Small Business Labs

Non-Profit Sector Big and Growing Faster Than Overall Employment

The Johns Hopkins Non-Profit Economic Data Project recently released its 2019 Non-Profit Employment Report. 

There are two key findings.  The first is the U.S non-profit sector is big, employing 12.3 million paid workers.  

As the study chart below shows, this makes the non-profit sector as big in terms of employment as the U.S. manufacturing sector.

The non-profit sector is also growing relatively rapidly. 

As the report chart below shows, from 2007 to 2016 (the most recently available data) employment in the non-profit sector grew nearly four times faster than the for-profit sector. 

We've long covered non-profits because the vast majority of them are small businesses. Over 80% of all non-profits spend less than $1 million per year in total expenditures.

And since there are about 1.5 million U.S. non-profits, a quick bit of math shows that the average non-profit has 8.2 employees.  

We've also long forecast that the non-profit sector would outgrow the for-profit sector of the economy. We continue to forecast this. The trends driving this growth include:

• The Internet and other technology makes is making it easier to start and operate a non-profit and especially small non-profits.
• Baby boomers, looking for encore careers and a way to give back, are starting growing numbers of non-profits.
• Millennials, who have a strong interest in social service, are starting non-profits.
• Non-profits and social service organizations are in many cases replacing governments as the key solvers of social problems.
• Revenue generating business models have become more common, which is leading to more self-sustaining non-profits. 

One issue may detract from the continued growth of non-profits is changes in tax laws. Key quote from the Johns Hopkins report:

"... the Federal Tax Cut and Jobs Act passed in December 2017 included several items that could have a negative effect on nonprofits’ ability to generate private donations. For example, by greatly expanding the standard deduction available to individuals, the tax bill will eliminate the tax incentives for giving for millions of taxpayers."

While we agree this is a risk, we believe donors will continue to provide enough support for this sector to continue to grow.

Quibi Bets Big on Mobile Movies

Quibi is a startup entertainment company that has raised $1.4 billion in venture funding to build a new content streaming service designed exclusively for mobile devices. 

Founded by Hollywood titan Jeffrey Katzenberg and led by CEO Meg Whitman, a Silicon Valley titan, the company has additional star power because of who they've signed up to provide content. 

According to TechCrunch:

"Quibi has attracted big-name talent to help kick off its first year, including Academy Award winners Steven Spielberg, Peter Farrelly and Guillermo del Toro; directors like Antoine Fuqua, Lena Waithe, Sam Raimi and Catherine Hardwicke; and stars like Stephan James, Chrissy Tiegen, Laurence Fishburne, Dave Franco, Bill Murray, Emily Mortimer and Kevin Hart, to name a few."

Quibi, which is short for “quick bites” is going to offer short-form videos of 4 to 10 minutes on everything from movies and TV shows in the form of short chapters to daily news and sports reports. 

These bite-sized pieces of content will have Hollywood quality production values, meaning they're expensive to make.  According to MarketWatch's article on Quibi:

"Lighthouses,” the service’s premium videos, will cost about $100,000-per-minute to produce, on par with some of the most expensive shows on TV.

The question, of course, is whether or not people want and will pay for high quality, short-form video entertainment on their phone (Quibi is planning on charging $4.99 to $7.99 per month for access to their content). 

Key quote from Fortune from Jeffrey Katzenberg on why Quibi will work:

“Everything they’re being offered today is centered around the TV. This is about your in-between time,” he told Fortune. “It’s quick bites, on the go and in between. It’s a very, very different viewing habit that we know our anticipated customers already have.… There is an unbelievable amount of content being consumed today on phones on the go. It’s just not of this quality.”

The shift to mobile computing devices is one of the most powerful technology trends of the past decade.

Whether Quibi is successful or not, it's an excellent example of the continuing impact this shift is having.

The Rise of Career Nomadism

Korn Ferry is a large, global organizational consulting and recruiting firm. Their research institute recently released their Top 10 Talent Trends for the New Year.  

