Small Business Labs

What Control Means to the Self-Employed

Our article yesterday covered a study showing how work autonomy and control resulted in mental health benefits for the self-employed. 

As a follow-up, the chart below (click to enlarge) is from the Freshbooks 2019 Self-Employment in America Report. It illustrates how those who are self-employed define control.

It comes down to control over the when, where, what and how of their work. The self-employed often have a lot of control over these factors.

This is why many choose and stay self-employed.

Key quote from the Small Business Trends article on the study 96% of Self-Employed Professionals Don’t Want “Regular Jobs”:

"Why do people ditch the financial and social security of their jobs to be self-employed?

The main reason, as found out in the survey, was control over career. Being self-employed or running a small business allows people to have a better career control."

And more control often leads to better mental health.

The Positive Mental Health Effects of Self-Employment

A recent academic study found that self-employed gig workers in the UK score higher across a range of psychological well-being measures than workers in the mainstream economy.

The study - The Effects of Self and Temporary Employment on Mental Health: The Role of the Gig Economy in the UK - found that gig workers are about 33 percent more likely to self-report positive traits in terms of mental health than those in traditional jobs.

The reason will come as no surprise to regular readers.

It's the autonomy, control and flexibility provided by gig work. 

Key quote from The Mental Health Benefits of Self-Employment, an article written by the study's researchers: 

Our preliminary conclusions point to the importance of autonomy in the workplace. The gig economy offers workers the opportunity for more control in their jobs, which may lead to more self-worth, more confidence and less strain...

For employees in the mainstream economy, heavy job requirements plus low autonomy equals a scenario with high occupational stress. 

We've long reported that work flexibility, autonomy and control lead to high levels of satisfaction among the self-employed.  Key quote from our 2013 article on this topic:

... those who create, manage and control their own work assignments, workplace and schedules reported very high levels of satisfaction (86% satisfied or highly satisfied)  ... few (less than 5%) would prefer having a traditional and almost all plan to continue as independent workers.

So it makes sense there are also mental health benefits.

Obviously, not all gig workers have work autonomy, control and flexibility. Those that don't are much less positive about gig work. Again from our 2013 article on those who report they don't have autonomy, control and flexibility:

"They are much less satisfied with independent work and almost half (49%) report being dissatisfied. Most (54%) would prefer having a traditional job and only about one third (35%) plan on continuing as an independent worker."

They also likely don't get the mental health benefits associated with work autonomy.  

But the majority of the self-employed - including those who get work through online platforms - report they have and value the autonomy, control and flexible this type of work provides.

WeWork Files to Go Public

WeWork released its S-1, which is the legal document a company files prior to going public, this week.

WeWork going public is a bit of a watershed moment for the coworking industry. It's the first of the new wave of coworking spaces to do so.

It's also a highly watched and controversial company, particularly due to its high private valuation and steep losses. Because of this interest, the S-1 filing is getting a lot of attention.

Our favorite part of the S-1 is the description of WeWork's mission. Key quote:

Our mission is to elevate the world’s consciousness.

Pretty lofty ambition for a company that rents commercial office space. But we agree the world's consciousness could use some elevating. 

The topline numbers show that WeWork's membership numbers and revenue have doubled every year for the last 3 years.  The S-i reports that:

• Q2 2019 membership of 527,000, up from 268,000 at the end of June 2018 and 401,000 at the end of December 2018.
• Revenue has grown from $436 million in 2016 to $1.82 billion in 2018 and they look to be on track to double revenue again this year.
• WeWork operates 528 spaces in 111 cities across 29 countries (click to enlarge the WeWork S-1 chart below for more details)

Their operating losses have also increased quite impressively, from $396 million in 2016 to $1.69 billion in 2018. They too are on pace to double this year.

But hey, it's not like it's easy or cheap to raise the world's consciousness. 

To help investors swallow the losses and cash burn, WeWork is planning to raise $6 billion in debt prior to going public. This, coupled with their current cash position of $2 billion, would give them a few years of cushion to get to profitability - or at least become cash flow positive. 

See these articles for more details:

Axios: WeWork files for long-awaited IPO

CNBC: WeWork reveals massive $900 million loss in filing to go public

Tech Crunch: WeWork reveals IPO filing

The Axios Pro Rata podcast also has a good review of the S-1.

Small Businesses Worried About Corporate Concentration - and Especially Amazon

The Institute for Local Self-Reliance recently released its 2019 Independent Business Survey. The key finding is small independent businesses see large corporations - and especially Amazon - as their main competitive threat. 

