The Freelance Economy
I was on the phone last night with Stephen DeWitt, the CEO of our portfolio company Work Market. He was talking about a specific community of people and I asked him how many of them were likely to be freelancers. He said “well the statistics say that 3 to 4 out of every ten people these days are freelancers.”
I thought that sounded high but after reading Mary Meeker’s Internet Trends Report, in which she says that “34 percent of the work force in the United States, 53 million people, now consider themselves independent contractors, short-term hires or other kinds of freelancers”, I think Stephen has it exactly right.
Look around you on the subway, the baseball park, the movie theater, 3 to 4 out of every ten people are freelancers. That’s a big number. And its growing pretty rapidly. Younger people are more inclined to be freelancers. Older people turn to freelancing for flexibility or economic necessity. And employers are more inclined to hire freelancers as technology makes the management and compliance requirements around freelancers easier to handle.
The biggest section of Mary’s report, some twenty or thirty slides if I recall, was on freelancers and the “on demand” economy. Technology, the Internet, mobile devices, and the communications and financial systems that have been built across all of these technologies is making freelance work easier and easier to issue and easier and easier to do.
When I got home last night for dinner, my son and his friend were checking out jobs on care.com. When I was their age, finding work was a manual process. Now you just pull out your phone, scan your feed, and get some work.
It’s a new era we are living in and the nature of work is changing and changing fast. There are tons of opportunities in and around this trend and we are invested in some of them. It’s one of the big megatrends of this century.
I simply agree.Look at all the things traditional employers used to provide. Every one is an opportunity to provide those services to a distributed workforce.It’s a brave new world.#pragmaticoptimist
This trend is massive and it’s scale is totally surprising to me.What do you think the impact will be on wages and standard of living? My gut is more of barbell distribution: a low end around commodity offerings and high end for rare, high demand work (likely mirroring what we already in the workplace).My concern is that this will accelerate income disparity, not fix it.
Great point and I don’t have a pat answer.This is just the tip of the disruption I think and maybe–just maybe–the disparity that exists already will get mollified by this shift not exacerbated by it.Gonna carry this thought into my next meeting. Thanks.
Freelancing is a market-driven activity. I strongly believe that market-driven activities add to disparity. Achieving parity is more of a centralized activity which has inherent problems of not being able to execute well (The Scandinavian countries are the exception) .Disparity will get reduced if viewed from a global scale, but the micro-fractures it will create will only lead to disruptive gaps in distribution and new set of socioeconomic problems.
Nicely said.I believe the opposite that market driven change is the only way to spread opportunity.
Actually your belief is not in opposition to what I said. A market driven change MIGHT be the only way to spread opportunity. But we were discussing disparity and if that can be reduced through market driven conditions. To me, most markets promote the act of consumption and there seems something structurally weak in this. Unfortunately, the reverse of it is also not a panacea so we are where we are, in equilibrium but in a volatile disparate environment.
It is a huge shift that the FED is under estimating fr their rate decision.
Good point. Probably missing in the unemployment statistics too. One of the numbers that troubles me is people dropping out of the work force-but what if they are freelancing?
An added benefit is happiness, in the past people felt as if there was only way to earn a living. These days you can make money in your pj’s posting silly stuff on Vine and YouTube.And the freelance economy also allows people to unleash their creative talents which benefits society as a whole.
Millennials are looking to fulfil higher rungs of Maslow’s ladder and are prepared to accept much more testing circumstances within the lower rungs in order to do so.Access over ownershipExperiences over ThingsFOMOYOLOThese are not mere catchphrases. They are the war cries of a generationThe yearning for:FulfilmentMeaning CreativityConnectionFREEDOMdwarfs the desire for stability and security. The freelance/sharing economy, growth in alt-finance, unbundling of banks/healthcare/education are just some of the colossal ripple effects
I do wonder how much of this is a reaction to the downturn. There is a behavioral economic analysis here to be done. As economy improves and opportunity to find full time work grows, the question becomes will this sentiment change?
fair point. then we will get to see whether this really is cause or effect.
If you look at growth of company size, companies with 10000 employees or more are growing, companies with less than 5 people are growing. Ones in the middle are getting squeezed.
Very well put LIAD, but not sure if it is reaction to environment or youthful exuberance.
Millennials are looking to fulfil higher rungs of Maslow’s ladderLife has always been about “suffer now, enjoy later”. So it will be interesting to see how these modern day “hippies” live when they get into their 50’s and beyond. Think about that for a second while you (not you but “you” the reader) spend time on the blog Fred Wilson who followed the standard plan which was not about anything that was mentioned in your comment.dwarfs the desire for stability and security.Yeah, who needs that, eh!I guess that doesn’t matter anymore even though it always has. Perhaps there are eithera) to many social safety nets or b) parents are well to do enough and will keep you floating in that suspended childhood state.c) you are enough of a lemming to buy into what you see others your age doing.I love the way that millennials assume that everyone older wears a suit, works in a shitty middle management job, is miserable and has made a huge mistake by going down the path that they did.
I have many friends in NY whose parents were hippies or bohemians in the city in the 1960-70s.Many bought their apartments in the village (and others in the buildings) when they went co-op for $8-10K and those are now worth $1M+. Some bought buildings from the city for back taxes to start artist spaces and such. They have held these assets for 40 years.These hippies are all now multi-millionaires mostly via luck. I’m not seeing such random windfalls for the millennial generation.
Lots of good comments today. I agree with all except I think that there will be plenty of people for Uber and others to utilize. The issue will be what percent of their income will Uber take???
The issue will be what percent of their income will Uber take???Putting my devil hat on what I see is the same thing that Amazon will do with both AWS, Amazon Prime and non Prime, Netflix and so on. After you crush the competition you then begin a progression of slowing raising prices predictably knowing that most people are locked into your offering. I know AWS for example is always lowering prices “the loss leader” however hard to believe at a certain point they might not actually raise prices.  Might not be on everything but once someone is married to that stack the cost to move is simply to steep.Oh so my point is Uber can do the same they can take more or less money similar to what Alan Greenspan would do to modulate the economy. Can’t happen you say? People always thought house prices only went up and never down.
Already doing: http://www.forbes.com/sites…Now the question is will drivers take it???? Or will somebody come out with an app like Kayak for car services????Being a middleman is really good until its not.
They aren’t locked in they can switch and rejig on a dime (and article said that that has happened). That said it’s dicey as allegiance to a particular service can be changed, so not like building on AWS.One reason they may be such pigs is that they do not want a race to the bottom. By charging high vig’s they send a message that a competitor can charge less but doesn’t have to charge that much less. Keep prices high and we all benefit.Imagine if they charged 10% then someone charges 8% and so on. By charging 30% they have a better chance of not having that happen. This has worked predictably in the past in other businesses, although I can think of some exceptions.Best case scenario for all market participants is the same thing that happens with lawyers. They charge high rates because they all charge high rates (yes that is different in many ways) and it works well for everyone in that game.30% is a rape though no question about that. Seems so much easier for what they do than being Best Buy and selling electronics in a mall.
The AWS analogy is slightly incorrect. If you implement in AWS in a certain manner, there is no requirement of being locked in. Also, it is highly debatable that AWS will raise prices to the point of discomfort (they may not be the lowest price providers, but that does not imply price points which pinch us. Competition will take care as long as there are a few behemoths around).Extend the analogy with these new points raises dimensions-:1. Services like Uber or even eCommerce sites where lock-in is low will have prices kept honest as long as there are other options. If the number of options start reducing, the entire story changes. In fact this is one area where VC money promotes removal of competition at the expense of bearing losses.2. Services like AWS where there is slightly higher barrier of exit will still have competitive prices as there are a few giants competing all of whom want to make it easier for people to jump on their platform3. Services like lawyers are more to do with non-routine critical aspects where it is not the exit barrier but the possibility of loss which makes you pay more
AWS is a mess that requires you to adapt and learn a way of doing things that is tied to the way even AWS names things. Sure in a perfect world you can make that be less of a problem but the truth is that is not what happens is my strong guess.Also, not talking about “discomfort” that is the point you just raise a bit at a time and the incremental isn’t worth the effort of leaving. That is the strategy.Look, even today there is an entire generation of programmers and startups who have no clue about general sysadmin stuff. I had someone ask me the other day what I mean by “installing ssh keys”. Not the best example but my point is all of these packaged ready to go things means you don’t know any other way because you don’t have to. So like buying a tv dinner (as they used to be called).3. Services like lawyers are more to do with non-routine critical aspects where it is not the exit barrier but the possibility of loss which makes you pay morePart of the way that attorneys retain clients is by building relationships and by being likeable. Much of law plays out in the future anyway so do you really know what is “good”? As such you aren’t going to switch to save a few dollars. Same with the person who cuts my hair.
