Small Business Labs

The Continuing 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.

Freelancing and the Work People Love

Harvard Business Review's Designing Work That People Love covers data showing that companies should change their approach to job design and performance management to take advantage of each employee's unique skills and passions. 

Key quote:

... in ADPRI's most recent 50,000-person surveys of stratified random samples of working populations around the world, the most powerful predictors of retention, performance, engagement, resilience, and inclusion did not include pay or liking one's colleagues or work location or even a strong belief in the mission of the organization. All those provided some explanatory power, but none was as significant as these three items:

• Was I excited to work every day last week?
• Did I have a chance to use my strengths every day?
• At work, do I get a chance to do what I'm good at and something I love?

The article suggests that employers:

• view their employees as the key stakeholders in the organization;
• move away from standardization in performance management tools;
• trust their employees to accomplish their performance goals the way they see fit.

In other words, employers should provide their employees with a work experience much more like the experience many independent workers (freelancers, self-employed, etc.) have.

Most independent workers report having some level of work autonomy, flexibility, and control.

They can do work they like, when, where, and how they see fit (within commercial constraints).  

Because of this, they do work they're good at and enjoy. And this leads to them being excited by and satisfied with their work.  

Of course, many independent workers don't have work autonomy, flexibility and controls. And independent workers who report not having these attributes are, on average, dissatisfied with their work.

But most independent workers report having at least one of these attributes, and even one of these attributes leads to most reporting being satisfied with their work.

This article caught our eye because we recently wrote an HBR article that suggests employers need to make traditional full-time jobs more appealing.  

And we also suggested that employers give their workers more autonomy, control, and flexibility.

The Great Resignation - or whatever you want to call it - has been a wake-up call for employers. They need to make their jobs better for their employees.  

Providing some of the attributes of self-employment - and coupling it with predictable income, decent benefits, and reasonable job security - will lead to more engaged and productive employees.

The Rise of Crypto Clubs

The New York Times' This Social Club Runs on Crypto Tokens and Vibes covers the social club Friends With Benefits (FWB), which the article describes as a "decentralized Soho House" and a V.I.P. lounge for crypto's creative class." Key quote:

Friends With Benefits is what's known as a decentralized autonomous organization, or D.A.O. — a kind of digital co-op that uses cryptocurrency tokens to coordinate access, make payments and vote on group decisions.

Friends with Benefits works like an online country club. Key quote from Wunderman Thompson's Crypto Clubs article:

Like a country club, membership is selective, vetted and tiered. To join, prospective members must submit a written application, which a committee of current members reviews. Once approved—only 20% of applicants are admitted—admittance requires a minimum buy-in of $FWB tokens, the club's proprietary cryptocurrency, which represents meaningful ownership in the organization.

The last time we checked, it cost about $4,000 to buy enough $FWB tokens to be considered for full membership. The price moves with the price of the $FWB crypto token.  

In addition to online activities and access to their Discord server for online chats, FWB also hosts IRL (in real life) events in several cities.  

FWB is by far the best-known crypto club. But there are more every day.

A good example is Flyfish Club, which they describe as:

"... the world's first member's only private dining club where membership is purchased on the blockchain as a Non-Fungible-Token (NFT) and owned by the token-holder to gain access to our restaurant and various culinary, cultural and social experiences."

In addition to their members-only restaurant in New York City, they plan on providing IRL events and online activities.  

They have two membership levels (shown below, click to enlarge). 

A regular membership costs 2.5 ether, about $7,500 at today's prices.

The $12,500 option provides access to their "club within a club" Omakase room. The club is expected to open early next year.

These clubs sound exclusive at best, silly at worst.

But the use of cryptocurrencies and NFTs allows new forms of membership models and business models. They also make it easier for members to have ownership in the clubs and profit from them.

Most new crypto clubs allow members to rent or sell their memberships. So if the price goes up, members can profit. They can also lose money. The price of FWB's tokens, for example, has fallen quite a bit since last year.

New business and membership models that make it easier and cheaper to create and operate crypto clubs likely mean we will see many more in the future.

Not Many are Excited About the Metaverse

According to the recent Axios/Momentive What's Next 2022 Poll, only about 40% of Americans are familiar with the metaverse, and just 7% are more excited about the future because of it.

The low metaverse awareness number is also likely overstated.  

This is because when you ask about awareness of trendy or aspirational topics in surveys, you get a lot of false positives. This is especially true if the topic is trending online and in social media.

As the Axios/Momentive chart below shows (click to enlarge), younger people, not surprisingly, are more likely to say they are familiar with the metaverse than older people.

We found the survey's excitement and scared question and data (see chart above) quite interesting. 

