The gig economy is social
Exploring the intersection of social and finance in the gig economy
Building and getting traction on a social component or feature within your product is highly desirable. Why? Because if successful, it’s a tremendously powerful engine that drives retention, monetization, and acquisition. However, it isn’t a universal strategy that just any product and target audience can succeed in. It requires specific consumer demographics and behaviors that are aligned to product experiences and value propositions to have the right ingredients for adoption.
Financial services has been one of those industries where social experiences were believed to be fundamentally misaligned with the demographics involved, sensitive information, cultural norms, and the distinct 1–1 relationship between providers and customers.
However, the rise of new niche fintech products for younger, more digitally native, and social consumers has begun to challenge this belief.
The Holy Grail
In A16Z’s new ‘social strikes back’ content series, D’Arcy Coolican, Anish Acharya, and Lauren Murrow explain the ‘holy grail’ of combining social experiences with modern financial services. For an industry that has become increasingly competitive and fragmented, with declining switching costs and increasing customer acquisition costs, the potential of social experiences to create or accelerate new growth for acquisition, retention, and monetization looks like the killer edge.
At Moves, we believe that the majority of participants in the gig economy are digitally native and organically participate in online and offline social communities surrounding their diverse interests. We also believe that financial behaviors and transactions are at the core of participating in the gig economy. These two characteristics create an ecosystem of social experiences for participants in the gig economy that are fundamentally financial in nature. In this article, we hope to present these characteristics at play in the gig economy, drawing on examples from other social finance products in order to frame the opportunity we’re excited to explore and share our ideas within this design space.
To illustrate the ‘holy grail’ outcomes of a social + financial ecosystem at scale and dive into the building blocks needed to make it possible, look no further than Robinhood.
Robinhood’s mobile-first, commission-free trading and easy access to investment products addressed the underserved need of young millennials seeking an alternative path to financial wealth. Their product provided a platform for this emerging sub-culture to effortlessly strive towards their shared desires and as a result, formalized and grew the social interactions within it. In parallel, two secular trends - record low-interest rates fueling a decade-long equity bull run and continued growth in social network adoption and engagement within their target audience bolstered their exponential growth since inception.
A few characteristics that shape the social culture that surrounds millennials focused trading apps like Robinhood:
Common Desire
- Seeking an alternative path to financial wealth and independence outside of hourly earnings or salaries
- Achieving financial returns independently, in opposition to ‘traditional’ advisors, strategies, and products
Common Problem
- Navigating the journey towards financial wealth and independence. Understanding how to access and evaluate where to apply their disposable income or investment funds
Common Empathy
- The emotional ups and downs of self-directed investment performance
- The feeling of missing out on market opportunities
- A sense of shared understanding and continuous reinforcement towards desires
Demographics & Macro Forces
- Primarily mid-to-high income millennials with high adoption of social platforms, HENRYs (High Earners Not Rich Yet)
- Distinct view on financial wealth and investments shaped by the 2008–09 financial crisis, record low interest rates driving continued record market highs, stagnant wage growth, and rising student debt.
What impact has this had on Robinhood’s success?
r/Wallstreetbets, 50/50 PLTR & TSLA portfolios, and GME short squeezes.
As of June 2020, Robinhood has a valuation of $11.2B with over 13M users, having added 3M new users within the first quarter of 2020. Robinhood growth has been catalyzed from the aforementioned macro trends and now having reached tens of millions of young retail traders it has begun contributing to them. As Robinhood’s user base increases along with the value of their financial assets, their social experiences of sharing information, coordinating actions, and creating narratives have begun to impact the nature of the very markets they invest into. The rise of the ‘Robinhood trader’ has altered perspectives on retail investor risk appetite, showcased by highly speculative trades (ex: Hertz, GME) and the proliferation of options strategies. Their social interactions have become a signal for what markets could do, and the recognition of the signal itself has on occasion resulted in the self-actualization of their narratives and ultimately their desires. The awareness of this social culture and the ongoing utility its participants receive from it (achieving desires, empathy, etc) continue to bolster the growth of Robinhood.
Social Culture in the Gig Economy
The supply side of the gig economy (eg, drivers, couriers, taskers) is made up of millions of independent workers. While they operate independently from each other and the applications they earn from, they have developed and maintain strong social experiences with each other based on common characteristics. The participants within the gig economy are highly diverse, yet find common ground across identities (ex: student vs full-time driver) and within the massive existing communities that operate within the gig economy (ex: taxi drivers, new immigrants). These intersections develop social experiences within the gig economy that support the objectives, challenges and daily life of its participants. These social experiences are not universal to all gig workers, but its presence within distinct communities (ex: rideshare drivers), platforms (ex: DoorDash), and or locations (ex: couriers of Toronto) within the economy engage a critical mass of its participants and drive awareness, narratives and ultimately outcomes that span the entire gig economy.
