Small Business Labs

The Appification of Small Business

The Appification of Small Business is a new research report from Intuit shows the extent to which small businesses have moved to the cloud, a trend they forecasting to continue (disclosure: Emergent Research contributed to this report).

Key findings include:

• The small business market is a lucrative developer opportunity – Small business owners currently spend $630 annually on software solutions, In addition, 85 percent of small businesses are willing to invest more in the next five years.
• The center of the small business cloud is financial management – On average, small business owners spend four hours a day online running their business. The top three online activities are: bookkeeping and accounting (65 percent), generating invoices and or accepting payments (65 percent) and managing existing customer relationships (58 percent).
• Small business owners want seamless integration between solutions – four out of five (81 percent) small business owners say it is important that the different software solutions they use work seamlessly together. Increasingly this includes mobile solutions, with nearly half (43 percent) of small business owners using a smartphone as the primary device to run their operations.

The report chart below illustrates how big this opportunity is.

        

The Rise of the Dependent Contractor

It seems like every day there is a new article slamming sharing economy platforms and marketplaces for their labor practices. Recent examples include:

• NPR's In Sharing Economy, Labor Laws Fall Short 
• US New's The Not So Nice Sharing Economy
• SF Weekly's Codependent Contracting: Couriers Demand App Company Accountability
• Former Labor Secretary Robert Reich's How the New Flexible Economy is Making Workers Lives Hell

I could easily list many more negative press examples from the last few weeks.

The reason all of this is happening is our labor laws have not kept up with changes in technology or changes in the economy. Simply put, more and more workers don't fit existing labor classifications. 

Key quote on this from the NPR article:

When it comes to the future of the growing “sharing economy,” things are far from clear. Two California juries are set to decide cases that could have wide-ranging implications on the industry that has grown up around Uber, Lyft, and other car-hire services.

Plaintiffs allege that the companies treat drivers as independent contractors even though they should be considered full employees, which would require Uber to provide sick days, health insurance and other benefits. Judge Vince Chhabria, who is presiding over the Lyft case, wrote that the jurors “will be handed a square peg and asked to choose between two round holes.”

Chhabria wrote that because he believes the labor laws, which employ legal tests to determine whether a worker is a contractor or an employee, are outdated.

It seems all of this will only calm down once our laws are updated. This will not be a quick or easy process. 

But there is a rapidly growing view that there needs to be a 3rd labor classification for workers who fall between clear-cut employees and traditional independent contractors. 

The term used to describe this 3rd class is dependent contractor.

The idea is to provide these workers some but not all of the protections of the traditional employee. Other countries, including Canada and Germany, already have labor laws covering this type of employment.  

Driven by the controversy around employment in the sharing economy (especially Uber and Lyft), we expect similar laws to start to be enacted in the U.S. over the next 18 months.

Labor laws are not easily enacted, so this is a very aggressive forecast. But this issue is not going away and expect growing pressure on governments and public officials will force fast movement.  

Yet another reason it's a great time to be a labor lawyer.

Seth Godin's Freelancer Course

I can't imagine any clearer signal that the freelance economy is happening than having one of the most successful business authors of past decade or so - Seth Godin - release a training class on becoming a freelancer.

The class is available on Udemy at a cost of $57.  

According to an interview with Godin on the Gaping Void blog, here's reason he's done this course:

This is the golden age for freelancers. More opportunities, more tools, more leverage than ever before. But for many freelancers, there’s a big “but”…

If you are a freelancer, it may be that you’re underappreciated, underpaid and merely a cog in a system that disrespects you.

And it might be your fault.

This is a focused check up from the neck up, a chance to understand how to work your way up as a freelancer, by making hard choices and digging deep into the choices that matter. 

I haven't had a chance to go through the course, but the guy's written 18 bestsellers. I think it's safe to say the course is good.  

2.7 Million Independents Work in the On-Demand Economy

According to a new report from MBO Partners - Independent Workers and the On-Demand Economy - about 2.7 million American independent workers report using at least one on-demand economy platform or marketplace as a source of work or income.

The study defined the on-demand economy as including:

• online product marketplaces provided by firms such as EBay, Amazon and Etsy and others (Craigslist was excluded).
• Online talent marketplaces such as Freelancer.com, Elance - oDesk, and others
• Sharing economy platforms and marketplaces such as Uber, Lyft, Airbnb, TaskRabbit and others

The online product platforms were most popular, with about 2.2 million U.S. independent workers reporting using them to generate income over the past year.

The online talent marketplaces came in second, with about 900,000 using them to generate work and the sharing economy platforms came in 3rd, with about 500,000 using them.

The majority of on-demand economy workers said they worked part-time (83%) and most (63%) said they did this type of work to supplement their income.  

