Intuit CEO Brad Smith's article How On-demand is Ushering in a New Era of Entrepreneurship covers a very important and under appreciated benefit of the on-demand economy - it reduces the friction and risk associated with starting a business.
"Friction", in this case, means the amount of time, effort and money associated with getting a business going. On-demand economy platforms (Etsy, Upwork, Uber, etc.) reduce the need for all of these resources.
They also assist by providing access to customers, one of the biggest challenges associated with starting any business.
This reduction in the need for resources coupled with access to customers greatly reduces startup risk.
Key quote on on-demand platforms:
They de-risk the proposition of starting your own business – with these “businesses of one” using on-demand work to generate income in service to financing themselves, or finding customers at the push of a button. The entrepreneur becomes “the product,” with the on-demand platforms providing the connection to a pool of potential on-demand customers. This stunning ease-of-entry would have been impossible five years ago.
This does not mean things are easy or there aren't challenges - and the article covers the main ones:
Current infrastructure and policies – in areas ranging from taxes and healthcare to rent and home mortgages – are designed for people with steady paychecks. The new breed of on-demand entrepreneurs don’t fit into this rigid system. They often experience irregular streams of income from a variety of sources. Taxes can be a nightmare, and many are unclear about their annual and quarterly tax obligations. To help these new entrepreneurs grow and thrive, we must create more flexible systems.
The on-demand economy also reduces the friction associated with getting and doing a part-time job.
On-demand jobs can be arranged in a matter of hours or even minutes via the Internet, schedules in most cases are completely under the control of the worker and workers can stop or start their work whenever they want.
This is much easier (less friction) than with a traditional part-time job. This is a major reason most on-demand economy workers are part-timers.
While the debates about on-demand economy jobs will continue, it's clear for many these jobs are providing an easier path to entrepreneurship and/or a flexible way to supplement income. These are good things.
Comments