Small Business Labs

Why Direct Sourcing of Freelancers is Growing in Popularity

One of the most interesting findings of the MBO Partners Contingent Labor Imperative study, which looked at the use of contingent labor by large corporations, is the growing use of direct sourcing of freelancers by these firms.   

The study defined direct sourcing of freelancers as:

"Direct sourcing of contingent labor (also called “self-sourcing”) is when a company builds a proprietary labor candidate pool comprised of independent contractors, freelancers, etc., which the company can engage directly instead of through staffing companies or third-party labor suppliers."

The study found that 28% of the firm surveyed widely use direct sourcing and another 32% use it in some areas of their firm. Another 28% report experimenting with direct sourcing. Only 12% say they are not currently using direct sourcing for contingent labor.

And as the study chart below shows, most firms plan on increasing their use of direct sourcing over the next 18 months and 5 years.

The report chart below explains why firms plan on increasing their use of direct sourcing (click to enlarge).

Simply put, direct sourcing addresses the top challenges corporations face in hiring and utilizing freelancers and other forms of contingent labor.

In our work, we've done many product-market fit studies.  And we've rarely seen a service so extensively address the business challenges of its target market as well as direct sourcing of freelancers does.  

Because of this, we're confident the plans by large firms to increase their use of direct sourcing in the future will happen.

See the study report for more information on the use of contingent labor by large corporations (those with 1,000+ employees). 

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

Teens Embracing YouTube and TikTok; Facebook Usage Declining

Pew Research's Teens, Social Media and Technology covers how American teens' usage of social media has changed since 2014. Key quote:

"TikTok has established itself as one of the top online platforms for U.S. teens, while the share of teens who use Facebook has fallen sharply."

As the Pew chart below shows (click to enlarge), almost all teens (95%) use YouTube, and 2/3rds of teens (67%) use TikTok.  

     

But the share of teens using Facebook has fallen to 32%, down from 71% in 2014-15.  

The study also examined the frequency teens use leading social media platforms.  

YouTube was the leader, with 19% of all teens saying they use YouTube almost constantly, 16% saying this about TikTok, and 15% saying it about Snapchat.

Only 2% of teens say they use Facebook almost constantly.

YouTube and TikTok aren't usually considered social media platforms. But social media and entertainment have been blurring over the past decade, so this usage comparison is valid.

And with the social media platforms adopting TikTok's approach to making recommendations, they will likely blend more in the future.

The Rise of Digital Nomad Villages

Digital nomad villages are organized communities that provide the work infrastructure remote workers need to be productive - and social activities to keep them happy.

The villages are generally in scenic locations and have coworking spaces, places for remote workers to live, decent WIFI, networking events, and a range of social activities.

The first digital nomad villages evolved organically and informally. 

Ubud in Bali and Thailand's Chiang Mai are examples and have been popular with digital nomads for many years.

But with the growth of remote work, local governments are starting to invest in the development of digital nomad villages.  Their objective is to attract digital nomads and the economic activity they provide.

The Portuguese island Madeira is often cited as the location of the first planned digital nomad village.  It has a very active social scene. Key quote from the village's community manager:

“It can be very social. In high season for nomads, which is in March until June, you might have to make a conscious effort to take a break from all the social interaction, depending on your personal social battery."

According to Sifted's Where are Europe’s top digital nomad villages? there are now quite a few digital nomad villages across Europe.  

Brazil recently decided to jump on the digital nomad village bandwagon.

According to Skift's Behind Brazil’s Plan to Launch South America’s First Digital Nomad Village, the beach town of Pipa (pictured below) was selected as the country's first digital nomad location. 

Work has begun to create the infrastructure needed to attract and support digital nomads.

Brazil is partnering with NomadX to build out Pipa. They're the firm that helped create the village in Madeira and several other locations.  

The competition to attract digital nomads and remote workers is heating up.  Countries and cities have realized digital nomads spend money, don't take local jobs - and even create local jobs supporting the needs, including work needs, of digital nomads.  