Independents working in the on-demand economy report strong satisfaction levels with 79% reporting they are either highly satisfied (61%) or satisfied (18%) with their work.

Only 9% reported being dissatisfied.

As the report chart below shows, almost half of those reporting working in the on-demand economy are millennials (ages 21-33).

    

Click here for the full report.

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

Coworking in India

I'm just back from a trip to India where I had the opportunity to visit several coworking spaces. Coworking in India is growing quite rapidly, with more than 100 spaces across the country and new spaces popping up on a regular basis.  

A recent Quartz article, India’s freelance boom is creating a crop of creative co-working spaces, nicely summarizes why this is happening:

In a country with the youngest population in the world, and an economy in constant flux, millions are bucking traditional companies and corporate-ladder-climbing to work independently. India is the second largest player in freelancing after the US, according to Elance, an online service that connects freelancers to projects, with average earnings of about $15 per hour and rising. Freelancer.com, one of the world’s largest freelance hubs, reported that even back in 2012 more than one-third of their 3 million users were Indians.

There's also a rapidly growing startup community in India. These startups need space and commercial offices are both hard to find and expensive in most of India's cities. This is leading to a rapidly growing number of spaces catering to startups.

Our overall reaction to coworking in India is that it's very similar to coworking elsewhere in the world.

Just as elsewhere in the world members are looking for a supportive community, networking and educational opportunities, an office infrastructure (especially excellent Internet service) and to be around like minded people. 

This comes as no surprise to us - the needs of the globally growing numbers of startups and independent workers are universal. This is why coworking has become a global phenomenon.

One of the coworking facilities we visited was The Hive (pictured below). It's located in a three-story mansion in the Bandra neighborhood of Mumbai (used to be called Bombay).

Bandra is an trendy, artsy area and many of the residents work in the entertainment and creative fields. It's a good place for Bollywood movie star spotting.

The HIve reflects this by being both a coworking space and an entertainment venue. The night we visited they were having standup comedy, but they also do music and dance events. 

Bombay Connect, also located in Bandra, is a more traditional space and houses mostly independent workers.

We expect coworking in India to continue it's rapid growth in the near future. In addition to rapidly growing local demand, we expect many places in India to become more popular with digital nomads.

Places like Rishikesh, considered the birthplace of yoga and where the Beatles went for spiritual instruction, are bound to attract digital nomads looking for a great location and a low cost of living.

Here are a couple of other articles on coworking in India:

Tech in Asia on 6 Coworking Spaces in Mumbai

Inc42's Top 28 Coworking Spaces in India

E27's 32 Top Coworking Spaces in India

The Shoe That Grows - Small Business Innovation in Action

The Shoe That Grows is a simple and clever solution to a massive problem - providing children in the developing world with inexpensive, long lasting shoes.

Ill-fitting or the lack of shoes is a big problem. 

Over 2 billion people in the world suffer from soil-transmitted parasites and diseases. 

Add in injuries and other issues that come from not wearing shoes or wearing shoes that don't fit and it's clear there's a need for this kind of product.

The Shoe That Grows addresses this problem by providing inexpensive footwear that expand through a simple system of buckles, snaps, and pegs.

It adjusts across five sizes and last five years – providing better protection and better health for children.

The reason we are covering this product is it's a really interesting example of small business innovation. 

The inventor is a guy named Kenton Lee (pictured). He came up with this idea while working in an orphanage in Kenya.

He pitched it to a number of shoe companies, but none were interested.

So he created his own non-profit to produce the shoes.

We've long been fascinated by how small businesses innovate. Our 2009 study - Defining Small Business Innovation - defined 6 attributes that enable small businesses to innovate.

These are:

• Personal passion: Personally invested, most small business owners are willing to try new approaches to make their business more successful.
• Customer connection: A deep and direct relationship with the market and customers helps small businesses understand customer needs, identify new opportunities, and fix problems quickly and efficiently.
• Agility and adaptation: Unlike large corporations, small businesses can quickly adapt to changing market conditions and implement new business practices.
• Experimentation and improvisation: When pursuing new opportunities, many small business owners and managers aren't afraid to experiment and improvise, accepting failure as part of the path to success.
• Resource limitations: Small businesses are adept at doing more with less. And these resource constraints lend to their innovative mindset. 
• Information sharing and collaboration: Small businesses traditionally rely on strong social networks to share information and inspire innovative thinking.

The Shoe That Grows is an excellent example of these enablers in action.  

By the way, the shoe is so popular they're sold out until July. 

Dogs Helped Humans Outcompete Neanderthals

Really interesting review of the book The Invaders in the Wall Street Journal. The book argues that humans and their dogs outcompeted Neanderthals, leading to their demise. 

