Political Organizing & The Venture Economy

By Jason Gray

Originally posted October 4th 2017

Political campaigns as the blueprint

When I moved to Wisconsin on January 2, 2012 for President Obama’s re-election campaign, we had 5 field staff on the team. Only 11 months later, in the run-up to Election Day, we had 200+ field staff overseeing 25,000 volunteers who knocked on 1 million doors in the state to help turnout voters.

How did we go from small to big? … Surprisingly to many, the answer may also be the blueprint for the next wave in our decentralized economy and a compelling thesis for investment.

At the core of going from small to big were neighborhood team leaders. Many of these volunteer team leaders had never been involved in a political campaign before, but they stepped up to take on leadership roles in their communities. This role included recruiting other volunteers, leading teams, planning meetings, and overseeing other core team members, who in turn coordinated efforts to persuade their neighbors and turn them out to vote, using both online and offline tactics.

What was HQ’s role in enabling them to effectively run their own organizations in their territories? We helped inspire them to step up, trained them to take on their responsibilities, provided a technology layer to use, a data infrastructure to tap into, and metrics/goals to track toward. Within this construct, as I traveled around the state, I was consistently blown away by how individuals become entrepreneurs in their communities: running relatively complex organizations well beyond what many of them had previously thought they were capable of, and achieving big goals that mattered. All in, this decentralized entrepreneurship enabled growth and scale at the rate of the fastest growing startups.

Now as a VC with LaunchCapital, I see pieces of the campaign model present in nearly every decentralized business that’s pitched to us — and of the model as a blueprint for the next phase in our gig economy and a solution to challenges envisioning the future of work.

We’ve started with the “N=1” gig economy (like Uber).

Uber is known as the company that’s mainstreamed the gig economy, whereby individuals are empowered to operate revenue generating initiatives. But when we look back over time, history may tell the story of Uber as just the first wave of a decentralized, tech-enabled economy.

Uber’s business model is an “N=1” relationship. That is, technology with an operating platform creates opportunity for an individual to profit by offering his or her services to other individuals.

Thumbtack is similar, as is many of the marketplaces that exist out there. In all these examples, the companies have built the technology, developed the operations, and invested in marketing to create a business model that makes sense for an individual to step into and provide their individual services: driving others, providing on-demand support, serving as a mechanic, and so on. N=1.

Moving to an “N=10” model, or the Venture Economy

Increasingly however, we’re seeing more and more companies pitch “N=10” models, beyond the Gig Economy into something that seems more like a Venture Economy model. That is, business plans whereby the central organization provides the technology, operations, and marketing layer that makes it easier for individuals to run more complex ventures — many locally based and others online — that require the lead operator to manage multiple additional individuals and/or engage in higher value tasks.

I don’t think it’s happenstance. As the gig economy begins to mature, we’ll have saturated more and more of the “N=1” business models, and entrepreneurs will need to look up-market to “N=10” models to create and capture new value. This follows what Clayton Christensen has written about for decades, as new technologies and business models mature, they are increasingly incentivized to move up the value chain.

What this looks like in practice

To illustrate this with examples, let me tell you about a few companies, some you’ve probably heard of:

• Upwork’s freelancer marketplace provides the suite of tools, advertising, and technology upon which not only individuals but also small businesses now provide full service development support. When I’ve posted for development work, I’ve engage with small organizations that have built their businesses around this platform.
• Stella and Dot — they’ve built a modern jewelry marketplace by selling its products through independent merchandisers, or local entrepreneurs. Raised $42 million in funding to date.
• Wonderschool — I recently got to know Chris and his big vision for Wonderschool. They work with educators and childcare providers to help them start their own childcares or preschools out of their homes, whether they live in apartments, condos, or homes that they rent or own.
• LawnLove — one of the excellent companies we’ve been invested in since 2014. Jeremy’s one of our most impressive entrepreneurs, and he’s built a business that empowers current local lawn care providers to grow their businesses in their communities.

We’re seeing more and more companies that leverage models like this every month.

Interestingly, not only are new startups entering the market with the N=10 model, many existing major players are increasingly evolving from N=1 to N=10 models. And it’s often not by the intent of the platform founders, but driven by how users are using the platform. Consider AirBnB, while their core product supports individuals renting out their extra spaces, they are regularly experimenting with ways to increase support and tools for individuals to become super-hosts and manage multiple properties at the same. Or Etsy, which was intended to be an N=1 marketplace, is evolving as power users discovered that they could build their own brands and companies through Etsy.

This business model innovation decreases the bar for entrepreneurship (in a great way).

Put simply, imagine starting your own business and having to build the technology layer, the legal layer, the operations infrastructure and know-how, and so on. That can be both complex and expensive.

Now, in Venture Economy businesses, imagine shifting these fixed start-up costs to the central organization, where they need to be done once and the costs amortized over space and time (and can be a candidate for venture capital funding). Two shifts are occurring at the same time:

1. Reducing the overall cost of starting a new business because of the centralized know how
2. Shifting the start up costs from the individual to the central organization, and thereby making it much more affordable to start a new business

In turn, we’ve lowered the barriers to entry (in a good way) for entrepreneurship and may unleash the potential of thousands of more people to start N=10 ventures for their communities — whether online or offline. That is, businesses that level-up in terms of complexity and value capture.

It is almost identical to what has been demonstrated and proven in tech-enabled political organizing. And in addition to potential for returns on investment, in a world where workplace needs are quickly shifting, it’s an opportunity that might help provide for thousands of new, good jobs across the country.

Note: Thanks to Jason Lu and Ian Hiltz for contributions here.

Originally published at launchcapital.com.