We expect many more purpose build digital nomad villages to be created over the next few years.

Corporate Use of Private Freelance Talent Marketplaces Accelerating

MBO Partners Contingent Labor Imperative covers a recent study looking at the use of contingent labor by large corporations (those with 1,000 or more employees). 

This is the second year of this study, and Emergent Research (that's us) worked with MBO Partners on this project. 

The study covers much ground, including contingent labor's share of corporate workforces, reasons for using contingent labor, challenges with using contingent labor, and the use of direct sourcing of freelancers and other forms of contingent labor.

But what we found most interesting was the year-over-year growth in the use of private freelance marketplaces — company branded and operated talent platforms that directly connect vetted freelancers with the firm's hiring managers.  

As the study table below (click to enlarge) shows, 54% of firms surveyed reported using private freelance marketplaces. This is up from just 32% in 2021.  

Also, users of private freelance marketplaces report broader and more intensive use of private freelance marketplaces. 

The study table below shows that 71% of companies that use private freelance marketplaces use them in 3 or more areas across their organization, compared to just 42% in 2020.  

There a several reasons for this surge in the use of private freelance marketplaces.

Companies have increased their use of contingent labor to access specialized labor, find hard-to-hire talent, and increase their workforce agility and flexibility.

The pandemic-induced shift to remote work has also increased the use of all things online, including private freelance marketplaces.  

But a significant reason is the ability of firms to establish a pool of known and vetted external talent that can be confidently reused across the firm.

This leads to reduced sourcing costs and faster fill times - and more importantly, because the firm vets and reuses the freelancers, higher work quality.    

In our 2016 Harvard Business Review article How PwC and The Washington Post Are Finding and Hiring External Talent, we covered some of the first corporations experimenting with private freelance marketplaces.

Six years later, the use of private freelance marketplaces has entered the mainstream.  

The Best Digital Nomad Locations

Digital nomads are getting a lot of media attention these days. Just recently, there've been multiple articles on the best places for digital nomads to go.

Airbnb compiled a list of "the top destinations in the United States and Canada for long-term guests and their Hosts, based on affordability, hospitality, popularity, and Host income."

According to Airbnb, the most popular places in the U.S. and Canada among their long-term stay nomads are:

In the U.S.:

• Los Angeles, California
• New York, New York
• San Francisco, California
• Houston, Texas
• Seattle, Washington 

And in Canada:

• Toronto, Ontario
• Montréal, Québec
• Vancouver, British Columbia
• Calgary, Alberta
• Victoria, British Columbia

Fortune's Zoom calls from the beach: These are the 10 best tropical islands for remote work covers a study from Zenefits on the top islands for digital nomads. These are:

1. Curaçao 
2. Koh Phangan, Thailand
3. Fernando de Noronha, Brazil
4. Easter Island, Chile
5. Aruba 
6. St. Lucia
7. Grand Cayman, Cayman Islands
8. Little Cayman, Cayman Islands
9. Moorea, French Polynesia
10. Jamaica

CNBC's From Bali to Bermuda: 6 tropical destinations that make it easy to live and work remotely also mostly covers island getaways for digital nomads. Their six are:

1. Anguilla
2. Antigua and Barbuda
3. Bali
4. Bermuda
5. Barbados
6. Costa Rica

Interestingly, there isn't any overlap between the two lists of tropical islands. The reason is that there are a lot of great tropical islands in the world.

We think the rapidly growing number of countries offering digital nomad visas - including many island countries on these lists - is why digital nomads are getting so much recent press.  

See our Digital Nomad section for more on this trend.  

Is it the Beginning of the End of Social Media?

The Axios article Sunset of the Social Network suggests that the rise of TikTok is leading to the demise of social media as we've known it. Key quote:

"Mark last week as the end of the social networking era, which began with the rise of Friendster in 2003, shaped two decades of internet growth, and now closes with Facebook's rollout of a sweeping TikTok-like redesign."

Facebook's TikTok redesign is based on adding a TikTok-like recommendation algorithm to their existing social graph algorithm.

