Shifting Tides in the New Economy
For as “new” and unprecedented as the new economy may seem— from business models based on our phones to freemiums, disintermediation and the blockchain — it’s not nearly as new as one might believe.
When we take a step back and take a genuinely hard look at what’s going on, we also see that old and new are merging. It’s not a one-way street to the future, and we’re learning from (and sometimes revisiting) the past by blending the best of different business models, reviving awesome-yet-underappreciated concepts, and reckoning with mistakes — especially on the regulatory front.
Companies are adapting
Increasingly, new and old companies are learning from one another. And as startups put traditional companies to task, we see established players innovating in new ways.
Take Airbnb, which now claims more rooms than all major hotel brands combined. Hotels have begun to see that shared and collaborative use of space is actually really smart, at the same time that many people still like hotels. Marriott has expanded into shared office and meeting space through its Workspace on Demand initiative, and Accor Hotels has gone on an acquisition spree of sharing economy-related platforms (most notably onefinestay).
For some time, the most popularly requested task on TaskRabbit has been IKEA furniture assembly. In September, IKEA announced it was acquiring TaskRabbit and would continue to welcome tasks of all kinds on the platform.
WeWork’s acquisition of the landmark Lord & Taylor New York City building for $850 million in October, followed by Meetup this month, could mean many things. For one, it probably means more meetups and more efficient use of office space (and of course assumes continued WeWork expansion). It’s also nudging commercial real estate developers into new ways of thinking, financing and connecting.
At a hyper-local level, Portland’s Fair Haired Dumbbell building is the first commercial real estate project partially crowdfunded under new JOBS Act rules. The project team are blending new and old models to radically transform real estate funding options in ways that also tackle affordable housing and gentrification, empowering average individuals to participate in the process. It’s a model that architects and cities could deploy nationwide. What’s more, the architects wish exactly that, so their templates and pro formas are openly available to download on their site (as is the easiest-to-understand explanation of Regulation D imaginable… humor included.)
In the workplace, a shift from jobs to work and from education to learning
The rise of freelancers continues apace. They’re growing three times as fast as the rest of the workforce, and by 2027 (three years earlier than originally forecast) they will represent over half of the U.S. workforce.
A favorite recent quote: “if everyone can have the flexibility of being an independent contractor while also enjoying benefits, why would anyone have jobs?”
Keep in mind, there’s nothing new about freelancing. For most of human history (until post-Industrial Revolution) work has been arranged in myriad ways, overwhelmingly on a non-employee basis. The term itself comes from “free lances,” which were medieval soldiers for hire, rather than bound to one master.
Over successive centuries we’ve had guilds, associations and professional networks, many of which have been highly successful at income generation and social safety nets. Renewing and updating these structures for the digital economy is one of the biggest opportunities of this century.
Meanwhile, new educational organizations are launching to prepare workers for this new workplace reality. MissionU is prototyping new kinds of vocational partnerships and skills-based credentials that students can use to either replace or supplement traditional university education, and doing so without the debt that plagues so many young workers (especially in the US) upon graduation.
We’ll continue to see worker misclassification lawsuits (are digital platform providers independent contractors or employees?) and platforms in a catch-22 when it comes to investing in non-employee workers’ professional development, until there is legal and policy clarity around their status. This is not going to change overnight. Even once new worker definitions emerge, there remains the hard(er) work of restructuring and rebalancing social safety nets and their concurrent responsibilities amongst workers, platforms and the government. (Portable, flexible benefits are a top priority.) However, in the meantime we will see — and are already seeing! — tremendous experimentation and growth of supporting services. For example, Intuit’s QuickBooks Self-Employed product suite is now at the core of the company’s mission and growth (disclosure: I am an advisor to the QBSE team).
Regulators are finally leaning in and catching up, though still not “ahead of the curve”
Five years ago, if you had asked an average government official what the sharing economy was, 95% of the responses would have been blank stares. Three years ago, that figure would have been about 60%. (This is based on my first-hand experiences around the world.) Today, it’s still not 100% but we have seen a sea change in public sector awareness.
This goes far beyond regulatory action such as the now-infamous recent case London’s transit authority denying Uber’s license to renew. Keep in mind, TfL did not say it was against ridehailing; it said Uber was not “fit for purpose.” Expect to see more local players enter, and more local government support of them.
Policy makers at all ends of the earth are getting involved. I have worked from Cape Town to Kuala Lumpur to Copenhagen in the past few months alone. My broader portfolio spans Singapore to Sri Lanka, Kenya to South Korea, Canada to Colombia to California. It is encouraging to see organizations such as Wesgro step up and bridge public and private sector needs, and governments such as Malaysia to proudly declare their support for and investment in freelancers. In other countries, notably the Nordics, resistance to freelance trends remains disheartening. The new Sharing Cities Alliance seeks to bring forward-thinking municipal leaders together.
Interestingly, we’re seeing a handful of policy approaches that would have been unthinkable a few years ago. Take, for example, dockless bikesharing pioneered by China and now expanding worldwide. Cities such as Paris have demanded that companies have a license to operate before launching, having learned from the challenges that such platforms have had in China. This never would have happened with Vélib, its traditional bikesharing scheme. Are governments finally learning, and are these new approaches fair and appropriate?
Many entrepreneurs and investors are shifting, too
One of the most striking and potentially most powerful shifts is about business models themselves. For starters, blockchain stands to upend, simplify, improve upon and and render obsolete many business practices once taken to be standard. The magnitude and impact of the blockchain has yet to be fully understood or realized.
Alongside this, a very different kind of conversation is gaining voice. It’s among entrepreneurs who wish to build companies other than unicorns (read: long-term community benefit over short-term financial profits, often with no desire to exit at all), workers who wish to have a more meaningful role in company vision, and investors that wish to fund this kind of initiative and companies.
Recently platform cooperatives and zebra companies have taken center stage in these discussions about new models, although mainstream media is yet to catch on. Neither of these concepts is new in itself; rather, they are building on time-worn concepts (of cooperatives, social capital and resilience) and updating them for the 21st century economy. Platform coops harness technology in ways that overcome some of the challenges of traditional co-ops (such as governance), while zebra companies can leverage the parallel growth of impact investing and conscious capitalism to build an entirely new company ecosystem.
Again, these changes won’t happen overnight, but we are in the early stages of what may become one of the most exciting, fulfilling chapters in modern history. We must remember to look backwards in order to guide our looking forwards — history has much to reveal to us.