The question is, in our opinion, oddly worded and prone to misinterpretation. So although it's interesting, we're not taking the results too seriously.  

But it does seem to indicate that few are more excited about the future because of the metaverse - even only 14% of younger respondents said they were more excited. 

Also, the scared data is, at least for the industry, scary.

Not only does one-third of respondents say the metaverse makes them more scared about the future - it's true for all age groups.

These data points indicate that the industry's excitement, hype, and hope about the metaverse may be overblown.   

It definitely shows that the metaverse industry needs to do a lot more explaining and education. 

The Axios/Momentive poll covers other topics, including consumer views on smart cities, micro-mobility, and electric vehicles.  

BTW, Momentive is the company formally known as Survey Monkey.

Etsy Sellers Going Out on Strike

Back in February, Etsy announced that in April, the site's transaction fees would be increasing from 5% to 6.5%, a 30% increase.  

Not surprisingly, many of Etsy's sellers were not pleased. And to show their displeasure, sellers have called for a strike to take place the week of April 11th.  

The sellers are not just upset about the fee increase.

They have a series of complaints against Etsy, including their mandatory marketing fees, unfair deactivations, and the growing number of sellers who aren't selling handmade products.

The Verge's Etsy sellers will go on strike in April and want customers to boycott provides more details on the demands of the sellers. Key quote on what the organizer of the strike thinks might happen:

"What would happen if on April 11th, so many sellers put their shops on vacation mode that Etsy starts shitting bricks."

We hope they'll at least be handmade bricks.

The strike's organizers hope this is the start of a broader set of collective action by sellers. Again from the Verge article:

"The strike is just action number one," she says. "What we want to really do for the future is form a solidarity support movement — peer support, artisans supporting each other."

At a minimum, the strike has caught the attention of Etsy executives. 

Key quote on Etsy's response to the strike from Gizmodo's Etsy Sellers Are Going On Strike to Prevent It From Becoming 'The Next Amazon':

"We're committed to supporting our community of 5.3 million sellers around the world by helping them grow their businesses," an Etsy spokesperson said. "Sellers have consistently told us they want us to expand our efforts around marketing, customer support, and removing listings that don't meet our policies. Our revised fee structure will enable us to increase our investments in each of these key areas so that we can better serve our community and keep Etsy a beloved, trusted, and thriving marketplace."

Collective action by independent workers is hard to organize, and successes in doing so have been rare.

But we see more and more signals that workers of all kinds are looking to band together and collectively fight for their rights. This is yet another example.

McKinsey and Bain on the Economic Impacts of the War in Ukraine

McKinsey and Bain are two of the three "big 3" strategy consulting firms. They provide business and financial advice to large corporations, governments, and non-profits across the globe.

Each firm has recently come out with its views on the likely economic impacts of the war in Ukraine.

Both firms point out that while Russia, Ukraine, and Belarus are relatively small end markets, these countries are critical sources of supply for various global commodities. 

Because of this, they both believe the broader economic impacts of the war are potentially significant.  

The chart below (click to enlarge) is from Bain's Crisis in Ukraine: Respond and Reposition and it shows the significant exports of the three courtiers involved in the war.  

Food and energy are the biggest categories, but metals and other raw materials are also on the list.

Bain highlights too many potential impacts to cover here. But the big ones are increased inflation, supply chain disruptions, lower economic growth, and geopolitical realignment.  

McKinsey's War in Ukraine: Lives and livelihoods, lost and disrupted covers much of the same ground.

One of their most interesting observations is that there will be financial system ripple effects. Key quote:

The disruption of sanctioned financial flows has the potential to ripple through the banking system and financial markets, with significant repercussions for affected bondholders, lenders, aircraft lessors, derivatives counterparties, and investors. There remains a risk of contagion with second-and third-order effects across the globe.

An example is AerCap, the world's largest aircraft leasing company, which has filed a $3.5 billion insurance claim because they have 100 jets stuck in Russia.

This is one of the first of what will likely be a barrage of losses and legal claims caused by the war and related sanctions.  

Both McKinsey and Bain point out that the war has created a high level of uncertainty in the global business environment. 

We certainly agree and think small businesses should:

1. evaluate how exposed they are to the direct impacts of the war. Energy and food-related companies will be likely be directly impacted. But supply chain disruptions due to raw material shortages will also impact a variety of SMBs. And almost everyone will need to deal with higher inflation.  

2. have a plan in case the war and its effects push the U.S. economy into recession. The good news is that most economists are not currently forecasting a recession. But many economists are cutting their economic growth forecasts and suggesting a slowdown in global economic growth will happen.

