Monthly Archives: September 2016

The Gig Economy – A Class Act…or not…

gig economy

Since I am working on my book, Thriving in the Gig Economy, I have been paying particular attention to the various Uber  employment lawsuits.  Even though  I am focusing on the high end of the gig economy where independent consultants sell their services and intellectual capital, the commodity end of Uber drivers can't be ignored, since it seems to garner all of the headlines.

This week a rather important ruling occurred that seemed to receive very little attention, which is surprising, since it suggests Uber's independent contractor lawsuits may lose class action status.

Last week,  a Ninth Circuit panel effectively reversed a decision from 2015 . A year ago, a judge had said that that the arbitration agreement in Uber's contract with its drivers was unenforceable.  The contract was designed to say if you have any dispute with us, Uber, you need to resolve it through arbitration rather than through the courts.  In this particular case, three drivers had sued Uber for saying they violated the Fair Credit Reporting Act (FCRA) when the company ran background checks on their driving records.  The FCRA, as all recruiting managers know, is the law that requires candidates for employment authorize any  background checks.   The decision said that Uber's arbitration clauses were fair, valid and enforceable.

By asserting that the arbitration clauses are valid in this case will have implications in the attempts of some drivers to create a class action.  As an outside observer, I applaud this.  Since I have the gig economy on the brain  and am an avid Uber customer, I have taken to quizzing all of my drivers about there thoughts on the lawsuit.  I wish I had thought to jot down the results, since my sample size is now in statistically valid territory.  That said, my recollections of the results are these:

  • Only one of about 25 wanted to be an employee
  • 2-3 did not know about the lawsuit at all
  • The majority did it part time to fit their schedule , as one said to me last Sunday, "why watch a football game when I can earn some extra cash for 2 hours?"
  • Most had other jobs including teacher, masseuss, contractors, programmers, hairdressers etc.
  • A large minority also worked for the other driving services

My very unscientific conclusion then is that it is a very diverse driver pool.  A key attribute of a class action lawsuit is that the participants in the class are largely similar.  I don't know that this is the case.  It is time for the independent contractor laws to be brought into the current century in a time when the gig economy of indepndent workers of all sorts is growing.  Potentially these lawsuits facing Uber will help make that happen. .

The Sharing Economy versus the Gig Economy

gig economy

Thriving in the Gig Economy - Scholarly Research

Since I am working on a new book, Thriving in the Gig Economy, I am reading  every scholarly item I can find on new alternative marketplaces.  As such, I was thrilled when  The Future of Work Podcast (1)  recently included an interview with Arun Sundararajan,  the author of The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism.  I had read Sundararajan's book already so was eager to hear him discuss it.

I appreciated the fact that he recognized that the advent of digital platforms is really an extension of age-old marketplaces.  The fact that they now happen to be powered by technology rather than a central urban location was somewhat incidental.  Technology was able to become the purveyor of these markets in part due to the increase in trust that the medium affords.  Millenials, interestingly  enough, have grown up in an era where trust in institutions and society is at its lowest level.  (which does not bode well for the upcoming election) .  Conversely, though, they are the most likely to trust a digital platform; since they grew up in a digital age, technology can provide a layer for legitimacy and trust to this cohort, more so than it does to Gen Y or boomers.

What did not resonate with me though was the way sometimes, the gig economy was used as a proxy for the sharing economy.  With all due respect to Professor Sunderararajan, I do not see it quite the same way.  To me, although the sharing economy term is often used interchangeably with the gig economy, it is not the same.  The sharing economy refers to the economic activity generated from the sharing of physical assets on a peer-to-peer level.  The poster child for the sharing economy is AirBnB, the home sharing service.  It enables individuals to rent their property or a portion of it to people in need of a vacation rental.  Although the host may need to prepare the house for the guest, that is not the service that is being purchased.  The product is the temporary housing. By extension, the preparation of the host is not a gig, but rather his/her role to get the financial benefit from the short-term rental of physical assets.

Other assets can be involved as well. There are several peer-to-peer lending platforms, like Lending Club, where individuals can pool financial assets and make loans to individuals or enterprises in need of funds.  Share a Mortgage is a London-based start-up that allows individuals to pool resources for the purchase of real property. E Bay, of course,  is also a sharing platform, allowing individuals to sell handicrafts or grandma’s antique dining room set.

There is some intersection with the gig economy when the asset being shared is in part intangible. SofaConcerts in Hamburg, Germany for example, allows people to host musicians in their home.  The home is being shared, but the experience, the performance, is also shared. Similarly, EatWith in San Francisco, allows hosts to open their homes to put on a dinner party.  The home and meal are shared, but the host has done the work to prepare the meal. The host could be an expert chef, so in that sense expertise is being purchased.

That said, the key distinction between the sharing and gig economy is that the former involves the purchase of a service or experience that involves a physical asset. At the high value end of the gig economy, the transaction can include an intangible asset in terms of the intellectual property that is developed on the gig, but a physical asset isn’t involved.

Despite our difference in perspective on this, I heartily recommend "The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism"; it is a good read.

 

I welcome your thoughts. 

 

The Entrepreneur’s Organization in San Francisco Turns 25

Entrepeneurs Organisation Celebrates 25 Years!

