The Unsung Heroes of the On-Demand Economy

We need to rethink the notion of entrepreneurship in the on-demand economy and build the tools and infrastructure to support the growing self-employed workforce.

There is no shortage of discussion these days about the rise of innovative service marketplaces — like Uber and TaskRabbit. Much of the attention has focused on the benefits to customers and the wave of disruption to established industries and business models. Amidst all this talk, though, what has gone less noticed are the actual people driving this new on-demand economy.

These are individuals who, when faced with the choice of deciding who’d be in charge of their livelihood, opted to own it. And in so doing, are having a transformative effect on the very definition of what it means to be a business owner.

Unlike their predecessors, many of today’s entrepreneurs don’t have storefronts, staffs or even business cards — and better yet, they don’t even have to find their own customers!

Enabled by the ubiquitous connectivity and power of smartphones, entrepreneurs are opening shops on Etsy, working as virtual assistants through oDesk, tackling neighborhood jobs on TaskRabbit, or driving on demand with Uber.

This new economy isn’t limited to low-paying gigs either. There are highly skilled professionals with advanced degrees from top 10 schools opting to work for themselves instead of a big firm. Consider the MBAs earning $100-$150 an hour through online consulting firm HourlyNerd or the lawyers making more than that on UpCounsel.

The Handy housecleaner and the UpCounsel attorney share a common characteristic: They’re a business of one. Intuit data shows that people choose this route to make money and be their own boss.

They have all the freedom and flexibility of an entrepreneur, but with one key difference: the ability to find customers on demand.

On-demand marketplaces enable the newbie entrepreneur to immediately gain access to huge customer bases by merely pulling out their smartphones. This stunning ease-of-entry would have been impossible even a half decade ago. Without spending a dime on marketing, they can now connect directly with paying customers.

This new wave of entrepreneurs — the self-employed workforce — is accelerating a broad trend we’ve been watching closely for nearly 10 years and started documenting in the year 2007 B.U. –before Uber.

They are part of the massive growth in the number of independent professionals. Full-time jobs with their corporate grab bag of benefits are becoming scarcer by the day. In the near future, working full time for a single company that offers little flexibility or work-life balance will become as outdated as the notion of staying with one company for your entire working life.

In fact, according to the Intuit 2020 Report, contingent workers made up only 6 percent of the U.S. workforce 25 years ago. That group has grown exponentially to roughly 30 percent of the workforce today, and is expected to exceed 43 percent by 2020. I think it will be upward of 50 percent.

Yet too often these unsung heroes of the on-demand economy languish in the shadows, their unique needs unrecognized by both government and industry.

The self-employed are a key economic driving force but the infrastructure and tools haven’t kept up with the pace of change. Taxes, retirement, insurance and more are based on a model of employment that, for many, doesn’t exist anymore.

Consider the Lyft driver who’s getting paid on a gross basis over the course of the week. What’s her net take-home pay at the end of the week? What does she owe the Internal Revenue Service for quarterly taxes throughout the year?

There is a tremendous lack of clarity, and the back-office tasks can be overwhelming for the individual operator. While there is a growing offering of support services emerging to address some of these challenges, including a product we have developed especially for the self-employed, much more needs to be done to help grow businesses of one.

Many of these solo operators don’t even consider themselves businesses — even though they have many of the same challenges (and opportunities) as those that operate traditional brick-and-mortar stores.

Regulators and policymakers need to adapt to these changes and reduce both the complexity and volume of requirements that may have historically been imposed on the traditional small business.

On-demand marketplaces must honor what it means to be an independent contractor and protect the freedom and flexibility of the self-employed workforce.

While the self-employed are responsible for owning their own career and business, they could use some help in finding and identifying the right benefits. This is an opportunity for government to help provide solutions and industry to help facilitate the process.

And we have to make it easy for the self-employed to stay compliant. The less time they spend figuring out their taxes, the more time they have to delight customers and earn income.

The self-employed are an inspiring force that is going to change the face of small business, shape a new workforce and make a dent in the universe.

It’s time we start championing this exciting new vision of entrepreneurship and build the infrastructure and tools needed to support this new wave of businesses.