They also feel government policies have not helped. Key quote from their article on the study:

Many public policy decisions in recent years have fueled market concentration and favored their big competitors.

As the study chart below shows (click to enlarge), the survey respondents listed Amazon as their biggest challenge.

Big companies, in general, also came in 2nd and supplier mergers and concentration came in 5th.  So it's clear the respondents consider big firms and industry consolidation a major problem.

But as is shown in the study chart below, they see Amazon as the biggest threat. 91% say Amazon has hurt their business at least a little and over half say it has hurt their business significantly.

It's important to note that retail small businesses, who are in competition with Amazon, are heavily overweighted in the survey sample (it was a non-probability sample).

A sample more reflective of the overall small business sector of the economy would not be as negative on Amazon.

But these numbers are still stunning and show the power and reach of Amazon and its impact on small retailers. 

The BBC's List of 101 Things You Need to Know About the Future of Work

The BBC's The 101 people, ideas and things changing how we work today really does cover 101 different trends, shifts, people and things impacting the future of work.

The long list includes a brief description of each item. For example, item 88 - Soft Skills - is described as:

"Employees need abilities computers and automated systems don’t have – like creativity, adaptability and persuasion. Yet recruiters are struggling to find these kinds of candidates."

They also include a link to a more detailed description that contains other links to even more detailed information (click here for the link to the deeper description of soft skills)

We probably wouldn't include some of the items that are on the list. But with such an extensive list there's bound to be some that are less important than others.

Overall it's an excellent list and a great resource and taxonomy on the future of work.

SafetyPIN: Building Trust in the Gig Economy (and elsewhere)

SafetyPIN Technologies is a startup that has created a background check system and trust badge that lets people see at a glance if someone they met online - or elsewhere - is safe to meet offline.

According to the company's website, SafetyPIN has:

"developed a proprietary algorithm that draws on over 10,000 sources of data – and combines behavioral screening — to identify people you can trust the most – and assure them they can trust you, too."

The algorithm checks an applicant's criminal and financial history, verifies their ID, and asks them a series of behavioral profiling questions to determine whether or not they qualify for a SafetyPIN.

The chart below from SaftyPIN's website (click to enlarge) illustrates potential SafetyPIN applications. Most are related to the gig economy, but others are use cases where two people who don't know each other are meeting for various reasons.

Most background check companies only target businesses. But because of this mix of use cases, SafetyPIN is targeting both corporations and consumers with their service. 

For corporate users they hope to become a background check service of choice for the hiring of independent workers (they currently are not providing background check services for the hiring of traditional employees). 

For individuals, their pitch is a SafetyPIN will increase the confidence of the people you work with or are meeting with. Youth coaches, for example, are a prime target market. 

And also unlike other background check companies, users receive and can display their SafetyPINs on their social media accounts and websites.

With the growth of the Internet, peer-to-peer commerce, delivery services and the growing online to offline economy, people are increasingly interacting in new ways. This, of course, is leading to all sorts of trust issues. 

Yet so far, most background checks and trust systems focus on only one party in a transaction or meeting - and mostly the sellers. 

It seems like extending background checks to all parties is a logical step. It will be interesting to see if SafetyPIN, or others like it, are able to make a business out of doing this. 

The Democratization of Wealth Work

The Brookings Institute's Who’s employed by the lifestyles of the rich and famous? covers the growth of the personal care and services jobs, which has been one of the fastest growing job segments over the past decade.

They refer to this type of work as "wealth work", a term coined by MIT Economist David Autor which he defined as personal service jobs created by rising incomes.

As the Brookings's chart below shows (click to enlarge), this includes a wide range of occupations.

A key driver of wealth work, not surprisingly, is the the growth of high income earners. Key quote from the Associated Press article Richer US households fueling a hot job sector: ‘wealth work’:

The main driver of growth in these jobs is the expansion of the upper-middle class. Nearly 8% of U.S. households earned $200,000 a year or more in 2017, according to the Census Bureau. That figure is up from just below 6% in 2007, adjusted for inflation, when the recession began.

And we certainly agree that wealthier consumers have been driving this trend.

But we believe there are 4 other drivers: 

1. A Lack of Time: Most Americans with full-time jobs report working more and having a lack of time.  This means outsourcing personal tasks makes a lot of sense.
2. Life's Growing Complexity:  Many tasks have become so complex or specialized that outside help by professionals is simply required.
3. Fear of Falling Behind:  People are increasingly concerned about falling behind, or their children falling behind. This has led to coaching of all kinds. Think sports, academics, arts and music coaching for kids and things like life coaches, career coaches, wealth managers, etc. for adults. 
4. Wealth workers don't just cater to the wealthy. People with even modest incomes increasingly are utilizing personal services.