All the trends are interesting. But the one that jumped out at us is the rise of career nomadism.

Key quote describing this group:

"... there’s an increasing amount of employees who actually want to make walking out the door a major part of their career. These “career nomads” are high-performing talented pros who have no qualms switching jobs, organizations and even careers. Millennials, people born between 1982 and 2000 and now the largest part of the US workforce, seem particularly disinterested in staying put."

Korn Ferry goes on to say that corporations are going to need to attract and keep these nomads happy or miss out on a key source of top talent.

We certainly agree. And we see this as one of the drivers of the growth of independent work (freelancing, independent consulting, etc.). 

Work is becoming more team and project-oriented, and the barriers separating traditional and independent work continue to erode. For an increasing number of workers, it’s not simply a matter of having a traditional payroll job or working independently. 

Instead, many are doing both, developing their professional lives by shifting back and forth between independent work and traditional employment. 

Often workers choose to go independent to explore new opportunities, learn new skills or gain flexibility. Later on, many rotate back to traditional jobs. 

The most extreme version of career nomads are digital nomads. And as with career nomads, millennials are particularly interested in spending some part of their careers as digital nomads. 

Talent mobility is a growing fact of corporate life, especially among highly skilled workers.  Hiring organizations need to accept and adapt to this new reality.

The Paradox of Increasing Business Travel; Skift's 2020 Travel Trends

Skift is one of our favorite publications. It covers the travel, dining, and wellness industries from a business perspective. Because of their remit, they report on a wide range of interesting trends.

The recently released their 10 Business Travel Trends for 2020. The 10 are:

1. The Power of Being There in Person
2. Designing Great User Experiences to Boost Adoption
3. Travelers Demand an End-to-End Experience
4. Winning the Price, Loyalty, and Experience Trifecta
5. Platforms Simplify the Ancillary Purchase Process
6. Expanding the Sharing Economy
7. Bleisure Travel is the New Black
8. Rethinking Corporate Travel Expenses
9. Business Travel Culture Drives Company Success
10. Taking Care of Business, the Traveler, and the Planet

While we like all of these trends, we find The Power of Being There in Person the most interesting. Key quote from the report on this trend:

Video and digital collaboration tools have transformed the modern workplace. Today,  employees can easily collaborate with co-workers around the world, offering a huge boost to productivity and what would seem to be growing opportunities to reduce travel costs. But in spite of the increasing potential of these digital collaboration tools to transform modern business, the importance of face-to-face meetings remains strong and critical to business success.

The chart below illustrates the fact that 9 out of 10 business executives surveyed agree with this.

We think this trend is similar to the paradox of place. This paradox is even though the Internet and connective technologies have made working remotely easier than ever, people and companies are increasingly clustering together in fewer, more valuable locations.

A related paradox is despite these same tools being able to substitute for business travel, business travel continues to grow. 

Our view is connective technology is, somewhat counter-intuitively, helping to drive the growth of business travel. It’s doing this in 3 ways.

1. Connective technologies have allowed business operations and workers to become more distributed. This means more travel as managers and employees travel to meet with those not co-located.
2. Connective technologies have also increased the number of people who work together regularly, but aren’t co-located. Thanks to the Internet and related tools, companies are more willing to create distributed teams and allow team members to live away from their teammates.  This leads to more travel and more people traveling because these distributed teams get together in-person.

3. Related to 2, connective technologies have led to more cross-organizational teams comprised of business partners, suppliers, customers and company employees. These teams are almost always distributed, which creates the travel need to get together.

We’re seeing signs that paradox of place is starting to shift, with work becoming more distributed. This likely means there will be more business travel in the near future.

We’ll have more on this topic in the new year.

The Rise of Esports

Quartz’s members-only article (meaning you have to be a paying subscriber to see it) The stars, teams, and investors turning esports into big business nicely covers the rise of esports.

