Small Business Labs

What is Nature Tech?

PWC's A surge in nature tech investing defines nature tech as:

...  nature-related technologies that help companies understand, mitigate and adapt to the twin climate and biodiversity crises ...

The World Economic Forum's 5 ways nature tech can bring integrity and scale to nature-based solutions defines nature tech more broadly as technology that supports nature-based solutions (NbS).

Which begs the question, what are nature-based solutions? The World Bank defines these as:

"Nature-based solutions are actions to protect, sustainably manage, or restore natural ecosystems that address societal challenges such as climate change, human health, food, and water security, and disaster risk reduction effectively and adaptively, simultaneously providing human well-being and biodiversity benefits."

The PWC article uses as an example various technologies that help honeybees thrive despite pollution and climate change.

These include measurement, reporting and verification (MRV) technologies that help beekeepers better understand hive conditions and site their hives away from pollution sources, bee hive heaters for cold weather, and even robotic queen bees to direct drone activity.

As the PWC chart below shows (click to enlarge), while not huge by VC standards, nature tech funding is growing.

 

Its clear nature needs help these days. So it's good to see nature tech funding is increasing.

Crypto's Winter and Generative A.I.'s Spring

The Washington Post's 'Crypto winter' has come. And it's looking more like an ice age starts with:

A year ago, the crypto world was booming, with prices for Bitcoin and Ethereum at all-time highs, celebrities stumbling over each other to promote expensive digital art, and logos from blockchain companies gracing sports stadiums and Super Bowl ads. That era is over.

And it's true. 

Thanks to a long list of frauds and criminal schemes - topped off by FTX's collapse - the crypto hype cycle is over. For now.

And replacing it is a major new hype cycle for generative A.I. 

Generative A.I. - an umbrella term for A.I. that doesn't just analyze existing data but creates new text, images, videos, code snippets, and more - had already established itself as tech's latest big thing.

But with the launch of ChatGPT, the hype around generative A.I. has reached a fevered pitch.

The Guardian's What is A.I. chatbot phenomenon ChatGPT and could it replace humans? does an excellent job explaining what ChatGPT is. Key quote:

ChatGPT is a prototype dialogue-based A.I. chatbot capable of understanding natural human language and generating impressively detailed human-like written text.

In addition to answering questions in a human-like way, ChatGPT also scans the Internet for information and data related to the topic.

For example, we asked ChatGPT what a technology winter is. Here's its answer:

A technology winter, also sometimes referred to as a "tech winter" or a "capital winter," is a period of time when investment in, and enthusiasm for, new technologies and startups cools off ... Technology winters can have significant impacts on the technology industry, including reduced innovation and slower adoption of new technologies. However, they can also be followed by a "technology spring" or a period of renewed growth and innovation.

Not a bad answer.

A.I. has gone through multiple technology winters, with the first happening in the 1980s and an extended winter running from the mid-1990s to the mid-2000s or so.  

Yet now, A.I. is widely used in business and science - and it's experiencing yet another technology spring.  

We expect Crypto, despite it's current problems, will also eventually have its own new spring.

VC Firm Forerunner on Consumer Trends

Forerunner Ventures is one of the most successful consumer industry-focused venture capital firms.  

They were early-stage investors in many well-known consumer brands, including Warby Parker, Bonobos, Dollar Shave Club, Jet (now owned by Walmart), and others.  

Forerunner recently released a consumer trends report they call The Dinner Party.  

Their premise is that the past several years dislocations have resulted in consumers needing to deal with mounting uncertainty and personal and societal adversities. 

Key quote from the report:

"The consumer has been upended by the change in every aspect of life and is facing mounting adversity. We are all searching for varying degrees of purpose, direction, and resilience to get back to solid footing and a path towards a brighter future."

The study identified eight psychographic consumer personas, which Forerunner calls "consumer archetypes". 

They also identify six broad consumer trends. These are:

1. Sick-care Evolves to Well-care
2. Money Matters
3. Choice is The Future of Work
4. New Age Activism
5. The Need for Community is Real
6. Sustainability Moves from Transition to Table Stakes

All are supported by interesting data from their consumer survey and well worth reviewing.

But one set of data jumped out at us.  

As the report chart below shows (click to enlarge), 61% of their survey respondents said they prioritize money over convenience, and 66% said they prefer DIY vs. paying to outsource.

       

This is a significant consumer shift away from the past decade's on-demand service revolution that provided consumers - for a price - the ability to outsource many aspects of their lives.

Key report quote on this shift:

We imagine this marks the beginning of a pendulum swing to a place of balancing price and value with urgency and convenience ... opportunity exists to provide relevant tools and resources for people who are now actively looking to do more with less, or re-engage in activities and experiences that help harken back to a simpler life.