The last point is very important.

Much of what is called "the on-demand economy" and "sharing economy" falls into the personal services sector. Everything from dog walking to food delivery to running errands can now easily and cheaply be outsourced to personal services companies.

Also, a wide variety of personal services have been productized and/or digitized, which has reduced their cost and made them in reach of middle class consumers - and even low income consumers.

A good example is portfolio management, which not long ago was only available to high wealth individuals. But today firms like Schwab, Vanguard and others provides a variety of personalized portfolio management services to middle class investors. 

A broader example is food delivery, which is being utilized by people up and down the income scale. 

This democratization of personal services means it's not just the rich driving demand. The middle class and even low to moderate income Americans are increasingly turning to these services. 

The growth of personal services and wealth work is not a new trend. We first wrote about this trend in 2008. But it's reached the size and scale where it's starting to get much more attention.

We'll have more on this topic - with a focus on wealth work jobs - in the near future. But a quick summary of our thoughts on wealth work jobs is we are more positive on them than Brookings is.

The Rise of Independent Worker Teams: Fiverr's Studios and Upwork's Agency Experience

Fiverr this week announced a new service offering called "Studios". This service gives freelancers the ability to easily join forces to sell and tackle larger and more complex client assignments than a freelancer could do on their own.

This follows last week's announcement by Upwork of what they are calling the "agency experience". Key quote from their press release:

"Upwork’s newly enhanced agency experience removes the friction that exists with the traditional agency model, making it easier for businesses to find, hire and engage specialized boutique agencies on the platform with just a few clicks."

The boutique agencies Upwork refers to are small service firms, most of which utilize freelancers as part of their project teams. 

Both services illustrate two growing trends:

1. The trend towards independent workers teaming up via online platforms and marketplaces.
2. The trend towards businesses outsourcing work to boutique firms and/or teams of independent workers.

These services also illustrate how the shift to cloud computing is creating new forms, structures and ways of doing business.

The chart below (click to enlarge) is from a 2014 study on the impact of cloud computing we conducted in partnership with Intuit. 

It illustrates how transformative technologies tend to diffuse through the economy and society in 3 broad waves.  

In the first wave, which occurs after a technology is first commercialized, the impacts are mostly efficiency gains. The new technology makes things cheaper, easier and/or faster. 

The second wave often leads to new types of businesses and new ways of doing business. The 3rd wave results in transformations of business and society.

Railroads are a good example of these waves. 

When first commercialized, most rail lines were built alongside existing canals and roads. They increased efficiency by moving goods and people faster and cheaper than canal boats and wagons.

In the second wave, railroads created new ways to connect distributed resources and producers to customers. This created new forms of businesses (distributed factories, new types of logistics businesses, etc.) and new ways of doing business.

And in the 3rd wave, railroads changed society in a variety of ways including opening up the West, helping to create suburbs and creating economic opportunities for rural areas (they also created standardized time zones).

In 2014 we suggested that cloud computing is a transformational technology that was in stage 2 and helping to create new forms and types of businesses. 

One example we used was what we called at the time "hives", which we described as:

Cloud-adapted small businesses will increasingly be made up of individuals who share talent to form a team. These businesses will operate virtually, with employees (many contractors) working in different locations, and staffing levels increasingly flexible - rising and falling to meet project needs.

Cloud computing is clearly not the only trend driving freelancer teaming and the growth of boutique consulting firms and agencies.

But it is a key enabling technology behind the growth of these types of organizations. 

We still think cloud computing is in stage 2 and will drive more change in organizations and how business is done. 

But one could easily argue stage 3 has also started, with the growing impact - good and bad - of cloud enabled social media an example of societal change.

We think it's too early to make this call, but we're not arguing with those who think otherwise.

On-Demand App for Access to Special Needs and Disability Care

Joshin is a new company that connects specialized caregivers with families with special needs care requirements. 

Their goal is to make it as easy for families to book a caregiver as it is to book a ride with Uber or a dog walker with Roverr. Joshin curates their independent worker caregivers to ensure they have the qualifications to provide the care required.

Joshin's founders are twin sisters who have a special needs brother.  So they understand the challenges facing families who need this type of assistance.

The video below is a TV interview with the founders. It does an excellent job of describing the service.

Joshin is another example of the growing number of niche and/or vertical market gig worker platforms.  

The Growth of Side Gigs

That side gigs - part-time or occasional work to supplement income - have become more common is hardly new news. Nor are the reasons behind the growing number of Americans with side gigs.