All quotes below are from primary users interviews
Common Desires
- Access income-earning opportunities quickly, with minimal barriers to entry
“Uber is the default way to start earning income when you immigrate here”
– Karim, Uber Driver at Toronto Pearson Airport Lot
- Increase income to reach short-term financial goals (ex: pay off debt, save for higher education, build up savings)
- An alternative path to traditional careers focused on flexibility and independence
“My goal is to have more financial independence”
– Carlos, New York based courier on DoorDash, Uber Eats and Postmates
- Leverage flexible earnings platforms to explore and set up towards future goals (ex: starting a small business)
“It’s the flexibility, but I can also make money. I get to pursue my hobbies and interests, but I also get out of the house. I can have a consistent schedule that isn’t 9–5.”
-Thomas, New York based driver on Uber and Postmates
Common Problems
- Navigating the financial challenges of being an independent worker (ex: income volatility, accessing traditional financial products, benefits, etc)
“I was told my loan application wouldn’t be accepted with Uber Income”
-Steve, Ontario Uber Driver
- The unpredictability of gig work (ex: orders, tips, app changes, regulation)
“Sometimes there just aren’t any Instacart orders that day and I owe bills the next”
– Jackie, California Instacart Shopper
Common Empathy
- The unique experiences of the gig economy: the good the bad and the ugly
- Sharing experiences, news, and strategies to succeed as a group
Demographics & Macro Forces
- Individuals between the ages of 16–25 and 26–35 make up the two largest demographics of gig workers. These two demographics have been shaped by the internet, facilitating the majority of their social and economic transactions online. It’s no surprise that 38% of Americans between the ages of 18–34 are earning income from gig apps.
- The proliferation of gig platforms facilitating marketplaces from rideshare to home improvements to dog walking has increased demand for independent workers and widened the scope of skills and interests for potential participants.
- The COVID-19 pandemic has adversely affected millions of full-time hourly jobs and increased demand for on-demand delivery services, resulting in hundreds of thousands of Americans utilizing gig platforms to earn income during this economic shock.
- Barriers to entry for traditional careers continue to rise with the cost of education, paths to immigration, and citizenship along with shrinking opportunities for middle-class jobs.
Social + Finance in the Gig Economy
The fundamental nature of the supply-side of the gig economy is financial. It provides a seamless and flexible marketplace to earn money. This axiom is the driving force of social experiences within the gig economy.
Here are a few examples that showcase the intersection between social and finance in the gig economy:
Supply-Side Viral Rewards to Bootstrap Platforms
Popularized by Uber during the early days of expanding their supply of drivers, money has been used as a ubiquitous incentive to drive viral referrals during the initial bootstrap of gig marketplaces. You might remember in the first few years of Uber seeing ads, blog posts, tweets, etc of drivers sharing their referral codes and stories of drivers making more annually in referrals than they did in rideshare earnings. Drivers were reaching out to friends, family, former taxi driver colleagues, etc building an informal network of referrals. The incentive structures benefitted both the referee and the referrer building a sense of mutual success in sometimes completely anonymous relationships. This strategy has been leveraged time and time again by emerging gig platforms. It has had a lasting impact on the social culture within the platforms. If you’ve been referred there is a feeling of being ‘brought in’ by someone and immediately sharing a financial reward. Within these social referral circles exist small “i” influencers, those that build a Rolodex of contacts and keep tabs on emerging platforms to drive referrals. Within our first month of launching Moves we met Mohammed from Vaughan, Ontario, we chatted on the phone with him during onboarding, and within a week he had referred 45 people, the same 45 he had referred to DoorDash, and before that Uber.
The Hustle
The independent nature of the gig economy creates an environment where you reap what you sow. The amount of effort, time, customer service, and tactics you put in directly influence your potential earnings. This mindset influences some participants to highlight, brag, laugh at, and encourage each other's individual journey. This ‘hustle’ social experience has similarities to the behaviors in communities surrounding retail trading, cryptocurrency, and e-commerce small businesses, with generally the same demographics participating.
Participants within these communities are openly sharing their financial experiences and using them as an opportunity to connect with each other to gain advice, empathy, or status. These are no small communities, on Reddit alone some of the top subs like r/doordash and r/uberdrivers have over 80K members.
The Hacks
Certain individuals thrive in this environment of self-determination and build, test, and at times institutionalize strategies, tactics, or more broadly ‘hacks’ that enable them to get more financial output for their input. The flexible and autonomous nature of gig marketplaces almost creates a game, where players can employ certain tactics (ex: extra napkins to get better tips, targeting specific busy locations with destination filters), equipment (ex: e-bike to increase hourly earnings) or sudo-exploits (ex: surge, multiple phones) to level up their earnings above the baseline. Many of these strategies are either shared socially so others may benefit or executed socially to achieve them.
The first rule about surge club, is don’t talk about surge club.
In the summer of 2019, a rapidly expanding group of Uber rideshare drivers at Reagan International Airport were caught creating artificial price surges. The drivers had determined peak times for landing planes and would physically come together in the parking lots to coordinate turning off their driver apps, they used the rider app to check prices and once the price had surged high enough, they turned on the driver app and accepted rides. This ‘hack’ was executed by independent participants socially coordinating to achieve a common desire — more money.