3. the pandemic forced many firms to become more agile and resilient. War impacts may mean SMBs will need to redouble these efforts.

The Bain and McKinsey articles are an excellent places to start in terms of thinking about how the war may impact small businesses. They're well worth reviewing.

We'll have more on this topic in the near future.

Yes, Dog Weddings are a Thing - and the Pet Industry's Growth is Accelerating

The New York Times article Love Is in the Air. So Is Dander covers the trend toward doggie weddings. And yes, these are weddings where two dogs get "married." 

No, these weddings aren't legal. But they can have all the pomp and circumstance of human weddings. 

Key quote from the NYT article on Twixie and Cowboy's wedding, both 2-year-old Brussels Griffons:

"... the four-legged guests enjoyed a meal of puppy chow from Vestals Catering in Dallas (which also caters events for humans), as well as a puppuccino bar and activities including a ball pit ... The nuptials cost about $25,000."

The happy couple is pictured below. There was no mention of where they went on their honeymoon.  

We saw this article in Petco's investor day presentation. 

And as Petco's chart below shows (click to enlarge), powerful trends - several of which have been accelerated by the pandemic - are driving the pet industry's growth.

We cover the pet industry because the pet humanization trend impacts the economy and society in a wide variety of ways.  The pet industry is also a large small business segment. And we like dogs (and other pets).  

See our pet trends section for more on this industry.

Gaming Gig Platform Rating Systems

Kellogg Insights article How Gig Workers Push Back Against Their "Digital Boss" covers research by Kellogg School professors on the impacts of gig platform five-star customer satisfaction rating systems. Key quote:

"What these platforms have created, in effect, is a system where the traditional role of the manager has been fully outsourced to customers and their star-based ratings."

The researchers found that gig workers often considered the ratings they received were not fair or didn't accurately reflect the quality of their work.

This, coupled with the significant impact ratings have on gig workers' ability to get work and generate income, has resulted in gig workers devising various ways of gaming the rating systems.

Our favorites include:

• offering a discount for a high rating
• asking trusted customers to spread a single project over multiple contracts, so they had the opportunity to receive multiple high ratings
• canceling a project early if it looks like it will lead to a bad rating - even if means not getting paid
• turning down work from customers that give out bad ratings, a common tactic with rideshare drivers.

Another of our favorites is not in the article. This is asking relatives and friends to post 5-star ratings to boost a gig worker's score.

Gig workers accomplish this by doing a project for a friend or relative for little or no money or reimbursing them. This is commonly done by newcomers on a variety of sites.  

Five-star customer satisfaction rating systems are not new. eBay popularized them in the 1990s. And their problems and the game playing that result from them have been known for years.

But despite their problems, because they provide an easy way for customers to provide feedback, their use is rapidly expanding. 

This has led to the study authors questioning their use. Key quote:

"One thing our paper highlights is the need to rethink whether this model of outsourcing control to a customer and primarily using a five-star rating system for all types of work contexts actually makes sense," Rahman says."

We tend to agree.

The Shifting Views on the Riskiness of Traditional Jobs Versus Self-Employment

Harvard Business Review's Workers Don't Feel Like a 9-to-5 Job Is a Safe Bet Anymore, which we co-authored, covers the changing way workers view job security.

As the article chart below shows, the pandemic accelerated a growing trend towards full-time independent workers feeling more secure working independently instead of having a traditional job.

 

Also, the share of jobholders saying independent work is more secure than a traditional job has increased from 18% in 2018 to 29% in 2021. 

While this data initially sounds counterintuitive, the reasons behind this shift in views are straightforward. 

Almost everyone believes traditional jobs have become less secure than they used to be. This is because corporate restructuring and layoffs have become common even in good times. 

And because traditional jobs have become less secure, self-employment - by comparison - looks more secure than it used to.

The self-employed also tell us that they feel more secure because they have multiple income streams, can pivot and react to changing market conditions, and control their destiny.

And it also appears that independent work has become less risky over the past decade.  

We cover this in more detail in the article. But the key reason is that the Internet and new technologies have made it cheaper and easier to become self-employed and operate as an independent worker.  

This shift in how workers perceive job security means businesses large and small need to rethink their employee value propositions. Key quote from the article:

Job security is a key reason people choose traditional employment over independent work. But declining perceptions of job security, coupled with workers rethinking what they want when it comes to work/life balance, are leading more people to prioritize flexibility, autonomy, and control when choosing where they will work ... Because of this shift, to successfully attract and retain top talent in the post-pandemic world, employers will need to give their employees the freedom and flexibility associated with independent work.

See the article for more on this topic.