While we like most any trend description that includes the word "harken," this trend is a major shift in consumer thinking - and a trend we fully agree with.

Forerunner has a strong track record of spotting, and successfully monetizing, shifts in consumer behavior. Because of this, we pay attention to their trends' work.

See the report for more details on the consumer archetypes and trends.

The Atlantic's 2022 10 Breakthroughs of the Year.

It's future trends season, and we'll be covering some  of the many 2023 future trend lists and related forecasts in the coming weeks.

We're starting with The Atlantic's recently released its inaugural edition of their 10 Breakthroughs for the Year.

The list is below and quite interesting.

It contains "breakthroughs" that are nearly or already commercialized (generative A.I., vaccines, lab-grown meat).  

The list also contains breakthroughs that are likely years or decades away from practical applications (reversing death, synthesizing life, small nuclear reactors).

But all of the breakthroughs are potentially society-changing, and most get little attention from the media.

The 10 Breakthroughs are:

1. The Generative-AI Eruption: A new dawn in how we build
2. The Power to Reverse Death (Kind Of): Organs revived in dead pigs
3. The Power to Synthesize Life (Kind Of): Mouse embryos "born" without sperm or egg
4. The Vaccine Cavalry Is Coming: Novel therapies for malaria and all influenza strains
5. A Snapshot of the Beginning of Time: Images of the first galaxies in the universe
6. 'Unheard of' Advances in Fighting Cancer: Miraculous treatments and an at-home test
7. The Obesity-Therapy Surge: Weight-loss medication that actually works
8. Cracking the Case of Multiple Sclerosis: And learning something important about the phenomenon of "long viruses."
9. Legal Lab Meat: A regulatory first
10. New Toys for the Green-Energy Revolution: Smaller nuclear reactors and bigger geothermal breakthroughs

In case you were wondering, the reason the recent fusion announcement by the Lawrence Livermore National Laboratory is not included is the news was released after this article was written. Otherwise, it would have been a shoe in the make the list.

They also have an accompanying podcast on the Plain English podcast with Derek Thompson (the article's author) for those who'd rather listen to the story.

There's way too much here to cover in a blog. So read the article or listen to the podcast (we did both) for more information.  

One-Third of U.S. Business Use independent Contractors

The U.S. Government Accountability Office (GAO) recently released Nonstandard and Contracted Work Arrangements, a study looking at nonstandard work arrangements by U.S. companies.

As the study chart below shows, 33% of firms responding to the 2020 Annual Business Survey reported they used contractors, subcontractors, independent contractors, or outside consultants.

These results are not surprising.

IRS data shows that there's been a long-term shift to contract labor by small businesses. And many studies show that a majority of big companies use contingent labor.

Echoing those studies, the GAO also sampled annual financial reports submitted by S&P 500 companies in 2021.

They found that 89% of the companies in their sample mentioned using contractors in their annual reports.

The shift to nonemployee labor by firms large and small has been going on for years. It's a trend we are forecasting to continue.

Why Firms are Adding Digital Nomad Policies

According to the 2022 MBO Partners Digital Nomad Study, the number of digital nomads in the American workforce surged 131%, to 16.9 million people between 2019 and 2022.

And as the study chart below shows (click to enlarge), the biggest surge in digital nomads came from traditional job holders.

The shift to remote work unleashed employees from their offices and desks, allowing many to become nomadic.

Unlike regular remote workers, who tend to stay in one place or shuttle back and forth between their home and a vacation retreat or a relative's house, digital nomads travel and explore while working.

This, unfortunately, can lead to legal issues, cybersecurity challenges, and tax problems.

And these issues can be expensive for firms and their employees.  

Fortune's 'Stealth workers' lying to their bosses about where they work are costing companies tons of money provides multiple examples of how firms can get into trouble by allowing their employees to work anywhere they want.

The biggest issue is that digital nomads can easily and accidentally create a new "permanent establishment" for their employer in the state or country where they're working.

That exposes the employer and the employee to the new jurisdiction's tax, regulatory, and employee compliance rules and laws.

In addition, since many digital nomads travel without their firm's knowledge, their employers may wind up breaking employment laws and regulations without any awareness that they are doing so.

The answer to these issues is to create a digital nomad policy. And all firms with digital nomads - which is most larger firms - should have such a policy.  

The Wall Street Journal's Work From Anywhere! (Well, Not Really) covers several companies that have added digital nomad policies. Key quote on Airbnb:

"Airbnb, which has as much skin in the free-range game as anyone, touts employees' license to "live and work anywhere." In practice, company policies keep roughly two dozen countries off limits. Stays in foreign countries can last no more than three months, and employees still need permanent addresses. So, not anywhere."

The Staffing Stream's Implement a Successful Digital Nomad Policy with These Best Practices provides a good starting point for creating a digital nomad policy.