We will leave the AWS discussion for a better forum where you and I can go 12 rounds although I am betting we can end it earlier and can call it a tie!On the sysadmin part, I guess absence of not knowing everything is fine. It is like asking a person in a driverless car 10 years down the line if he knows how to drive a stick. It might be helpful if he knows it, but in a city of driverless cars will never get to prove the value because it is no longer needed.An entire generation of startups can help you solve your larger problems more easily. And they can pitch in with sysadmin stuff using Google. Heck, they can even code using Google because they know what to search and where to look!
Docker is coming…could easily remove many of the lock-in advantages that AWS or Azure have today. Platform technology lock-ins are in general getting harder and harder and harder…
“Choice” inherently implies a lock-in. Even choosing to take an Uber over Lyft implies a lock-in for that specific ride. Platform lock-ins have not become harder, they were always there. Ask an airline or a bank why they are still running an IBM mainframe for the past 50 years. Atleast now they have more freedom in their choices.Thinking of getting locked-in to AWS/Azure etc. is akin to saying that we are locked to the language we chose to build our application. Of course we are locked, we made a Choice between the red pill and the blue pill irrespective of what the Oracle thought or said.+1 to Docker
To be fair, not sure the hippies knew how lucky they were at the time. Probably hard to know the asset you bought was either very undervalued or going to go up a ton until it does.Think point you identified is millenials are probably accumulating less assets as we tend rent before owning. It lessens the chance we expose ourselves to luck. This might also be an affect of technology, networks, market places, sharing economy etc.I’d say we might be creating excess cash from savings as sharing economy in theory means no big costs to buy assets and is more steady contained costs, but I doubt this is true given wage data I’ve seen. Hopefully I am wrong.
They had no idea. It was pure dumb luck (half of them think they were financial geniuses).You’re not going to be socking away a lot of savings if you order all your meals delivered from seamless rather than cooking, ride uber rather than the subway, and drop $100 on brunch every weekend.
Yep, there is no better example of how even the smallest leak can drain a pool than how we pay for prepared food.
It lessens the chance we expose ourselves to luck.Owning is also “forced savings” it is money that is tied up and you can’t blow it on non essentials and it is there later for you, in theory.Perfect world people would bank the difference (and have flexibility) but that rarely happens.
Right. Liquidity vs. returns.Luck, in this example, is outsized returns. Though money is tied up, it can multiply in value a lot faster if you get lucky and you can realize it if there is liquidity. If just banking difference, though you are perfectly liquid, you never get the shot at the home run because you don’t take a swing.Perfect world is you have your choice to bank the difference or tie it up, and you’d know what you are getting yourself into (not the result, but the risk) ahead of time.
What’s interesting is the “hippies or bohemians”. People that were more traditional and moved out of the city haven’t experienced anything even close to that price appreciation.My cousin was non traditional (didn’t get married until he was 40 and then against the wishes of his parents to woman of a different religion and “class”) but he is now sitting on a really nice property in “center city”. And some other real estate simply because that is where he lived and he could by exposure. If he had been like his brother he would be in a house in the suburbs that hasn’t experienced anywhere near that price appreciation.
At some point we will have to reconsider socialism, which was never possible due to the human nature of 30% drivers / 70% followers lead to socialist structures of “bureaucrats” replacing “managers/owners.” That’s not socialism.Social networks, incidentally, make it much more possible. Where a person’s physical needs (housing, food, insurance, education) are fulfilled by the larger group, which is also encouraging the individual to develop their talents and add value in a fulfilling/meaningful/creative/free way.I’m sorry, did I just say “socialism”? sorry.
Stop throwing that “socialism” thingy aroundSome one is going to lose any eye 🙂
I’m lucky I work in tech, that’s all I have to say. And yes, I’m a freelancer, working with 5 other freelancers. No corporate structure at all.I can’t afford to have employees, my margins are just not big enough (we are servicing large companies not building “for the masses” yet…)Everyone of us submits weekly timelog and invoices. We are using a homegrown time management / PM system.I must admit I have toyed with the idea of buying real estate properties in Brooklyn (where we all live and work) and offering free rent for full time employers who are paid less. If they stay with us for X years they get to keep their apartment, or something like that.I have no idea what the tax ramifications for this type of thing would be, or if it’s remotely legal. It’s just a thought/dream.
.You would be able to expense the fair market value (or purchase price) of the real estate at the time of constructive receipt by the beneficiary.They would have to recognize as income, the FMV at the time of constructive receipt.Very simple tax consideration.Could get a little more complicated if there is an employer-employee relationship which would require the employer pay payroll taxes–not a difficult thing to figure out.Any good real estate tax attorney, accountant can explain the ramifications to you.JLMwww.themusingsofthebigredca…
(My other reply above). I traded a product and service that we sold in the 80’s for apartment rent. I then offered the apartments at a reduced rate as part of total employment “package” if you want to call it that. It worked out to be a pretty good incentive and to our advantage.  When one employee quit they wanted to continue paying the reduced rent. They even brought in their husband to visit and make the case. That was a fun day. In the end of course they had to move out or pay the full price rent.In fact my first apartment out of college was fully paid every month by trade the same way. Since our product was high margin and we have excess capacity this worked pretty well with real estate.
If they stay with us for X years they get to keep their apartment, or something like that.Back many years ago I was able to setup transactions where I traded reduced rent apartments as an incentive which helped save payroll costs.. I did that a number of times. I didn’t own the apartments I merely was able to trade the services that we offered for the apartments and then more or less arbitraged the whole thing to my advantage.
I agree with the “dwarfs the desire for stability and security”, but primarily because I don’t think the jobs that used to fit that description exist anymore. Where are they? What job should a millennial get that would fit that description? I can think of jobs they’d have which would teach skills that might fit that description (because once they lose their unstable and unsecure job, they’ll be able to find another), but the jobs themselves don’t seem to fit the bill anymore.I’m thankful for the skills I have that allow my 10+ years of freelance and start-up work. I’ve gotten to work on a lot of interesting things, each of which have taught me more useful skills. I’m lucky in that some of my skills are rare, so some of those freelance stints left me enough cash to save for the next lull. It hasn’t been the easiest route, but it’s been much more fulfilling than what I imagine as the alternative.
Maslow’s “hierarchy” of needs is exactly that a well established universal “hierarchy”. Any attempt to invert that pyramid is a temporary delusion or rationalization.
That’s an unusually negative perspective from your good-self. You leave no room for hope.
How so ? Let’s look at some analogues !The fact that one must have a stable atomic platform on which to build out molecular components,or that one needs a stable molecular platform to build out cellular componentsor that one needs a stable cellular platform to build out living-system components.how is that either negative or hopeless?It is simple the realism required to move forward while standing atop a well established/realistic modelling of the hierarchical dependencies inherent in the substrate building components at hand.
No need to over-complicate it old-bean. Marley sings it so much better and simpler…: “Emancipate yourselves from mental slavery, none but ourselves can free our minds. Have no fear for atomic energy cos none of them can stop the time”.Keep your feet on the ground and your head in the clouds. Peace bro.
“Keep it as simple as possible but no simpler” my man :-)I love Bob too but you will notice that all the wonderful feel good liberation songs over the last few decade have not changed the oligarchic lock-down power structures much.Where as little more application of Maslow’s “hierarchy of needs” offers a more promising/incremental framework for “feet on the ground” continued progress.
For sure. As with young people for many generations past.
On demand sales team(s) now too. Amazing, http://techcrunch.com/2015/…
I saw that, and not sure that this one will work for a lot of businesses.
I think there is a dark side to this. Yes, it’s good for people who wish to work flexibly and it can be good for employers as it gives them flexibility as well. However, it removes the security that (despite what LIAD says) a lot of people, including young people, want. Not having the security of permanent employment makes it much more difficult and/or more expensive to secure loans/mortgages. What about pensions to which employers have traditionally contributed? For unskilled sectors and some skilled ones I see it as a race to the bottom where those willing or able to accept the lowest wages will get the work.
i agree with you. it’s not all roses by any means. there will be terrible income disparity and development of a societal underclass.no fixed salary = no credit = no mortage = no healthcare and on and on.i’m not saying this ends well. i’m sure throughout generations most people wanted to sit on a river bank, drink wine and write poetry. clearly the world can’t function that way. it’s just that this generation seem more happy to gamble. i’m just reading things how i see them.
fingers crossed that we’re both wrong
Did you see the piece by John Oliver about unpaid maternity leave a few weeks ago? Given the shareholder value emphasis of corporations and the campaign contributor value priority of Washington, I don’t see how this gets fixed. Short of revolution.
didn’t see John Oliver piece but hope revolution is not the answer – they never tend to end well.