The Post-Pandemic Rise of the 3rd Place

The Hill's The future of work: Not the office or home covers an academic study showing that more people are working from "3rd places", which is anywhere that is not a person's home or regular place of work.

As the study's chart below shows (click to enlarge), workers reported spending about 12% of their working hours in 3rd places in November of 2021.

In terms of 3rd places, public places (coffee shops, libraries, etc.) were the most popular, followed by "a friend's house" and coworking spaces.

Regular readers know we've long covered coworking and the increasing use of 3rd places, such as coffee shops, gyms, and other spaces people work.  

So the trend towards working in 3rd places is not new. But like many other trends, it's been dramatically accelerated by the pandemic-induced shift to remote work.

While we're on this topic, another interesting shift relates to one of our favorite trends - the paradox of place.  

The paradox is that even though the Internet and connective technologies have made working remotely easier than ever, people and companies have increasingly clustered together in fewer locations, mostly in and around major cities.  

Economists call this agglomeration, which proves yet again economists shouldn't be allowed to name things.  

This is another trend impacted by the pandemic. 

We're seeing signs that, thanks to the shift to remote work, the paradox of place is breaking down and workers and companies are geographically spreading out.     

We expect both the trends towards greater use of 3rd places for work and economic de-agglomeration to continue.  

According to Gallup, Few Remote Capable Workers Want to Work Full-Time in the Office

Gallup's The Future of Hybrid Work: 5 Key Questions Answered With Data covers their data showing that only 9% of workers with remote capable jobs prefer returning to the office full-time.

As the Gallup chart below shows (click to enlarge), most (50%) prefer a hybrid work schedule, and almost one-third (32%) say they'd like to work remotely full-time.

This is not good news for the companies planning to return to the office full-time.

The reasons most workers want a hybrid work schedule are:

1. To avoid commute time.
2. It's better for my well-being overall.
3. I need the flexibility to balance family needs or other obligations
4. The option to work in person with coworkers.
5. I feel more productive and connected to my organization.

Key quote from the article:

"Hybrid work helps employees get the most out of their day while ensuring they feel connected to coworkers and the organization."

That few want to be in the office full-time is not surprising. Workers have found they like the flexibility working remotely provides.

And it's clear they won't give it up easily.  

See the article for more details on where people want to work and what it means. 

Workcations, Bleisure Travel and the Growing Digital Nomad Trend

Morning Consult's When It Comes to Travel, Blended Is the New Business covers the growing trend towards people combining work and leisure travel.  

This trend - which is referred to as bleisure travel or workcations - is not new. We first covered it in 2015.

But the pandemic and shift to remote work have greatly accelerated this trend. According to Morning Consult's data, about 40% of those planning to travel on business this year will combine their trips with leisure travel.

Fortune also expects to see more people taking workcations in 2021, and they've included it in their 2021 travel trends to watch list.  

The Morning Consult chart below (click to enlarge) shows the top reasons people embrace bleisure travel.  

According to CFO's 'Workcation' plans rising: What it means for your company, increases in bleisure travel will require companies to create new policies to avoid tax and legal compliance issues.

CFO's article covers much of the same ground as our HBR article Your Company Needs a Digital Nomad Policy.  

And a growing number of companies are adding new policies and programs for bleisure travel and digital nomads. 

Shopify, for example, calls theirs program Destination 90, and Unilever's is called Uwork. We expect many more firms to add programs like these.

Work and life continue to blend in new ways, with many accelerated by the pandemic. Bleisure travel is a good example.

In our interviews with digital nomads, we've learned that bleisure travel is often the gateway experience that leads them to become longer-term nomadic travelers.

So we expect the increase in bleisure travel to be a growth driver for digital nomadism.

See our digital nomad section for more on this topic.

Book Review: Tiny Business Big Money

In Tiny Business Book Money, small business expert Elaine Pofeldt offers solid advice on starting and operating a microbusiness, which she defines as a business with fewer than 20 employees.

This is a follow-up to Elaine's first book on solopreneur businesses - Million-Dollar, One-Person Businesses. 

While researching that book, she discovered that many solopreneur businesses turned into highly successful employer small businesses. 

So she decided to chronicle how these firms scaled and reached high levels of sales and profitability.

In this book, Pofeldt profiles nearly 60 microbusinesses that have reached $1 million in annual revenue and describes the tools, techniques, and methods they used to succeed.

Our favorite section of the book is chapter two, Mindset Makeover.

It's our favorite because our research shows that an entrepreneur's mindset is crucial to success. And Pofeldt does a great job describing the kinds of mindsets successful entrepreneurs have.