The best description we've seen of this change, and its likely impacts, is Medium's The End of Social Media, which describes TikTok's approach as "recommendation media." Key quote:

"In recommendation media, content is not distributed to networks of connected people as the primary means of distribution. Instead, the main mechanism for distributing content is through opaque, platform-defined algorithms that favor maximum consumer attention and engagement."

In other words, social media users see content generated by their friends and social connections.

With recommendation media, algorithms distribute content based on the user's likelihood of becoming engaged in the content - regardless of the content's source. 

Not everyone is happy with this shift. Trevor Noah, for example, says Instagram now "sucks" due to its use of recommendation algorithms.  

And reality stars Kylie Jenner and Kim Kardashian are telling Instagram to “stop trying to be TikTok.”

The shift to recommendation media has major implications for small businesses and independent workers using social media for marketing.

Building large audiences of followers will become less important while designing content to appeal to recommendation algorithms will become more important.  

It will also mean spending more time and effort building and cultivating customer communities while using recommendation platforms like TikTok and Instagram (and soon, Facebook) to find new customers.

We think traditional social media will survive. The use case - connecting friends, family, customers and people with like interests - is too strong not to.  

But the rise of recommendation media will change the marketing game for small businesses and independent workers.

The Freelance Gender Pay Gap

Bloomberg's Men Make 48% More Than Women in the Gig Economy. Study Finds covers an interesting ZenBusiness study on freelancer earnings by gender.

The study's methodology is quite clever.  

ZenBusiness scraped data on freelancers' names, specialties, and hourly rates for almost 6,000 US-based freelancers active on the talent marketplace Upwork.  

And after using a gender API to group the freelancers by sex, they calculated the average wage rates for men and women.

They found that the average hourly rate for men is 48% higher - $68.58 versus $46.30 for women.

As the Bloomberg chart below shows (click to enlarge), the study found that the pay gap varies quite a bit by job type.

Our broader studies of the overall independent workforce have found the gender pay gap between male and female independent workers to be in the 20% range.  

This is similar to the 16% gender gap Pew Research found for full-time workers.  

And although we're impressed by the ZenBusiness study, it's not without issues. 

For example, listed hourly rates may not reflect actual pay rates. 

We also know from our studies that, on average, part-time independent workers charge less than full-timers, older workers charge more than younger workers, and more experienced workers charge more than less experienced workers.

The ZenBusiness study doesn't have data on any of these attributes. But gender differences in any of these areas could easily skew the results.  

So kudos to ZenBusiness for raising this issue and pointing out this data. 

But more research is needed before conclusions can be drawn on the freelance gender gap associated with online talent marketplaces. 

California's Independent Truckers Shut Down the Port of Oakland

Independent truckers protesting California's gig law, AB5, shut down cargo operations at ports in Long Beach and Oakland last week.

The reason is that AB5 will force most of California's 70,000 independent truckers to become employees of trucking companies. The vast majority of independent truckers want to stay independent. So they're protesting.

Although AB5 was passed several years ago, the law's impact on truckers was delayed by a series of legal actions by the California Truckers Association (CTA).  

A few weeks ago, the U.S. Supreme court refused to hear CTA's appeal, which resulted in AB5 becoming effective for the trucking industry in California.

Key quote from the Owner-Operator Independent Drivers Association (OOIDA) on this decision:

"For truckers that have invested their blood, sweat, and treasure in creating their own businesses, it is dismaying that lawmakers and the courts are forging ahead with this radical policy that dismisses a beneficial business model that has been in place for decades."

The independent truckers are demanding an exemption to AB5, which has been granted to over 30 professions. Key quote from Transport Dive's article on the protests:

"Our goal is to get exempted from [AB5], to get carved out from it, just like other industries," Cindy Perez, a Long Beach owner-operator, said on July 14. "And if we're not, we at least want to know why."

The logical response for many California independent truckers, if they don't get an AB5 exception, will be to take their trucks and move to another state. Truckers are in demand across the country.

Losing these truckers will hurt more than just California.