Simply put, workers up and down the income ladder are finding that their compensation simply doesn’t keep up with rising costs, especially of education, health care, and housing. 

Because of this, more Americans are turning to side gigs to help them make ends meet.

As the chart below from the 2019 MBO Partners State of Independence study shows, the number of "occasional independent" workers has increased by roughly 50% over the past 4 years.

Occasional independents are are workers who report working independently occasionally or sporadically, but at least once a month on average. 

Most occasionals have other jobs, but many have activities such as care giving, homemaking, school, etc that keep them from having a traditional full or part-time job. 

And, of course, most occasional independents are working side gigs to supplement their income. Other reasons for side gigs are to pursue a passion, build skills and to start or test out a new business opportunity.

Another reason side gigs are growing is that online platforms and marketplaces are making them easier to do. These platforms provide a low friction (meaning it's easy and quick to get started), highly flexible (work when you want or can) work options.

With wage stagnation, the hollowing out of middle skill jobs and the rising costs of housing, healthcare and education showing no signs of abating, we believe the number of Americans with side gigs will continue to grow.

Bain Consulting on Predicting the Next Tech Disruption

Predicting the Next Tech Disruption from Big 3 Strategy Consulting firm Bain and Company discusses 4 forecasting tools (shown below) Bain uses to predict when disruptive technologies will be widely adopted.

Two of the tools - experience curves and adoption curves - have been around a long time and widely used.

For example, we use both - and especially adoption curves - in our forecasts. And much like McKinsey also suggests, Bain suggests using similar technologies to help you develop your adoption curves. 

This is something we've done for many years and have found very useful. 

Bain's Elements of Value tool is focused on consumer technologies. But we think it could be modified to also work with B2B tech. You'd just need to create the equivalent of Maslow's hierarchy for business users.

The tool we found most interesting is what they call barriers and accelerators. 

We spend a lot of time examining potential barriers and countervailing trends that could impact our forecasts. This is because we've observed that most technology forecasts are overly optimistic because they don't include these.

A good example is drone forecasts back in 2014. The vast majority of these forecasts at that time simply ignored the wide range of barriers to broad adoption drones faced. 

Other examples include autonomous car forecasts, Internet of Things forecasts back in the early 2000's and again in 2010 through 2015 and pretty much all the forecasts that A.I. and automation would eliminate huge numbers of jobs by 2020 that were put out 6-8 years ago. 

In all these cases barriers and countervailing forces were either missed or ignored. So we certainly agree with Bain's inclusion of this tool.

Forecasting is obviously not easy and no one can actually predict the future. But using tools like the ones Bain suggests will help your forecasts miss by less.

From Man’s Best Friend to Family’s Favorite Child

Regular readers know we like Pet Trends here at Small Business Labs.

So we had to cover the U.S. Chamber of Commerce's article The Pet Economy Kicks Into Overdrive.

The article covers the growth of the pet economy. Key quote:

The surge in spending on pets – and explosion of new products, services and unique “experiences” to help quadrupeds and their owners bond more closely – is at an apex, tracking to break U.S. records this year.

According to the article, "the U.S. pet economy is projected to exceed $75 billion this year, up from $72.5 billion in 2018 and a doubling of 2005’s $36 billion ...".

The key reason the article gives for this growth is pretty much the same as we covered in our article in our article Pets Used to be for Kids. Now they are Kids: pet humanization.

Key quote from the article:

“What we see happening is a transition from pets being ‘man’s best friend’ to ‘family’s favorite child,’” Petco chief merchandising officer Nick Konat, told CO—. “ People want to take the best care of their pets, like they are a member of the family.” He does not view this mindset as a trend so much as a movement that’s been building over time as people integrate pets more fully into daily life — the workplace, dining, shopping and celebratory occasions."

The pet industry's growth is attracting a wide range of products and services. Our favorite from the article is Nashville's BarkPark (pictured below).

BarkPark describes itself as "an ultra-fun dog park that doubles as a hip human hangout for playing, working, and chilling."

They also claim BarkPark "is a much needed ‘third place’ for dogs".  

While we're not sure how needed a new 3rd place for dogs is, it's likely pet parents will embrace the concept.

Comparing the Risk Profiles of Independent Workers vs. Traditional Job Holders

One of the clear findings from the MBO Partners State of Independence study series is that, on average, independent workers (freelancers, independent contractors, the self-employed, etc.) and those with traditional jobs have different risk profiles. 

Simply put, independent workers are more comfortable with the risks associated with being independent than traditional job holder are. They're also are more willing to accept these risks in return for greater work autonomy, control and flexibility.

