Opportunities Shaping the Future of Work
by Jeff Bussgang, Flybridge Capital Partners
Why would a venture capital firm like Flybridge, known primarily for its investments in infrastructure software (e.g., MongoDB), be so excited about investing in the future of work? Primarily because of people like Arestia Rosenberg, who doesn’t like to travel unless she’s working. That’s right, working.
“The experience is more that of a local one: ‘Where’s my grocery store? What’s the best yoga class?’” she observes. “Making business connections and seeking out opportunity takes more effort, but it’s great, because it’s far more rewarding.”
Through an innovative “work abroad” program called Remote Year, Rosenberg spent 12 months traveling while also working as a freelance creative consultant. The program immersed her in different communities, cultures, and settings — including a hip-hop school for at-risk and impoverished youth in Phnom Penh, Cambodia, called Tiny Toones. It was there that she stumbled on a story worth telling, and that story turned into a short documentary she recently raised more than $10,000 for on Indiegogo.
To us, Rosenberg’s professional and personal journey represents the future. All that infrastructure software that we, and others, have been investing in allow you to work securely and effectively from anywhere and raise money for passion projects, all while simultaneously exploring different pockets of the world. Technology has enabled a new way of working, and we think that represents an exciting opportunity.
In the last two years, we have focused on investing in startups that embrace this new way of working, a practice area we call “the Future of Work”. Here are a few observations we have from our work in this field:
1) Automation is Disruptive to Work, But Opportunities Arise in Times of Disruption
Advancements in areas like artificial intelligence, machine learning, robotics and the blockchain have already started to transform the nature of work and the workforce — sometimes in frightening ways. According to a McKinsey Global Institute report, 75–375 million workers (3–14% of the global workforce) will need to be retrained for new occupations by 2030. Why? Because roughly 50 percent of today’s work activities are technically automatable. Bain recently produced a similar study that predicted “decades of disruption” in labor (see figure below). As a result of automation and the information revolution, we are experiencing a hollowing out of middle skills, and therefore the middle class.
We see opportunity in these challenges — particularly at the intersection of professional development, recruiting, and learning. Our company, Codecademy, is a good example of a startup taking advantage of this trend, helping teach the world to code. Companies today have the chance to leverage these emerging technologies and provide professionals with the tools and resources they need to up-level their skills, advance their career, become independent contractors, and pursue lifelong learning.
2) Their Time Has Come: Millennials Are Ruling the Workplace
The rise of millennials in our workforce is at the center of our investment thesis. millennials value flexibility, saying in a recent survey by Deloitte, that “flexible working arrangements support greater productivity and employee engagement while enhancing personal well-being, health, and happiness.”
But that’s not all millennials look for. They also hope to make an impact and find intrinsic value in their work — and need to hear from their manager that they’re making an impact and that their contributions mean something in the bigger picture. Gallup studies show millennials want professional feedback, but only 19 percent say they receive it regularly.
“Employees who are coming in now have grown up in a generation where they’ve historically gotten far more feedback in their educational environment and extracurricular activities,” says Sean Lindsay, founder of Eager Labs. “But the lack of feedback in the workplace is a shock to them. As total digital natives, they can post a picture of their lunch online and get more feedback than they get about their work in a month on the job.”
Some may argue that the needs of millennials are not dramatically different than those of past generations. As one author quipped, “Every generation thinks it invented sex.” True, but the priorities and culture of millennials, who grew up as Net Natives, are clearly different than those of past generations. We are intrigued by startups that focus on those differences while addressing universal needs.
3) Focus on Opportunity Creation, Not Job Substitution
The negative impact of automation on jobs, in our view, is greatly exaggerated. The rise of automation isn’t about job or skill substitution, it’s about opportunity creation. As economists Lawrence Mishel and Josh Bivens recently put it in a paper on jobs and inequality: “Even if robots displace some jobs in a given commuting zone, other automation (which presumably dwarfs robot automation in the scale of investment) creates many more jobs.” We agree. There are enormous opportunities for technology and entrepreneurs to enable the worker of the future, as well as match talent with need more effectively.
One example of a change in how work is getting done is the rise of the gig economy. Now a mainstream model for matching independent workers with temporary opportunities in transportation thanks to Uber and Lyft, the gig economy approach is rippling through other industries as well. Consistent with this theme, we invested in Hyr, a startup that connects workers with open restaurant and bar shifts on-demand. Hyr workers use their mobile phones to take greater control of their schedules and lives.
Another gig economy example in our portfolio is Wethos, which matches nonprofits with skilled, affordable freelancers, allowing professionals to find meaningful work while maintaining flexibility. What we particularly liked about Wethos was that it linked the gig economy opportunity to the rising focus on workers finding purpose (also referred to as the purpose economy). Another investment at the intersection of the gig economy and the purpose economy is Splice, a cloud platform empowering artists and producers to create and share music more efficiently, allowing musicians to earn millions of dollars while expressing their love of music in the context of a passionate community.
Thanks to these companies, individuals are becoming their own boss, completing shifts whenever and wherever they want, and finding a greater sense of purpose in their work.
4) Convening Space, Flexible Space, Inspiring Space
In just eight years, Jesse’s former company, WeWork, has morphed into a $20 billion company with more than 200 shared working spaces around the world. And they’ve done that by bringing smart people together and enabling them to collaborate in a more fluid, flexible fashion. In turn, that’s attracted big companies’ attention. Flybridge Boston moved its office last year from a fancy, wood-paneled view of the Charles River to WeWork St. James. Our neighbor in our WeWork office is insurance giant Liberty Mutual. Amazon has taken over the floor below us and the likes of Bank of America, Microsoft, and Starbucks have also outsourced real estate to WeWork and signed on as tenants. That’s because WeWork brings people together in inspiring spaces to collaborate and perform inspiring work. Other entrepreneurs are working on building the next generation of inspiring spaces to work, play, eat, socialize, exercise and just generally connect. We continue to seek out inspirational ideas and entrepreneurs in this category.
In short, we are actively looking to make investments in each of these areas: bringing automation to the workplace, opportunities that arise from the gig and purpose economy, new inspiring spaces and services that cater to the unique needs of millennials.
We are placing bets in these areas because we believe Rosenberg’s experience is not unique. As she said herself: “I see the future of work as the opportunity for employees to make choices for themselves, whether that be location, hours, or job titles. I don’t think there are hard and fast rules anymore for what ‘going to work’ looks like. I see more flexibility in the employees’ hands.”
Thanks to Jesse Middleton.