It’s naive and dangerous to think that a contractor economy is stable in the long-run. Just look at the Boomer pension train wreck. In a democracy things like this get fixed. If they don’t get fixed…………
Exactly. And for the young, building a portfolio of progressively skilled work product, and being able to charge higher prices for it? Tough. Every millennial I talk with who’s “freelancing” longs for a job. For community, belonging — and a steady stream of income and benefits.
Hello there Anne :-)Yes, many want to be part of a culture that does something they agree is meaningful.
Yep…this is the part where we start to truly understand the non-wage compensation that traditional employers have provided.
Fred I own a software factory in Uruguay and its been impossible for me to hire HQ engineers. Now I changed the strategy, am building sworn of companies where mine sells and manages the biz and I have a sworn of freelancers and young companies collaborating with us. This strategy is sustainable and easy to grow. Twitter:diegofiore
Mine and sells? Sworn of freelancers?I think I follow but am not sure.
mine = “My company” sells, and do project management, product management, product Design.
“Now you just pull out your phone, scan your feed, and get some work.” Fred, this is an unbelievably sunny (and unrealistic) view of the world of freelancing.Young people “freelancing” happened back in our post-college days too. We called it temping, and it was what people did between jobs. It’s not new.When you’re a freelancer you’re also a salesperson. Getting work online would seem to remove sales friction — a la the temp agency, updated — but that’s going to work better when your work is a commodity or can be represented pretty transactionally.I agree that there are tons of opportunities to provide services to this community. One interesting project I saw was a woman who wants to serve as a sort of factor to freelancers, paying them a smooth income for the work they’re producing. Interesting and pretty difficult. If nobody else knows who she is and posts her link, I’ll find it later and link it here.I have to dash, and wish I could stay here to rain on some of the sunshine that I anticipate will emerge here about how awesome it is to freelance. Like any other job, there is awesomeness. And then there are challenges. (And 1099 reform would be a good start on some of the structural challenges.)I go back to that day that many in this group pilloried Eric Ries for his Kickstarter. I read what he was doing as an effort to build more financial sustainability into providing his highly complex, expert skillset as a service. That’s the freelance challenge in a nutshell. And many in this innovating group were “haters.” So you’ve got that challenge, too.(adding on, 6/4 — I didn’t find the article I remembered reading. Pretty sure this is the company, though I had mis-remembered the female CEO/founder: https://even.me/)
Correct. Free lancing is amazingly hard. It’s hard to find work at higher levels-and it’s hard to get paid in a lot of cases. For people with technical skills, it’s a lot easier.
Here are some rates for technical freelancers:iOS developer===========Avg.: $65 hr (125k)Mid-level: $40 hrSenior-level: $80 hr Expert-level: $150-200 hrIt can go as high as $275-330 hr.Front-end web developer===================Avg.: $75-100 hr Mid-level: $101-$125 hrSenior-level: $126-$200 hr Expert-level: up to $260 hr Designer========Avg.: $59 hr Mid-level: $75 hrSenior-level: $100 hr Expert-level: $125-150 hrSimilar rates for freelance Product Managers, Back-end Developers, people who can write technical documents.So technical founders save themselves A LOT OF MONEY.
I find expert level freelancers for less than $ 70, that’s why I think the technical freelancers in US are in a difficult position in the long term, except when on-site work and excellent communication skills are required.
It’s possible to get great developers in India, Brazil, Eastern Europe for a fraction of the US freelance developer rates.It’s really about whether the person commissioning the technical freelancers want them to be in the same time zone in case a support issue arises, e.g. bug crashes the site.Women in particular like being technical freelancers because it means they can be at home and look after their children and still earn a good income as well as show their talents.
I think the increase of a remote work culture and the “karma globalization” (e.g: github, stackoverflow, blogs) will change the freelance market dramatically and harm US technical freelancers.Now, for example, the users who share code in github are a very small part of the whole development population.
There are a couple of recruitment sites emerging that use Machine Intelligence to crawl developers’ Githubs, Stackoverflows etc. to check how good their code is.Github etc are all useful.However, a developer still has to customize and solve specific code problems that aren’t shared there.
Was talking to a Dev in Berlin yesterdayunderstand there are now interview grooming service’s where applicant is unskilled but is trained to give answers then when hired is given mechanical turk type support. Big startups are hiring people who outsource their work !!!!Happy to detail confidentially Dev in question prepared to blow whistle has a reputable doctorate and wholly plausibleSorry for.crap typing on train
There are various ways of looking at this-:1. The technical freelancers who do more of the same are at maximum risk2. Technology inherently requires a lot of learning and perhaps aging impacts the ability to learn as fast as the younger lot. (Due to other interests, evolving priorities and generally lesser time at hand)3. Inspite of having a technical firm which works remotely for its clients, I have realized that nothing beats the social aspect of meeting in person. It has nothing to do with an open mindset but more to do with the way we are hardwired as social beings4. Standard, regular, technical work will flow out of the US much like the Manufacturing or any business lifecycle to lower rate locations. Obviously with this kind of work having more volume, freelancers and even boutique firms will get impacted in the US or any place with higher ratesThe beauty of technology is that it is highly democratic, extremely Boolean with low entry barriers. Once a level of excellence is realized, all that remains to differentiate are the rates!
It’s still very hard to do only virtual. Keeping the internal community going plus deal with zillions of local labor costs/regulations could possibly make it more expensive
You are right, it is not the same to be face to face, but if my small Argentinian company was able to sell to Fortune 100 companies I am bullish on the development of the virtual side of businesses.
If you can make it work, it works well
If you ever want to discuss the benefits of a Freelance Management Software, please feel free to reach out to me at [email protected]
What are these stats from? Front end web developers command more than iOS? Are these people that know HTML and CSS or is it people doing crazy stuff with Angular and Backbone?
Quora and a few freelance sites.The front-end is for Ruby-on-Rails. Angular, Kinetic, Node and Backbone rates are lower (but only slightly).It’s entirely possible to contract developers at $25-35 per hour too.And I know 20-something freelance developers on West Coast earning $170,000 pa who are only doing Cake PHP.
I guess I’m glad I’ve been spending my time learning Ruby on Rails. Though my understanding has been that Ruby on Rails, Node, etc. are considered back-end.
Node can be front-end for data viz.Languages like Python and Ruby can be front+back.It’s only languages like SQL that are strictly back-end.
I suppose when you’re doing views in Rails that looks and feels like front-end. In my technical interviews I’m often surprised to learn that places looking for people that do Rails, etc. don’t generally expect you to have touched SQL at all, ActiveRecord alone is good enough.
This is like calling a plumber a freelancer.
Ha, Rich!Some developers do actually consider themselves to be plumbers, especially back-enders.They make the pipes that run the data through the house (the site).
freelancing is real, but let’s not toss every design shop, dev team, ad agency …into this group.
I agree with you. Dev shops can skew the rates higher because of their “clout”.The lone freelancer might go for $15-25 an hour and maybe negotiate cash on completion / stock.
Yep, thats the number Ive worked.
Front end web devs are ridiculously overpaid.
The danger of that is developing a lifestyle based on being paid that amount when we all know that type of pay will almost certainly not last. Anything paid well attracts competition and prices will eventually drop. Most people doing this probably are not concerned with that even if they know that it exists.
This is exactly the SF bay area crash I see coming.
User arrives on the site. If it’s not working or doesn’t have look+feel that user identifies with, they’re not going to click onto subsequent pages or input any info that data scientists and back-end developers can work with.Is it worth it to pay a bit more to front-end devs to get that homepage right?
While we are digressing from the topic, the reason for front-end devs to be overpaid is because people value what they see in front of them. The complex algorithm written to reduce transactional calls and thereby increase the efficiency of task by 18.76% is better suited for war-room stories! And I am willing to swap these with you or anyone listening…
I’m not saying the great ones are not worth the top of that scale or higher. But there are vanishingly few great ones.I am saying most average and senior front end devs I see working in SF these days are not worth the rates in the first 3 tiers.
I think you and I are in agreement – UI Engineer wins because the customer pays first for how the car looks rather than how efficient the engine is.When we do projects for customers, it does not matter if all the back-end services are 100% complete in 10% of project estimate. We are still at “project not started stage”!Most front-end devs command higher salaries because the back-end guys do not want to touch JS and definitely not CSS/HTML. So I guess part of the rates are for doing what others do not want to do, like an expensive carpenter.
This is a loaded question.Are all of the Uber drivers who are 1099’d not freelancers?If they are, then there is no distinction between them and W2’d employees except employees get their taxes paid by their employer upfront.Wonder what JLM would say to this.
