Many people complain that the #GigEconomy creates low wage jobs with no benefits and is therefore a negative for society. What this perspective fails to recognize is that for so many, the #GigEconomy represents a tremendous opportunity to complement an existing income stream by moonlighting. Moonlighting, or doing paid work that is done – often at night – after your regular job is over has been around forever, and now there is even a platform for that, Moonlighting.com.
The Company Origin
Jeff Tennery, who spent over 30 years as a senior executive in the mobile world, spent a year moonlighting with his friends and future colleagues building the mobile platform for supplemental work, Moonlighting.com. From his perspective, the idea that gig or project work had to be the primary income for someone was reasonable, but the idea that a firm or platform had to be the provider of that full time role was problematic.
“There is a demand constraint”, Jeff explained. For the digital platforms that offer task based, on demand work, there is not enough demand for those projects to keep every worker busy. As such, that work and that income, by definition, needs to be supplemental.
As the founder of a firm, M Squared Consulting, that matched independent consultants to projects, that point of view resonated with me. We would always tell consultants that we were just another marketing arm for their businesses. The beauty for them was that we would contact them with a project that : 1) they didn’t have to get for themselves, and 2) it would be a completely new client with the opportunity to do new and different things. All talent intermediaries, whether traditional or digital, are like that, but not all communicate the fact overtly. Moonlighting does. They also get the most freelancers belong to several platforms, in fact 4 to 6, and they support that.
Blockchain in the Model
In fact, given their bias for transparency, they are building enhancements to their platform using blockchain to ensure that independent workers can own and control their records across various platforms. Blockchain is the distributed leger that create a permanent, unchangeable record. In the case of independent workers, there are many pieces of data that should be permanent like industry certifications such as a CPA, technology credentials, like Google adwords certified, educational degrees conferred and employment verifications. Once in the chain, these facts can be a permanent record for a freelancer. Since every platform needs that same information, Moonlighting is creating APIs so that these records can be shared across the platforms. There will also be smart contracts and the tracking of the number and ranking of reviews given to the freelancers.
Having these permanent records available will reduce the cost for the platforms and thereby increase the income potential for the freelancers. “Why does a platform need to take 20%? With blockchain the costs can go way down and the freelancers can keep more of what they earn. “ These enhancements, Jeff says, will make Moonlighting a “platform for the people.” The freelancers will become stewards of their own information on the platform and make more money doing it.
Plans for an STO and ICO
To fund this growth they are doing an STO, or Security Token Offering. The company plans to do 2 different issues. The first will be a regulated, non-equity security token issue. Later in the year, and contingent upon further SEC guidance, the firm will issue a utility token, a virtual currency that has value (or utility) to those who are in the community that use it. The “MoonBit”, the utility token, will also be exchangeable into fiat or regular currency. It will enable moonlighters to share in promotions offered by the Moonlighting.com, much like frequent flyer programs do for travelers.
As these exciting events are on the horizon, there is no reason to think the future isn’t bright, based on past performance. Started in 2014, the company can now handle gigs and moonlighters in all 50 states. They have 650 thousand moonlighters and plan even greater growth. Their list of investors is impressive, with financing from major media firms like Gannett, tronc and McClatchy. As one of the first firms to be truly mobile, they are listed as one of the top 10 apps in the jobs category on the app store. I’d bet on them…at least a moonbit or two!
The April 30th opinion handed down by the California Supreme Court about worker classification has been described as a “seismic shift” which could cause “the end of the Gig Economy.” Those latter dire predictions suggest that the curtain is coming down on what has become a whole new stage for the future of work. My view, albeit a bit more jaded, is that there are a number of acts to come, and it will be fascinating to see how it all plays out.
In the spirit of full disclosure, I am not an employment attorney. Rather I have been an entrepreneur in the human capital space, starting a #GigEconomy company in 1988 before it was in vogue; M Squared Consulting matched independent consultants to clients, individuals who were frequently providing services as 1099 consultants. As a result, 5 years later, I started an employment compliance company. Since the ambiguity of worker classification was impairing our growth, I needed to create a way for my clients to secure the services of our amazing consultants without the specter of employment classification risk.