Homo sapiens arrived in Europe about 40,000 years ago. It appears they quickly domesticated wolves, who helped them hunt and defend their camp sites. 

 

According to the book, this partnership turned humans into "super predators" that drove the dog-less Neanderthals to extinction.

Scientists have long debated what happened to the Neanderthals. They were in many ways much better suited for living in Europe than Homo sapiens.

They were bigger, stronger and more able to deal with cold weather.  Recent research also shows they were also intelligent. 

All of this has increased the debate around how Homo sapiens were able to outcompete Neanderthals. Dogs may have been the reason.  

This book is part of a fairly new field called "invasion biology", which is the study of invasive species and their ecological impact.

Man, of course, is the most invasive of all species. Its partnership with dogs - the Fido Scenario of human evolution - may be one of the keys to our evolutionary success. 

We have fun with pet trends and all the silly things that go with it. But this research shows that dogs may not only be man's best friend, but also an important evolutionary partner.  

Coworking and the Blending of Work and Life

We quit using the term "work/life balance" many years ago. It simply doesn't fit the world most of us live in.

Instead, we started using "work/life flexibility". This term fit what we were hearing in our interviews and seeing in our survey results. People consistently tell us they want to be able have some control over where, when and how they work.

But even this doesn't really describe what's going on. What we are increasingly seeing and hearing is the traditional demarcation between work and home is going away. Replacing it is a new normal where work, home and life are much more seamlessly blended.  

The Harvard Business Review article Work-Life Balance Isn't the Point covers this shift. Key quote:

... work and personal life should be allies and that participation in multiple roles, such as parent, partner, friend, employee, can actually enhance physical and psychological well-being — especially when all of the roles are high quality and managed together.

We clearly see the blending of work and life in our research on coworking spaces and their members. Some spaces, like the creative industry focused Neuehouse, even stress their role of providing spaces that blend social and work activities.

The picture below, from Neuehouse's website, illustrates this.  

Alex Hillman, of the coworking space Indie Hall, has long said coworking facilities are in the happiness business - which is another way saying blending work and life. His slideshare presentation How We Measure Success of Our Coworking Space contains much information supporting this point of view. 

We're in the process of finishing up research project on this topic and we'll be releasing our results in May at the GCUC coworking conference.

But it's clear from our preliminary analysis of the results that work/life blending is common among coworking members.  

The Myths About Working in Retirement

A good study from Merrill Lynch on working in retirement is nicely covered in the Fast Company article The Real Reasons More People are Working in Retirement.  

The study covers in detail what they call the 4 Myths of working in retirement. According to the study summary, these are:

Myth 1: Retirement means the end of work. Reality: Over seven in 10 pre-retirees say they want to work in retirement. In the near future, it will be increasingly unusual for retirees not to work.

Myth 2: Retirement is a time of decline. Reality: A new generation of working retirees is pioneering a more engaged and active retirement—the New Retirement Workscape—which is comprised of four different phases: (1) Pre-Retirement, (2) Career Intermission, (3) Reengagement and (4) Leisure.

Myth 3: People primarily work in retirement because they need the money. Reality: This research reveals four types of working retirees: Driven Achievers, Caring Contributors, Life Balancers and Earnest Earners. While some work primarily for the money, many others are motivated by important nonfinancial reasons.

Myth 4: New career ambitions are for young people. Reality: Nearly three out of five retirees launch into a new line of work, and working retirees are three times more likely than pre-retirees to be entrepreneurs.

These findings are very consistent with our work looking at Baby Boomer and Mature (aged 68+) independent workers.   

We cover this topic in more detail in various articles in our Baby Boomer category.

The Pet Sitting Dog Fight

Seattle based Rover.com, a site that connects dog owners and sitters, recently announced a $25 million funding round led by Technology Crossover Ventures.

This brings the total amount raised by Rover to $50 million across 4 funding rounds.

Other investors in Rover include Menlo Ventures and actor/tech investor Ashton Kuchar.

It also sets Rover up for a dog fight with the other dog sitting startup, DogVacay.

They've raised $47 million from VC powerhouse Andressen Horowitz, Sherpa Ventures and others. 

Both firms offer a list of pre-screened pet-sitters that can be sorted by geography and availability, similar to how Airbnb’s offers lodging for humans.

Both charge an average of about $30 per day for doggie vacation stays.

The market research firm IBISWorld says that U.S. pet owners will spend $2.7 billion boarding their animals this year, so there's definitely a big market to go after.

The pet industry continues to grow faster than overall economy with he main driver being pet humanization, the trend towards people treating their pets as family members. See our Pet Trends category for more on this topic.