Small Business Labs

Excellent Schwab Podcast Explains Survey Selection Bias

Every so often, we write an article knowing few people will read it.  And let's face it, survey sample selection bias is not a hot topic.

But you should read this article because survey selection bias is a growing problem.

This is because easy-to-use online survey tools allow people who are untrained in survey methods to easily and quickly create and field surveys.

Schwab's Choiceology podcast Survey Says covers what selection bias is and why it's a problem.  

The podcast starts with the story of the 1936 presidential election, which Franklin Roosevelt won in a landslide over Republican Alf Landon.

What few know about that election is that the Literary Digest presidential poll, considered the gold standard of presidential polls at the time, predicted Alf Landon would not just win - he would win in a landslide. 

This, of course, was a huge miss. Key quote from Social Science History's "President" Landon and the 1936 Literary Digest Poll:

"The disastrous prediction of an Alf Landon victory in the 1936 presidential election by the Literary Digest poll is a landmark event in the history of American survey research in general and polling in particular."

The prediction was so bad that the Literary Digest - a respected and successful magazine - went out of business two years later.

The failure was due to selection bias. Simply put, the Literary Digest's survey sample heavily overweighted Landon supporters. This led to an erroneous prediction that Landon would win.  

Because we're industry analysts, we review dozens of surveys yearly. More than a few suffer from selection bias, and we know not to trust their results.

So if you're a user of surveys or someone who fields surveys, you need to know about selection bias - and how to identify and avoid it.

And listening to the Schwab podcast is a quick and easy way to do this.  

Commercial Real Estate Industry Facing The Perfect Storm

Commercial real estate is getting a lot of media attention, with most articles forecasting stormy weather ahead for the industry.

For example, the title of Goldman Sachs's recent podcast on this topic is Navigating the 'perfect storm' in commercial real estate.

The Wall Street Journal's Commercial Real-Estate Woes Run Deeper Than in Past Downturns is also gloomy. Key quote: 

"Landlords are contending simultaneously with a cyclical market downturn and with secular changes in the way people work, live and shop. The sudden surge in interest rates caused property values to fall, while the rise of remote work and e-commerce are reducing demand for office and retail space."

Fortune's Office vacancy will increase by 55% by the end of the decade as hybrid and remote work push real estate to an 'inflection point' again paints a grim picture. Key quote:

"As much as 330 million square feet of U.S. office space could become vacant and unused by 2030 due to remote and hybrid work, according to a report released Wednesday by global real estate firm Cushman & Wakefield. When added to another 740 million square feet of space that will become vacant from "natural" causes, the total is around 1 billion square feet of unused office space building up over the next seven years."

And the retail industry continues to get hit by the shift to online shopping - and has to also deal with challenges related to remote work.  

Yahoo Finance's Retail store closures 'to sharply accelerate going forward': UBS research covers a study that estimates that "50,000 retail stores will close out of the current base of 940,000 stores in the United States by 2027, excluding gas and food service stations."  

If things turn out to be as dire as these articles are saying, it will have significant negative impacts on the overall economy.

We're more optimistic than these articles.  

But small businesses and independent workers with exposure to the commercial real estate industry should think through how they will deal with a major downturn in the commercial real estate market. 

Update The New York Times published A Bleak Outlook for Manhattan’s Office Space May Signal a Bigger Problem this morning.  It's hard to keep up with all the gloom and doom commercial real estate stories these days.  

The impact of Recent Layoffs on Freelancing

Historically, job security has been one of the main attractions of a traditional full-time job.

But research (click on the chart below to enlarge) from the long-running MBO Partners State of Independence study shows a growing share of independent workers believe independent work is more secure than a traditional job. 

The study has also found that the share of traditional jobholders saying independent work is less risky than a traditional job is also growing, increasing from 18% in 2018 to 33% in 2022. 

Put another way, 7 in 10 independents and 1 in 3 traditional employees say independent work is more secure than traditional employment.

And the rash of layoffs in tech is reinforcing this view.  

Two recent articles on this topic caught our eye.

Vox's Tech Workers are Increasingly Taking Contract Jobs covers the recent tech industry layoffs. Key quote:

"Part of what's leading more people to independent work is that regular employment doesn't look so hot right now in certain industries ... All of a sudden, contract work isn't looking so bad."

The article also points out something we often hear in our interviews - because most independent workers have multiple sources of income, they feel more secure than if they were relying on a single employer:

"It's almost like diversifying your stock portfolio," she said. "Instead of working for one company, I'm going to work for several because if one of them doesn't have work, the other ones do."

The Information's Tales from the Shredder: How a Quarter-Million Fired Tech Workers Are Picking Up the Pieces focuses more on the human impact of getting laid off.  