As the chart below shows (click to enlarge), 65% of those with traditional jobs think it's risky being an independent worker or running your own business versus only 18% of independent workers.

This different view on risk is reflected by what people value in terms of their work. 

Independent workers tend to value the flexibility, autonomy and control independent work provides. Traditional job holders tend to value stability and a predictable income. 

Interestingly enough, as the chart above shows both groups tend to be satisfied with their income.

That independent workers are more comfortable with risk than traditional job holders may seem obvious. 

But it's rarely discussed in the debates around independent work and the gig economy.  

Nor is the willingness of most independent workers to trade security and a predictable income for greater levels of work autonomy, control and flexibility. 

Instead the assumption by many is that most independent workers - like most traditional job holders - would prefer having a traditional job.

This assumption is simply wrong. 

40% of Americans Say They Struggle to Pay Bills

The Washington Post's ‘This doesn’t look like the best economy ever’: 40% of Americans say they still struggle to pay bills covers the fact that despite a strong job market and a 10 year long economic recovery, a lot of Americans still struggle financially.

The reason, according to the article, is this expansion has been weaker and its benefits distributed far more unevenly than in previous growth cycles, Key article quote:

This is a “two-tier recovery,” said Matthew Mish, head of credit strategy at the investment bank UBS. About 60 percent of Americans have benefited financially, he said, while 40 percent have not.

The 40 percent — which Mish calls the “lower tier” — have seen paltry or volatile wage growth, rising expenses for housing, health care and education, and increased levels of personal debt. 

The struggles of the lower tier is nicely illustrated by Intuit's recent Pursuit of Prosperity study. 

As the study chart below shows, almost half of Americans live paycheck to paycheck and have little to no savings.

Regular readers know we consider the growth of the lower tier is a key reason why more Americans are turning to highly flexible, low friction gig work to supplement their income.

This is especially true when someone is hit with a financial shock such as a job loss, health issue or unexpected major expense. 

As the Post article points out, "Half of U.S. jobs pay less than $18.58 an hour and more than a third pay less than $15, which makes it difficult to save or invest for a better future."

And without savings, people are vulnerable to financial shocks such as a job loss, healthcare issue or unexpected major expense.

In response to financial shocks like these, a growing number of people turn to gig work to generate extra income. 

We cover this topic in more detail in our Economic Uncertainty section. 

The Washington Post also has an excellent podcast interview with the article's author. 

Freelancers and Solopreneurs are Increasingly Exporters

Despite trade wars, tariffs, and the erection of other barriers to cross-border commerce, independent workers, freelancers and solopreneurs are increasingly finding customers outside U.S. borders.

As the MBO Partners State of Independence study chart below shows (click to enlarge), in 2019 22% of Independent workers who work full-time as independent workers said they provided goods or services to customers outside the U.S.

This us up from 19% in 2018 and just 12% in 2012.

The increase in exports is being driven by several factors:

• Online marketplaces have made it much easier to find and service customers outside of the U.S. They also simplify and facilitate transactions and payments.
• Collaboration software has reached the level where communicating with remote customers is easy and efficient. This has greatly increased the ability of service providers to serve customers outside of the U.S. 
• Improvements in outsourced logistics services have reduced the costs and greatly simplified the process of delivering physical products to pretty much any global destination.

We expect the trends driving the growth of exports by full-tine independent workers to continue to strengthen. Because of this, we expect the export activity by independent workers to continue to grow.

The Number of Nonemployer Businesses Continues to Grow

According to the  U.S. Census, the number of nonemployer businesses in 2017 increased to 25,701,671, up 3.6% from 2016. 

Nonemployers are businesses that have an owner, but don't have paid traditional full or part-time employees (W2 employees). The data comes from tax records.

As the chart below shows (click to enlarge), the number of nonemployers has been growing around 2.45% per year since 2010.

That may not sound like a lot of growth, but it's about 3 times the growth rate for overall employment.

We've long tracked the nonemployer business statistics. 

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

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

But we find this data a useful general indicator of U.S. self-employment.

The Recent Flurry of Gig Economy Studies

It's been a busy couple of weeks for gig economy studies. Below is a list of 4 of the recently released studies.

1. Want Your Business to Thrive - Cultivate Your External Talent: The Society for Human Resource Management (SHRM) and Success Factors teamed up for study, which surveyed independent workers, managers who hire independent works and HR employees. 

The goal of the study was to get a 360 view of external labor use by businesses. And, overall, they've accomplished that goal. 

But we admit we laughed out loud when we read their press release.