.A 1099 is a method of reporting income. It does not imply that someone is a “freelancer” meaning someone who offers their services to a myriad of potential employers.In the Uber example, the company is attempting to establish these workers as “contract” employees primarily for benefits reasons — not to have to provide health benefits, as an example.I would rather doubt that when the IRS gets around to examining this issue with Uber in the dock that Uber is able to prevail. These are not likely going to fit the strict definition of contract employees — this is, rather, a work force that is assembled in a rigid process for the benefit of the employer.When you receive 1099 income, you are responsible for self employment taxes as well as the cost of certain benefits — for yourself. As an example, you still have to have an Obamacare policy.Further, affiant sayeth not.JLMwww.themusingsofthebigredca…
I understand that but was referring to something else.You are an employee if you need to be at a certain place and a certain time doing certain jobs over time.In NY at least they will come after you and shut you down if you are not putting people on payroll when they fit that requirement.True for Uber drivers. Instacart schleppers. Kitchen laborers. All over the hospitality field.That is what is breaking.
You are an employee if you need to be at a certain place and a certain time doing certain jobs over time.Agree. But keep in mind this one difference. In the case of “In NY at least they will come after you and shut you down” you are talking about a bunch of different businesses primarily small and not able to hire an army of the best lawyers to play rope a dope with the government and/or any rules.Places like Uber are bottomless pits of influence and power and have the ability to buy the best consultants, advisors and lawyers money can buy. This is quite different than being Danny Meyer or someone with a bodega. Or 1000 Danny Meyers.After all if that is not the case how did they manage to even stand a chance against the legacy taxi structure which was well protected in many ways?
Agree.And it is going to be tough cause it impacts tax dollars.But honestly it is time to break this down and part of the change that Fred is talking about.Anyone who has a small growing business tech or not, but hospitality especially in NY runs into this alot.Unwise to break this law. No one I advise does.
Unwise to break this law. No one I advise does.Also very hard to compete in a business where others typically “break the law” (by my “you can only be as honest as your competition” saying). NY is most likely a cesspool of this type of behavior.Plus the other paradox is that people with something to lose are at a great disadvantage when taking chances and breaking the law. I just ran into a situation the other day with a small property that I am buying where the rear door (an exit) is blocked and the current owner says that it is ok and has passed fire inspection. I went to the trouble of verifying that info with the town inspector (even the fire inspector). Was willing to walk from the deal if I didn’t get the right answers. However back when I was younger (and had little to lose) I might not have done that. I would have taken that chance. The actual “risk” is nominal but my perspective changed because it has to change.Likewise if you are employing drivers to deliver luli and operating by the book and if someone else competes and cuts corners (under the table pay, drive own vehicle) you could be greatly disadvantaged price wise. But you do what you have to do, depending on your risk tolerance and so on. (Also the care that you take in actually making your product for that matter. Someone producing a similar product can probably do many things to lower the cost that might not be apparent to the end purchaser….)
All of these companies are predicated on an underemployed work force.If full employment via trade policies (like JLM was talking about) happens Uber, instacart, handy et al are going to be in deep shit.
you are conflating income with supplemental income. there will always be pool of workers available for Uber and Instacart etc. Pizza Delivery has been around for a century and isn’t going away anytime soon.
If you start to get picked up by uber in the kinds of cars pizza gets delivered in (95 civics with a mismatched quarter panel) you’re not going to use uber any more.
That’s a demand issue not a supply issue. And Instacart?
Instacart shoppers net about $10/hour http://www.huffingtonpost.c… I assume they have to pay self employment tax out of this, plus car and phone expenses.If you are making $25-35 an hour in your real job are you going to waste your time making $10/hour in your free time?The whole thing is predicated on a large pool of desperate contractors.
we have an entire economy built around $10-20 hr jobs. There is no indication that this pool of workers is shrinking.
That’s a point I made to Benedict Evans when he opined on Twitter how everything is better than in the late ’90s boom. For VCs, maybe, but there was much more broadly-shared prosperity back then.The key economic metric showing the difference is the labor force participation rate.
I don’t disagree but keep in mind that there is a great deal of social proof when you see your peer group doing the same thing and accepting those wages.Look Fred said this (which I questioned in another comment):When I got home last night for dinner, my son and his friend were checking out jobs on care.com.The way I read it care.com is basically baby sitting jobs.. Not typically done by boys. We mowed lawns, shoveled snow and so on.
The whole thing is predicated on a large pool of desperate contractors.There are all sorts of things like that floating around in the new economy. Another example is companies that are funded and have a customer base that essentially is other startups that are VC funded. When that goes away, and it will go away, what you will hear is big sucking sound.Back in the 80’s I had a big customer that was in business just to handled outplaced corporate employees by providing them with counseling, resumes, job help and office space to look for work. Built a nice sized business and sold it before that type of caring went out of style. Was an artifact of all of that downsizing and when companies reputation mattered more than it does today.
On fire today.
Bill collection is the worst acquired skill I’ve had to develop from all my freelancing work.
and it’s hard to get paid in a lot of casesI did photography for lawyers in college (as one of many things) and the first issue that I ran into was getting paid. These were personal injury lawyers primarily and they fronted all of the costs. God did they jerk me around. Not all bad, I learned tricks and lessons that helped when I started a business and had collections to deal with and accounts receivables. So it was an education.That said, it is easier now then it was back then. No way I could have accepted credit cards for payment. If I had been able to it would have been easy to simply say “pay by credit card for your photos” and charge on delivery.With respect to “consulting” no matter what the amount, it is a primarily a matter of attempting to set the payment ground rules upfront.  Or, hiking the amount you charge to cover for any losses. Of course if you are going to earn your living by charging “big dollars” and you can’t do that then you will simply have to factor that in or figure out a way around that issue. That is part of being in business. Being “in business” for yourself involves many parts and tricks. No way around that. But maybe not. If you are to restrictive with credit in some businesses you will definitely in many cases get less business. No question about that. Each industry is different and unless you can walk on water it is difficult to buck standard industry practices (but I have to point point out that is not a reason to at least try..)
Free lancing is amazingly hard. It’s hard to find work at higher levels-and it’s hard to get paid in a lot of cases.Typically that is called “consulting”. Sometimes it can also mean a higher level person is in between jobs and sometimes it can mean they are really a consultant and can go from gig to gig or handle many clients at the same time.The thing with any type of consulting, at least on a small scale, is that you a) always have to hunt for work and b) you do not build any equity and you have nothing to sell since your product or service is yourself.
Good observation that while the freelancers & technology enthusiasts want to go at 100 miles per hour, government regulation is still at 10 miles per hour.
Completely agree Anne. Very well said. This is obviously a very skewed (and highly skilled) readership on AVC who primarily chooses to be freelancers or the same with many / most of our friends and colleagues. The majority of “freelancers” are simply individuals who used to have economic security, but now are simply forced to take on all the risk that a company used to have (if demand goes down, the worker can have their shift or project canceled. If they get sick, they have the cash flow issue etc.). Pretty out of touch by Fred and Mary I feel.
I’m way late to this post, but I’m afraid you’ve hit it on the head. If we’re being brutally honest, there’s a generation 20-30yrs that is doing the freelancer thing because they simply don’t have a lot of other options. I hear that all the time, even from skilled tech workers in SF & LA who are the least at risk in the employee rental model…and make no mistake, employees are rented & returned for any reason that collab economy companies see fit, often simply because the startup failed to generate demand to match supply (as you point out). Often the smarter folks and those who have more access / support build their own brands (design, engineers, marketers or otherwise) and then tell their employers to shove it.We need some good, minimal structure around contract & non-trad FT employment, but unfortunately the states and fed level are in the pocket of people who preach scale and economies of efficiency w/o acknowledging long or even medium term growth.
.I agree more with you than you do with yourself.Truth.JLMwww.themusingsofthebigredca…
One interesting project I saw was a woman who wants to serve as a sort of factor to freelancers, paying them a smooth income for the work they’re producing.Is that some kind of variation of a payday loan? If you can find the link that would be interesting to see.
I’m pretty sure that this is who I’m thinking about — for some reason I thought they had a female founder/CEO, which doesn’t look to be the case.https://even.me/about-even
Young people “freelancing” happened back in our post-college days too. We called it temping, and it was what people did between jobs.Another way to put it is to call it what it is in many cases. “Living hand to mouth” or “Living from paycheck to paycheck”.Working essentially and not building any savings or equity or stability and with no implicit guarantee. Just enough to get by for the week and pay for cigarettes, entertainment, or drugs.The availability of work in this manner does have that “negative”, in addition to the obvious clear positives.
Indeed. I think it’s a tough sell, on the one hand we want to look at success stories and say “those people made it because they had grit and ingenuity” but on the other hand if all you can get is a crappy job that requires you to have 2 other crappy jobs just to stay afloat…I find it hard to judge that situation.
pilloried Eric Ries for his KickstarterI felt part of the criticism was also that Ries was offering advice similar to a person who writes a book and speaks on how to make money investing in real estate, but doesn’t invest in real estate themselves, they make money off of selling books telling others how to do that. As opposed to Fred who offers advice and blogs but actually earns his living doing the activity that he writes about.
