems worth experimenting with.  

"Vertiports" and Air Taxis Getting Closer

According to the Axios article Meet the "vertiport," where you'll go to hail an air taxi, the Federal Aviation Administration (FAA) is releasing "vertiport" design guidelines.  

A vertiport is where vertical takeoff and landing (VTOL) vehicles will take off and land. This is a necessary step for air taxis to become operational.

Several electric VTOL (eVTOL) manufacturers are already working on plans to build vertiports in several U.S. cities.

Two leading air taxi manufacturers, Archer Aviation and Joby Aviation have partnered with Reef, the U.S.'s largest parking management company, to build vertiports atop existing parking garages (click to enlarge image below).

After a very long gestation period - the first flying car prototypes were produced over 100 years ago - we seem on the verge of flying taxis becoming a reality.

Test flights are happening, and plans to start operating commercial air taxi services are just 2-3 years away. 

Even the big airlines are getting on board. United Airlines, for example, recently put down a $10 million deposit on 100 Archer's eVTOLs.

We're certainly looking forward to our first ride.

McKinsey's 2022 Technology Trends

Last month the global consulting firm McKinsey released its 2022 Technology Trends Outlook.  

We pay attention to McKinsey because they advise leadership teams from a wide range of organizations, including Fortune 500 firms, government agencies, foundations, nonprofits, and tech startups.

So their tech trends influence a large number of decision-makers around the world.  

McKinsey groups their trends into two broad themes, which they describe as:

"two thematic groups: Silicon Age, which encompasses digital and IT technologies, and Engineering Tomorrow, which encompasses physical technologies in domains such as energy and mobility."

They rank the trends on three metrics:

• Innovation: based on related patents and research efforts
• Interest in the technology: based on recent news and web searches.  
• Amount of investment in the technology in 2021 (size of bubble in the chart)

McKinsey also provides an adoption rate score for each technology but doesn't use that score in its ranking chart.  

This approach leads to some interesting results.

As the McKinsey chart below shows (click to enlarge), applied AI is the leading technology with a very high innovations score, coupled with relatively strong interest scores and investment levels.

Tech industry darling, Web3 scores relatively low. This is due mainly to a low innovation score - despite many techies believing Web3 is the next big thing.  

The McKinsey article provides a detailed analysis of the 14technologies in their list, and how it ranked in 2018.  

We like McKinsey's approach because they go beyond just looking at the technology and include data on the drivers of adoption.  

Anyone interested in tech trends will find McKinsey's list well worth reading.

The Power of Weak Ties and Coworking

LinkedIn's study A causal test of the strength of weak ties shows that weak ties - casual acquaintances versus close friendships - provide the most useful connections in job hunts.

This confirms Mark Granovetter's landmark 1973 study The Strength of Weak Ties 

As LinkedIn's article points out, Granovetter's study was conducted well before the era of big data and his surveys often had less than 100 respondents.

LinkedIn's study was massive. Key quote from their article:

"Digging deep this time, Rajkumar and colleagues tracked the modern-day connection-making patterns — and job-hunt outcomes — of 20 million LinkedIn members. The research was conducted on data from 2015 and 2019."

The reason weak ties turn out to provide the most help for job hunters is nicely explained in the LinkedIn article:

"When we connect with so-called weak ties — people we know only slightly — we gain access to job networks that stretch into unexpected areas. That lets us find people and opportunities we otherwise wouldn't know about. 

This is the magic of weak ties," Rajkumar says. "They bridge information flows. They help us navigate large spans of the labor market efficiently." By contrast, our best friends' contacts are so similar to ours that they don't help much; they're redundant." 

So what has this got to do with coworking?

The answer is simple. 

As we pointed out a decade ago in our article Coworking Strengthens Weak Ties, belonging to a coworking space increases the size and usefulness of members' weak tie business networks.

We also found that weak tie networks don't just improve job hunting outcomes. Weak ties also improve business development outcomes. 

This is especially important for independent workers (freelancers, etc.). who can leverage their coworking weak ties to win new projects and business. 

Like Granovetter's studies, our first studies on weak ties and coworking were qualitative and had relatively small sample sizes.

But since 2012, we've surveyed thousands of coworking members and interviewed hundreds more on this topic. And our findings have been consistent - coworking increases the weak tie networks of members, and that improves their business development outcomes.