Their big finding is it's a myth that most independent workers aren't doing independent work because they can't find a job. They also found - and it apparently shocked them - that independent workers like the flexibility and autonomy they have. 

These findings have, of course, been known for many years. But it's nice to see the HR world catching up.  

2. Platform Work in the UK 2016-2019: This study is a collaboration between the University of Hertfordshire and the U.K.'s Trades Union Congress (TUC). It found the number of people in the U.K. doing gig economy work has doubled over the last three years. 

And as the study chart below shows (click to enlarge), about 10% of UK residents report using a gig platform for work on a weekly basis and almost 30% are seeking work using these platforms.

The study also found the majority of people using online platforms to find work are working part-time to supplement their income. The study report has lots of interesting data on UK gig workers.

3. Freelance Economic Impact Report: Fiverr and Rockbridge Associates teamed on this study.

Using data from the U.S. Census non-employer dataset, the study explores the size, growth and skills of the specialized knowledge worker population across the 25 largest U.S. metropolitan areas. 

This is one of the few studies that provides a city level look at independent work. It's also one of the few focused only on knowledge workers. 

4. How Well Are Independent Workers Prepared for Retirement?: From the Pew Charitable Trust, this is really an essay instead of a study. 

We're including it because it contains data on gig workers in general as well as data related to gig worker retirement savings. 

The key point of the essay is we need more data on the gig economy, something we definitely agree with.

The gig economy is clearly a hot topic, but it's also a complex topic. So it's good to see the growth in studies in this area.

Freelancers Increasing Their Use of Online Marketplaces to Find Work

One of the biggest shifts uncovered by the MBO Partners State of Independence study series is the increased use of online marketplaces to find work by freelancers and other independent workers.

As the study chart below shows (click to enlarge), in 2012 only 3 percent of full-time independent workers reported having used an online marketplace to find work in the prior 12 months.

In 2019, 24% said they had.

Relatively few (8%) report using online talent marketplaces as their primary source of work. 

But online talent marketplaces have become important secondary and tertiary sources of work. Independent workers use them to fill in gaps in their work schedules, explore new markets, find new clients and learn new skills. 

Going forward, the use of online marketplaces by independent workers will no doubt increase.

The 2019 data show 29 percent of full-time independent workers reported they intended to use an online marketplace over the next 12 months.

And as the chart above also shows, there's a strong correlation between between one year’s reported intentions and the next year’s reported usage. 

So we're very confident forecasting that next year we'll see close to 30% of full-time independent workers using online platforms to find work.

We'll continuing reporting on the findings of MBO Partners State of Independence study (we worked with MBO on this study) over the next few weeks. 

Facebook Announces Libra, a New Cryptocurrency

Last week Facebook announced Libra, a new cryptocurrency. It's designed for use in transactions and as an easy and cheap way to transfer money. 

Expected to launch next year, Libra is what's known as a stablecoin - a digital currency built to avoid the large fluctuations in value that Bitcoin and other cryptocurrencies experience.  

And unlike Bitcoin, because the value will remain relatively stable Libra will usable as way to buy things. 

While Facebook is the driving force behind Libra, it’s created a foundation that other organizations can join. The foundation will be responsible for managing Libra and Facebook will have no more control than any of the other full members.

So far 27 organizations including Mastercard, Visa and Stripe and Paypal, Uber, Lyft, Spotify, several venture capital firms and 4 nonprofits have joined as founding members of the Libra Foundation. 

It is expected there will be more than 100 members by the time Libra launches.

Facebook also announced a new digital wallet called Calibra, which will provide users a way to store and spend Libra. Expect to see many others offering Libra digital wallets.

According to Facebook the main near term market for Libra is the 1.7 billion people around the world who lack access to the banking system.

Other early likely users include people who live in countries with unstable currencies, people who want to move money across borders and people who want to buy digital goods and services (in-game purchases, for example). 

But the longer term goal is for Libra to be used for everyday purchases by everyone. This is a goal Bitcoin and other cryptocurrencies have failed at, primarily because their value fluctuates so much.

It will be years before we know if Libra will succeed as common medium of exchange, but the broad organizational support Libra has attracted certainly makes success possible.

In the past we’ve suggested small businesses stay away from cryptocurrencies. We think Libra easily could be different.

Although unlikely to be an important payments option for most small businesses in the developed world anytime soon, it should be easy to add it as a payments option post launch.

So Libra will be worth looking at when it launches. 

More Freelancers Feeling Secure

MBO Partners released their 2019 State of Independence study this week.

