Platforms: An Amazing Opportunity For The Creative Class

We Want More Work!

Today’s digital platforms of on-demand work are undergoing their first major crisis. Several, like Homejoy, have recently gone bankrupt. Others have had to pivot to find a more sustainable business model. It turns out it’s not so easy to offer your clients quality on-demand workers for a very low price: many workers will just not show up where they are expected. Angry users will never return and seek other alternatives.

When you pay peanuts, you get monkeys. The sporadic nature of these low-paid gigs makes it impossible for many of these platforms to win the loyalty of the workers. Uber and TaskRabbit are accused of exploiting unqualified workers by offering low pay and no durable work prospects, when they should provide job security and better pay. There is a judicial battle in the US to have Uber drivers (contract workers) qualified as full employees, because, so goes the argument, you can’t be an independent worker if you are entirely dependent on one company.

The rise of platforms such as Uber has opened up an entire new field for litigation: are self-employed drivers in fact employees?

And yet, platforms aren’t doomed. Some of them will change their models and ultimately offer workers better work conditions and higher pay if they want to serve their customers at the highest level of quality and scale. Others may even end up offering workers employee contracts if it’s the best way to increase quality and economic viability. When it comes to creative class workers — consultants and architects, for example — the platformization of work has only just begun. Its development will unleash tremendous new opportunities, produce troughs of new work options and markets. Squeeze the middleman and you’ll get more demand on one side and more offer on the other. Lower prices and higher pay. Can online platforms really do what corporations can’t do? Well, nobody says it’s easy, but it sure is possible.

The gig economy is redefining work as we know it

The platformization of work causes us to question the very meaning of work, employment, work relationships, insurance and the role of the state to protect a country’s workers. As Nick Grossman and Elizabeth Woyke explain in their widely-discussed paper “Serving Workers in the Gig Economy”, the gig economy has completely unbundled the benefits and protections that have traditionally come with full-time employment, which means that “the different components of a job — income, structure, social connections, meaning, access to healthcare — which used to be bound together, are now becoming available from different places”.

Nick Grossman & Elizabeth Woyke, authors of a landmark paper

The platformization of work, with the emergence of web and mobile marketplaces and work platforms such as Amazon’s Mechanical Turk, UpWork (the freelancer marketplace), and on-demand service platforms like Uber, Handy and Doctor on Demand, has accelerated the shift in the past 2 to 3 years.

Knowledge-based work is only now undergoing the same redefinition. It used to be that only writers and artists were free of the constraints of nine-to-five work days. Artists can’t possibly be managed like regular workers. So instead of selling their brawn to a company, they sell their creations or performances on a gig basis to whoever will pay the price. What’s new is that more traditional non-artistic professions are now following the same pattern: accountants, for example, have the job that most people would think is the least “artistic” job there can be (which is debatable), but they too can increasingly ‘gigify’ their work on digital platforms. And they have a lot to gain from it!

A study by Freelancers Union and Upwork revealed the prevalence of freelancing in the US

The gig economy now concerns a growing part of the US workforce. According to a study by Freelancers Union and UpWork, in 2015, 54 million Americans — more than one third of the working population! — participated in some form of freelance work, often combined with salaried work. This huge number includes workers with all kinds of qualifications. Some are very well-paid. Others aren’t. Some juggle different jobs. Others don’t. What’s certain is that the trend is here to stay and is forcing us to question everything we take for granted.

Platforms really do make the cake bigger for low-qualified workers

For low-qualified workers, who go from gig to gig and sometimes can’t make ends meet, platforms like Handy or Uber don’t provide an easy life. But without digital platforms their situation would be worse. There is just more work because of these platforms. Corporations have been reducing their reliance on full-time workers for a long time, but the development of the work platforms has made it easier for them to offer more work than before, work that would previously have been performed by overworked employees or would not have been offered at all. As work can be unbundled into different tasks, in many shapes and sizes, there is less reluctance to hire a contract worker to perform a given task. Thus a wide array of new jobs and tasks can easily be offered that would otherwise not have existed.

Uber’s powerful network effects, as drawn by Yammer founder David Sacks

Entire markets have been created or have expanded exponentially. Uber was obviously bad news for the taxi industries in large cities. But what Uber has proven is that the market for chauffeured transportation was infinitely bigger than the taxi market in these cities, big enough for hundreds of thousands of new drivers. Hundreds of thousands! There are clearly many poorer passengers the taxis could never target. The network effects of two-sided markets simply expanded the existing market enormously—and could have expanded it even more were it not for restricting regulations.

Platforms contribute to market transparency for better worker revenues

Founded in 2015, Dispatcher is a new app that matches gig workers with jobs. Its cofounders want to build a real-time labor exchange for the gig economy, similar to an ad exchange, to empower the on-demand workforce. It mediates the relationship between the worker and the work platform and serves as an ‘agent’ for the worker, helping him/her make the best decisions about where and when to work. As Robert Yau, Dispatcher’s founder explains:

“Our vision in the future is to potentially predict what are the best jobs based on location and time. So workers can pick and choose, essentially. It Uber’s paying me $20/hour while Postmaster, because it’s dinner, is paying me $30/hour, a worker may decide to do Postmates rather than Uber. Today, they don’t have that visibility. The thinking is that, with Dispatcher, when we become the labor exchange, that visibility will get exposed”.
Robert Yau, the founder of Dispatcher.com

The critical vision of Dispatcher is that price transparency can be brought to the marketplace, to the benefit of the worker!

