Small Business Labs

GCUC 2019 - Coworking's Surge Continues

The 2019 U.S. version of the Global Coworking Unconference Conference Series (GCUC) happened last week in Denver. Over 500 attendees showed up to discuss the state of the coworking industry and learn from one another.

It was clear from the discussions and presentations that the state of the coworking industry is excellent.

The industry continues to grow at a rapid pace, niche and independent coworking spaces are thriving, and the big coworking chains continue to expand. 

One thing that caught our eye was the number of attendees from coworking spaces serving new industry segments and vertical markets.

A good example is Palletized, a coworking and cowarehousing space that provides logistics services and warehouse space in addition to office space. This vertical market is quite large and because of ecommerce, growing quite rapidly. And now there's a coworking option for this industry. 

Coworking rapid growth has been driven by 3 waves of customers. The first group were freelancers and independent workers who were coworking's first customer base. Quickly following them were startups and micro businesses. More recently large corporations have embraced coworking.

Going forward we think all three of these groups will continue to drive coworking's growth. But we also see a fourth wave emerging. This wave will be driven by niche and vertical market growth (like Palletized) and geographic expansion. 

Coworking started in the urban cores of large cities. But now it's diffusing across geographies into the suburbs, smaller cities and even into rural areas. 

These areas, BTW, are the home to most Americans. About 98 million Americans live in urban core counties. But 175 million live in suburbs and small metro areas and 46 million live in the nation's rural counties. 

This means coworking is just starting to expand into markets where 2/3rds of Americans live and well over half work. 

Bottom line - the industry has a lot of room to grow.

Allwork's articles GCUC 2019: What Coworking Members Really Want and GCUC 2019: Is the Coworking Market Saturated? - quick answer - no - nicely covers several of the panels and related discussions.

We "borrowed" the picture above from Allwork's GCUC coverage.

The Rise of "Superjobs"

From Jobs to Superjobs covers the results of a Deloitte study looking at how automation and A.I are changing work and jobs.

The key finding is Deloitte sees automation changing jobs instead of simply replacing workers.

By this they mean many jobs are evolving and requiring new combinations of human skills and capabilities.

In particular, they see jobs increasingly requiring both hard and soft skills.

Deloitte see two types of jobs emerging due to increases in automation and the growing use of A.I. 

One type they call "hybrid jobs", which they describe as:

"Roles that perform work using a combination of skill sets drawing on both technical and soft skills. Historically, these types of skills have not been combined in the same job."

The other type are "superjobs", which are:

"Roles that combine work and responsibilities from multiple traditional jobs, using technology to both augment and broaden the scope of the work performed and involve a more complex set of domain, technical, and human skills."

The emergence of superjobs is going to require new types of thinking by both organizations and workers.

In particular training people for jobs that require strong hard and soft skills will not be easy. It will also require major shifts in thinking. 

It's not just traditional employees who will become super. According to Fast Company's A Growing Crop of Supertemps is Changing Work, independent workers are also becoming super.

So whether you want to be a traditional employee or an independent worker, you're gonna need a mix of skills - and a cape. 

TV Sitcom Explores the Blending of Work and Life and the Barriers Between the Professional and Amateur

Salon's Mike Schur's new sitcom "Abby's" is "Cheers" for the gig economy is an interview with the producers of a new NBC sitcom that takes places in a backyard bar. 

The interview covers what a show set in an illegal backyard bar says about modern culture. 

The interview explores multiple themes. But the most relevant to us here at Small Business Labs are the blending of work and life and break down between professional and amateur.

These shifts are happening across our society. A good example is when friends reach out to sell you something, which is increasing common thanks to the growth of side gigs.

Abby, the bar owner in the show, faces this on a regular basis because her customers are also her friends and neighbors. Key quote from the article on this:

There's one part of your question that I found interesting, and it is something that we talk about in the writer's room a lot. That is, where does the relationship between our patrons and Abby, when does it become personal and when is it professional? We dealt with that in a really explicit way in one episode with Beth [Abby’s next door neighbor] grappling with, "I thought this was a friendship and the way you're behaving, you're making me feel like you don't see me that way."

