Archive for July, 2015


Collaborative Startups Shift from Contractor to Employee Relationships

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On-demand startups, which are a subset of the Collaborative Economy, have been under scrutiny on worker treatment. They’re under the magnifying glass more than ever.

This new industry, which was birthed  the 2008 recession, provided rise to the “gig” worker, or independent contractors. These part-time workers were offering their idle time, working multiple jobs, and offering their spare bedrooms to make ends meet. Many of the workers see the benefits of “being their own boss” as they can choose the time, service, and how they work –rather than reporting to a salaried job.

In past months, there’s been increasing pressure to shift the relationship from contractors to employees. There have been lawsuits against Uber, where a single driver was able to win business expenses, but also we’re seeing American presidential candidates like Hillary Clinton suggest she’ll be influencing startups to provide fair wages and benefits to workers, while Jeb Bush takes Uber rides in San Francisco, promoting the service and free market capitalism.

Providing worker resources for freelancers isn’t new. For more than a decade, the Freelancers Union, featured here in The NYT, offers centralized healthcare, retirement programs, and other job-related services. Peers, a three-year-old sharing economy advocacy group, is also making signals that they plan to offer resources to these gig workers.

This blog is used to track the trends in this new economy and explain what it means to established businesses. As such, we will track how these contractor relationships are now starting to shift toward full-time and part-time employee relationships.


Startups are shifting from contractor to employees relationships:
Here’s a running list, mostly in chronological order.

 


This means: Short-term suffering for startups, but long term resilience for the Collaborative Economy.Tech startups, under scrutiny from workers rights advocates and the political election, are shifting workers into employee relationships rather than independent contractor status. This does not mean the space will collapse, as nearly every other established industry from retail, to hospitality, to food, has successfully operated with workers that are employees.

It does mean that these companies will need to provide ample training, resources, and also hold employees accountable based on customer feedback and ratings –just as other established companies do. It also means that these startups will need to provide new forms of worker benefits, discounts, and perks under these new relationships.

We already see that these startups, and their workers, are lobbying for a third class of workers dubbed “Dependent Contractors” which could work several services at once while benefiting from 401k, retirement, healthcare benefits, and fair treatment of workers.

Want to learn more? You can check out my full body of work on the Collaborative Economy, which includes reports, graphs, databases, lists, frameworks, info graphics, essays, and points of view.

(Creative Commons, photo from Washington State Dept of Transportation)

Large Companies Ramp Up Adoption in the Collaborative Economy

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The Collaborative Economy market is growing at an accelerated rate. Not only is adoption increasing by individuals at a rapid pace, but the VCs have invested a massive $16 Billion to pad the war chests of these disruptive P2P commerce startups. Corporations aren’t standing on the sidelines waiting to be disrupted, the progressive companies are leading the charge by deploying these same strategies and technologies. The following three slides show market growth, adoption by brands, and indicate how companies are deploying, you can view all the data in a Google Sheet, live on the web and thanks to Amy Bishop for her research analysis managing the sheet.



Key Stats

Above: These five stats indicate the growth of the disruptive startups: Young companies, rapid growth, high volume, low assets, and high valuation show how business models based on networked based technology quickly achieve scalable growth. Often, traditional companies are based on the principals of the Industrial Revolution, owning many assets and achieving linear growth.



Large Corporations Ramp up Adoption in the Collaborative Economy

Above: Large corporations, which we define as companies with over 1000 employees, $1B in revenue, and are often Fortune 1000 companies are also adopting, many in the last two years. Towards the end of 2014 we saw a significant increase in adoption in part from Uber’s API which led several partnerships, and Lyft’s aggressive partnerships in early 2015. Coincidentally, Crowd Companies is just over a year-and-half-old, launched right before the large companies started to deploy in scale.



Corporations Deploy On-demand Models, Host Marketplaces, and Sponsor Startups

Above: You’re probably wondering what corporations are doing, in order of frequency, they’re deploying what we call as “Brand as a Service” which include on-demand models, such as Whole Foods partnering with Instacart, rental models like BMW’s DriveNow program. Corporations are also launching their own marketplaces, such as Cisco’s used networking marketplace, Patagonia’s used apparel store, and Ikea’s marketplace of used goods. Lastly, companies are sponsoring the startups with advertising, or co-marketing such as Lyft and MasterCard for “Priceless Rides”, or KLM partnering with Airbnb to offer a unique airline apartments for rent.


Conclusions
Companies are quickly jumping into the Collaborative Economy, but frequency doesn’t indicate success. While there’s been over 190 case examples, I only know of the business results of a few, and to my knowledge only one company (BMW) has indicated that a program was profitable, in public. One thing is for sure, this is the market for the brave early adopters who want to lead the charge, not wait for the movement to pass them by, and in many cases these corporations embrace innovation, and therefore the risk of not seeing direct results for a few quarters or years. Also, when we launched Crowd Companies there was approximately 70 case examples, and since then, there’s been about 120 more deployed in a year and a half, many by our own members, the pickup is certainly increasing. The adoption will only continue to increase in frequency, to the point where we can no longer accurately track deployments as every corporation will have dozens of iniatives.

Disclosure: MasterCard, Cisco, Whole Foods, BMW are paying members of Crowd Companies, an innovation council I founded. Want to learn more? view the entire live database on this Google Sheet, see the multiple tabs. Photo by Misty