Software eats overhead
Middle management is what’s actually under attack by the sharing & on-demand economies.
Middle management is actually what’s under attack by the sharing & on-demand economies.
The sharing economy is officially mainstream. The Washington Post, New York Times & Time Magazine have all covered it with a new attention focused on how it impacts the workforce and the future of work.
Uberization will have its benefits: Technology could make your work life more flexible, allowing you to fit your job, or perhaps multiple jobs, around your schedule, rather than vice versa. Even during a time of renewed job growth, Americans’ wages are stubbornly stagnant, and the on-demand economy may provide novel streams of income.
We may end up with a future in which a fraction of the work force would do a portfolio of things to generate an income — you could be an Uber driver, an Instacart shopper, an Airbnb host and a Taskrabbit,” Dr. Sundararajan said.
— Farhad Manjoo, January 28, 2015, Uber’s Business Model Could Change Your Work in the New York Times.
It’s true that, in many ways, sharing-economy jobs can offer more autonomy than traditional employer-employee relationships. But there’s a dark side to these work arrangements that gets considerably less press: the shifting of risk off corporate balance sheets and onto the shoulders of individual Americans, who may not even realize what kinds of liabilities they’re taking on.
— Catherine Rampell, January 26, 2015, The dark side of ‘sharing economy’ jobs in the Washington Post.
Is this an on-demand economy, sharing economy, or simply the economy?
Much focus has been on the shifts that are taking place in the economy. Former taxi drivers now driving for Uber and Lyft. Uber is now onboarding 50,000 new drivers a month. People who used to stay in hotels, staying in Airbnbs. Airbnb is booking more room nights than the largest hotel chains. These are the cultural shifts that are under way, but who is really under attack here?
To reprise Marc Andreessen’s famous prognostication, software is eating management overhead. Powerful marketplace and platform software algorithms, along with the proliferation of smartphones enable a worldwide workforce like Uber drivers to be managed through an app.
Who is really being disrupted here?
Is it the jobs of people who perform the work? I’m referring to drivers, handymen, home cleaners, shoppers & delivery people. All of the on-demand platforms are constrained on the supply side of their markets. They are rapidly expanding to new markets and onboarding independent contractors as fast as they can to perform whatever task it is the consumer wants when they open their favorite app on the remote control for their life.
These jobs are being shifted into marketplaces with people working as freelancers, but need for the work remains.
A caveat to this is that technology is on its inexorable march, and some of these jobs will eventually be under attack. Uber’s CEO has publicly stated that he plans to eventually replace drivers with self-driving cars. And that future might be sooner than we think.
Or is it the jobs of people who manage the work & resources? Local vacation rental management companies. Taxi dispatchers and fleet managers. The manager who does the shift scheduling.
As Peter Reinhart succinctly describes in his post Replacing Middle Management with API’s,
The software layer between the company and their armies of contractors eliminates a huge amount of middle management, and creates a worrisome disconnect between jobs that will be automated, and jobs of increasing leverage and value.
If your job can be done by software, your job is under attack.
Sales, marketing, scheduling, invoicing, payments, filing, paperwork, middle management — all overhead is being eaten by algorithms. At the end of the day, these marketplaces represent what software has always done — find efficiencies and trim the fat.
In the near-term, these marketplaces will be much more disruptive to small businesses that manage a workforce that can now be more efficiently managed by a platform with direct access to consumers who want their services.
What’s this going to mean for people?
The people powering the sharing economy are working as freelance independent contractors, which has tradeoffs:
Pros — new flexibility, mobility, independence in work
Cons — loss of traditional employment benefits, community, training
Ultimately, new constructs will replace the traditional constructs to meet human needs.
Community is a human need, if you talk to an Uber or Lyft driver right now, they probably only know 1 or 2 other people driving. That will change, communities will spring up (like the one we’re building at KungFu). 20 years ago, a freelancer designer or startup founder was likely to be in her bedroom or a coffee shop. Today, they’re at a coworking space. Last month, the first “co-resting” space for rideshare drivers, Groove, opened in San Francisco, 15 years after the first coworking space, Citizen Space opened here.
What’s it mean for society?
Airbnb, Uber, Lyft, Instacart and 180+ others are on the march. Regulators will have to adapt. And balance will be reached eventually, but it’s likely going to be years, as battles need to be fought before city councils the world over.
Airbnb will collect hotel taxes
Uber & Lyft drivers will have deep background checks and greater safety training
Insurance regulations will adapt to ridesharing and home sharing & car sharing
Consumer protections will form
IRS regulations will adapt to allow companies that want to provide benefits to independent contractors do so
Every shift presents opportunity
The middle management fat that’s getting trimmed right now? Time to look ahead to jobs and companies that are going to be emerging as the “sharing economy” becomes “the economy.”
What’s the future look like?
Airbnb SEO experts & pricing optimization software
Airbnb hotels
Software to help people working as independents make more money and save on their taxes
By the mile insurance for Uber drivers
And much more…
But the truth is, if you’re not busy reinventing yourself and your habits, you’re being left behind.
Live long enough and you get left behind.
Either accept it or catch up.
— Bob Lefsetz, January 28, 2015, Oldsters
I’m the CEO of Kung Fu and our mission is to ensure the people powering the sharing economy, er — the economy — are successful. We’re building a community of freelancers with access to work opportunities, benefits and services designed to meet their needs. And this is all new, so if you have ideas, I’d love to hear them. Hit me up @cschultz.