What we each remember is like a blogospheric Rohrschach test!In my mind, some were perturbed that Eric was using Kickstarter at the same time that he had book deal with a traditional publisher.Sentiment I felt/heard was that he made “enough” money from his regular efforts. (Which blew me away.)
To me its easy.Freelancing when you don’t need the money = All goodFreelancing when you depend on it for food and shelter = All bad
You nailed it, Phillip. Spot on.I literally have two types of friends–the “haves” and the “have nots.” The “haves” benefited from stable employment, health care coverage, 401K’s, stock options, good credit, etc., and have accumulated a nice nest egg and are poised for retirement. The “have nots,” many freelancers, some entrepreneurs, others just guys w/ bad luck, are in a bit of trouble since they’re a tad beyond their peak earning years w/ out a pot to pee in.Chasing the dream is all well and good, as long as you understand (and can afford) the risks.
I’ll give you the low tech example. I own a large old house (3 stories, 5br, 1839)I am getting it repainted. I received several bids and the low one was from somebody that hired freelancers. Do I really want somebody that doesn’t know what they are doing 45ft in the air??? Pass.The other was for a wrought iron fence. Guardian said they only do industrial, but one of their guys freelances. Ok, he was way lower than everybody else. Nice guy, worked nights and weekends. Said he was going to use the money to go on a nice vacation with wife and kids. Great.
Do I really want somebody that doesn’t know what they are doing 45ft in the air??? Pass.Always got a kick out of those signs for “College Student Painters” people that actually think it’s a good idea to hire a college student with no experience to paint their house. Who would think that people like that exist that will hire and think it’s cute to “give them a chance”?Guardian said they only do industrial, but one of their guys freelances.I have a graduate degree in that type of thing, finding and probing people who come and getting their phone numbers for something I might need in the future for some reason. I once hired a Bell of PA phone installer (in the 80’s, union guy) to put in CCTV cameras in my place. He said “But I don’t know how to do that” I said “it’s running cable you can do it it’s no big deal”. And he did and I saved a ton of money. Note the attitude he had before I pushed him. Single function machine. Knows what he knows, doesn’t think beyond that. No hustle.Recently I tried to get the young fire inspector to climb on the roof to inspect an HVAC but he turned me down. Even though he was a fireman. Declined $75 to just get me the serial number on the unit. A rare failure in the strategy.My dad earned money when I was a kid doing electric work on the side before he had his own business. I used to go with him on jobs.
I do it all of the time as well. Hey cable guy, want to wire my house???I think some of the negativity in this thread is warranted. When people want to know what pushes down wages??? Look no further. Think that London cabbie who had to get the “knowledge” likes the Uber person taking fares?And I agree with you once these companies get strong positions they will exploit them by charging doers a larger percentage.Same for the fence guy, my wife got quotes from HomeDepot and Lowes which were ridiculous and made me get quotes.
Separately, there is a certain satisfaction and pleasure, you will have to agree, by doing a “Hey cable guy, want to wire my house???” and the strategy working vs. using an app to do the same.Another thing is that it’s likely that when you get the cable guy that way, you can set the rules because Cable Guy has never been approached and isn’t doing it frequently enough to even truly estimate his cost of time or the effort involved. So if you wave a few bucks it’s a done deal.
I can tell you where you are going to get better service, that is for sure.The guy you approach and just give some money looks at it as found money.The guy that is trying to do it by advertising on a service is going to resent their cut, resent the fact that they deal with a bunch of cheapskates (sorry but a lot of people that try and use those apps are), and basically try to make money.
How did you know the price was off
Generally means you’ve been doing something long enough to be good enough to warrant charging more.
????When you have to freelance to make a living people can push your price right to the bottom, they will, and they do.When you don’t have to take the job you are in the drivers seat.Unfortunately as Erik points out there are a ton of people in the first category.
That is part of the equation too, yes.
Sorry I’m not thinking so well the past few days, less holistically
I agree 100%. For the last 10+- year I earn about 20 to 30% of my day job salary doing casual freelance. I dial it up or down depending on what I want the money for. It always comes easy, thru a friend or a friend of a friend. Always. As an example: https://dl.dropboxuserconte… easy 10k for 2 to 3 weeks of a few hours at nights and weekends.On the other hand a friend who only does freelance is always stressed and struggles to maintain a constant flow of jobs. It is either very little of it – where he is unhappy – or too much of it where the jobs start bleeding into each-other and that makes him and and his clients unhappy.The biggest struggle for freelance at least in the creative fiend is not even too few or too many jobs, it is the right jobs/clients. I am helping a friends mother with branding her line of beauty products right now and the main problem is her ability to know what is good or bad design. We’ve gone countless rounds of explorations for a mark and she is stuck into some super cheesy solution someone did for her before I got involved.The trick is turning down the work the moment you realize whether someone is going to be a good client and project. Unfortunately though, when “… you depend on it for food and sheeter…” you can’t be too picky.
Yup. You’re totally unhedged as a freelancer. It’s not healthy for the labor market
The growth of 1099s seems to also be a thing driven by companies not wanting to deal with transactional work.Then there is also the growth of 1099s because the work is knowledge based but treated transactionally because of the labor markets desire to not fully negotiate with labor.Then there is also the growth of side gigs because of cash insecurity and the feeling of job insecurity that appears to be a millennial hallmark
Yes! To your first point, 1099-ing work de-risks the corporation. From the smallest companies — like yoga studios, which notoriously do this in NYC — to large banks that hire armies of 1099s, sometimes for “knowledge work,” and sometimes for low-end transactional work, for example at tax season. (My first job in banking was as a temp doing precisely this!)I don’t get your second point.And the third point, interesting and yes!!! This is some of what Gary Chou is answering — for some people — in his Orbital Bootcamp.
21st Century technology is reversing the effects of centuries of colonial growth. All western countries grew off the backs of exploited labor, and continue to benefit from cheap overseas labor.Freelancing, the “sharing economy,” crowdsourcing (whatever you want to call it) is both enabling people at the bottom of the pyramid to find work, or allow those who want more from life than a 9 to 5 job, to have it on their own terms.We live in a global economy and you’re not just competing for job in your town, state or country. You’re competing for jobs globally, and you’re competing with algorithms.But as empowering as the tech that enables the sharing economy is, it also allows those at the top to exploit those who are not able to, or don’t understand how to, leverage the tech for their own benefit.In short, the current technology behaves the same way all tech has ever behaved; the way people use it.
Thanks. And to your point:”We live in a global economy and you’re not just competing for job in your town, state or country. You’re competing for jobs globally, and you’re competing with algorithms.”Yes, and — I guess I see this as a quantum physics view. At human scale, it’s more Newtonian: you’re competing in the bubble of your network.
It’s a beautiful bloodbath of competition for employment.Awesome for the truly skilled and ambitious.A certain wake-up call for the entitled.
http://www.herecomestheairp…WeWipe4U launching next.
There are subtleties to this Andy.Kickass line cook at our favorite restaurant. The person who serves me dinner at my local wine bar who is a pro and smart and makes my night a pleasure.Highly skilled and they make almost nothing.There are built in inequities in here somehow.
In the independent restaurant and bar business it’s not a stretch to think that both of those people are making infinitely more than the person who signs their checks…who most likely is 6 figures into the place and hasn’t taken a salary in years. There are exceptions of course, but I don’t think it’s unfair to say that both of the people you reference are getting tremendous value out of the risk being taken by their employer.
Interesting.I’ve been pondering this from a different angle as the profit in luxury food items ends up going to the distribution side and not towards the labor side.You can work to right this but there is often not enough margin to make it work.Something I bang into all the time.
The acceptance of a trend is quite different than having a venture createdand funded based on that trend. Monetizing trends and scaling themisn’t easy. Funding every idea basedon trends verses analytics isn’t prudent.Ignoring the initial gut reaction shouldn’t be ignored.At this level a group has to convince the right people. Can the successful ones in this space discuss the failures they were convinced to support? How one was convinced that a bad idea was good ignoring their initial gut reaction.Successful people win more than others because they are not afraid of failure. Failure is a learning tool.If successful people with great track records embrace an idea for a ventureand the idea can be briefly scaled because of funding when is failureof the venture accessed? When isthe plug pulled?Is a space similar to elance.com being just duplicated?
Yup. Starting to see freelancers pod up and go from gig to gig to gig to gig. Like a mini consulting firm. They pull in people they trust when they need them, and discard people when they don’t need them, like an amoeba working its way through.I think it pays big time for freelancers to get out of their house, and to get out of coffee shops and work in co-work spaces.
No question about being in a good work place. Starbucks can only do so much
Yes, but until an economic crisis appears and you need to find a “safe” work.
depends on your industry, but financial corporations weren’t “accretive” or creating a lot of jobs in the last one!