Dynamex Operations West vs. Superior Court
That said, I read all of the coverage about the California opinion with great interest. The case, Dynamex Operations West vs. Superior Court involved a delivery company who had employed delivery staff, but then converted them to be independent contractors. The judges determined that in this case the ABC standard needed to be applied to the question of whether the workers were employees or contractors. The ABC standard is that workers can be classified as independent contractors only if the hiring company demonstrates that the worker in question satisfies all of the three conditions: (A) that the hiring company does not direct or control the worker (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is engaged in an independent business of the same nature as that involved in the work performed. The judges ruled, that once applied, there was no question that the workers were employees.
Reading this, I had several questions about the applicability of the opinion as well as the implications going forward on various types of on demand talent platforms. I reached out to Rich Mengehello, a partner at Fisher Phillips who runs the Gig Economy practice to find out the answer to some of my questions.
Employee vs. Independent Contractor
I wondered about the applicability of the opinion given that the workers had been employees and were then converted. On the one hand, that makes the optics of the situation look bad, but, it should not limit the opinion. That said the opinion applies to Dynamex only. Although one could argue it will now apply to a whole host of other companies, the question won’t be called until a worker at one of those firms files a suit. As such, Lyft, Task Rabbit, and Handy, as well as many others, will continue doing business as usual until a suit is brought by one of their workers. It is these (likely) subsequent suits which will tease out the nuance in the opinion.
The nuance is important, especially because of point B, “is the worker operating in the usual course of business”. Uber, Lyft and other ride sharing companies are likely to construe themselves not as ride companies but as transportation logistics technology companies, and rightly so. For example, I serve on the Board of The Front Porch, a Continuing Care Retirement Community. At one location in California, we are partnering with Lyft for a business to business service to transport our residents. Lyft deals with our facility and we handle the billing, since our residents may not have smart phones and may not want to deal with their credit cards. Through the Lyft platform, we have the security of knowing where are residents are, that they have been picked up on schedule, and at which time we can expect them to be back on site. As such, the information and functionality of the platform is key to the value of this service for our company. For me, the transportation logistics company positioning works.
Company Classification Matters
Similarly, as I look at firms that are not in the on-demand space, but in the space I helped create with just in time consulting, they also do not consider themselves as human capital firms. At a “Collaboration in the Gig Economy Conference” in the fall, an Upwork executive corrected the audience by saying that Upwork is a technology platform, not a staffing company. It is their algorithmic approach which is technology based that is critical to their value and growth. Their intent is to identify the optimal talent and enable a match. That said, they have added an Enterprise Solutions product which includes giving clients the option of employing an Upwork resource rather than engaging them on a 1099. As a regular client on Upwork, I was delighted to see this addition, though I was alerted because I added one hour to my project. Were I to put my compliance hat back on, that additional one hour worked by my marketing consultant would not have raised concerns for me, but good for Upwork nonetheless.
Interesting Platforms Lead to New Business Models
Additionally, there are many platforms in the #GigEconomy that have different business models. Thumbtack, for one, is a great platform for personal service providers, from videographers to gardeners. They work as a referral service for these entrepreneurs, providing leads. They also offer additional services to help these independent workers better manage their businesses; why should a great handyman need to understand financial management? They also offer pricing tools and a sense of community. They are a gig economy company with no employment implications. Here is a blog post I did on them in the fall.
Another example is Loom, which is a specialty platform that provides talent for start-ups. Their unique niche is that the talent is willing to work for equity, rather than immediate cash compensation. That model has some interesting complexities, not the least of which is the valuation of the equity offered. However it does not have that same independent contractor risk.
Finally, there are other #Gig Economy companies who are taking on the employment responsibility for Independent workers. Shift Pixy, which I profiled in my recent book, Thriving in the Gig Economy, is a prime example. They specialize in providing shift workers full time jobs in the hospitality/fast food sector by enabling them to choose shifts that work for their schedules at various food service firms. Shift Pixy offers benefits as well as the flexibility sought by those in the gig world.
So, I do not foresee the end of the #GigEconomy as a result of the California Supreme Court decision. That said, I do believe it will create much more dialogue on the subject of independent contractors and employees, and perhaps that will lead to more clarity in the law. If that were the final act, I would applaud it.
There was a great article in Medium today advocating that all freelancers adopt rush fees. The idea is that urgent projects require special attention that may shuffle the priorities of your existing workload. So between the extra hours and other client considerations a premium is due. I heartily agree, not just with the premise but with the idea that one set price is seldom the answer. There are many considerations that come into play when pricing a project, not the least of which is its urgency.