This is the 9th year of this ongoing study, which provides an in-depth look at American's independent workers (freelancers, independent contractors, self-employed, etc.). Emergent Research works with MBO Partners on this study. 

The study covers a lot of ground, but we think one of the key findings is how independent workers view the security associated with independent work.

As the study chart below shows (click to enlarge), in 2019 a bit over half (53%) of full-time independent workers reported they feel more secure as independents than they would if they had a traditional job.

This is up from just 32% saying they felt more secure in 2011. 

When we ask in interviews why independents in this group feel more secure, we consistently hear 3 things:

1. Because they are in control of their work and business, they feel more secure than being at the mercy of a employer and a boss. 

2. They feel having multiple clients and/or streams of income is more secure than relying on a single source of income.

3. Due to layoffs, company failures, changes in corporate directions and a broader lack of corporate loyalty to their employees, they feel traditional jobs aren't secure and by comparison independent work is more secure.

In addition to the reasons above, there are several more reasons the percentage who feel more secure as independents has increased.

The strong economy has made is easier to be a successful independent worker. Independent work is also more socially and culturally acceptable than it was a decade ago. This makes independent work look better in general. 

Another factor is the strong job market has allowed independent workers who would prefer a traditional job (we call them "reluctant independents") get a traditional job. 

This has led to a decline in the share of full=time reluctant independents from 34% in 2012 to just 19% in 2019. 

Reluctants are much less likely to feel independent work is more secure. So the reduction in their share increases the share who feel independent work is more secure.

One of the biggest reasons people don't pursue independent work is they consider it too risky and insecure. For the reasons listed above, this is starting to change - especially since traditional jobs are increasingly viewed as insecure.

We'll have much more on the MBO Partners State of Independence study findings over the next couple of weeks. 

Most Small Businesses Still Have Less Than $400,000 in Annual Revenue.

According to data from the U.S, Census 2016 Annual Survey of Entrepreneurs (the most recent data available), the median U.S. employer small business (those with paid traditional employees) generated less than $400k in revenue in 2016.

Our title includes the word "still" because we posted on this data back in 2016, when 2014 data was most recent available.

An alert reader asked if there was more recent data. And as the chart below shows, there is.

But it hasn't changed much in the past two years.

The median small business still had receipts of about $390,000 in 2016 and about 4 in 10 (39%) had less than $250,000.  Only about one quarter (27%) of small businesses generated more than $1 million in revenue.

Uber and Lyft Offer to Compromise Over Driver Concerns

Yesterday the CEO's of Uber and Lyft published an op-ed in the San Francisco Chronicle offering to support efforts to improve the working conditions, wages and rights of their drivers. 

The offer is in response to a bill in the California legislature that would make it much more difficult for companies to classify workers as independent contractors. 

The new legislation would codify a ruling by the California Supreme Court in the Dynamex case.

The key part of the ruling is that contract workers should be classified as employees unless they are conducting “work that is outside the usual course” of the company’s business.

This is a very broad legal standard that if strictly interpreted would impact a lot of independent contractors. 

Uber, Lyft and pretty much all the gig economy companies (and most other companies) have been lobbying against this legislation. Labor unions, worker rights organizations and others have been lobbying in favor.

This Chronicle article nicely summarizes the views of both sides.

In their op-ed the CEO's argue making their drivers employees would cut their flexibility, which is something drivers value. Key quote:

“Very few jobs allow you to start or stop working whenever, wherever, as often as you want ...”

We agree and our research has consistently found rideshare drivers highly value the flexibility provided by this type of work. Our research has also consistently found the vast majority of rideshare drivers do not want to be employees. 

However, we also agree that rideshare drivers and other gig workers deserve better protections than they currently have.

The obvious answer is the creation of portable benefits (see this recent report from the Aspen Institute on portable benefits for more details).

But portable benefits has been a hot topic in DC for years, yet there has been little to no progress on making them happen. 

We think forcing rideshare drivers to be employees will benefit the small share of drivers who are full-time and don't value flexibility. 

We also think it will hurt the vast majority of drives who value flexibility. It will also hurt consumers because it;s likely prices will go up and driver supply will go down.

We've posted in the past on our view that traditional W2 employment cannot provide the flexibility that many are looking for, so we won't bother covering it again.

But we will end with our summary quote from our prior post:

We think companies can provide more flexibility than they currently do. But we also think they are unable both legally and culturally to provide the same level as independent work does.