LinkedIn's weak tie study doesn't directly confirm our work on weak ties and coworking. But it reinforce our study's findings by illustrating the power of weak ties.

Airbnb's Guild on How Communities Can Benefit From Digital Nomads and Remote Workers

Airbnb says its Guide to Live and Work Anywhere "provides industry-first analysis of global remote work initiatives."

This isn't even close to accurate- there have been many studies on this topic. 

But marketing hyperbole aside, the Guide provides an interesting look at how cities benefit by offering incentives to attract remote workers.

They also show the incentives cities are using. Below is the Guide chart on Tucson's remote worker incentive package.

The growing competition among cities and countries to entice digital nomads is one of the most interesting remote work trends.

Whether it's the creation of digital nomad villages, providing specialized remote work visas - or, as Airbnb's Guide points out - providing direct financial assistance, countries and cities are increasingly engaged in an arms race to attract remote workers.

Study Finds Only One Third of Americans are Financially Healthy

The Financial Health Networks 2022 U.S. Financial Health Pulse study reports that financial health in America declined across many demographic and socioeconomic groups over the past year.

This is the first time in the five years of this study that Americans' financial health declined.

As the report chart below shows (click to enlarge), the share of Americans reporting being financially healthy declined from 34% to 31%.  

The study also reports that 37 million Americans are financially vulnerable, 139 million are financially coping, and 78 million are financially healthy.

We track this data because a lack of financial health is a key driver of the growing number of part-time gig workers.

Those financially vulnerable or coping are much more likely to supplement their income with part-time, or even full-time, independent work.  

And as the Financial Health Network's findings show, 176 million Americans fall into these two categories.

This is one reason we continue to forecast that independent work and the gig economy will continue to grow.  

The report has a lot more information on the financial health of Americans and is well worth reviewing for anyone interested in this topic.

NIL Payments Have College Athletes Joining the Creator Economy

If you're a college sports fan, you know that NIL payments - paying college athletes for the rights to their name, image, and likeness - is changing amateur athletics.  

After the NCAA lost a supreme court case, college athletes were allowed to profit from their celebrity. This lets college athletes - especially football and basketball players - earn money by monetizing their name, image, and likeness.

Morning Brew's In year No. 2, NIL continues to disrupt college football points out that 12 college football players have signed agreements worth over $1 million.  

And it's not just high-profile stars. Key quote from Morning Brew:

"Boosters at many powerhouse schools have formed controversial collectives to funnel money into athletes' pockets. At Texas Tech, the Matador Club collective is paying every football player and women's basketball player $25,000 a year in exchange for event appearances and community service."

This means even the back bench walk-ons that couldn't qualify for a college scholarship can earn a decent amount of money.

NIL money is not limited to football and basketball players. Even college athletes in nonrevenue sports - like golf - are being paid.

It's also not limited to college athletes. High school athletes are starting to earn NIL money, and even elementary students are getting into the act.   

The rules around NIL money vary by state, but NIL recipients are independent workers. And because they're earning money by monetizing their name, image, and likeness, they're part of the creator economy.

Not surprisingly, the big conferences dominate NIL revenue. 

The chart below is from OpenDorse, an athlete marketplace, and NIL technology company. It shows the top 10 conferences by total NIL Income.

It's unclear what the long-run impact of this shift from amateur to paid college and youth sports will be.

But what is clear is that NIL money has created a large, new segment of the rapidly growing creator economy.  

Edelman's Depressing 2022 Trust Barometer Study

We've followed the Edelman Trust Barometer research series for many years, and we consider it one of the most important studies we follow.

As we point out in the title, we also consider it one of the most depressing studies we follow. 

The reason is the study chronicles the long-term global decline in people's Trust in society's institutions.  

And the 2022 study, which is subtitled The Cycle of Distrust, continues to show this decline.

As the study chart below shows (click to enlarge), businesses are now the most trusted institution, with 61% of global respondents saying they are trusted.

The chart also points out that businesses got the top spot because their trust level fell less - down 4% points from 65% in 2020 - than governments' trust level over the past two years.  

Two of the other top 10 findings caught our eye. Key quote from the report:

Distrust is now society's default emotion: Nearly 6 in 10 say their default tendency is to distrust something until they see evidence it is trustworthy. Another 64% say it's now to a point where people are incapable of having constructive and civil debates about issues they disagree on. When distrust is the default – we lack the ability to debate or collaborate.