I agree but the freelance life in times of crisis is a really hard and lonely experience.
Agree 1000%. That’s why freelancers need to get into co-work spaces like Nextspace.us, or find them when they travel by using desktimeapp.com
This is the new hiring method as well. Work with someone as a contractor, see if they like working with you and are passionate about what you’re working on – and then can offer them full-time work and comfortably incentivize them to join.
My experience with “podding up” (90s, I wouldn’t try it again) is that it’s not terribly sustainable: these are human relationships.The “drawing in” requires energy/effort to build and sustain relationships. The “discarding” is painful. Even without this, the mechanics of writing a proposal, billing, and collecting is going to have to be managed, and will tend to fall more on one or two people.It will be interesting to see if a form emerges that can contain this sort of effort sustainably.Some might (sunnily) argue: this is how Hollywood movies are made! People go from production to production!Beyond the obvious, I’ve had a few recent conversations with film people about this. I’m told that a film set is highly structured, hierarchical (and unionized.) This structure, and things like standard written job descriptions, remove some of the friction of going from job to job.
Wait until the freelancers have to buy individual health care premiums. There is no risk to spread. There are no retirement benefits and short term employment can be stressful for someone who would like full time employment. Being able to use contractors as a business alternative is great but our economy should be set up so contractors can can have some of the same benefits too s full time employees.
that is partly what Obamacare is trying to do
Vouchers would be better, cheaper, and easier to administer.
.The problem identified by Ellen Sing is not solved by Obamacare. There is no “pool” effect that is available to an individual similar to a company buying a company wide program.There are subsidies — through the state exchanges and Healthcare.gov — at unrealistically high levels of individual premium (and staggering deductibles) which can only be attained by having a very low level of income.JLMwww.themusingsofthebigredca…
Maybe in theory but not in real life. My premium is $1200 a MONTH out of pocket for what my friend pays a premium out of pocket of $700 a YEAR for the same health care policy. She is an employee of a very large group. They can demand better rates because they are spreading the risk.
Obamacare doesn’t spread the risk. Also doesn’t solve the problem of moving across state borders.
.Right on.Three years ago running a public company — me/wife and Humana $453/month with a pool of approximately 50; $1000 deductible and incredibly low co-pays.Today, me $963/mo (Assurant through USAA); wife $653/month (Humana) with $5,000 deductible and virtually no co-pay arrangements.This is essentially a $17,000 annual increase.Obamacare was an opportunity for every health insurance company in America to jettison all their marginal policies and reprice all their cheaper policies. They also can reprice everything every year.The government has become the enforcement arm of the insurance companies. They will literally fine you if you don’t buy a policy.The numbers on the economical viability of Obamacare are so far off the reservation that states will begin to default on their own state exchanges — as Hawaii has already done.The promise of Obamacare had as one of its most important supports, the reduction of the rate of increase in health insurance and, more importantly, health care directly. MIA.My doctors’ practice is closing down after 40 years of operations and refusing to take new Medicare patients for the last 3 years.This a train wreck and will only get worse and worse. It would have been a lot cheaper to have the White House doctor make house calls on the folks who had no insurance.JLMwww.themusingsofthebigredca…
well, Canada would welcome you JLM. You can become a landed immigrant here in no time, and get cheap healthcare, with similar quality levels as the US 🙂 you can’t have acres of garlic and sunshine and low cost healthcare….something has to give.
.As you know, I am actively working on the merger of the United States of America, Mexico and Canada. I intend to form a new country called the United States of CanMex.JLMwww.themusingsofthebigredca…
haha….let’s do it 🙂
.Of course, Kenya comes in, The Big Mix. My oversight. Please accept my apology.JLMwww.themusingsofthebigredca…
Trying to figure out how poutine can go with salsa…
Funny story.I was in Portugal last week w/ a sinus infection. My hotel sent me to an immediate care clinic around the corner. Social medicine. The woman at the clinic spoke very little English and I speak no Portugese. I pointed to my ear and nose and said “infection.” She nodded knowingly and set me up w/ a doctor’s appointment for that afternoon. I went back to my hotel and Googled the doctor’s name figuring I might as well check out his credentials, although I’m admittedly clueless about Portugese med schools. So, what popped up? His specialty is DENTAL IMPLANTS. She hooked me up w/ a dentist! I immediately went back to the clinic, but first I used Google’s language translation tool to identify “sinus infection” in Portugese.Bottom line: The GP that afternoon charged me 50E for the visit, while the farmacia’s costs were 18E for antibiotics and a prescription decongestant. Would have been at least double or triple that in the U.S.Since Obamacare my monthly med premiums are up over 50% and I just received yesterday another notice of an impending rate hike. Unbelievable.
.Great story. Bad Obamacare experience.JLMwww.themusingsofthebigredca…
Right on, JLM. This has been a boon for the healtcare industry. Just look at any healthcare sector mutual fund over the past 3 years.
Health plan at my last employer was a co-pay type plan (no deductible) premium fully paid by employer. Keeping the plan on COBRA after leaving the job would have been about $500/month, I got a comparable “silver” plan from the same provider on the healthcare exchange for $240/month and the co-pays were all about $10-$20 less.
Same here. As a self-employed person, my premiums ($1K/mo for a family of 4) have increased 30% annually since Obamacare. And I have a $10K annual deductible per person. It is a real problem and will force many back to w2 status for the healthcare benefit.
Health care coverage is a key factor; changes in health care coverage are a key enabler. The Freelance Economy has been in place at high levels in the UK for 20 years, due in part to the fact that people could obtain health care coverage through NHS – they didn’t need to work for a company / corporation in order to access medical care and many freelancers felt they could generate more salary as an independent contractor. Rollout of Obamacare offers options for those who want to freelance, who believe they can make more by doing so, but could not get coverage or would have to pay premiums that were too high to make it possible.
This is funny. As an independent contractor, the main challenge for my family is affordable healthcare. I pay $1000/mo for a family of 4 w/a $10K annual deductible per person. And fortunately, we are all healthy and young (mid-40s). Since the rollout of Obamacare, my healthcare cost has increased 30% annually. It has gotten to the point that I may have to go back to a W2 employee for the healthcare benefit.
And we are starting to see “crowd-grouping” healthcare options, i.e. Freelance Union.
And that’s an excellent example of Technology use that is saving the world. The interconnectedness between supply & demand wouldn’t be possible without the Internet, computers & smartphones.[The 53 million stat in the Mary Meeker report is from the Freelancers Union, here:https://www.freelancersunio… ]In their 2006 book “Revolutionary Wealth: How It Will Be Created and How It Will Change Our Lives”, futurists Alvin and Heidi Toffler had already imagined work without firms, a world where everyone is essentially a freelancer. They saw a future where more people work, but fewer hold jobs.And to think that “job” in today’s sense of formally committed work in return for pay is a recent innovation, less than 3 centuries old, depicted by Adam Smith in his 1776 analysis on the division of labor.
Well, Da Vinci the greatest genius we’ve ever had was a freelancer. He had a portfolio career and didn’t limit himself by being “in the box” or a cog in the wheel either.* http://uk.businessinsider.c…
Yet in our society, and this has never been attributed to someone like da Vinci obviously, the ability to do many things “well” has often been derided  and described as “jack of all trades, master of none”Which is unfortunate because in order to survive in the world (or in entrepreneurship) the best thing to be is often “jack of all trades, master of none”.By being “jack of all trades” (starting a business) you can iterate and work on many parts of the business until the idea is proved and improved to the point where you can afford to hire people. But if we assume that you can do nothing yourself and have to pay for everything the only way you can get anything done is if you have a boatload of money. Refer also to any number of words on this list: https://quizlet.com/4112952…
Let me say this: I’m thankful my parents encouraged me to be an all-rounder and grateful my managers put me through hard training.Founders have to fulfill these 20-ish roles:* DOGSBODY* DOGSBODY* Idea generator* Investor* CxO* Product lead* Market researcher* Strategy consultant (to figure out competitive differentiation)* Salesperson* Conflict mediator * Accountant * Legal consultant (to deal with incorporation, IP filings, agreements etc) * Systems architect* Project Manager* UX Designer* Engineer (front)* Engineer (backend)* Engineer (mobile)* QA systems tester* Logistics * Marketing & PR* Psychologist* Human Resources* PA* Did I already say DOGSBODY? Lol.Any founder who can’t do the Product Strategy, Engineering and Sales roles will indeed need SUPER TANKER amounts of money to hire those skills in.The dogsbody role they do for free because they believe and care about their business, team and clients.If being a founder isn’t a portfolio career, what is?!
