Small Business Labs

Betting on Fusion Energy

Tech Crunch's Y Combinator and Mithril Invest in Helion, A Nuclear Fusion Startup covers a $1.5 million investment in Helion, a nuclear fusion startup.

What makes this really intriguing is Helion's claim that it can produce, in 3 years, a fusion generator that's:

"1,000 times smaller, over 500 times cheaper, and realizable 10 time faster than other projects."

They go on to say they will be able to generate electricity for less than 4 cents per kilowatt hour.  

What makes these claims so bold is most observers believe fusion energy is several decades and many hundreds of billions of dollars of investment away from becoming commercialized.

The infographic below is from Helion's website and explains their approach.  

All I can say is "wow".  If this happens, we would have a non-polluting, low cost energy source with an unlimited amount of fuel. This would fundamentally change the world.  

While this seems fanciful at best, Nature's article Plasma Physics: The Fusion Upstarts seems to imply firms like Helion may be able to do this over the next decade or so.

It's Not Just Cloud Price Wars Driving Usage

The cloud storage price wars being waged by Google, Amazon, Microsoft have been getting a lot of press this summer.  

As the chart below from TechCrunch's Cloud Storage is Eating the World Alive shows, since March of this year the cost per gigabyte of cloud storage has fallen by more than 50%.

As the article points out, the current price is not far from $0.  

But the price declines are not just limited to storage. Amazon, for example, recently announced price cuts ranging from 28% and 51% across a variety of their Amazon Web Services (AWS) cloud product line.

Cloud application vendors are also joining in.  Splunk, a cloud based data analytics service, recently cut their prices by 33%. 

And Google is telling everyone to expect price declines to continue.  

These cost reductions are leading to more small businesses (and consumers, and big businesses) migrating to the cloud. But it's not just price reductions driving this trend:

• The shift to mobile computing is increasingly requiring cloud storage so files are easily available across multiple devices and geographies.
• Growing numbers of applications are cloud based due to the use of large datasets or the need for computing horse power. Use of these cloud apps are exposing more businesses to the cloud.
• increasing collaboration across teams, geographies and organizations is leading to the growing use of cloud based collaboration tools.
• Cloud uptime and reliability are improving, reducing concerns about the use of cloud applications.

These factors largely explain why we believe the cloud is a transformation technology for small businesses. We explain this in the Intuit presentation Small Business Success in the Cloud.

Y-Combinator Goes Freelance

Last week was Demo Day for Y-Combinator's summer batch of startups.  

For those not familar with Y-Combinator, it's the most successful startup accelerator in the U.S. According to their website, since 2005 over 700 startups have gone through their program and today these firms have a combined market valuation of over $30 billion.

Well known grads include Dropbox, Airbnb and Reddit. Only 3% of the startups that apply to their program are accepted.  

The program lasts 3 months and culminates with Demo Day, when the 70 or so participating startups each get 2.5 minutes to pitch their companies to potential investors.  

A wide variety of startups are chosen to be in the Y-Combinator program, everything from biotech to Internet apps to even a couple of companies working on nuclear energy. 

This summer's class included quite a few companies focused on independent workers. There were a number of online talent marketplaces as well as several firms focusing on services for independent workers.  

Examples include:

Bayes Impact - marketplace linking data scientists to non-profits

Bannerman - marketplace for bouncers and security guards

Lawn Love - marketplace to hire lawn care professionals

Unwind Me - marketplace for massage professionals 

Traction - marketplace connecting freelance marketers to brands

Zen99 - provides HR support for freelancers

Tiempo Labs - provides invoicing and time management solutions for freelancers

This much attention from Y-Combinator is a clear signal that Silicon Valley believes the economy is shifting towards more independent workers.  

The Rise of Digital Nomads

Yahoo Travel's The New Digital Nomads - Run Your Business From Anywhere in the World covers the growing trend towards people professionals who are choosing a location-independent lifestyle that allows them to travel and work anywhere in the world.

The Internet and a growing array of telework and online collaboration tools are the key enablers of the digital nomad lifestyle.  

As long as they can find a decent Internet connection, laptop carrying nomads can work pretty much anywhere.

Digital nomads who travel to exotic locations get most of the press, but more and more people are also taking advantage of telework tools to take long weekends away from home, live temporarily near relatives and live full or part-time where they want to live instead of where their job is.

This really hit home to us on a recent trip to Portland. We met a lot of people who telecommute to other cities. They do this so they can live in Portland.

We also met people who spend their summers in Portland, but move to warmer, drier places instead of enduring Portland's dreary winters.  Unlike the classic retired "snow birds" who fly south in droves for the winter, the people we met are still in the workforce.

A couple of interesting statistics from our research shows how widespread the digital nomad movement could become:

• 22% of all independent workers surveyed reported less than 10% of their revenue came from their local area.
• 14% reported that none of their revenue came from their local area.

