Small Business Labs

How the iPhone Changed the World

The iPhone was released on June 29, 2007. It wasn't the first smartphone - smartphones have been in existence since the 1990's - but it's clearly the smartphone that truly launched the mobile revolution. 

Recode's How Apple’s iPhone changed the world: 10 years in 10 charts covers some of the amazing changes that the iPhone has brought with it. 

It has charts and data on things like the growth of data traffic, phones replacing cameras, its impact on advertising, etc. 

But our favorite is it's impact on chewing gum sales.

As the article chart below shows, gum sales have declined substantially since the release of the iPhone. 

The reason, according to the article, is we're now too busy looking at our phones in check-out lines to buy gum. Key article quote:

Supermarket checkout lines — strategically stocked with magazines and candy — were for a long time a major point of sale for gum. Consumers waiting on line to pay would look around and make impulse buys. Now, however, we’re so consumed with our phones that we’re not reaching for a pack of gum to stave off our boredom. 

This is a great example of secondary effects and unintended consequences (we assume Steve Jobs was not targeting gum sales with the iPhone).

As the article points out there must be many more examples:

"Have drug dealing and other illegal activities become more efficient thanks to the smartphone’s discreet payment model? Has English become more prominent as English-language-based mobile apps connect the developing world? Have smartphones and the omnipresent connectedness they provide enabled the rise of helicopter parents, niche communities or better literacy."

One example we've spotted is walkers distracted by cellphones are leading to increasing rates of pedestrian accidents, injuries and fatalities. This is resulting in cities deploying new types of in ground traffic lights so folks looking down at their cellphones can see them. 

The picture below is of a new traffic light in the Dutch town of Bodegraven.

There are no doubt many more examples. 

VCs Investing Heavily in AI and Machine Learning

VC investments in artificial intelligence (AI) and machine learning more than doubled in 2016, according to the National Venture Capital Association.

As the chart below (click to enlarge) from the Axios article Venture Capital Investment in AI skyrockets shows, VCs have continued to pour money into AI in 2017.

Virtual reality is also attracting a lot of investment. 

It's not just startups. Most of the major tech companies are also investing heavily in AI.

The CNBC article Everyone keeps talking about A.I.— here's what it really is and why it's so hot now nicely covers what some of the major firms are up to.

Seeking Freelance Flexibility With Full-Time Stability

The Inc. article What Do Millennials Want From Their Employers, Exactly? This Study Sums It Up in 1 Sentence says Millennials want:

"Freelance flexibility with full-time stability"

This is, of course, not just what Millennials want.

It's what everybody wants.

The study the article refers to is Deloitte's 2017 Millennial Survey. Deloitte surveyed 8,000 Millennials from 30 countries and found:

"In spite of perceived across-the-board advantages of working as freelancers or consultants, nearly two-thirds of millennials said they prefer full-time employment. Millennials’ anxiety about world events and increasing automation may be partially responsible for them wanting to remain in their jobs, but the allure of flexible working options might be just as influential."

Our research finds the same thing, except we hear this from everyone and not just Millennials.

As we've often reported in the past, most independent workers choose independent work because it provides greater autonomy, control and flexibility than traditional employment. 

But in exchange, independent workers have to deal with the stress, uncertainty and lack of stability that comes with independent work.

We refer to this the yin and yang of independent work. 

But despite the lack of stability, most independent workers report preferring independent work. 

At the same time and similar to the Deloitte study's finding on Millennials, our research indicates about 60% of all Americans prefer a traditional job. 

So what's going on?

The answer is there are substantial risk profile differences between independent workers and those working in traditional jobs. Key quote from the recently released 2017 MBO Partners State of Independence study:

One of the key findings of this study is that the motivations for working independently are as much psychological and emotional as they are financial. Over the years, this study has detected a stark perceptional divergence between those who choose to work independently and those with traditional payroll jobs. Beyond having different risk profiles, they simply see the prospect of independent work—and what you can get out of it—in a different light.

Simply put, most of those with traditional jobs see independent work as too risky and unstable. Their risk profile and risk tolerance makes independent work unattractive.

However, independent workers have risk profiles that allow them to pursue and prefer independent work.

Of course independent workers would like more stability. And those with traditional jobs would like more work flexibility.

The big implication of this is as the economy shifts to more independent work, more people who don't have independent work risk profiles are going to be working independently.

This will not go well for this group unless we figure out how to improve the security and stability of independent workers.

It would also help if more companies offered flexible work options for their traditional employees.

The Growing Use of Online Talent Marketplaces

One of the more interesting findings from the MBO Partners State of Independence study is how much the use of online talent marketplaces has increased over the past 6 years.

As the blue bars in the chart below show (click to enlarge), only 3% of independent workers reported using online talent marketplaces to find work in 2012. By 2017 this grew to 20%

Also interesting is the response to a question about their planned use over the next year (red bars).