In my recent book, Thriving in the Gig Economy, I point out some other important considerations:
- Risk and return are directly correlated. The more risky a project, whether due to the scope or aggressive goals, the more it should pay. It may seem to some that you are taking advantage of your client, but the truth of the matter is, a project that could be doomed for failure will not be good for your reputation either. Turnaround situations are a case in point. The potential for failure is high so the rewards should be as well. Conversely, if a project is very low risk for you, because you have done something similar a thousand times, then a lower fee may be warranted.
- Capital formation is a long term investment. If an engagement is going to build your intellectual capital by broadening your skill base, you should be willing to do it for less than you might otherwise. This is because in the long run, you become more marketable and potentially can command higher fees because of the upskilling. For example, launching a project for a different type of branded good, via a new channel, or in a new geography or country could open you up for whole new array of opportunities. Consider it an investment in your practice and price it accordingly.
- Car Sharing firms and rental cars charge differently. Denis Russel, the co-author of my first book, A New Brand of Expertise, had a great pricing analogy for consultants that compared the difference between cabs and rental cars. In this day and age, ride sharing companies may be the better example. The idea is that people use Lyft rides and rental cars for different purposes. Uber charges much more per mile than a rental car, since it is a short stint with convenience and urgency at a premium. Similarly, a client who wants a small urgent project yesterday, versus one who is open to a 6-month study should have very different pricing algorithms.
- The 1% rule helps. Here is another handy rule of thumb; a person’s daily fee should be 1% of his/her equivalent annualized salary. A marketing consultant who feels $200k would be the going rate for her expertise, should then charge $2000 per day for her services or $250 per hour. A more junior person who could command $80k per year, should charge $800 per day or $100 per hour. That said, though, keep in mind it is the work, not your pedigree that should determine the price.
- Anchor clients deserve a deal. Before the retail world was so disintermediated by online selling, the estate business would refer to the primary retailer in a mall as the anchor tenant. Not only was that key store bringing in the shoppers, they were also paying a significant portion of the rent. An anchor client is one that pays your rent, so to speak, by giving you recurring business. Having that project year in and year out from that one client is a wonderful thing. Some consultants may want to increase the fees after a few years. Unless your costs have risen dramatically as well, resist that impulse. Being able to plan your year with a known piece of work on the books is a luxury for some, and one that should be managed carefully.
- Government contracting is not for the faint of heart. –The state and federal government is one of the largest consumers of consulting services. The General Services Administration spends about $50 billion annually, much of it ear marked for small businesses. However, doing business with the government as an independent is not easy. No surprises there… To be eligible to win government contracts, you will first need to obtain through Dunn & Bradstreet a D-U-N-S number, a unique nine digit number. In many cases, you may need a security clearance. You will also need to register with the System for Award Management (SAM). If this is seeming a bit complicated, that is because it is.
In addition to these considerations, there are also many ways to structure fees. Too often freelancers may default to a standard hourly option, but there are many other options. Some may or may not be possible, if you are working through digital talent platforms. Check out my book for more details on pricing so you can better appreciate the beauty of the art.
Baseball is back in season, even though Opening Day is not until Tuesday in San Francisco. (Go Giants!) Nevertheless, as America’s past time gears up, I thought it was appropriate to reprise this post from 2017. The freelance world does not know how much it owes to baseball, or more specifically to Curt Flood, an athlete who, in his own way, helped make the gig economy possible.
Curtis Charles Flood played 15 years in major league baseball from 1956-1971, playing for the Cincinnati Reds ( or Redlegs, as they were known at the time) the St. Louis Cardinals and the Washington Senators. He had a solid career, with three all star team appearances and seven golden glove awards. He won two different hitting titles and still today is ranked third behind Willie Mays ( a Giant , of course) and Richie Ashburn for most games played in center field. However, his impact is not what he did on the field. rather it was what he refused to do off the field, namely accept employment terms that no longer seemed appropriate to him.
Before 1969, players were bound by the reserve clause in baseball, which made players beholden to the first team with whom they signed. The had no say about their futures once the contracts were signed. Team management could make the decision to trade or release a player without so much as a “how do you do” to the athlete.
When the team wanted to trade him after 12 years to Philadelphia, Flood refused, saying,“I do not regard myself as a piece of property to be bought or sold.”