Platforms have made it possible for middle-class individuals to increase their revenues when these revenues had been stagnating or declining for decades. A large part of the independent contractors who find work on those platforms already have full-time or part-time jobs but want to or need to work more to increase their revenues. As is now well-documented, the revenues of middle-class Westerners have declined over the last two decades. To simply make ends meet, most people need to be very creative. The many platforms of the digital economy have made gigs and property-sharing sources of revenue (renting the things you own, as with Airbnb) easily available.

For highly-qualified workers, digital platforms offer the promise of a just reward. Good ratings and reviews can make a profile more attractive for a company seeking talent. Why rely on an old-fashioned CV if one can actually prove one’s worth online? It is naturally critical for the workers to have control over their data. Data portability (from one platform to the other) is a big issue worth fighting for. And leaving the right digital traces is a skill worth acquiring.

There is now a whole new ecosystem of services for workers

As Nick Grossman and Elizabeth Woyke show in Serving Workers in the Gig Economy, these services all have a common theme, “the desire to retain the flexibility and freedom of gig work, while obtaining the protections and benefits of traditional full-time work”. So independent workers can have their cake and eat it too. The main difficulty about being a freelancer (without a salaried work on the side) was access to benefits and protections. The safety net — benefits such as unemployment, disability and retirement — bundled with work, is part of a package that’s invisible… and taken for granted. But there are new kinds of insurance products that address freelancers. For example, Peers offers a program of portable benefits that stay with the worker regardless of employer. Even offers a banking product that helps hourly workers manage the ups and downs of an unpredictable work schedule and income.

For the creative class, platforms are an amazing opportunity

Highly-qualified workers have embraced the gig economy with enthusiasm. A higher number of the so-called “intellectuals” are happy to escape the “prison” of salaried work. Take programmers. They’re in such high demand that they welcome the opportunity to become independent and get paid more. For those who work fast, it’s easier to combine multiple jobs, and leave the jobs that are less exciting. HR people will have to learn the right ways to appeal to the best freelance talent: offer them flexibility and exciting projects.

The “Creative Class” is a socioeconomic class identified by American economist Richard Florida. According to him, creative class workers are a key force for economic development of post-industrial cities in the developed world. In the US, they represent 30% of the total workforce. They are made of two groups:

  • the “super creative core” (12% of all US jobs) includes scientists, engineers, programmers, researchers, professors, artists and designers. Their primary function is to be creative and innovative. They find the problems and solve them.
  • the ‘creative professionals’ are the classic knowledge-based workers who work in business, finance, healthcare, legal or education. They solve specific problems.

Both the super creative core and the creative professionals have long enjoyed more autonomy and flexibility in their work. Some professions (like lawyers and doctors) were traditionally independent workers, but others among the creative professionals have long been the employees of big corporations which act as middlemen between problems and problem solvers.

Consultants are a case in point. For a hundred years, big consulting firms have hired young creative talent to solve their clients’ specific problems. Their model has consisted in overcharging companies for the consulting services of junior consultants. That worked quite well because these young consultants could just copy-paste the work of their elders. Alas, fewer companies today accept to pay so much for copy-paste work. More of them demand customized services by experienced workers. So the model is coming to a halt. But that doesn’t mean consulting is dead! Indeed they can increasingly sell their services directly to the companies that need them. Algorithms can match the right workers with the companies that require their specific skills.

HourlyNerd co-founders Patrick Petitti, Rob Biederman

New platforms have emerged that offer to connect qualified workers directly with the companies (or people) whose problems need to be solved. For example, HourlyNerd is a Boston-based global online marketplace that connects big and small companies with over 20,000 independent business consultants for project-based work. Clients post projects, receive bids, select experts and make payment on the platform. Another example of a platform on which high-skilled workers offer their services is CoContest, which is known as the ‘Uber of interior designers’. (Funnily enough, a majority of the designers who participate in the contests on the website are Italian.)

Let’s make sure we play our cards right if we want to get more work

First let’s not kid ourselves about the ability of some of these gigantic platforms to become predators. If every gig worker is a small company, then identity and personal reputation are their brand and professional card. If so much is mediated by platforms, it it critical that the workers control their data. Reputation gained on one platform could be used to obtain income from another platform. So data portability would give workers more flexibility to choose where and how to work. Right now, by default, the data generated is the property of the platform rather than that of the worker. Mature platforms prefer to keep their users’ reputation value within their own system, which will only increase the winner-take-all trend towards gigantism. It’s important to make data portability an issue and favor the small newer platforms that use data portability as an argument.

With the Next: Economy conference, Tim O’Reilly (left) tackles the challenge of stressing the advantages of platforms from the workforce’s point of view

Second let’s make policymakers aware of the value that work platforms can have for workers. Lobbying and raising awareness is critical to have governments on the side of gig workers. Rather than banning the platforms, they could incentivize platforms to adopt a model with more protections. Work platforms opt toward a model of independent contractors because of the transactional costs and friction of the employment paperwork. If these burdensome and costly processes could be made into digital, instant, API-driven processes, then there could be more protections from the start!

On a more individual level, we need to embrace what amounts to a paradigm shift. Deconstructing work as we have always known it (in companies) is scary. But platforms will be a boon if we play our cards right. Let’s choose the right platforms and boost our work prospects!