Small Business Labs

Why Being Anti-Fragile is Important for an Entrepreneurial Mindset

MIT Management's 3 traits of an entrepreneurial mindset covers the key traits that define an entrepreneurial mindset, no matter the environment.

Key quote on an entrepreneurial mindset:

An entrepreneurial mindset helps leaders create value by "recognizing and acting on opportunities, making decisions with limited information, and remaining adaptable and resilient in conditions that are uncertain and complex," said Rowena Barrett, pro-vice-chancellor for entrepreneurship at the Queensland University of Technology.

The three traits are:

1. Solutions-oriented
2. Adaptable
3. Anti-fragile

We liked their description of anti-fragile, which is spelled out in the chart below (click to enlarge).

We've studied and worked with start-up founders, small business owners, and other types of entrepreneurs for over 20 years.  

And what we've learned is that the one trait that almost all of them have is being anti-fragile.  

What the Crypto Winter Means for Web3

Crypto has had fraud and scam problems from its beginning. We covered these in-depth earlier this year.

Also, crypto markets crashed last spring, with Bitcoin prices falling to their lowest levels since 2020. Other crypto coins and token prices fell even more.

But the FTX cryptocurrency exchange's implosion and bankruptcy is an even more significant blow to crypto than prior acts of fraud and price volatility. 

This is because FTX was seen as a source of stability in the uncertain world of cryptocurrencies.  

Key quote from the New York Times article Here's the Latest on the FTX Collapse:

FTX's implosion sent shock waves through the crypto and financial communities. Numerous funds and crypto start-ups were entangled with FTX, which extended lifelines to other firms after the crypto market crashed in the spring.

So what does the crypto winter (some are calling it a crypto ice age) mean for Web3?

Axios' Web3 is in FTX's Blast Radius points out that:

Web3, at its heart, is all about using blockchains and crypto tokens as tools for organizing decision-making, governance, and financial incentives in every realm of human endeavor — from virtual world-building to social networking and from accounting to art-making.

But to accomplish any of this, Web3 and crypto firms will have to show that they can add value while at the same time significantly reducing the industry's fraud and scam problems.

We first covered Bitcoin in 2013 and blockchain in 2015.  

We also covered a wide range of potential blockchain applications in 2017. But it's five years later, and none have come to fruition.

We're not ready to give up on Web3. We continue to think Web3 technologies will eventually produce useful applications.

And just as many other technologies went through "winters" and successfully emerged - the Internet, A.I., etc. - we think Web3 will, eventually, work through the problems.  

But the promises will be less grandiose, and the applications grounded in reality.

Another Strong Month for New Business Applications

The October Business Formation Statistics were released by the U.S. Census last week.

And as the Census chart below shows (click to enlarge), there were 432,934 new business tax I.D. applications in October.  

Business applications took off in Q3 of 2020, and in 2022 they've run at a rate about 43% higher than pre-pandemic.

Retail trade, which includes ecommerce firms, and professional services, continue to be the top two applications categories.

Also continuing is the shift to solopreneur business applications instead of employer business applications. 

We're going repeat ourselves and point out that new business applications ARE NOT the same as new business startups.

Research by the U.S. Census and similar research by our firm indicates that about 18% - 22% of applications result in new businesses. So if you read that 432,000 small businesses were started in October, it's not correct.  

But by historical standards, 20% of 423,000 is still a lot of new businesses.  

The Polycrisis and Doomsday Scenarios

The recent Financial Times article Welcome to the World of the Polycrisis introduces the concept of the polycrisis. Key quote:

A problem becomes a crisis when it challenges our ability to cope and thus threatens our identity. In the polycrisis, the shocks are disparate, but they interact so that the whole is even more overwhelming than the sum of the parts.

The article is written by the noted economic historian Adam Tooze. His earlier article Defining Polycrisis - from crisis pictures to the crisis matrix includes the rather complex polycrisis chart below (click to enlarge). 

It highlights seven crises and a wide variety of sub-crises and how they are linked.

The combination of multiple individual crises, coupled with these crises amplifying each other, leads to a polycrisis.  

Not everyone agrees that the polycrisis is a new thing. 

Quartz's The Case Against Polycrisis points out that throughout history, the world has had many problems simultaneously.

But it's hard to argue with former US Treasury secretary Lawrence Summers who is quoted in the Financial Times article:

"This is the most complex, disparate, and cross-cutting set of challenges I can remember in the 40 years that I have been paying attention to such things."

While on the topic of crisis, the Washington Post's Asteroids! Solar Storms! Nukes! Climate Calamity! Killer Robots! covers doomsday scenarios.

These are even worse than the polycrisis in that doomsday scenarios would likely lead to the extinction of humans.

The article has a list of the top 10 doomsday scenarios:

10. Solar storm or gamma-ray burst.

9. Supervolcano eruption.

8. Asteroid impact.

7. Naturally emergent or maliciously engineered, pandemic plant pathogen affecting staple crops.

6. Naturally emergent or maliciously engineered pandemic human pathogen.

5. Orwellian dystopia. Totalitarianism. Endless war paraded as peace. The human spirit crushed. Not a world you'd want to live in.

4. Cascading technological failures due to cyberattacks, reckless development of artificial intelligence and/or some other example of complex systems failing in complex ways.

3. Nuclear war (may jump soon to No. 1).

2. Environmental catastrophe from climate change and other desecrations of the natural world.

1. Threat X. The unknown unknown. Something dreadful but not even imagined. The creature that lives under the bed.

Since we're forecasters, we don't worry about doomsday scenarios in our work. If one were to happen, we'd be out of business.