Key quote:

“Tens of millions of viewers are tuning in to watch other people play video games competitively, and it’s becoming big business …  it is creating a new kind of sports star, and both the gaming industry and professional sports franchises have taken notice.”

As the Quartz chart below shows, esports' revenue is growing rapidly and expected to generate about $1.1 billion in revenue is 2019. 

According to the article, esports started in 1982 with a TV show Starcade, in which teenagers competed in arcade games. Alex Trabek of Jeopardy fame even hosted one of the episodes. 

Since then the industry has grown to the point where professional sports teams are getting involved. Again from the Quartz article:

“The Philadelphia 76ers have bought esports teams and are providing them access to training facilities —and they’re not the only ones. New England Patriots owner Robert Kraft owns a team, as does Los Angeles Rams owner Stan Kroenke.”

Esports is an excellent example of how technology is creating societal change – and new businesses and opportunities.

BTW, we find the Quartz premium membership service to be well worth its cost. We particularly like their weekly subject briefings, like this one on esports. 

Remote and Distributed Work Driving Growth Outside of Major Cities

Citylab's Talent May Be Shifting Away From Superstar Cities covers research showing that the fast-growing "superstar cities" - New York, San Francisco, Seattle, Los Angeles, Washington, DC - may be slowing down. 

Taking their place in attracting talent are lower-cost cities and towns, mostly in the sunbelt. 

The data comes from EMSI's Talent Attraction Scorecard, which looks at six metrics by county: job growth, skilled job growth, net migration, annual openings for skilled workers (per capita), educational attainment growth (based on adults with associate degrees and above), and a broad measure of regional competitiveness.

In addition to finding talent is spreading out across the U.S., the study also found continued growth of remote workers - again, especially in lower-cost areas of the country. 

EMSI found about 7 million Americans report being full-time remote workers. This is about 4.7% of the workforce.  

As the study chart below shows (click to enlarge), many Western cities have a much higher percentage of remote workers than the national average.

There are several drivers of the shift away from superstar cities.  Key quote from the article:

The big knowledge and tech hubs which once had such a stranglehold on attracting talent seem to be losing their allure. Many places around the country now have bundles of amenities—renovated old buildings, coffee shops and good restaurants, music venues, and not least of all, more affordable homes—that can compete with the biggest cities. In other words, the amenity gap between superstar cities and other places has closed, while the housing-price gap has widened.

Another driver is continued improvements in distributed work technologies. With the advancements of video conferencing and online collaboration tools, it's become much easier to interact with and manage remote workers.

We believe the trend towards distributed work will continue and even accelerate over the next 5 years.  The economics of moving to lower-cost areas of the country are simply too strong for this not to happen.    

Renewable Energy to Pass Coal for U.S. Electricity Generation in 2021

According to the Institute for Energy Economics and Financial Analysis (IEEFA), renewable energy sources will pass coal in terms of U.S. electricity generation in 2021.

As their chart below shows, each of the sources will produce around 800 billion kilowatts of electricity in 2021.

Included in the IEEFA's definition of renewables are utility-scale biomass, geothermal, hydropower, solar and wind, plus small-scale solar.  

The fastest-growing of these sources by far are wind and solar. They are forecast to continue growing at the pace of the past couple of years (around 20% for solar and 10% for wind). 

Coal generation, as the chart below shows, has been rapidly declining since it's peak year in 2010.

Simply put, coal is not economically competitive with other sources. This even though many of the costs of coal (pollution, worker health problems, etc.) are not included in its price.

As cheaper and more efficient ways to store energy become available, there will be even less need for coal plants.

Expect coal's rapid decline to continue. Also, expect solar's growth to continue.

This is good news for both the economy and the environment.  Solar energy creates more jobs (and better jobs) than the coal industry as well as being much better for the environment. 

Scientific American's Top Emerging Technologies of 2019

Scientific American's describes their Top 10 Emerging Technologies Of 2019 as "World-changing technologies that are poised to rattle the status quo." 