This has increased from just 4% in 2012 to 25% in 2017.  This indicates that 2018 will again see an increase in the usage rate.

There are several reasons for these increases.

The rising number and diversity of online talent marketplaces is clearly one reason for the growth of their use.

Whether you're a dog walker, doctor or driver (or pretty much anything else) there are vertical market platforms that will help you find work. 

A greater willingness on the part of companies to utilize these marketplaces is also creating more demand. 

More people looking for highly flexible ways to supplement their income is a third reason. 

And while few independent workers report these marketplaces are their primary source of business or income, more independents are turning them to fill gaps in their schedules, find new clients and explore new business opportunities.  

In other words, independent workers are seeing online talent marketplaces as another channel for finding business.

Not surprisingly, the use of online marketplaces is correlated with the age. Younger independent workers, who tend to be more tech savvy and have less developed professional networks, use them more than older independents.

The trend towards greater use of online talent marketplaces will likely continue.

In addition to the growth of public talent marketplaces, a growing number of corporations are setting up private talent clouds and marketplaces. Combined, this means much greater demand for labor found through the cloud.

Despite Big Problems, Uber Will Likely Continue to Thrive

To say there's been a lot of recent bad news about Uber is, of course, a massive understatement. 

Rarely has a firm had as many problems, miscues and crises as Uber has had so far this year.

Recode even calls it Uber's no good, very bad 2017.

But despite all this, CityLab's Why Uber Will Still Dominate covers the reasons the company is very likely going to continue to be successful.

The key reasons are Uber (and Lyft) are cheaper than their competitors, have much greater name and brand recognition and have a huge data advantage relative to their competitors.

They're also fortunate in that their market continues to grow very rapidly. And regulatory pressures on Uber and ridesharing in general seem to be declining. 

A good example that Citylab points out is how quickly Uber has regained share in Austin, Texas since it reentered the market. 

Uber and Lyft left the Austin market last year due to what they felt were unreasonable local regulations. A new Texas state law overrode these regulations, so both firms reentered. 

Despite Austin being considered an anti-Uber town, they almost immediately returned to being a market share leader.

Florida also recently passed a state wide law favorable to Uber and other ride sharing firms. 

Uber's biggest strength is consumers like them.

The chart below (click to enlarge), from the excellent Quartz article There’s still one thing people like about Uber, nicely illustrates this.

 

The article also covers the myriad of scandals, problems and issues Uber is facing.  Key quote:

"The latest Uber headlines are straight out of a TV drama ... The facts in the stories are worse ... The stories would defy credulity if they weren’t about Uber, a company whose first half of 2017 seems better suited to fiction than reality."

But the article also points out:

"Despite all of it, there is one thing people still like about Uber: its service."

Uber's data advantage is simple. They have more data than their competitors. More data means better analytics, which means better business insights. Better insights provide competitive advantage. 

Before you send us an email about it, yes, we are aware of the various Uber boycotts. 

Two points about them:

1. Most consumers aren't paying attention to the news about Uber.
2. Most of Uber's revenue comes from outside of the U.S., where consumers are paying even less attention than they are here.

And we're also aware they are facing talent attraction and retention issues, especially in San Francisco. But Uber still shows up on top places to work lists and they've recently made several high profile hires. 

Also, as long as they offer compelling jobs - and their mission to re-engineer global transportation is very compelling - people will want to work there.

This is not to say Uber won't fail. They can and will if they don't fix their management team and bring in adult leadership. 

They also need to treat their drivers better.

But as long as they are winning with consumers and their industry is growing at what the DC think tank Brookings call "hyper growth", they have the time required to fix their problems.

And we think they will.

BTW, in case you are wondering Uber is not currently nor has ever been an Emergent Research (that's us) client. 

Cyclical and Structural Forces Behind the Growing Independent Workforce

MBO Partners released their 2017 State of Independence report today.

In 2017, the total number of independent workers (self-employed, freelancers, independent contractors, etc.) in American rose to 40.9 million, up 2.8 percent from 2016.

And MBO Partners is forecasting the independent workforce will continue to grow over the next 5 years, reaching 47.6 million in 2022.

It's the 7th year MBO Partners has conducted this study, which gauges the size, growth, motivations and attitudes of independent workers. We work with MBO Partners on this study.

While the overall independent workforce continues to expand, how it's expanding is quite interesting and reflects broader cyclical and structural forces impacting the overall economy.

Looking a bit deeper at the data shows:

1. The number of full-time independent workers declined for the second straight year.

The number of full-time independents (those working as independents at least 15 hours per week in an average work week) declined by 4.1 percent to 16.2 million in 2017.

The main driver of this decline is the strong jobs market is allowing "reluctant independents" - people who work independently but would prefer a traditional job - to return to traditional employment. 