We also liked chapter 6 - Set Yourself Up for Success - and its description of the lean way most very small businesses run.  

In particular, Pofeldt describes five basic models tiny businesses use to run their businesses. These are:

1. The automated approach
2. The freelancer/contractor model
3. The outsourced model
4. The traditional employee model
5. The partner model

A key goal of all these models is to run lean and stay flexible. 

The book points out that most microbusinesses use several of these models, and our microbusiness is no exception.

We decided early on not to have traditional employees and instead rely on contractors, business partners and outsourcing. We chose this for lifestyle reasons and to help us achieve our work/life balance goals. And in our case, it worked.

See the book for more details on each of the models and "real-life" examples of their use.

Certainly, anyone thinking of starting a solopreneur business or microbusiness will find the advice and information in Tiny Business Big Money of great value.  

Existing solopreneurs and microbusiness owners will also find useful advice.

For example, our firm plans to implement some of the automation ideas we found in this book.  

As the book points out, the pandemic has led to a surge of interest in starting microbusinesses.  And Tiny Business Big Money provides a guidebook for successfully doing so.  

Working in the Metaverse Deja Vu

The metaverse continues to attract much media attention, with recent articles from Quartz, The Wall Street Journal and A16Z focused on how the metaverse will change work. Examples include:

The point of all these articles is that we should soon expect to spend at least part of our work lives in metaverse settings.

Quartz's article suggests there will be three main ways the metaverse will change work:

1. The metaverse will become an office alternative, with many office workers spending at least some of their time in virtual offices.
2. Training will increasingly become metaverse based,
3. The metaverse will become the new office lounge and place for what used to be called "water cooler" discussions.

The Wall Street Journal article covers much of the same ground and focuses on the metaverse being a place where people will meet. Key Quote:

When we need to get together with colleagues or customers to do more than chat, we'll log into virtual spaces so realistic it will seem as if we're physically in the same room. We'll see each other in the form of avatars that, if we choose, look nearly identical to our real selves. 

A16Z's article focuses on whether or not the metaverse will fully replace traditional offices.

The article's view is that it will augment rather than replace physical spaces and real-life meetings. Key quote:

The metaverse won't replace the physical office, but it will transform it for the better, and the distinction between virtual and physical offices will soon melt away.

We agree with most of these views of how the metaverse will change how and where we work.

But we've been around long enough to have more than a bit of deja vu on this topic.

In 2007 we published a report with Intuit suggesting virtual worlds (what is now called the metaverse) would blossom as a business tool and location over the next decade.

The picture below is from the report and shows an avatar leaving The Gap's Second Life retail store.

Our forecast was wrong, but virtual worlds stayed hot for a few more years. 

For example, Network World's 2008 article IBM, Second Life create business-friendly virtual worlds covered a joint-venture between IBM and Second Life to develop virtual world work and business applications. Key quote:

IBM also opened a virtual sales center in Second Life last year and, separately from the Second Life partnership, is building an internal virtual world where workgroups can have meetings.

We attended several meetings in IBM's Second Life meeting center, and we joined many large corporations in opening a virtual office in Second Life.  

The four words that are most wrong in forecasting are "this time is different." 

But we think things are different for the metaverse than they were in 2007. 

The technology is dramatically better, and the shift to remote and distributed work provides an excellent opportunity for the metaverse to succeed. And we think it will.

5 Biggest 2022 Tech Trends According to Adobe's Chief Product Officer

Business Insiders' Adobe's chief product officer predicts the 5 biggest tech trends of 2022.  What caught our eye about this list is 3 out of the 5 trends relate to self-employment and independent work.  These are:

1. The next generation of top talent will have "Polygamous Careers," transforming the corporate world as we know it:  The article describes this as "One's profession will be a portfolio of projects, whether you're a designer, engineer, salesperson, or investor. The idea of "exclusivity" in an offer letter will be laughable faster than we think."

2. "The Stakeholder Economy" will turn customers (and employees) of businesses into owners: This trend is on the use of tokens and Web 3.0 to make it easier to share ownership in small businesses and/or create new forms of SMBs.  

3. The next generation will have a nomadic decade of life and work, and will love it: This prediction is that "... young adults in their twenties increasingly choose to spend a decade of their lives living between a set of rented or swapped spaces around the world, working remotely, and immersing themselves in communities and cultures."  In other words, there will be more digital nomads.

The final two trends are on specific technologies.  These trends are The rise of immersive experiences will mainstream 3D creation and Artificial Intelligence will make personalization too good to opt-out

That 3 out of the 5 trends relate to self-employment shows how mainstream the shift to independent work has become.  

See the article for more on the trends.