Floods case went all the way to the Supreme Court, and due to the fact that Justice Powell had to recuse himself because of his ties to the Busch family, the owners of the Cardinals, he did not win. However his action and the attention it garnered paved the way for change and ultimately led to free agency in baseball.
So what does this have to do with the gig economy?
What Flood wanted was control over his professional life. After all that time in the league, he felt he was owed that. Various studies have shown that when professionals decide to start consulting independently it is for that same motive — control over their life. MBO Partners 2016 State of Independence in America Report says that over 60% of consultants cited control of their time as a key factor in going out on their own. Similarly, the McKinsey Global Institute’s recent report entitled Independent Work: Choice Necessity and the Gig Economy noted that the independent workforce is larger than previously thought and that most participants choose independent work for its flexibility and autonomy.
What Flood did, by challenging the reserve clause, was to create a new notion of how employment relationships can work, a mental model that could be extrapolated to other businesses. Many people may only think about the free agency in sports, but it has its analogues in all sorts of other professional fields now as well. In fact, in the aforementioned McKinsey report, they cite different categories of gig workers, and the high end consultants who pursue the independent work option by choice are dubbed in the study as free agents. So thank you Curtis Flood for making your stand so that you could get the gig you wanted. The gig economy is in your debt.
It has been a busy week of interviews about my new book. Here is a partial list:
7/12 – Technomics, KGO, Host Jason Middleton; he half hour show will air in the second week of August
7/19 School for Start-ups Radio, Host Jim Beach; will air Tuesday July 25
I am thrilled to report that Publisher’s Weekly included Thriving in the Gig Economy as one of the new and noteworthy upcoming books.
A student of the #gigeconomy, I am always reading what is being said about it. Although we all know it is a global talent market, sometimes sitting in the shadow of Silicon Valley, you can forget that the rest of the world may not be moving at the same pace. Last Friday,I read a great article about the gig economy in Africa which piqued my interest, especially because its development is being analyzed very rigorously and in some jurisdictions, seriouss efforts, both public and private are being launched to accelerate its adoption.
In an Atlantic article entitled, https://www.theatlantic.com/business/archive/2017/04/gig-economy-global/522954/ “What the Gig Economy Looks like Around the World” the author highlights the work of Mark Graham, an Oxford professor at the Oxford Internet Institute. He is billed as a “Professor of Internet Geography”, which is a title, I , for one, find fascinating. He points out that there is a massive over supply of labor for low wage gigs found on digital platforms like TaskRabbit and Fiverr. As more and more people from the developing world join the platforms offering lower rates, wage compression occurs. The study looked specifically at workers in Kenya, Nigeria, Ghana, Malaysia, Vietnam, and South Africa.
Graham points out that workers in these countries face the benefits and potential risks of the gig economy. The former include income potential, work autonomy, and flexibility while the latter are isolation, discrimination and reduced employment security. The study looked at digital platforms as a source of freelance work as well as outsourcing domains, like call centers. In the platform world, the risk of employment security was significant. In the outsourced operations, there were more issues around working conditions and the treatment of workers.
Some workers thought the digital platform by its nature enabled bias that was either racial or based on the country of origin; one worker in Nairobi tried to make it look like he was in Australia to improve his chances of getting a gig. There were questions of what labor laws apply in work that is done on the cloud from workers that may be in many different countries. Professor Marks thinks this ambiguous question is one that requires an answer. To combat wage depression, it was thought there could be union efforts, but such efforts are difficult in a virtual environment.
Nonetheless, some governments see the emerging gig world as a potential tool to reduce poverty in their countries. Nigeria has launched a major effort to educate its citizens about the benefits of freelancing called, Microwork for Job Creation.” http://nigerianjobsmarket.com/2013/03/11/microwork-job-creation-initiative-in-nigeria/ The program is designed to educate citizens about the opportunities in the digital world as well as showcase for Nigerian businesses the ways they may be able to work more efficiently. They have a Facebook presence as well, called NajaCloud. Check it out at https://www.facebook.com/Naijacloud/posts/174030629411778
African entrepreneurs are also supporting the rise. Four entrepreneurs in Cape Town launched GetTOD last summer. Much like Handy in the US, GetTOD is an on-demand service for plumbers, electricians and Handymen.Press releases say it is the first platform of its kind in South Africa. Others are very likely to follow.