The blending of work and life is making answering this question both increasingly challenging and important.

We also find the show's view on the blurring distinctions between professionals and amateurs interesting. Again from the article:

There's also this weird thing in our culture now, where if you want go out somewhere, but you don’t want to drive, you use your phone and you get into some guy's Toyota Camry. It’s his car. It's like the barriers between what you would think of as a professional and amateur are completely broken down now, right?

These are both cultural and work shifts that are happening at least in part to the growth of the gig economy. It's interesting to see TV shows picking up on and exploring these trends.

Somewhat related, the popular online game The Sims is adding "freelancer" as a career choice. Sims will be able to be a writer, artist or programmer.

Just like in the real world, freelancing Sims can choose not to take gigs and instead take more time off.  Or, if they need more simoleons (money), they can take on extra gigs.

Having both TV shows and online games adding freelancing and alternative work arrangements illustrates the growing role independent work is playing.

Podcasting Entering the Mainstream

In case you hadn't heard, podcasting is booming. 

According to The Infinite Dial 2019, an annual survey conducted by Edison Research and Triton Digital, more than half of all adult Americans have listened to one.

And as the report chart below shows (click to enlarge), 32% of all Americans aged 12 and older listened to a podcast in the last month. This equals about 90 million people.

There are a number of drivers of podcasting's growth. These include:

• There's now a diverse array of interesting podcast content.
• Large audio/music firms like Spotify, Pandora and Apple have embraced podcasting.
• So have big media companies like the New York Times, the Wall Street Journal and the Washington Post.
• Smart speakers have made it easier to find and listen to podcasts.
• The use of internet audio in cars has become easier and more widespread.
• Successful business models are emerging.

Most revenue estimates for the podcast industry continue to be small - ranging from $500 - $700 million in 2018. But as the TechCrunch article Y Combinator Bets on the Booming Podcast Industry points out, revenues are expected to rapidly increase. 

Podcasting is interesting to us here at Small Business Labs because it's yet another example of small businesses and even individuals successfully competing with large corporations. 

In fact, many successful podcasts come from solopreneurs and micro-businesses. This is due in part to podcasting's low production and distribution costs.

The other part is creating compelling content, which a lot of solopreneurs and micro-businesses are capable of. This is especially true for podcasts designed to build community or used for content and/or influencer marketing. 

Medium's 10 Big Takeaways from 2019's Infinite Dial Research covers the study in more detail.

23% of Traditional Full-Time Job Holders Plan to Switch to Gig Work

According to MetLife's 2019 U.S. Employee Benefits Study, 23% of Americans with full-time traditional jobs intend to switch to gig work over the next 5 years. Another 14% say they are considering it. 

As the study chart below shows, younger workers more likely to say they're intending to leave their job for gig work than older workers. 

 

The reasons those with full-time jobs say they are interested in gig work are increased schedule flexibility, the ability to work where they want and the ability to take on multiple, different projects.

The high level of interest in the gig economy is tempered by the concern about the lack of financial security associated with gig work. According to the study, the top reason cited for not joining the gig economy is “I prefer the stability and security of a full-time job"

This reason is consistent with other studies. Concerns about job stability and security will also result in most of the people who say they plan to switch to gig work not doing so.

But some will - likely about 10%-15% of those saying they plan to and this still results in a lot of new gig workers. 

Another interesting finding is 1 in 5 full-time employees have a side hustle and spend on average 25 hours per month on it. Most, according to the report, do this out of financial necessity. Over half of those with with a side hustle say they are planning on turning it into full-time work.

The study reinforces findings from other studies (including ours) that interest in joining gig economy by traditional employees remains high.

Craft Brewers Continued to Gain Share on Global Brewing Giants in 2018

The small and independent Brewers Association released their 2018 Craft Beer Growth Report. Key quote:

In 2018, small and independent brewers collectively produced 25.9 million barrels and realized 4 percent total growth, increasing craft’s overall beer market share by volume to 13.2 percent. Retail dollar value was estimated at $27.6 billion, representing 24.1 percent market share and 7 percent growth over 2017. 