Bankrate's Side Hustle Survey

Interesting survey resluts from Bankrate on side hustles.  According to their findings:

• nearly half of working Americans (45 percent) surveyed reported having a side gig in addition to their primary job. 
• 48% of millennials, 39% of Gen Xers and 28% of Baby Boomers reported having side gigs.
• side giggers worked an average of 12 hours per week
• side giggers earned an average of $1,122 per month

One quick note on earnings, 60% of the respondents reported earning less than $500 per month, so the average is swayed by a relatively small number of respondents reporting earnings greater than $2,000 per month.

As the study chart below shows, "3 in 10 working Americans with a side hustle say they need the extra income to help cover the cost of regular living expenses."

So as Bankrate points out, even though we have a strong economy a lot Americans are living paycheck to paycheck and just getting by. And a decent chunk are just getting by thanks to a side gig.

Outdoorsy - An Aribnb for RVs

Outdoorsy claims to be the largest recreational vehicle (RV) rental marketplace. And we certainly don't know of a bigger one. 

RV owners use Outdoorsy to rent their idle RVs to people who want to hit the road but don't want to own an RV themselves.

So think of Outdoorsy as an Airbnb for things that roll that you can sleep in. 

Outdoorsy nicely illustrates several trends we follow:

Asset Monetization: Just as Airbnb allows people to turn their home into income, Outdoorsy does the same for RV owners. 

Digital Nomads: These are folks who have a location-independent lifestyle that allows them to travel and work anywhere they can plug into the Internet. 

While the digital nomads that tend to get the most press are the ones that travel internationally, a growing number hit the road domestically in RVs and camper vans. Outdoorsy is obviously a good way for people to try out a nomadic lifestyle. 

Platforms supporting microbusinesses: Outdoorsy recently announced a vehicle purchase program geared towards very small RV rental businesses. With this program even a solopreneur can more easily start an RV rental business. 

And, of course, owners who rent out their RVs are creating a source of self-employment income.

Outdoorsy's short video below nicely describes the company.

"The Venture Capitalizaton of Belonging"

Fast Company's Social clubs died out in America. Now, venture capital is bringing them back provides an interesting look at the changing landscape of American social clubs.

The article starts by pointing out the long decline in the membership of traditional clubs. Key quote:

"Over the last few decades, sociologists and political scientists have found that American clubs of all stripes–from youth service clubs to bowling leagues–have experienced steep declines in their memberships. ... The Freemasons has lost 3.8 million members since the late 1950s. The Elks ... has seen its membership drop from 1.6 million in 1980 to 803,000 in 2012. The Rotary only has 330,000 members now and only 10% of them are under 40."

It then covers various kinds of new types of clubs that are mostly in urban areas and cater to those with relatively high incomes:

"These are stylishly designed, members-only spaces that often come with a high price tag, thereby limiting membership to the wealthy and privileged. There are social clubs like Soho House, Spring Place, and the Battery, which serve as gathering spaces for well-heeled professionals.

There are special-interest clubs like The Cultivist, which, for $2,200 a year, gives art-lovers access to museums and galleries without the hassle of making bookings. There are private gyms like Equinox and Peformix House where you can work out with celebrity coaches using top-of-the-line equipment. There are beautiful coworking spaces like WeWork, the Wing, and the Riveter."

The broader point of the article is that the new wave of clubs need to charge high prices because they are ventured backed, have lots of amenities and high costs. This is very different from the traditional grass roots, self-organized clubs where membership is either cheap or free. 

Our favorite quote is final sentence in the article:

"But we need to ask ourselves: Are we, as we are building community, creating a Tocquevillian society full of associations, or are we creating the Gilded Age of Louis the 14th.”"

Good question - and one that can easily be asked more broadly about income equality in America.

We've long covered the shifting nature of social clubs. This is due to our coworking research.

We've also dug into the topics of loneliness and belonging. This is because solopreneurs, remote worker and home-based workers report loneliness and lack of belonging among their biggest work challenges. We also look at these topics because of the community building aspects of coworking.  

Because of this, we've been exposed to some fascinating work on these topics.

A great example is the How We Gather project, which is a collaboration between Harvard Divinity School, the Fetzer Institute and the On Being project. 

It's an extension of a Harvard Divinity School report that looked at declining church membership.

It too is called How We Gather and it has become a very influential paper on this topic.

It also inspired coworking pioneer Tony Bacigalupo to create The Gathering Summit, which is an online conference that brings together community builders from all over the world to learn from and support each other.

The list of presenters at the Gathering Summit is a who's who of the experts these topics. So if you're interested in this area, visit the Gathering Summit homepage. 

The need for belonging and community is part of being human and it impacts many aspects of our lives and work. Included are impacting the future of work, the future of small business and the future of self-employment and the gig economy.

So we will continue tracking and reporting on this topic.