Key article quote on the technologies:

One day soon an emerging technology highlighted in this report will allow you to virtually teleport to a distant site and actually feel the handshakes and hugs of fellow cyber travelers. Also close to becoming commonplace: humanoid (and animaloid) robots designed to socialize with people; a system for pinpointing the source of a food-poisoning outbreak in just seconds; minuscule lenses that will pave the way for diminutive cameras and other devices; strong, biodegradable plastics that can be fashioned from otherwise useless plant wastes; DNA-based data-storage systems that will reliably stow ginormous amounts of information; and more.

It's a great list and hard to argue these technologies won't have a big impact.

But you could easily argue about when "one day soon" will be.

By far the hardest part of technology forecasting is timing. 

Identifying trends is pretty easy.  For example, it's not hard to predict that AI will improve and have a big future impact.

What is hard is identifying when the impact will occur. 

Back in 2014, there were lots of forecasts that AI-based driverless cars would be common by 2020. There were also many forecasts that many professions - accounting, medicine, law, etc. - would be disrupted by AI by 2020.

These forecasts were obviously wrong.  

So while we agree that the technologies in this list will have a big impact, whether or not the impact is "soon" will depend on your definition of "soon". 

All of the technologies listed are under development.

And a few (social robots, for example) have reached the point where there are in-market examples. 

But don't expect widely commercialized versions of most of these technologies for at least another 10 years, and in some cases much longer.

Pew Internet: Experts Optimistic about Digital Life over the Next 50 Years

Pew internet's Experts Optimistic About the Next 50 Years of Digital Life project asked hundreds of technology experts how people's lives might be impacted by the evolution of the internet over the next 50 years.

72% of the respondents said there would be change for the better, 25% said there would be change for the worse and 3% believe there would be no significant change.

Key quote on why most are positive:

The optimists responding to the better-worse-no change question expressed hope that in the next 50 years digital advances will lead to longer lifespans, greater leisure, more equitable distributions of wealth and power and other possibilities to enhance human well-being.

But as Pew points out, even most of the optimists said there are potential downsides:

... nearly all of these experts’ written predictions included warnings about the possibilities of greater surveillance and data-abuse practices by corporations and governments, porous security for digitally connected systems and the prospect of greater economic inequality and digital divides unless policy solutions push societies in different directions.

What these experts recognize is technology can be used for both good and evil purposes. It's up to us to decide which.

The report is long, but the first page provides an excellent summary.

Corporations Starting to Embrace Digital Nomads

12 months living as a digital nomad, from LinkedIn, describes how a GE talent development executive spent a year as a digital nomad.

The key quote describes what she did when she finished her year as a digital nomad:

A point of culmination of this experiment is when I had the opportunity to pitch my experience to the CHRO of GE and so I have presented my learnings about this aspect of the future of HR, painting an image of digital nomads and flexible work at GE.

In the forecasting business, this is what's called a signal.

And in this case, the signal is corporations are starting to consider creating digital nomad programs.

There are 3 reasons we see this as a strong signal.

First, the author of this article is in talent development. This means she works with the people who decide the remote work policies at GE.

Having someone in her position supporting digital nomadism makes it much more likely GE will allow others to become digital nomads.

Related to this, she was able to pitch the chief human relations officer (CHRO) at GE on her experiences. This means the senior team at GE is now aware of digital nomads.

And 3rd, this didn't happen at Google or Facebook or some tech startup. It happened at GE, a traditional manufacturing firm. 

According to the findings of the 2019 MBO Partners digital nomad study, there are about 7.3 million American digital nomads. Of these, about 3.1 million report having traditional jobs.

Based on our digital nomad interviews, the vast majority of job holding digital nomads have been allowed to do this outside of any official corporate policy.  In most cases, their boss decided to allow them to travel. 

This is starting to change. As with GE, corporations are starting to explore, evaluate and consider - and in some cases, putting in place - digital nomad policies and programs. 

See the MBO Partners digital nomad research brief (we worked with MBO Partners on this study) for more on this topic.