The Co-location Flex
If you thought server co-location and competing on latency was only for high-frequency traders, it's not. In September, mobile phones were found hanging in trees near Amazon delivery stations and Whole Foods locations in Chicago and surrounding suburbs. These phones were reportedly synced up to the phones of Amazon Flex workers close by with the objective of getting a jump on the scarce orders dispatching from these locations. The split-second advantage could be the difference between earning income and not earning income that day.
“They’re gaming the system in a way that makes it harder for Amazon to figure it out,” Sharma said. “They’re just a step ahead of Amazon’s algorithm and its developers.”
-Chetan Sharma, Wireless Consulant quoted in Bloomberg
This exploit is just one of many ‘hacks’ being employed and shared between certain social circles within the gig economy to achieve common financial objectives.
What we’re excited about at Moves
We’re focused on exploring product experiences that facilitate the organic social behaviors of our members towards increasing their financial health. We believe that this will provide value to our members by creating social experiences and features to support behaviors that increase income and reduce financial anxiety — experiences that not only support individual financial health but result in the collective progress of better financial outcomes of our members.
Our first experiment towards this objective has been Moves Gigs. Moves Gigs is a simple bi-weekly email to our member community based on the following hypothesis:
“Can we create gigs for our gig worker members to help us acquire more gig workers?”
With Moves Gigs, we post paid tasks including research interviews, referrals, and content writing thereby creating a new income-earning opportunity for our members while supporting initiatives like content marketing to acquire more members. Think of it like an internal gig marketplace where the input (earnings) aligns to our objective of supporting the financial health of our members while driving product engagement (in the future depositing money into Moves account) and the output (content, data, social posts, testimonials) fuels the acquisition of more members. We’re still in the early phases of the experiment, but the level of engagement in our first few weeks has been encouraging, seeing our community submit stories, photos, and testing our product.
Looking into the future we have a few ideas we’re excited to start exploring.
Social Challenges
Leveraging the ‘hustle’ and ‘hacker’ social behaviors in the gig economy, we’re excited about the possibility of creating challenges or streaks within Moves that facilitate not only individual goals but provide transparency to other Moves members on the same app (eg, Uber) or location to compete or benchmark against. These challenges are aimed towards achieving individual or collective financial objectives, reinforcing our value proposition. Think of Strava, but instead of running or biking a segment between Union Square and Mission District, you’re riding an e-bike or driving to hit $200 in the day or get into the top 5% of Moves Members in the Bay Area. In addition to the inherent social rewards (status, recognition) of participating in these challenges, Moves could provide financial incentives. This cost could drive increased engagement, but also reduce credit risk within our products. If we can design and incentive behaviors like earning more income ahead of a payment date we could potentially reduce the risk of members becoming overdue, ultimately supporting their long-term financial health and our credit performance.
Outsmarting Finances, Together
Leveraging our data set on member activity in the gig economy (ex: trips, ratings, earnings, tips, etc) and financial health (ex: avg account balance, expenses) we can establish an aggregate view of behaviors and tactics that could increase the collective financial health of members. Distilling this data into actionable strategies for members to understand their performance (avg tip, hourly earnings), spending behaviors, or common expenses (ex: annual car maintenance costs or insurance premiums) in comparison to their peers can provide valuable feedback loops to tackle low-hanging savings or earning boosts. This aggregation can also provide Moves with valuable insights into potential products or offerings that can be purchased or coordinated at a collective level for members. As the membership grows the resulting data can provide leverage to establish economies of scale for common needs (ex: data plans, car maintenance, insurance, benefits). Ultimately this flywheel spins faster and faster, attracting new members with an increasing value proposition, leading to more data, resulting in further member value.
Common Ownership
We believe that gig workers create economic value for the platforms they earn on and should share in the value created. In the bootstrap days of today’s dominant gig platforms, workers were a critical input to create the two-sided market needed. Many took a leap of faith, became early adopters, and maybe even faced repercussions. Even at scale, couriers, shoppers, or earners play an essential role in the quality of service, coverage, reliability, and validation of new concepts or verticals (ex: grocery delivery). As an emerging product for millions of gig workers across the U.S. we believe there’s an opportunity to leverage our platform to provide our members with ownership in the marketplaces they make possible. Our hypothesis is that providing our members at a collective level with ownership in the gig economy could create four outcomes:
- Gig workers have a common economic alignment that stimulates social experiences
- Gig workers have economic alignment with the platforms they earn on — improving platform governance and stakeholder satisfaction
- Ownership in public gig companies creates the potential for long-term wealth thereby improving member’s financial health
- Building ownership through Moves drives long-term member retention
I hope these ideas and hypotheses provide you with a shared sense of excitement for what we work on every day at Moves. The goal of this article is completely selfish. We’re trying to build a muscle of sharing our ideas and thinking in the open with the hope it helps us distill our thinking and — if lucky — find a reader who shares our excitement and wants to join the journey.