In 2017 the share of full-time reluctants declined to its lowest level of 24%, down from 26% in 2016 and 34% in 2012. 

In addition to reluctants returning to traditional jobs, so did some independents who are highly satisfied with independent work. Despite being highly satisfied, opportunities presented by the strong jobs market lured them back to traditional employment. 

2. The number of high income independents continues to grow.

Despite the decline in full-time independents, the number of full-time independents who earned $100,000 or more increased for the sixth straight year.

In 2017, 3.2 million full time Independents reported making more than $100,000 annually, up 4.9 percent from 2016. This group has grown steadily throughout the study time frame and now represents nearly one in five full time Independents.

The tight labor market and ongoing economic expansion is enabling those whose skills are in demand to get more work, and to command a premium for their services. It's also leading to more highly skilled people to choose independent work over traditional employment.

3. The number of part-time independents also declined.

The number of part-time independents (those working as independents less than 15 ours per week in an average work week) declined to 11.8 million in 2017 from 12.4 million in 2016.

This again was largely due to the strong job market pulling people back to traditional employment. 

4. The number of occasional independents continued to surge.

Occasional Independents (those working irregularly or sporadically as independents but at least once per month) soared 23% to 12.9 million, up from 10.5 million in 2016.

Stagnant wages, declining middle class jobs and rising costs (particularly for housing, education and healthcare) are resulting in more Americans supplementing their income through regular but occasional independent work. 

It's clear that both cyclical and structural forces are impacting independent work. 

The cyclically strong job market and the related "war for talent' are impacting the growth of the independent workforce several ways.

It's pulling some independents back to traditional work. At the same time, it's enabling independents with in-demand skills to find more work and earn more. This is making independent work more attractive to highly skilled workers.

The structural shift towards independent work is also made clear by the fact that overall independent workforce continues to grow despite an extremely strong traditional job market.

The unemployment is 4.3%, a level last seen in the late 1990's and only reached a couple of times since 1960. The number of open jobs, a bit over 6 million, is at an all-time high. 

Yet despite this historically strong jobs market, more people continue to join the independent workforce. 

This is due to a combination of structural factors that are leading to growing numbers of independent workers.

These include such factors as changing demographics, social shifts, organizations shifting to contingent talent, technology enabling independent work, wage stagnation, the hollowing out of middle class jobs and many others. 

See the report for more details. 

We'll have more on this study in the coming weeks.

Mapping Key Emerging Technologies

Maps are a popular way of displaying emerging technologies and how important they are and/or how quickly they will impact business and society.

Almost all technology analyst firms produce maps. They do this to try to display complex information in a simple, digestible form.

Traction Technology Partners, a firm that tracks and analyzes emerging technologies for enterprise clients, has created an interesting tech trends map (click to enlarge).

The map's horizontal axis is based on survey of "members of the Traction Network (mostly CIOs, CTOs, and senior IT execs in the enterprise)".  They were asked to rank the importance of a wide range of technologies.

The map shows the technologies that ranked in the top 6, with cybersecurity ranking the highest in terms of importance. 

They were also asked to rank the rate of adoption of these technologies on a 1 to 10 scale. This is the vertical access and cloud computing ranked the highest on this metric.

According to the map maker's Medium article the goal of this map is to:

... create a relatively small, 2-D map that a reader can grasp in 15 minutes or so, and which accomplishes the paradoxical and essential job of pulling all the emerging technologies into one map while dividing them into different and more-or-less well-defined neighborhoods.

All technology maps have their strengths and weaknesses. This one struck us as being quite useful. 

Six Points on the Map of Emerging Tech covers the map and its creation is more detail, including charts on how technologies outside of the top 6 ranked. 

Click here to sign up for the Traction Technology Partners newsletter. We just signed up and have yet to see it, so we can't provide a review.

But based on the people who are at Technology Traction Partners, it's a safe bet it's well worth reading.

Meal Delivery Heating Up

Blue Apron, a meal kit delivery service company, has filed for an IPO. 

The company reported $795 million in revenue for 2016, up from $341 million in revenue for 2015.

It lost $55 million in 2016 compared to $47 million in 2015.

There's been a lot of press coverage recently on the failure of VC-backed food delivery businesses.

Most of it claims that food delivery in general is not a viable business.

This is, to paraphrase Mark Twain, greatly exaggerated. 

We recently covered the fact that GrubHub, a public food delivery business, is large, growing rapidly and has been profitable for several years.

Blue Apron's IPO filing provides more evidence of the viability of food delivery. 

Blue Apron has raised over $190 million in VC funding, most recently at a $2 billion post-money valuation. They expect to go public at a higher valuation, somewhere in the $2.5  to $3.0 billion range. 

They currently have over 5,000 employees and claim to have over 1 million customers.