But the polycrisis - whether new or not - is something we deal with daily.

And we agree with Larry Summers. This is the most complex set of issues and problems we've seen in our decades of doing forecasts.  

What the Department of Labor's Worker Classification Guidance Means for Independent Work

Last month the  Department of Labor (DOL) announced it's releasing new guidance to help determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.

The announcement got a lot of press coverage, most of it saying the new guidelines will make it much harder for companies to classify workers as independent contractors. Examples include:

• Wall Street Journal's Biden Rule Would Add More Gig Workers to Company Payrolls
• New York Times's Biden Proposal Could Lead to Employee Status for Gig Workers
• NPR's Labor Department proposal could change gig worker and company rules

But - and this is a big but - the new guidance basically returns the guidance to where it was under the Obama administration. Key quote from the Wall Street Journal article on the proposed guidance:

"It would replace a Trump-era rule—completed just days before the Biden administration took office—and return to an approach favored by the Obama administration."

In other words, the guidance is reverting back to what it was between 2008-2019. 

In case you weren't following independent work and the gig economy between 2008 - 2019, it grew dramatically. So going back to an approach favored by the Obama administration is unlikely to have a major impact on independent workers. 

Bloomberg's Uber, Lyft Shares Fall on Possible Changes to How Gig Workers Are Classified also points out:

"Companies had anticipated the Biden administration would reinstate the Obama-era guidance on the classification, and the proposal didn't come as a surprise, according to Tom White, an analyst at DA Davidson & Co. "It has no immediate changes to anything related to how companies operate their business," White said. "It's a proposal that in some ways can be viewed more like a conversation starter."

So don't expect significant near term changes in the gig economy based on the new guidance.

But having said that, all the press saying it will have an negative impact on the gig economy, will have an impact.  And that impact will likely be companies - and their lawyers - choosing to be more conservative about the use of nonemployee labor.

But this will be a relatively minor impact.    

The legal issues around worker classification, the DOL's role, and why the new rules aren't going to have a major impact are too long and complicated for this blog post. So we're not going to cover them here.

For those interested in more depth on this topic, we recommend the Independent Contractor, Misclassification, and Compliance blog. 

Their article THE LABOR DEPARTMENT'S INDEPENDENT CONTRACTOR RULE HAS LITTLE IF NO LEGAL IMPACT BUT IS LIKELY TO CAUSE ANXIETY FOR MANY STAKEHOLDERS covers this topic in-depth.

The article's title, in our opinion, also nicely sums up the impact of the new guidance.

Ford Targets VanLifers With Their New Transit Trail Van

Ford recently announced the Transit Trail, a variation of their popular Transit commercial van targeted at VanLifers and others wanting a camper van.

The Ford Transit Trail's design makes it easy to customize and add things like shelving, cabinetry, and beds. 

Car and Driver magazine describes the Transit Trail as:

Essentially a factory-built camper van base, the Transit Trail comes with key elements that vanning aficionados want, such as swiveling front seats, an onboard AC inverter, an over-cab storage compartment, dual alternators, and a fuse panel, all backed by Ford's warranty.

The Transit Trail is also off-road ready with four wheel drive, an uplifted body, and large tires.  

Buyers can customize the Van themselves or get custom conversions via the Ford Pro network of upfitters and interior installers.

The Transit Trail starts at around $65,000, but Ford claims that due to the design and features of the Van, customization is much easier and cheaper than other options.  

As their video below shows, Ford is targeting VanLifers- digital nomads that travel, live and work in RVs, vans, or other vehicles converted into roaming residences.

This is a large and growing market segment.

According to the 2022 MBO Partners study, The Aspirations and Reality for Digital Nomads, there are 3.1 million VanLifers in the U.S.  

This is up from 2.6 million in 2021 and 1.9 million in 2020.

We expect the VanLife segment to continue to grow.  And one reason is the growing support ecosystem for VanLifers, including companies like Ford releasing products making it easier to be a VanLifer.  

See our Digital Nomad section for more on this topic.

Emergent Research (that's us) worked with MBO Partners on the abovementioned study.

There are Millions of Aspiring Digital Nomads

The digital nomad trend has long attracted lots of press and a strong social media following.

Popular digital nomad and #VanLife blogs, videos, and Instagram accounts have created a spectator sport inspired by idyllic pictures and videos of happy digital nomads in exotic locations. 

This media coverage, combined with the shift to remote work, and the desire by many to travel, has resulted in millions aspiring to become digital nomads.

Each year, as part of the MBO Partners digital nomad study series, we ask adult Americans who aren’t digital nomads if they plan on becoming digital nomads over the next 2-3 years.

In 2022 the results project to 25 million saying they will and 48 million saying maybe.

This is a 12% increase compared to 2021 in the number of Americans saying they will or may become digital nomads over the next 2-3 years - and a 33% increase compared to 2019.  

We call this group "armchair digital nomads."  

The reason is our studies indicate only about 8% to 11% of those saying yes or maybe will follow through and become nomadic.

The vast majority will continue to follow the exploits of other digital nomads instead of becoming one themselves. 

However, this data shows how extensive the interest is in this lifestyle.

It also shows how the shift to remote work, especially for traditional jobholders, is making the idea of becoming a digital nomad even more popular.

Which is one reason why we are forecasting continued growth in the number of digital nomads.  See The Aspirations and Realities for Digital Nomads for more on the digital nomad trend.

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