There is a collapse of Trust in democracies: In many of the democracies studied, institutions are trusted by less than half of their people, including only 46 pts in Germany, 45 pts in Spain, 44 pts in the U.K., and 43 pts in the U.S. Moreover, no developed countries believe their families and themselves will be better in 5 years.

These are genuinely dismal findings.

The one bright is that the trust deficit provides an opportunity for businesses that can develop a trusted relationship with their customers.  And it shows customers are willing to give businesses a chance to do so.

Even as Coworking Takes Off Again, the Women's Coworking Space The Wing is Grounded

The Wing, a network of work and community spaces designed for women that raised over $100 million in venture funding, is closing.

Below is the email The Wing recently sent to members.

   

The Wing always saw itself as much more than a coworking space. They envisioned their firm as a lifestyle brand built to empower women in all phases of their lives. 

The New York Times described The Wing's vision in their lengthy 2017 article The Wing, a Chic Women's Club, is Going Wide as:

"... a locus of a mediacentric feminist movement, like Ms. in the 1970s, or a mass-scaled temple of "exclusivity," like Soho House, if Soho House wrapped itself in a marketing banner of she-power."

The Wing had 11 locations in 2019, with six in New York City. But as their email says, they struggled during the Covid-19 pandemic and could not recover.

The coworking industry, in general, struggled during the pandemic. According to Fortune's As the office goes extinct, the WeWork era rises again, over 800 coworking spaces shut down over the past two years.

But as the article also points out, the coworking industry is experiencing a post-pandemic boom. Key quote:

"Old coworking spaces are back to life, and new ones are popping up. The advent of hybrid work and the slow return of business travel has left both middle and upper classes seeking a place where they can take meetings, focus, and find companionship: a coworking space."

The future is clearly bright for the coworking industry.

But unfortunately, the rising tide of remote work-driven coworking demand was too late to provide lift for The Wing.  

And yes, we got a bit carried away with our flight metaphors.  

The Six Fold Jump in Work From Home

Nick Bloom is a Stanford Economics professor and one of the leading authorities on the shift to remote work.  

He's part of the team at WFH Research, which produces a steady stream of high-quality research and data related to the shift to remote work.  

He posted the chart below on LinkedIn yesterday. Key quote from his post:

"The shift to WFH is the largest shock to labor markets in decades. Pre-pandemic WFH was trending towards 5% of days by 2022. Now WFH has stabilized at 30%, a 6-fold jump."

Companies have been trying to get their workers back to the office, but most of these efforts have been unsuccessful.  

We continue to think the hybrid model has won, which will lead to more workers returning to offices.  

Because of this, we think the share of days worked from home will trend down to around 22%-25% over the next 2-3 years.  

This is still a substantial increase relative to before the pandemic.

McKinsey finds 36% of Employed Americans are Independent Workers

McKinsey's Freelance, side hustles, and gigs: Many more Americans have become independent workers, covers the results from their American Opportunity study.

And this study found that independent work is booming. Key quote:

"... a remarkable 36 percent of employed respondents—equivalent to 58 million Americans when extrapolated from the representative sample—identify as independent workers. This figure represents a notable increase since we estimated the US independent workforce in 2016 at 27 percent of the employed population."

The study asks survey respondents to self-identify as independent workers. Those answering yes to either, or both, of these questions are considered to be independent:

• "Is your current job as a contract, freelance, or temporary worker?" 
• "Would you consider yourself a gig worker or part of the gig economy?"

The article covers a range of data from the study, but the data on how workers view economic opportunity jumped out at us (click to enlarge the chart below). Key quote:

"Given the broad range of reasons why people work independently, it's surprising how united this group is in one distinct characteristic: they are among the most optimistic workers in the country."

Striking out on one's own requires a certain amount of optimism.  So it's not surprising to us that independent workers, on average, are more optimistic about their economic opportunities than workers overall.  

See the article for more details.

New Business Applications Continue at Historically High Levels

The number of new business applications in July was 425,698, which is another strong month.

Although down from their all-time high in 2020, applications in 2022 have averaged about 420,000 per month. This is about 40% higher than before the pandemic.

The business application data comes from IRS Employment Identification Numbers (EIN) applications. EINs are the tax id number that identifies a business for tax purposes.

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

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 chart) is Census speak for firms they think are likely to hire traditional employees.

As the above 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 is 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 high levels of business applications means a corresponding surge in new employer small businesses and solopreneurs.