Anne is right- love reading you Fred, but this is the kind of post that makes me crazy. With all do respect to Mr DeWitt and yourself it’s just cliché from people that don’t have to worry about the rent (or mortgage if you can save enough to get one). Not everyone is cut out for freelancing-which is a form of entrepreneurship given what has to be done to keep work going. I hated it- was hard to concentrate at the task at hand as one is often worried about where the next gig is coming from. No security, no stability over the long term- not so bad if one is entering the workforce, but it’s pretty darn tiring later on. Is this the way anyone reading these comments wants their employees to feel? A work contract is not only an employment contract, it is a social and moral contract between the employer and employee. It says the employer values and cares about the employee. It motivates people to give their best and feel that they are helping to build something. All of which human resources proessionals cite as important to building a happy and stable workforce. Freelancing has it’s place (like consulting), but until the human issues attached to keeping a good employee for the long term are addressed, let alone solved I have serious questions whether this is a long term good for either side of the equation.
Why not have both?Just because all the supporting elements aren’t perfectly in place yet doesn’t mean there is no valid trend here. More work, less jobs. That’s the trend.
now where did i say “people don’t have to worry about the rent” or “everyone is cut out for freelancing”c’mon. don’t give me shit for something i did not say, did not suggest, and wasn’t even anywhere close to what i was talking about
I think it’s fair to say your ideas on this topic disgusted him
While working at an IT solutions company, we ran thousands of assignments using WorkMarket. The freelancer market has definitely grown in the past couple of years. We went from calling techs to get them to join WorkMarket to having several groups of techs sorted by Skillset and more…
The freelance, moonlight and virtual workforces are booming. With Twitter and Linkedin, there are platforms in place that scale the difficulty of lead generation, and the quality of public content becomes the competitive advantage. Much less politics, much less favoritism… It’s a transactional relationship, less personal, and with no favors, though it’s one of independence. And without these enabling technologies, it was much more difficult even 4 years ago.
.What is the difference between being unemployed and being a freelancer?When you are unemployed you answer your cell phone on the first ring.When you are a freelancer, you check the caller ID before answering the phone.This is a symptom of our times with an essentially jobless recovery and the lowest labor force participation rate since the mid-1970s.This is still a very, very, very tough economy and it is a little patronizing and unrealistic to suggest that many “freelancers” are doing this because they have “chosen” this course of action.Most are being forced into hustling for gigs because there is no real work out there. The magnitude of unemployment — spare me the U-3 fiction — and underemployment is staggering.We need approximately 140K jobs per month just to keep pace with high school and college graduations plus soldiers being discharged. We are essentially failing to meet this demand.Can you imagine what happens when 10-20MM low skill, low wage illegal immigrants come out of the shadows?No, this is not Tomorrowland. This is a disaster and getting worse.You have to remember that the AVC.com and the tech community is a very small segment of the world.JLMwww.themusingsofthebigredca…
Do you agree there were will be fewer jobs, but more work?
.Actually, I think the US can be at full employment if it will get its trade policies right. We need to repatriate all the jobs that we sent off shore to prison, child, unfairly compensated and environmental predatory labor countries.We need to only let access to our markets when foreign countries have given us unbridled access to their markets. Our market is the most important one on Earth and we need to leverage that.We need to fully fund the SBA and a few other things.We need to get our immigration policies — both legal and illegal — right and to secure our borders.We do some of these things and we will have an immediate surge in employment.JLMwww.themusingsofthebigredca…
I agree but I also think people go the freelance route because it allows them to “satisfice” their need for money on a week to week basis. So the fact that they can freelance and know that it will put bread on the plate (or drugs, cigarettes and booze) means they are less likely to even attempt to get locked down to a confining “full time” job.
.I think people with money may fall into the notice of “satisficing” but most freelancers I use have real jobs and freelance on the side.I use eLance to find editors and beta readers. It is ridiculous how cheaply well qualified people will work. I often pay them more because I am embarrassed at how cheaply they will work.This is real world. I am using 3 editors and 3 beta readers right now.JLMwww.themusingsofthebigredca…
It is ridiculous how cheaply well qualified people will work. I often pay them more because I am embarrassed at how cheaply they will work.Apparently the memo didn’t get out that describes the practice of loss leaders to get business then raising prices once you have satisfied customers and have established a relationship. Works very well in non commodity personal service business. No question if you are going to paint your house you will pay the painter that you know and have used more than the painter that you have never used (what I am doing now). My arbitrary figure is typically “20% more”.The other phenomena is people’s tendency to negotiate against themselves or to think in terms of how they spend money. Then there is servicing people spending their own money (generally cheap even if they are rich) vs. people spending their companies money (want the job done, no aggravation) and so on. Just to name a few. It’s obvious which you at least try to have as a customer if you can. You can only make so much money fixing an old lady’s refrigerator.
I tried joining Work Market in August 2012. Wasn’t operational outside US/North America. Has that changed? Not clear from the website.
Thanks. Looking forward to it hitting the UK.
This is an interesting discussion. Contract work (services provided by independent individuals) or freelancing has in fact been around for a very long time. But, because of corporate budget cut backs, government employment legislation, our wild roller coaster economy, rapid changes driving emerging skills, the internet itself (the enabler) and other factors, this trend is growing rapidly. And, businesses of all types are leveraging this. It’s not just an “worker” trend but a major shift in corporate (and government) employment direction so they can fulfill requirements with less risk. In reality, companies like Uber (huge valuations) is nothing more than a freelance management system to match individual freelance (for money) drivers with consumers (short term employers in need of a ride). There are “Ubers” in almost every business sector. Even companies like Craiglist are re-birthing and capitalizing on this.What was once a select few who could command higher rates due to exclusive and on demand services is now becoming a “commodity” driving the competition for opportunities up and rates down. Therefore the emerging freelance economy is becoming more complex and driving the need systems and processes to deal with it. It is also fueling rapidly emerging and specialized skills from “contractors” who never before had the reach to “work anywhere, for anyone” and find opportunities best suited to gain value from their uniquely specialized skills.I’m certainly not smart enough to debate the long term impacts of this trending shift (and there will be many we can’t even imagine as happens with all disruptive forces), but it is becoming “mainstream” and escalating fast. Therein lies the opportunities for those who see it coming.Fred, I believe you are right on with this focus. There is money to be made and spectacular opportunities ahead as this evolves.
Maybe just to an IT temp staffing roll up, as a call option the “sharing humans” economy?
I also think this is huge for the economy and the way businesses operate. Elance.com seems to be one of the biggest marketplaces connecting freelancers to jobs and facilitating escrow payments etc., but mainly sorts freelancers by price, while Pickcrew.com (formerly Ooomf) is more about quality. This trend, especially visible on Elance, raises interesting questions about outsourcing jobs, not only to freelancers, but to cheaper labor in other countries and the consequences this has for global economies.
In Nashville, we are seeing a growing cycle of freelancers wanting to come back to more of a “team” environment. There are still plenty of devs going into the freelance world, but we are seeing more and more come back to a company because they miss that environment. Anyone else relate to this trend?
While not totally apples-to-apples theme, a Forbes article from this weekend discusses a very similar topic of how one-person “firms” are growing. It’s According to the article (which references U.S. Census Bureau):”there were 30,174 “nonemployer” firms that brought in $1 million to $2,499,999 in 2013. That’s up from 29,494 in 2012 and 26,744 in 2011.””And there are many more nonemployer businesses getting close to the $1 million mark. In 2013, there were 221,815 bringing in $500,000 to $999,999, a number that held steady since 2012.”here is link to full article:http://www.forbes.com/sites…
I’m just gonna leave this here:freelancersunion.orgI think freelancing should be a wonderful option for anyone who wants to take it. But we have some work to do in order for that to be true. The Freelancers Union is way cool, in my opinion.
The elephant in the room is, of course, healthcare. We’re all health insurance slaves.
Yes, the opportunities for varied and interesting work, along with the flexibility, are great. But, they come at a cost of traditional benefits — healthcare being the most immediate one. Retirement funding mechanisms are also important.
When I first went into business one of the people that I dealt with was a man in his late 20’s (considered “old” when you just get out of school!) who did typesetting. It was a business but I guess because it was only 1 person, and he operating out of his loft apartment with a machine (phototypesetter), he made it clear that there was an absolute ceiling to what he could earn in a year since he spent a large part of his time getting work as opposed to actually doing work which he could charge for. Today the “getting work” part is much easier and in many cases trivial however as a result, the wages for doing that work, has dropped considerably because of competition and the choice of vendors is so numerous. Sometimes it’s difficult to see the net gain and benefit. Lack of a traditional barriers to entry or friction in the relationship means not as easy to keep a customer. I always liked barriers and things that required effort personally. A few years later as a result of dropping prices I bought my own machine and no longer needed the typesetter vendor and a few years after that I bought a Mac 512k and a Linotronic and a few years later many of my customers bought Laserwriters and didn’t need us!  That’s an exaggeration for effect, they did still use us but one of my largest customers (a career service that did resumes for laid off corporate workers) dropped us right about when we were taking delivery on an $80,000 USD (in the 1980’s dollars) Linotronic. They had purchased a laserwriter and a Mac themselves..)