A big thank you to all of my early readers who have offered up some great comments about my upcoming book, Thriving in the Gig Economy. Here is a sample.
“The new landscape of work may feel like the wild west — so we’re fortunate to have Marion McGovern as our guide. THRIVING IN THE GIG ECONOMY is a rich and useful handbook that addresses every aspect of the new free agent terrain.”
– Daniel H. Pink, author of DRIVE and A WHOLE NEW MIND
“Thriving in the Gig Economy is a must read for anyone entering or re-entering the workforce in a non-traditional way. But if you are an entrepreneur thinking of starting your own company to ride this new wave or are an executive at a traditional firm, this book has valuable insights for you as well. Marion McGovern has written a meticulously researched description of how the dynamics of the workforce of today and tomorrow have and will continue to change.”
—Tony Earley Jr., Chairman, PG&E
“Thriving in the Gig Economy is a must read for anyone considering becoming an independent consultant, a newly established consultant or a seasoned consultant that truly wants to thrive, not just survive, in this evolving Gig Economy. Marion McGovern’s entrepreneurial zeal and expertise establishing and running a successful business focused on this marketplace long before the term “Gig Economy” was coined, coupled with her latest research on how this evolving economy is growing and changing, provides the reader with the tools, tips, techniques and resources to truly thrive in the Gig Economy!”
—Jeff Hayes, President and CEO of CPP, Inc.
“This is your go-to source for a font of information about the gig economy—how to build your brand, set your price, find work that matches your skills, manage employment risks, and master the ecosystem that supports this fast-growing sector.”
—Wayne F. Cascio, PhD, Distinguished Professor, University of Colorado, and Robert H. Reynolds Chair in Global Leadership, Editor, Journal of International Business Studies, The Business School, University of Colorado Denver
Berkeley Haas Magazine http://haas.berkeley.edu/ published the first announcement of my new book, Thriving in the Gig Economy. What can I say but go Bears!
Book by Marion McGovern, MBA 85
In Thriving in the Gig Economy (Career Press, July 2017), Marion McGovern, MBA 85, explores dramatic changes in the world of work and offers advice on how to capitalize and compete in the new landscape. McGovern focuses on the high end of the gig economy, looking at the alternative workforce of senior consultants. She dives deep into the world of digital marketplaces and outlines ways to maneuver in this new, digitally enabled world of work to create a path that optimizes success.
Thriving in the Gig economy is nearing completion. We are in the final editing step , ensuring the footnotes, acronyms and tables are all correct. The grammar is not far behind.
In the meantime, I am happy to report that I have received several endorsements. Here is a taste:
“Thriving in the Gig Economy is a must read for anyone entering or re-entering the workforce in a non-traditional way. But if you are an entrepreneur thinking of starting your own company to ride this new wave or are an executive at a traditional firm, this book has valuable insights for you as well. Marion McGovern has written a meticulously researched description of how the dynamics of the workforce of today and tomorrow have and will continue to change.”Tony Earley Jr.
“Thriving in the Gig Economy is a must read for anyone considering becoming an independent consultant, a newly established consultant or a seasoned consultant that truly wants to thrive, not just survive, in this evolving Gig Economy. Marion McGovern’s entrepreneurial zeal and expertise establishing and running a successful business focused on this marketplace long before the term “Gig Economy” was coined, coupled with her latest research on how this evolving economy is growing and changing, provides the reader with the tools, tips, techniques and resources to truly thrive in the Gig Economy!”Jeff Hayes
“This is your go-to source for a font of information about the gig economy—how to build your brand, set your price, find work that matches your skills, manage employment risks, and master the ecosystem that supports this fast-growing sector.”Wayne F. Cascio
I am in the editorial process with the book now, dealing with footnotes, releases and endorsements. Some aspects of the work now are tedious, but necessary. This is where, the fact that I am a big picture person and not so great with details makes some of this work now a bit of a slog. That said, it is always wonderful when I get an endorsement from one of my readers. I will start sharing those here soon.
I am happy to report that I have submitted the first 7 chapters of my manuscript to Career Press Inc. The balance of the book is due in mid-January 2017. In the meantime, I will be wrapping up interviews, finalizing some research and writing about the future of work. I welcome any comments you may want to share.