The Entrepreneur’s Organization, (EO) had a celebration last week to celebrate the start

Veteran Entrepreneurs Organization Reunion

Veteran EO Members at the Palace of the Legion of Honor

of its San Francisco chapter 25 years ago.  I was one of the intrepid founding members of what was then called the Young Entrepreneur;s Organization,  or YEO.

(As an aside, I was 7 months pregnant when I joined EO.  I remember the other  mostly single young members being shocked when they politely asked me if it was my first child, and I replied, “no, it is my third.”)

Back in 1991, you had to have sales of $1mil before you were 35,and you were kicked out of the organization at 40. Many members went on the the Young President’s Organization, (YPO), once they hit their 40s.  As one of my kids once said, who would want to be in the Old Entrepreneur’s Organization?

About 10 years ago, they got rid of the Young in the title and just branded the association as the Entrepreneur’s Organization (EO).  As one of those folks who made the transition to YPO, I have to say that EO was different YPO remains a wonderful organization for me and I am proud to be an active member, but it was not the same as EO.  In YPO, you could have members who were hired guns, presidents recruited to grow, turn around or manage an existing enterprise.  Similarly, there was the “lucky sperm” cohort, of those presidents who stepped in to a family business.

In EO, everyone was a founder.  Everyone had that experience of  having that kernel of an idea in your mind.  You kick it around, you nourish it, and ultimately you get it growing. As a female entrepreneur, I liken it to being pregnant.For awhile when you are pregnant, only you know what is happening inside your body  Chances are, your husband doesn’t even know for a few days anyway .  But slowly it becomes apparent to others.  At some point, i.e. the birth, to continue the metaphor, you let some others into the tent.  Still, you are very careful how it grows.  Over time more people become involved, but you  remain the one most involved with shaping the future of this enterprise.

As the business grows, your entrepreneurial role is akin to  parenting.  Gradually, other people begin to influence the development of the company.  At some point, you realize you are no longer in total control, and then there is the moment when the company is growing in ways that you had never envisioned. Hopefully you imbued it with the right core values to ensure that this maturation is true to your original vision.

EO was a great support while making this journey.  Sharing concerns, opportunities and problems with a like minded group of peers was a tremendous learning experience.  I grew in ways in those years that I did not appreciate at the time. Along with MIT and Inc. Magazine, EO put on the Birthing of Giants Program.  This was an amazing  program for a cohort of 40 young entrepreneurs.  We would spend a week together each spring for 3 years. In the intervening years, many things would happen to the fortunes of these young firms and their founders. Companies, went public and bankrupt, firms were merged, rolled up or sold. And through it all, we learned lessons from each other that would stay with us through the years.

So I was grateful to be able to attend the wonderful 25 year celebration at the Palace of the Legion of Honor last week.  The EO chapter put on a terrific program with 4 different speakers, all of whom were inspiring and provocative. One lesson EO taught me is we can never stop learning, so it was wonderful to continue my education at this event.  Thanks EO.

The Gig Economy Eco System

Employment in the Gig Economy

As the politicians debate the implications of the gig economy, they typically just talk about jobs.  They lament that so many gig workers don't have benefits and are being taken advantage of by those running the powerful digital platforms. As I have said here often, they seldom mention the professional gig economy workers, 91% of whom have self selected this career path.  But perhaps the bigger oversight is that they fail to recognize the jobs that are being created serving the new needs of the gig economy and its workers.

Take a recent press release from ShiftPixy. http://www.shiftpixy.com This app is a way for

From the ShiftPIxy website

From the ShiftPixy website

companies in need of shift workers to recruit contingent gig workers to fill their scheduling gaps. This means that a small business can use this app, rather than trying their luck at all the digital sites. what Kayak did for travel, it is doing for low-end contingent labor.

Employment Laws and the Gig Economy

Moreover, the Shift Pixy guys have paid attention to the employment law issues that have bedeviled some of the large talent platforms like Uber and Handy.  ShiftPixy employs the gig workers on behalf of its clients.  By employing them, it enables them to accrue enough part-time hours from various clients to qualify for benefits typically only accorded to full-time employees.

In case you are wondering, I don't have an investment in Shiftpixy so this is not a commercial.  It is recognition that someone has solved not just one but two key problem with the gig economy. First they just bit the bullet and made the employment call. Since the laws are murky ( another favorite subject of mine) they built an employment infrastructure that is easily accessible via an app that takes the employment risk away from their clients.  "You want a shift worker to bag groceries, great, they would have to be an employee.  Since you don't want them to be your employee, we will handle that. " Most of the digital platforms put the onus on the buyer to figure out the employment law issues, so ShftPixy took that off the table, making it safe for any size company to engage a gig worker. In the spirit of full disclosure I  think that is especially brilliant idea, since I did the same thing 15 years ago, when I started Collabrus, a company designed to employ consultants when they need to be employed by nature of the work or as a risk management strategy.

ShiftPixy is solving another more intractable problem though, by creating a structure that consolidates part-time hours to enable benefits eligibility.  It sounds straightforward, but it is actually a pretty complicated business model.

In the end, Shift Pixy is a small start-up with a little staff, but none the less, they are themselves a job creator.  They have their own employees, but they will also be creating opportunities for various part-time workers to get additional shifts in a way that suits their lifestyle and financial needs.

So as the politicians lament the loss of traditional jobs, I say lets applaud the innovators who are creating the economic infrastructure to strengthen the new world of work.

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