Now ally that trend to another. In all likelihood your kids’ generation will live >100. Setting aside the possibility we will destroy the planet in that period, this is potentially an actuarial nightmare. Savings will have to be managed more carefully during all that freelance work of which you speak. And work lives will have to be longer, unless Albert is right and the very nature of work and remuneration for work is radically redefined.
Freelancing is a term needing to be redefined in the “new era”. It used to mean a 1099 contractor offering full-cycle services to companies or individuals.What we will see more of is a decoupling of this “full service cycle” into more specific functions, filling in pieces of the puzzle by independent contractors. For example, one freelancer is great at sales, but doesn’t have the team to fill all of her orders, so she reaches out to her network of designers, coders, etc. to fill specific roles in her deliverable.Each of her resources can themselves be outsourcing the work further. Sounds a little crazy, but on larger projects this is happening now. Somewhere along the chain can be a high school kid looking up data or whatever.The implication for this could be staggering – imagine the old notion of an “enterprise” as a bunch of people indentured servants of a single master entity, turning into a “distributed enterprise” of freelancers coming together in different combinations to solve different problems.
I believe Koppelman was first I’d seen (about a year ago) to talk about shift from W-2 to 1099 economy. There are some cool companies in the space: Zen99, Payable, Sherpa, Kung Fu, etc. But all very early stage. No one has truly raised institutional VC yet, but there’s a huge opportunity to build a network among 1099ers (their own LinkedIn, of sorts). Connie of StrictlyVC also did a great writeup of a VC panel from the On-Demand Conference that talkd about this issue explicitly: http://www.strictlyvc.com/2…
Makes it all the more important to know the sort of value that you offer as a freelancer/consultant, and actually be able to differentiate yourself from the crowd, since increasingly the crowd includes everyone.Seth Godin has a “Freelancer’s Course” on Udemy that looks like it will benefit an increasingly large slice of the population: https://www.udemy.com/seth-…
When I got home last night for dinner, my son and his friend were checking out jobs on care.com. When I was their age, finding work was a manual process. Now you just pull out your phone, scan your feed, and get some work.I am curious what your son and his friend’s skills are that they are getting only, from what I can tell, babysitting or care taker jobs? I don’t say this because they are boys and not girls either. I just wonder if that is the best “job” that they should be considering, despite the easy availability of finding that type of employment vs. something else.
Agreed on the megatrend. As a self-employed freelancer running a cash-flow business (if that’s the near-consensus term here on A VC), I welcome the shift. Still, this does seem a rather sunny outlook. In addition to examining the panoptic aspects of workforce-management systems, the recent Harper’s article “The Spy Who Fired Me” delves into the darker side of oDesk, “the world’s largest online freelance marketplace.” Surveillance, trouble getting paid, and an expectation that freelancers will provide de facto free labor are just a few of the issues addressed. Worth the read.
The 35% includes freelancing (odd jobs) and contracting (40 hrs/week onsite temping).Many companies have 25-50% of their workforce as contingent. These contract workers are mostly on the W2 payrolls and benefits of the middle agency and don’t fit the typical ‘freelancer’ profile even though they move from job to job like freelancers every few months.I think the growth of local hiring-on-demand is great and may even reverse offshoring as rates for local contractors without middlemen becomes more competitive, markets become more efficient and supply and demand find each other more easily and cost of living in offshoring destinations go up.
I wrote about a related topic with the future of digital work here: http://blog.kirigin.com/dig…I think it is a huge opportunity.
If you use the Census definition of “contingent worker,” which includes freelancers and the underemployed, we’ve had that level of 30 percent to 40 percent temporary workers since at least 2001, when the fact was first described in detail by the GAO. Unfortunately, this is often treated as “freelance” without the distinction between those who are well-paid labor/professionals and those who are simply struggling to find regular work.Fred’s comment about his kids reflects that perspective: “Now you just pull out your phone, scan your feed, and get some work.” But can you live on that work or are you just looking for something to do for a while?The assumption that Millennials are more comfortable freelancing is probably correct. It may reflect the fact it’s simply harder to get the kinds of jobs that were available to young Americans 50 years ago. When was the last time you saw a paperboy? Do you remember when the middle aged McDonald’s worker was a freakish aberration in a sea of teens in their first jobs? At the same time, we thought Millennials eschewed auto purchases as a generational ethos, yet they now buy more cars than any previous generation.The economy is changing radically and we need to talk about it without positive or negative filters on the discussion. During the Industrial Revolution, we mourned the loss of farming families, but the result was a significant increase in prosperity, albeit with plenty of turmoil and discomfort, particularly for the workers. If we can deliver flexible on-demand work that pays sufficiently well to allow the on-demand laborer to trade for the labor and services they need, the economy can grow by trillions over the next 15 years. In this transition, we should try not to repeat the abuses of the last major transition, to industrial production. It requires that we decide, like Henry Ford, that his workers should be able to afford his products. Then we have to out-Ford Ford, by using the market to find a fair price without resorting to hired thugs, who always are available on-demand, to rein in labor when it asks for more.That’s what startups need to think about: Creating prosperity to drive their bottom line.
I wouldn’t relate what we’re doing at Spare5 ( http://spare5.com/ ) to freelancing in the historical senses of the word, but it has been really cool to observe people making extra money in their spare time on their phones instead of playing candy crush or checking facebook. Some of our best users have full time jobs (some high paying), while others can’t or choose not to work a traditional job, but all appreciate how that incremental additional cash can improve their lives while allowing them to keep their full freedom.
not sure if Mary Meeker’s slides went into the following:- What verticals are these freelancers employed in?- What jobs are they doing?- Avg hourly rate.
My 2 cents as a freelancer:Yes, things are great if you have acquired a rare/premium skill (presentation design mixed with strategy consulting in my case) that you can deliver across a big market (I can work with clients across the globe).Some things are missing though for many freelancers:Basic rights that employees have extracted from employers after the industrial revolution: holiday, sick pay, pensions, etc. etc.You do not get the mentoring/learning/coaching experience that you would normally get in a properly working enterprise. Especially at the early stages of a career.
Nitpick, but it’s 34% *of the workforce* that’s freelancing. Not 100% of the people that you see on the subway or baseball park is a part of the workforce. If there are 53 million freelancers in a country with 310 million people, it’s 1/6 people, not 1/3 or 1/4.
I’ve been “freelancing” since 1996, so I have a fair bit to say on the topic.I really like Reid Hoffman’s idea, the startup of You.Yes there’s a lot of headwind, networking, leads & sales all need to be strong enough to keep your business running. And packaging services & collections pose further challenges.That said the upside is huge. You gain wide exposure that you cannot get from being at a single firm. You gain resilience & fortitude. You forge relationships & the dollars are higher.I will say most of this requires you cut out the middle man, be they agents, recruiters or services like work market. Only then can you build on those relationships, control services & pricing, and sell additional services to existing customers.The pool of people categorized by the fed as freelance includes a wide spectrum of people, from temp & commodity workers to sophisticated solutions providers, artists like Louis CK & many entrepreneurs.
We’re building the freelance marketplace for marketing experts and community pros at CloudPeeps.com. We have a transparent company culture so are always happy to answer any questions about what we’ve learned along the way! 🙂
This is a huge trend so well spotted. Technology is changing the world of work. There will be losers and winners and we need to figure out how to make sure the balance is in the right direction. This trend is part of the answer to all the tech destroys mid management jobs articles. It is also the kernel of the answer to the demographic crisis in Europe. It is an opportunity and a threat. We need to help make it a force for good.
interested to hear how you might reconcile your excitement with the freelance economy, with your seeming endorsement of albert’s idea for guaranteed minimum income?the former is all about risk and uncertainty (as i know: many many moons ago i was a freelancer and it, well, sucked) but the latter is all about eliminating risk and uncertainty.so… in the future, we all get a comfy stipend from the government and when we’re bored, do some freelance odd jobs for a few hours? 🙂
Freelancer economy = 3rd world 2.0. Just embellished with apps.
I like being a freelancer, although seriously income is lumpy. Sometimes it feels like I’m drowning in work, and sometimes I’m sitting on my hands. It was easier when I was working in a corporate setting, because I had team members that could handle some of the workload. I have to hire people (contractors) now if I want something taken off of my hands. ZenPayroll is going to be a really big company, since it’s the default go-to for a lot of the entrepreneurs I know. It’s already pretty solid, which is great. I signed up for Work Market out of curiosity and was seriously turned off by their onboarding process, which died multiple times while I was using Chrome.