Obviously, a large share of independent workers are effectively teleworkers and potential digital nomads.

While the digital lifestyle is not for everyone, we expect more people to choose this path. The oDesk blog has an interesting series of videos on digital nomads.

Encore Career Study Findings - More Encore Small Businesses

Encore.org is an organization focused on encore careers, which they define as "post-midlife work or pro bono service to meet community needs". Their tag line is "second acts for the greater good". 

They go on to say that encore careers combine personal fulfillment, social impact and continued income, enabling people to put their passion to work for the greater good.

Their primary target market is aging baby boomers and their goal is help this group transition to social service work as they enter the traditional retirement years.

The recently released the results of their 2014 Encore Career survey of Americans aged 50-70 there were a number of interesting findings related to small business formation by aging baby boomers: 

- 25 million Americans in this age group are interested in pursuing encore careers.

- A whopping 73% of respondents who said they were interested in pursuing encore careers said they very interested (33%) or somewhat interested in starting their own encore business (40%).

- 28% of the 4.5 million Americans already in encore careers are self-employed. 

- The average age the survey respondents plan to retire is close to 70. This is the average for all Americans in this age group. The average expected retirement age for those already in encore careers is 73.

While only a small percentage of those who said they are interested in starting an encore small business will do so, it's clear from this survey there will be a steady stream of new small and solopreneur encore businesses formed in the coming years.

On-Call and Fixed Contract Work Becoming More Common

The New York Times article Working Anything But 9 to 5 covers the impact of erratic work schedules on low income parents.

The erratic schedules are due to labrometrics systems, which the article nicely describes as “software that choreographs workers in precise, intricate ballets, using sales patterns and other data” to figure out how many employees are needed day to day and hour by hour.  

In other words, labormetrics systems are being used to turn traditional employees into on-call workers, who may or may work on a given day. Key quote from the article on the impact of these erratic schedules:

Yet those advances are injecting turbulence into parents’ routines and personal relationships, undermining efforts to expand preschool access, driving some mothers out of the work force and redistributing some of the uncertainty of doing business from corporations to families, say parents, child care providers and policy experts.

Our workforce surveys and interviews have shown a clear increase in the number of on-call workers over the past 5 years.

We expect the number of on-call workers to continue to grow - the economics of labormetric system are simply too strong for their use not to expand.

Another group with alternative work relationships with their employers are people who work on fixed term contracts.  Once limited to athletes, movie stars and senior executives, fixed term contract positions have become much more common across the economy.

For example, consulting firms and financial organizations now commonly hire people on contracts that run out in 2-3 years or less. 

And these types of relationships are spreading to other industries.

Reid Hoffman, LinkedIn's founder, calls these types of assignments "tours of duty" and suggests 2 year contracts are the best type of employment relationship.

People working on-call and on fixed term contracts are mostly counted as traditional employees in government statistics.

But these people know they aren't traditional employees. In interviews they self-describe as independent workers who move from gig to gig.  Because of this, we include them as independent workers in our studies.  

This group is an example of the growing number of people dealing with increased economic uncertainty, which is one of the key forces leading to The New Entrepreneurial Mindset.

Adapting To Versus Adopting Cloud Computing

The recently released Intuit dispatch Small Business Success in the Cloud includes the following forecast:

Nearly 80 percent of U.S. small businesses will be fully adapted to cloud computing by 2020, more than doubling the current 37 percent rate.

We've gotten a lot of questions about this forecast, so we thought we would explain it in more detail (Emergent Research worked with Intuit on this study). 

 

For the purposes of this forecast, "fully adapted to cloud computing" means being completely or very confident using cloud tools to manage a business. 

We chose this metric because we felt cloud adoption was not an informative statistic. This is because most small businesses use the cloud for at least some tasks and especially email and social media.  

But despite relatively high cloud adoption rates, relatively few (37%) small businesses report being confident using the cloud to manage their business.

And if small businesses aren't confident about the cloud, they won't change their behaviors due to the cloud or fully embrace the cloud's capabilities. 

But those who are confident will adapt their businesses to the cloud. This means not only embracing the full range of cloud computing's capabilities, but also potentially doing things in new and innovative ways. 

To get at this information, Intuit recently surveyed small business owners with 50 or fewer employees. Below is the key survey question and the responses.  

As you can see from this data, 37% of respondents said they were completely or very confident in their use of web tools. We call this group "fully adapted". 

We're forecasting the "fully adapted" group will grow to 78% by 2020.

This forecast was done by looking at the small business diffusion rates of other technologies (online banking, ecommerce, mobile payments, etc.) and factoring in the vendor pressure to move to the cloud (few new products come in non-cloud forms) and the increasing speed technology is adopted. 

We are strong proponents of the use of behavioral data and metrics as forecast tools. We think this type of information provides deep insights on the likely impacts of a new trend, shift or technology.