It will also disrupt operations at two of our country's largest ports for an extended period, impacting supply chains across the U.S.

This is yet another example of the backlash against AB5 by workers the law was supposed to help. 

Gender Identity and Sexual Orientation are Complicated and Fluid

We recently updated our contact information with an organization that supports small businesses.

When we got to their gender identification question, we discovered their pull-down box listed 37 options, which are listed below (click to enlarge).  

     

Gender identification and sexual orientation have been rapidly changing.

A recent Gallup poll found that the share of adult Americans who self-identify as LGBTQ has doubled to 7.2% over the past decade.

This growth is driven by younger adults, with 20% of Gen Z and 10% of Millennials reporting they identify as LQBTQ. This compares with 4.2% of Gen X, 2.6% for Baby Boomers, and less than 1% for traditionalists (born prior to 1946). 

This means the LGBTQ share of the population will continue to increase and could double again over the next decade.  

Not only has gender identity and sexual orientation gotten more complicated - they have also become increasingly fluid.

Web MD defines gender fluidity as:

"Someone who is fluid -- also called gender fluid -- is a person whose gender identity (the gender they identify with most) is not fixed. It can change over time or from day to day. Fluid is a form of gender identity or gender expression rather than a sexual orientation." 

And as the BBC's Why sexual identities shifted during the pandemic reports, the pandemic accelerated the trend toward people changing or adjusting their gender identity or sexual orientation.

The shifts and fluidity in gender identity and sexual orientation - and how society views these shifts - are important social trends.  

And businesses need to understand that a growing share of their customers and workers identify as LGBTQ.  

If you're curious about the gender terms listed above, check out the Gender Wiki for definitions.  

St. Louis Fed on Women's Growing Share of Self-Employment

The Federal Reserve Bank of St. Louis released data showing that the share of self-employment in U.S. employment increased during the pandemic.  

The data also shows that self-employment declined less and recovered more quickly than traditional employment did during the pandemic.

But one of the Fed's most interesting findings is women's growing share of self-employment during the pandemic.  

As the St. Louis Fed chart below shows (click to enlarge), women's share of self-employment has been growing since 2008 - and it shot up during the pandemic.

The St. Louis Fed suggests that "the burden of home and child care placed on women in 2020 made self-employment a more attractive option."

We agree in terms of the large jump during the pandemic. 

The data used in this study comes from the monthly Current Population Survey (CPS), which is the source of the monthly jobs report and unemployment data.

The CPS numbers include people who said they were self-employed during a specific reference week, and that self-employment was their primary source of work during the reference week.  

These constraints are why the numbers are relatively low. The June CPS, for example, reported about 16.8 million self-employed workers.

Yesterday we reported on the Nonemployer Data Set. It uses tax data to estimate the number of U.S. solopreneurs. In 2019 the estimate was 27.1 million,

This is still substantially lower than the MBO State of Independence study estimate, which is that there were 51.1 million independent workers in 2021. This study uses a broader definition of independent work than the CPS and Nonemployer Dataset.

And other studies show even larger numbers of independent workers - some as high as 68 million.

These studies, surveys, and data collection efforts use different definitions of self-employment and methodologies. This makes understanding the numbers quite confusing.

But it does give us things to write about.  

Number of Nonemployer Business Grew Again in 2019

According to the U.S. Census, in 2019, the number of U.S. nonemployer businesses increased to 27,104,006, up 2.3% from 2018. 2019 is the most recent nonemployer data available.

Nonemployers are businesses with an owner but don't have paid traditional full or part-time employees (W2 employees).

The data comes from tax records, and you can think of nonemployers as solopreneur businesses (some exceptions apply). The data includes anyone reporting $1,000 or more in self-employment income, so part-time solopreneurs are included in these numbers.

From 2010 to 2019, the number of nonemployer businesses has grown at an average annual rate of 2.5%.

That may not sound like much growth, but it's about three times the growth rate for overall employment.