Blue Apron clearly has business issues it needs to solve - including lots of competition - and there's no guarantee the stock will do well. Key quote from the New York Times article Blue Apron Has a Good Product. Beware the Stock:

Yet similar services are proliferating wildly. Over a dozen such companies have raised cash from venture capitalists, and multiple supermarket chains have jumped into the act.

Another good example is the organic meal kit delivery company Sun Basket. Founded in 2014, it already has 1200 employees and is growing very rapidly. 

And Europe's Delivery Hero has also recently filed to go public. It reports having $390 million in revenue in 2016, up 71% over 2015.

Food delivery is already a multi-billion dollar industry. This makes it pretty clear there is strong demand for food delivery services.

In fact, it's clear that the demand for on-demand services across a variety of economic sectors is strong and growing.

No doubt many VC backed on-demand companies will fail. That's the nature of VC backed companies.

But the firms that survive and win will likely, like GrubHub, be quite successful. 

As we said before, the bottom line is the gig/on-demand economy is here to stay. It will also continue to grow. 

Despite Strong Job Market, Economic Uncertainty Still High

We consider the trend towards rising levels of economic uncertainty and insecurity to be one of most powerful trends we follow. We also think it's one of the least studied and understood.

A combination of factors drive economic uncertainty. These include relatively slow growth, stagnant wages, middle class job losses and declining job security.

In addition, a growing amount of research also points to income volatility as a cause of economic uncertainty.

The New York Times article Steady Jobs, With Pay and Hours That Are Anything But covers research by the JP Morgan Chase Institute showing that income volatility, while most pronounced for those with lower income, is common across all earning levels.

The excellent article chart below (click to enlarge) nicely summarizes this data.

Key quote from the article:

“Since the 1970s, steady work that pays a predictable and living wage has become increasingly difficult to find,” said Jonathan Morduch, a director of the U.S. Financial Diaries project, an in-depth study of 235 low- and moderate-income households. “This shift has left many more families vulnerable to income volatility.”

The article points the main culprit is shifting pay and variable work hours at a growing number of traditional jobs.

This fits with the findings of The 2017 edition of the Intuit On-Demand Economy Workforce study.

This study found a large percentage of gig workers are doing gig work supplement their income in response to financial shocks and/or income volatility associated with their primary source of income. 

Key quote from the Aspen Institute's New Findings Reveal the On-Demand Economy Plays Key Role in Improving People’s Financial Stability, which covered the Intuit study:

... income volatility is growing and more Americans are facing financial hardships and shocks than in the past. Second, it’s clear that our traditional safety nets are not working as well as they need to.

Because of this, a growing number of Americans are turning to gig work to help them work through a financial hardship or smooth volatile income streams.

In other words, the gig economy is being used as an alternative safety net for many gig workers.

This is not to say there aren't income volatility issues with gig work. There clearly are, especially for those working full-time in the gig economy.

But for the majority of gig workers who work part-time or occasionally in the gig economy, the gig economy reduces instead of causes income volatility.

Economic uncertainty has a number of effects. It leads people to avoid long term or major commitments, both in their personal lives and as consumers.

Examples include delayed and lower rates of marriage, having children and home ownership. It also leads to a resistance to large purchases of all kinds. All of these have major impacts on the economy.

See our Economic Uncertainty section for more on this trend.

The Business of Work/Life Integration

A growing number of firms are offering services and products based on the trend towards work/life integration. This is the shift towards work, home and life becoming increasingly blended.  

An interesting example comes from the popular dating site Bumble (tagline: Find Your Honey). They are opening a pop-up community center in New York not surprisingly called The Hive. 

It's part of Bumble's plan to expand beyond dating and help users in their professional lives.

As the Bumble chart below shows, the planned activities at The Hive blend professional and social events.

    

This trend towards work/life integration is very apparent in our coworking research.

This shows that while coworking spaces are workspaces, they are also places where members socialize together. 

In fact, our findings indicate that most coworking members consider the social side of coworking to be at least as important as the work side. 

The blending of work and life is leading to growing numbers of services, places and activities that also blend work and life.

We see this shift in much of work:

• digital nomads are blending work and life in their quest to become "temporary locals".
• "Bleisure" travel" and "bizcations" have become more popular as people combine work and pleasure travel. 
• We consistently hear about work/life flexibility and integration as a reason people choose to be self-employed and small business owners.
• Corporations are exploring how to promote employee "wholeness", another term for work/life integration

None of this is a new. 

New York University sociologist Dalton Conley coined the term "weisure world" about a decade ago to describe this shift.  

According to Conley, activities and social spaces are becoming work-play ambiguous and work and personal time are blurring together.

The 2013 Harvard Business Review article Work-Life Balance Isn't the Point nicely 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.

The shift towards work/life integration shows no signs of slowing down.

Expect to see more products and services designed for this market.