Two Views of Independent Work in the Sharing Economy

Two articles with very different points of view on work in the sharing economy were published this weekend.

The New York Times article In the Sharing Economy, Workers Find Both Freedom and Uncertainty presents an unflattering view. Key quote:

... peer marketplaces as part of a larger global phenomenon, in which labor brokers encourage people to work on contingency without basic employment benefits or protections. The companies essentially channel one-off tasks to the fastest taker or lowest bidder, he says, pitting workers against one another in a kind of labor elimination match.

Tech Crunch's Algorithms Are Replacing Unions as the Champions of Workers describes sharing economy work in almost utopian language:

Through labor marketplaces and mobile apps, we are creating a world where workers are fundamentally in control of their economic lives ... The algorithm today could do for workers what unions did in the 19th century: provide a vastly improved market for work, one that is simultaneously more convenient, safe, and lucrative. 

So who's right?

Both and neither, depending on how you look at it.  

In our interviews, surveys and focus groups independent workers almost always describe what we call the yin and yang - or two sides - of independent work (freelancing, self-employment, etc.).  

They tell us they love the autonomy, control and flexibility working independently provides. At the same time, they tell us they are challenged by the stress, uncertainty and insecurity.  

For most independent workers, the good outweighs the bad and the majority report they prefer being independent.

For example, the survey work done as part of the multi-year MBO Partners State of Independence studies consistently shows a bit more than half of all independent workers prefer being independent and do not plan to seek traditional employment.  

But these surveys also show about a quarter of independent workers don't like being independent and would prefer having a traditional job.  The rest are on the fence.

The key factor indicating whether or not someone prefers independent work is how much work autonomy, control and flexibility they believe they have.

If they report being happy with their levels of work autonomy, control and flexibility, they generally report preferring independent work. If they report being unhappy with these, they generally tell us they would prefer traditional employment.

So both points of view about independent work presented in these articles are valid, but incomplete. This is common for this topic.  

The more nuanced and accurate view that independent work is both good for most and bad for many rarely shows up in the media.

TJ McCue's Excellent 3D Printing Adventure

TJ McCue is crisscrossing the country in a an RV exploring the world of 3D printing. How cool is that!

According to his trip website, over 8 months TJ will make hundreds of stops with the goal of:

... exploring the cities, towns and off-the-path byways to uncover a fundamental change in the way things are designed and made, and how this is bringing radical change to business and to society at large.

At each waypoint, we are celebrating the creative process, while illuminating the impact of design through firsthand customer stories, consumer creativity and student innovations. 

For those not familiar with TJ, he's a 3D printing expert and a key resource we turn to for information on all things 3D printing and small manufacturing.  

TJ is reporting on his trip through a series of articles on his website. His most recent stop was at the Maker Space Artisan's Asylum, which is located in Somerville, MA. Key quote from his article on this stop:

In every makerspace I have been in or talked to, the core essence is always one that says, “Let’s figure this out together.” Some have called the maker movement a DIY (do-it-yourself) movement, but it is often far from a solo endeavor -- it is DIT - Do-It-Together. 

Anyone interested in 3D printing, manufacturing in general or future trends should be following TJ as he travels the U.S.  

You can follow TJ on Twitter and his trip hashtag is #3DRV.

The New Entrepreneurial Mindset

The economy is clearly changing and to better understand these changes Emergent Research (that's us) and Intuit partnered on a year long study examining these shifts, the trends driving them and their impact on the small business economy.

At a very high level, the major trends driving small business change are:

Socio-economic uncertainty: Demographic, economic and social shifts - as well as automation and global competition - are leading to fewer “good jobs”, income inequality and increasing job insecurity, pushing more people to consider full or part-time self-employment or small business ownership. 

Technology: new infrastructure is enabling new business models, making it easier to reach and serve niche markets and reducing the costs of starting and operating a small business.

Platforms and Marketplaces: The growing number and use of marketplaces (Etsy, AirBnB, etc.) and business platforms (tech and financial industry partner programs, etc.) are enabling new forms of small business and allowing many more people to become full and part-time micropreneurs.

Customer Needs: Consumers are now more interested in supporting local businesses as well as buying unique and/or customized products. This creates more niche small business opportunities. Businesses are also more interested in working with small businesses and increasingly hiring independent workers.  

These shifts are touching everyone at all points in the economy. It is a time of both great anxiety and great opportunity. There is both less security and more freedom. 

In this new landscape, many people are re-imagining the idea of small businesses to create new, innovative models that work for their needs. The result is something we call The New Entrepreneurial Mindset.

Over the coming months we will be releasing a series of reports, presentations and videos covering the full findings from The New Entrepreneurial Mindset study.

The first of these is Small Business Success in the Cloud, which we posted on yesterday. This looks at how cloud computing is transforming the small business economy.