One of the more interesting nonemployer data sub-trends is that the number high earning nonemployers - those who report gross receipts of $100,000 or more per year - is one of the fastest-growing segments.

Higher earners grew at an average annual rate of 3.7% between 2010 and 2019 and reached 3.23 million in 2019.

The Nonemployer Dataset gets less attention than other government data on self-employment.

This is because the dataset is messy, hard to work with, and includes a hodgepodge of business entities - passive businesses, firms no longer in business, LLCs owned by major corporations - that aren't active solopreneur businesses.

It also is hardly up to date.  The latest data is from 2019 and 2020 data won't be out for at least another year or so.  

But despite these issues, we find the nonemployer data to be a useful indicator of the historical growth of solopreneurs in the U.S.

VCs Continue to Fund Creator Economy Startups

The Crunchbase News article Online Content Creators Are Making Millions. VCs Want To Cash In On The Booming' Creator Economy' Too covers the growing amounts of capital VCs are putting into creator economy startups.

Crunchbase News defines the creator economy as:

"Loosely, the creator economy encapsulates the industry of people who create online content and make money off it, independent of a third-party brand. That could mean posting dance videos on TikTok and getting sponsorship deals, reviewing beauty products on YouTube, or writing about current events for paying subscribers on Substack."

As the article chart below shows (click to enlarge), VCs have invested $637 million in creator economy startups this year, and funding will likely easily exceed 2021 levels.

So where is this money going?

The article says the main investment area is content monetization. In other words, anything that helps content creators make money.

We're about to field our 2n annual digital content creator survey as part of our ongoing creator economy research project. See last year's survey results here, 

We'll post this year's survey findings in the early fall. 

Visit our creator economy section for more on this topic. 

Amara's Law and 3-D Printing

Amara's Law was coined by the noted futurist Roy Amara. It states:

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

We immediately thought of Amara's Law after reading the New York Times article 3-D Printing Grows Beyond Its Novelty Roots, which suggests that "3-D printing could be poised to play a major role in manufacturing."

The reason we thought of Amara's Law is the New York Times 2010 article 3D printing is spurring a manufacturing revolution said pretty much the same thing.

So did the 2015 Harvard Business Review article The 3-D Printing Revolution. Key quote:

"Here's what we can confidently expect: Within the next five years, we will have fully automated, high-speed, large-quantity additive manufacturing systems that are economical even for standardized parts."

3-D printing was invented over 40 years ago.  

And according to many futurists and analysts, 3-D printing has been five years away from fundamentally changing manufacturing ever since.

But it hasn't because 3-D printing is an example of how long new technologies can take to mature and reach mainstream use.

It also nicely illustrates a truism of technology forecasting – new technologies are easy to spot, but getting the timing right around when a new technology will become mainstream is extremely hard.

This, coupled with the incentives futurists, analysts and companies have to overstate the near-term importance of new technologies, explains the first part of Amara's Law.  

However, we agree that after 40 years of development, 3-D printing is becoming mainstream.  

The recent NYT article covers the 3-D printing firm Vulcan Forms. 

As the picture below shows, Vulcan Forms 3-D printers are huge.

And they use a wide variety of materials to deliver high-quality, high-volume printed parts at competitive prices.  

Technology forecasting is hard. Yogi Berra was right when he said “It's tough to make predictions, especially about the future.”

And we've made our share of forecasting mistakes – especially around timing.  

So, when you read about exciting new technologies that are about to change the world, keep Amara's Law in mind.  

See McKinsey's recent article The mainstreaming of additive manufacturing and our Small Manufacturing section for more on 3-D printing

What is Entrepreneurial Tourism?

One of the most interesting trends we track is the mixing of business and travel. It's a long-term trend that's been accelerated by the pandemic-induced shift to remote work.

This broad trend includes several sub-trends, including the rapidly growing number of digital nomads and increased bleisure travel (combining business and leisure travel).

Entrepreneurial tourism, which combines starting a new business with travel, is another growing segment.   