We first started following the craft beer industry in 2006 because we felt the industry was a good example of the growth small, niche markets. 

It's also a good example of a barbell industry structure. These are industries comprised of relatively few giant corporations on one end, a narrow middle consisting of a shrinking number of mid-sized firms, and a large and growing number of small, micro and even solopreneur firms on the other end.

As the chart below shows (click to enlarge), craft brewers have gained significant market share versus the beer industry giants over the past decade. 

And while craft brewer share gains have slowed, the industry continues to thrive. The number of U.S. craft breweries increased from 6,490 in 2017 to 7.346 in 2018.

Share gains have gotten tougher for several reasons. It's simply harder to gain share given how a large a share the craft brewers already have. Big brewers have also been buying craft brewers as well as creating their own craft brands (Blue Moon being a good example).  

As we pointed out a long time ago, the key trends driving the growth of artisan products like craft beer are:

1. Growing numbers of customers are looking for unique, unusual, personalized and/or locally produced products.  

2. The Internet and online marketing has made it much easier to find or be found by people interested in buying niche products.  

3.  Technology is lowering the costs of serving niche markets and making artisans able to compete with even the largest of firms. 

We see no slow down in these trend and believe craft breweries will continue to be able to effectively compete with the global giants.

The same is true in many other industries. See our Industry Structure section for examples. 

Half of U.S. Full-Time Employees Plan to Defer Retirement Due to Financial Reasons

MetLife recently released their 2019 U.S. Employee Benefits study. It's the 17th year they've done this study.

The study is based on a survey of 2,675 adult Americans with a full-time job at companies with at least two employees.

About 40% the respondents work for smaller businesses (those with less than 500 employees) and 60% work for larger firms, including 20% who work for firms with more than 10,000 employees.

There's a lot of good information in the study. But the study chart below (click to enlarge) really jumped out at us.

It shows that 52% of the full-time employees surveyed said they plan to postpone their retirement due to their financial situation. This is up from just 37% in 2015.

We've long often covered the trend towards delayed retirement (see our baby boomer section for many articles on this topic). But even we were surprised by these numbers.

The reason is the people who took this survey all have full-time traditional jobs. These are the people who should be the best prepared to retire. 

And yet about half believe they're going to need to delay their retirement because they don't have the financial resources not to. 

As we've pointed out in the past, for a variety of reasons Americans 55 and older have the highest rate of self-employment of any demographic cohort. 

This means deferred retirement also means a lot more older independent workers. This is especially true since the millions of Americans who don't have traditional full-time jobs are likely to be in even worse retirement shape than those that do.

Community Lenders Creating Community Spaces - Credit Unions are Opening Coworking Spaces

CreditUnions.com's article 3 Ways to Connect Through Coworking Spaces provides an excellent example of how coworking is spreading across industry verticals and niche markets.

The article highlights 3 credit unions that have opened coworking spaces. Key article quote on these spaces:

Three credit unions are building their own shared space models that reflect each institution’s strategic approach to serving their field of membership while branding themselves as not only community lenders but also community leaders.

CommunityAmerica Credit Union($2.7B, Lenexa, KS) has rented a chunk of the WeWork shared office building in a hip section of downtown Kansas City, MO, to use as work space for its own employees and for community lunch-and-learn and happy hour-style events. The picture below shows a lunch-and-learn session at the space.

Digital Federal Credit Union($8.5B, Marlborough, MA) has created the DCU FinTech Innovation Center, which it describes as a “non-profit, mission-focused fintech accelerator” in downtown Boston. 

Vermont State Employees Credit Union($778.2M, Montpelier, VT) has filled extra space in a new branch in rural Bennington, VT, with local entrepreneurs and other tinkerers and thinkers who now occupy a shared space dubbed the Lightning Jar. 

Credit unions have always been about community.

Most started as small, local savings and loan co-ops. And they continue to be member owned non-profits. 

So it's no surprise the industry is starting to extend their community efforts by embracing coworking.

This is also yet another example of the growing number of differentiated and niche coworking spaces.