Our favorite quote is from a laid-off tech worker that illustrates the lack of security of traditional jobs:

"They paid us well; they gave us good severance," he said. "But the experience made me feel like I was just a tool. If they need you, they hire you. If they don't need you, they discard you."

The choice between a traditional job and freelancing generally comes down to an evaluation of the pros and cons of each.

And anything that makes traditional jobs less attractive - like a lot of publicity about layoffs - makes freelancing more attractive, and means more workers making a choice will choose freelancing. 

Emergent Research (that's us) works with MBO Partners on the State of Independence study series.

What are DINKWADs?

Regular readers know that two of our favorite topics here at Small Business Labs are new buzzwords and pet trends.

So we had to cover DINKWADs, a new to us buzzword.  

It stands for "dual income, no kids, with a dog."  

DINKs is an old buzzword. It was coined when yuppies (a 1980s buzzword for young urban professionals) started pairing up.   

DINKWADs adds, "with a dog."

The Insider's Meet the DINKWADs: The TikTok legion making everyone jealous with their double incomes, no kids, and a dog covers this new acronym and trend. Key quote:

"The allure of the DINKWAD lifestyle is solely based on financial and personal freedom from any responsibility," Ahmed said. Instead, Benfield and Ahmed love to travel and are both passionate about not having children. They have a beloved rescue mutt named Yvie instead."

The same type of quote appeared in the old DINK stories, but without the mention of dogs.

But since the acronym DINK was coined, the trend toward pet humanization has dramatically accelerated.

And now, pets - and especially dogs - have become viewed as family members and kid substitutes. 

And you can pridefully show you're a DINKWAD by wearing a DINKWAD t-shirt (available from Etsy).

We cover trends like this because declining birthrates have significant, long-term economic and social impacts.

Key quote from our article U.S. Birthrate Hits Another All-time Low:

"Declining fertility and birth rates have enormous social and economic implications. They lead to reduced economic growth, make it harder to pay for social programs (especially social security and Medicare) and cause economic dislocations due to changing demand patterns."

See our Demographics and Pet Trends sections for more on this topic.

Skift's Travel Industry Megatrends

Skift is a travel industry analyst firm and one of our favorite sources on travel trends. Much of their content is behind a paywall, but they also produce free content (we subscribe to several of their newsletters).  

We follow travel trends because of our interest in remote work and digital nomads. We're also active travelers, so we like travel trends.  

They recently released their 2023 Travel Megatrends report. It covers 22 travel and travel industry trends.

Two trends jumped out at us. 

Blended Travel Comes of Age covers the growth of travel that includes work and leisure. Key quote:

"The pandemic has led to a permanent change in how we live our lives between work and the personal. No longer just a trite category called "bleisure," the idea of blended traveling is front and center for every major travel company now. How new strategies focused on the blended traveler will emerge more clearly in 2023, as the industry recognizes the whole traveler holistically." 

As the Skift chart below shows (click to enlarge), the share of business travel that includes a weekend has increased substantially since the start of the pandemic.

Because of the growth of blended travel, the entire travel industry is trying to figure out how to serve this market segment better.

The other trend that caught our eye is The Anywhere Traveler Puts New Destinations on the Map. Key quote:

"Millennials now surpass Boomers as the largest sector of the U.S. population, giving rise to a new class of "anywhere travelers." This group has a strong passion for experiences that take them to less obvious destinations. These habits, in their own way a new form of balancing overtourism, will put new destinations in focus."

We like this trend for several reasons.  

First, It illustrates one set of impacts due to the aging of baby boomers. Aging boomers will have many economic and societal impacts, and these, in our opinion, are being underestimated.

And second, the Anywhere Traveler will increasingly be a remote worker or digital nomad.  

The other 20 trends are also interesting, and the report is well worth reading for anyone interested in shifts and trends.

Wunderman Thompson's 100 Trends to Watch in the Coming Year

Wunderman Thompson's Future 100: 2023, which is one of our favorite annual trend reports, was released this week.

It's one of our favorites for several reasons.

First, since a global marketing agency produces it, the production values are outstanding. It's well-written, and the pictures and illustrations are fun and often intriguing.

Second, who else puts out a report with 100 trends? It's almost too much to go through.

And finally, the report includes 10 consumer trend categories covering everything from beauty to work. Click to enlarge the chart below.

We always have our favorite trends from this report.

This year they include The Artisan Wave, Situationships, Non-Linear Work, and Deepsea Tourism. See the report for descriptions.

And we're always interested in their top 3 destinations. This year they are Morocco, Kyoto, and Tanzania. We've been to all three and they're great places to visit.

If you're interested in consumer trends, this report should be on your reading list. It's free.

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.