Tuesday, February 2, 2016

Venturing into the Gig Economy

I recently listened to a podcast by the venture capitalist Naval Ravikant, CEO of AngelList and founder of ePinions.  His comments told me that I had crossed a very important threshold, and did even know it.  I am living in the “gig economy.”

Naval was responding to a question regarding the impact of information technology in driving a new form of economic model.  As an investor in many forms of tech-enabled business services, I was intrigued by his response.

Naval remarked that the industrial revolution of the 1900s brought people together around minimal efficient scale, such as factories, to drive productive collaboration.  Today, innovations in social, mobile, analytics and cloud technologies are driving substantial reduction in the cost of basic transactions, allowing disintermediation among service participants. 

Proximity to one another is no longer required for the consumer and the producer of a service.  One example is the Uber driver who receives orders via mobile phone without any human intermediary. 
He offered a better example in describing independent contractors using Twitter and online sources (like LinkedIn) to find jobs.  The podcast referenced the “gig economy.”

Whether it’s selling your arts and crafts on Etsy or Ebay, offering taxi services through Uber or accommodating tourists in your spare room via Airbnb, the world of work appears to be changing. This is the “gig economy” — where incomes are earned or supplemented by trading individual goods and services online.

One survey issued in January suggests that some 45 million people, or more than 1 in 5 adults in the US, participate in the gig economy, also known as the sharing or on-demand economy. According to the poll by Time magazine, 14.4 million people derive a majority of their income from the gig economy, defined as "contingent work that is transacted on a digital marketplace."

Naval’s commentary went beyond the business-oriented examples to advocate for a more personal adoption of “gig living.”  He argued that each one of us has the opportunity to develop and exploit our personal brands, and our unique expertise.

This reminded me of a recent conversation with a senior executive in a large company who said to me, “We are over-run by consultants.  What we really need are experts.”  And, expertise is a personal, not institutional, trait.

Naval offered a recipe for success in the gig economy, comprising:

·         Find something you love to do, and for which you have a shot at being among the best in the world
·         Build your independent brand around it – with your name
·         Only take up creative work – providing opportunity for continuous learning, refinement, relevancy; building competitive advantage
·         Develop personal comfort with a boom-bust cycle of demand

At the heart of this is the premise that it’s best to leverage what you do best and hold tightly to your independence in the gig economy.

Peter Allen has many years of operating experience as a top executive and strategic advisor for companies of all shapes and sizes, with focus on technology-enabled business services. He is now Senior Advisor for Alvarez & Marsal, and Chief Evangelist at Peter Allen & Partners.

Image:  https://hacked.com/primer-gig-economy/

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