And our Harvard Business Review article Your Company Needs a Digital Nomad Program goes into more detail on why they are important.  

The digital nomad trend will likely continue to grow. 

Because of this, firms of all sizes need to be aware of the risks associated with digital nomads - and have policies to mitigate these risks.

Deloitte on the Canadian Gig Economy

Deloitte's The Gig Economy is Here to Stay provides an overview of the Canadian gig economy.  

The chart below (click to enlarge) contains the key data: about one in three Canadian workers use the gig economy to generate income.

This is similar to the workforce share of gig economy workers in other developed economies.  

Deloitte provides four broad trends driving participation in the gig economy. These are:

1. Older workers are delaying their retirement.
2. Younger workers (Gen Z and Millennials) are seeking more flexible work arrangements.
3. Worker perceptions around long-term employment are changing.
4. More people are looking to supplement their income with alternative work.

We certainly agree that these trends are helping to drive the growth of independent work and the gig economy.

See Deloitte's report for more information on the Canadian gig economy.

The Creator Economy has a Middle Class - Thanks to Traditional Jobs

If you read about, participate in, or study the creator economy, you'll quickly learn that while a small share of independent creators earn a lot of money, most earn very little. 

Harvard Business Review's The Creator Economy Needs a Middle Class nicely covers this.

The HBR article's author, venture capitalist Li Jin, was also recently quoted in Fast Company's Web3 investor Li Jin thinks a Universal Creative Income can help bolster the 'passion economy' on this topic. Key quote:

"The creator economy follows this extreme power law curve where a very small sliver of creators were able to make a living ... Most creators exist in this state of precarity and are barely earning anything ... the vast majority of creators were just kind of scraping by earning a little bit of income here and there."

And data from the 2022 MBO Partners State of Independence study backs this up.

This study asked independent digital content creators (freelancers, self-employed, etc.) about their creator economy earnings.

The results fit with Jin's assessment of creator economy income. Key quote from the study:

"32% of Independent Creators make less than $5,000 annually, while only 10% make more than $100,000. About one-third (36%) report making between $5,000 and $30,000, while 22% make $30,000-$100,000."

In other words, about two-thirds of independent content creators (68%) report earning $30,000 or less from their creator economy work.

But the MBO Partners study also surveys Americans with traditional jobs.

And it turns out that about 17% of traditional job holders report they work in the creator economy. This equates to about 25 million Americans.

About half (47%) of this group report working full-time in the creator economy, with the other half (53%) saying they work part-time.

The chart below shows the reported income distribution for full-time creators with traditional jobs.

There isn't a standard definition of the middle class. But Pew Research defines "middle class" households as those earning $52,000 to $156,000 annually in 2020 dollars for a household of three.

This is not a perfect comparator with the MBO Partners data above. The MBO Partners data is for a single job, and the Pew data is for a household of 3 (many of which have two incomes). But it's a good enough comp for a blog post.

And according to Pew, in 2021, 29% of American households were lower income, 50% middle income, and 21% upper income.

After adjusting for the two income issue with the Pew data, this is similar to the MBO Partners data on full-time creators.

So there is a creator economy middle class. But its members mostly have traditional jobs.

We'll have more on the creator economy in the near future.  Emergent Research (that's us) worked with MBO Partners on this study.

The Number of U.S. Independent Workers Continued to Surge in 2022

MBO Partners released the 2022 edition of their ongoing State of Independence study series. Emergent Research (that's us) works with MBO Partners on this study.

The key finding is that the number of independent workers (freelancers, gig workers, independent contractors, etc.) reached 64.6 million, up 26% over 2021's 51.1 million.

As the study chart below shows (click to enlarge), the number of U.S. independent workers is up 57% since before the pandemic. This is despite a pandemic-induced decline in 2021.

What is also quite noticeable in this chart is that the total number of independent workers grew relatively slowly between 2015 and 2019.

This raises the question, has the pandemic - and the related shift to remote work - resulted in a growth inflection point for independent work?

We believe the answer to that question is yes. And there are both supply and demand reasons why.

On the supply side, workers are seeking to take greater control of their destiny, exercise a sense of agency, and build strong connections between their work and personal purpose.

On all these fronts, working as an independent - either part or full-time - can be a path to empowerment and self-realization. And more Americans are choosing this path.

On the demand side, firms of all sizes are increasing their use of independent talent to access specialized skills and improve business flexibility and agility.

But while we think we've reached an inflection point, independent worker growth will likely not continue at the torrid pace of the past two years.

We're forecasting that the growth rate will slow to 5%-7% next year. This is still quite fast by labor market standards.

We'll be covering other key findings in the coming weeks.

See the study microsite for more information. And click here to download the 2022 MBO Partners State of Independence report.