Skift's Venture Capital Legend Tim Draper Looks to Franchise Hostels covers Draper Startup House: Key quote:

"Draper Startup House, the eponymous chain of 30 hostels across 25 countries that caters to both entrepreneurs and investors, offering them workshops, a digital community, and funding opportunities ..."

In other words, Draper Startup Houses blend startup programs, funding opportunities, and like-minded communities with accommodations and hospitality services. 

The Draper Startup House chart below (click to enlarge), shows some of their services.  

Draper is not the only firm pursuing this niche.

Earlier this year, we posted on the hotel group Selina teaming with Tech Arts to create an entrepreneurial tourism program.

And Skift's article points out that the large VC firm Andreessen Horowitz recently invested in Launch House, another entrepreneurial tourism company.  

Many coworking spaces around the world also provide startup programs.

The bottom line is that entrepreneurial tourism means startup founders can now choose to start their firms from a wide range of global locations and programs.

We've mentioned in the past that economic geography is a fascinating field. And the rise of entrepreneurial tourism is another example.

The Tilt's 2022 Creator Economy Benchmark Research Report

Started and run by content marketing expert Joe Pulizzi, we've found The Tilt to be a valuable source of information on the creator economy and content entrepreneurs.  

They just released their 2022 Creator Economy Benchmark Research report. Key quote on one of their key attitudinal findings on content creators:

"... 90% say they are inspired to create to achieve "financial freedom on their own terms."

This is consistent with our research on the creator economy.

But as the report chart below (click to enlarge) shows, many creators have a ways to go to achieve this goal. Only 51% of full-time content creators report earning enough to support at least one person.

Our favorite part of the report is their advice to content creators and would-be creators. Key report quote on the advice: 

Build an entrepreneur's mindset: Many creators view content as a passion project. In our experience — and according to the research — successful content creators are also effective business owners. These content entrepreneurs are savvy about finances, operations, sales, negotiations, and time management. Are you willing to learn quickly and devote at least half your time to these tasks?

Plan your runway: It will take roughly 17 months to become self-sufficient as a content entrepreneur. Do you have the support you need to weather that period?

Moderate your financial expectations: Do you want to become a content creator to get rich? Are you aiming for the million-dollar lifestyle? Or do you see the creator journey as a path to build a well-rounded life and satisfying career? Those who stick with the content creator path are not motivated primarily by money, but by the thrill of independence and control. Wealth isn't off the table; 19% of full-time content entrepreneurs tell us they earn substantial money and support multiple people.

Take a master class in monetization: The content creator's ability to monetize is the single biggest factor determining longevity and success. There are dozens of ways to monetize your efforts. Consider joining a class or community to supercharge your tactics.

Embrace Web3 channels and strategies: Content creators must build channels they own to ensure all their invested time and money cannot be pulled away overnight. This is a mission-critical activity for all creators regardless of longevity, profitability, or industry.

Anyone interested in the creator economy - including existing content creators, and those considering becoming content creators, will find the report useful.

We also recommend subscribing to The Tilt newsletter. It has excellent stuff on the business of content creation.

Ecommerce's Post Pandemic Regression Toward the Mean

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

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

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

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

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

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

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

This is an example of regression toward the mean.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Meaning Matters to Workers

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

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

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

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

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

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

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

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

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

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

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

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

The Pandemic Accelerated Bleisure Travel

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

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

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

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

Key quote:

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

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

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

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

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

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

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

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

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

BCG on Tapping Into Fluid Talent

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

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

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

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

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

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

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

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

The Rise of Fairy Tale Farms

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So leave the farming decisions to a real farmer.

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

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

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

See our Small Farms section for more on this topic.

The Worker Classification Debate Comes to Professional Golf

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

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

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

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

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

Professional golfers are not employees of the PGA.

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

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

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

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

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

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

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

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

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

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

What is the Internet of Plants?

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

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

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

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

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

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

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

See our small farms section for more on ag tech.  

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

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

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

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

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

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

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

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

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

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

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

See the report for more details.

New Business Applications Continue to Surge

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

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

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

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

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

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

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

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

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

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

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

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