Your first reaction is, f-off, of course I am doing it right. I have met many a Gig worker who ‘knows’ that they are doing it right, and they are not. You need to give me some time to explain.
First, most people ‘think’ they know what the Gig Economy is, why it is, and where it is going. The vast majority are dead wrong, and again, I will tell you why I think that, if you just give me a chance. Also remember that the Gig Economy is also known as the Share Economy. This is important as it is the basis of the movement itself. This whole thing is a weird mixture of laissez fair Capitalism and communal sharing of assets (aka as Socialism). That’s why the world has so many Dogmatic opinions about what Gig is and what should be done about it floating about. I am not here to extoll its virtues or faults. Nope, just trying to get people to ask themselves “Am I doing this right?“.
That is the basis of this thesis: Most Gig participants do not know what they are really doing, the economics of what they are really doing, and if participating is good or bad for them personally.
I want to start from a point of realism. Facts, figures, math, economics, physics if you will. We all interpret the world inside our little brains by taking in all kinds of information and fitting it into predetermined boxes within our inner minds existing story line that makes up our individual reality. Our brains do this because there is just so much information pouring in all the time, that this is the only way it can cope. It works too! and is very efficient when things around us don’t change much, thus making us appear smart when in reality we are only acting upon past pre-planned actions to pre-planned stimuli. Like a robot. That is just an artifact of our evolution and our default state of consciousness. Any new information that does not fit into your world view mindset, is simply discarded as it requires too much effort to accommodate (unless it is trying to kill you). It is easier to either stuff something into a box you already have, or toss it away as nonsense or lie, or ‘fake news’ to avoid rearranging the boxes or creating new ones. (remember your reaction to the word Socialism or Capitalism above? That’s your brain box at work). Our brains do this to survive in the jungle, but we live in an ever-changing modern world, so we must adapt. Changing the story itself? Well, that’s a whole other thing we won’t get into here. To explore new possibilities or as I like to say, to actually think, one must first start with a clean slate and no boxes. You must force it to happen. Just look at the information itself to start with, not its implications (cause the monkey brain will take over), or where it came from, who said it, or what it means. Especially do not apply analogy to any fact. That is where this new something looks a lot like this other something I already know about and therefore it is that same something. Or, the I know because people I know told me the answer to that already. Thinking thru analogy is the mind box mechanism in action. Just understand that each item of information as just a fact, or figure, or formula. Make your own conclusions at the end of the discovery process. That is how you make new brain boxes. They may or may not fit your original idea(s) you had before you started, but whatever conclusion you reach it will be based on facts, not our built in tiny-brain short cuts. You need to be better than your brain as weird as that sounds.
We can all agree that the Gig Economy is technology driven. It is the changes in technology that allows this alternative economic interaction (because that is what it is) to exist. Technology that enables different forms of commerce, distribution of goods and services, allocation of labor, allocation of assets and capital. But it is basically the same old economic system and rules we have always had, but now with different tools. It seems like the old rules don’t apply, but they do. What has changed is what rules apply and to who. That means you Jacko.
It is simple economics 101 when you get right down to it. Understanding these economics is the key to understanding how to use these tools to your advantage. If you do not know them, you will be taken advantage of. Simple as that. The hard part is that economics exists within Societies, which are not normally logical.
The U.S. Bureau of Labor Statistics published a report on individuals in alternative work arrangements: 16.5 million people now make up what is known as the “gig economy.” I have seen other statistics that show where over 40% of all Americans have dipped a toe or two into the Gig pool at some time or another. Soon that will be the majority, it is simple economic fact.
Why? (always ask why). The simple answer is because they can. You will see articles saying that it is because they must because of economic situations, and well for some that is true, but we will get to that later. The root answer is always because they can. People are not ‘forced’ into Gig jobs by Gig platforms existence, no, they choose to because for whatever reason they want or need to. That want or need existed with or with out the Gig economy.
Being an entrepreneur, small business owner, independent contractor, small investor, or any other number of small economic actor(s) in our economic system used to be hard. And by that, I mean really hard. So hard in fact, that few ever even attempted it. The tools required to do so were the barrier. Not ideas, or effort, or ambition, or foresight. Nope, tools. You may hear (analogy) that is too much government regulation hurting small business. Horse shit. Regulations apply to all men equally or at least they should and if they don’t then that is known as corruption. That would be like saying I lost at Monopoly because it has too many rules. Monopoly may be hard to win, but by being in the game I at least I get to throw the dice once in a while. Think about that the next time your brain uses that particular box. For any business to be successful, it needs capital (money to make money and that makes it a tool). It needs to be able provide a good/service, reach customers, bill customers, get paid by customers reliably. Big companies could out compete any small business, in any field, simply by the economies of scale and reach. They had the money, people, and organization. The game was rigged, so you as an individual had but two choices: Work for them or Compete with them. There was only one sane choice. The David vs Goliath story is a myth with just enough possibility to let you think somehow the underdog might win. While possible, it is improbable because they had all the good tools. We lusted after those that took the chance however! Shark Tank is an example of the entrepreneur dream (by asking Big Business for access to their tools in an ironic twist). The Apprentice is the opposite example of trying to get the best spot in the Cult (I mean corporation).
If you Gig, you are a business
Most Gig economy ‘workers’ are in fact, not workers at all. Never were. That term is used because that is what most people already are and they apply that box to themselves here(analogy), and they don’t mind being labeled as such. They probably already work (as labor) for some other business that pays them for their time and effort based on the value of what it is they produce. If you ‘work’ and you don’t make more money for your ‘owner’ than what it costs them to have you there, you won’t be there in the first place or for long. That is your real value in the economic system. They pay you by the hour but make money by the product. There is no other correlation other than what is in your head. You think your company keeps you around because they like you? Boxes friend. Boxes.
When you GIG, you are not the ‘worker’, you are the owner of the business. You have crossed the Rubicon and you might not even know it. You do whatever is needed to earn a dollar and that usually costs you some money (a tool to earn money). You need to make more money than it costs you to get it, and that is cash flow. You need to think that way to succeed as a Gig business owner. Not what am I being paid, but what value do I get for what I share. Is that equitable to me for what I share? Did I come out ahead or not in the transaction? This is not a lifestyle choice, but a business choice. Asking the question “Can I live on this much?” is the wrong question, nor even a relevant one to the business equation. If a Gig business does not fit your lifestyle, change your lifestyle or do a different business, but don’t blame the economics of a business for your personal issues. That is like saying my Lamborghini sucks at hauling plywood. Don’t blame the car, get a truck or do something else with the Lambo.
Today, the casual GIG business owner (I will no longer refer to them as workers in this article), is able to jump in and out of any business on a whim. This has never been possible in all of human history on any scale other the smallest of examples. This is because they have the tool sets that allows that to be an option. Think lemonade stand. You need your stand, cash register, cash for change, some lemons, water, and signs ready to go at any moment. You have the option of setting up any time, anywhere, whenever you feel like it. When you are done, you put your stuff away for later. Now, change that so that you have a lemonade web site that goes live worldwide when you are selling, customers who pay automatically when they receive a drink and that goes straight to your account, the drink is delivered for you anywhere on the planet, and they find your stand from wherever they are by simply using their phone. Better tools, better business but in either case, you are doing the Gig thing. In both cases, you are competing against the local 7-11 for the same dollar pool.
The technological tools represent the change in scope, size, and footprint that your small business can be. In fact, it changes what possible types of businesses you can even have. As the tools disrupt more and more business types, the more and more business types you can run! The barriers to entry are what is being disrupted, not the business or the economics of the business itself (generally, but that is not always true!).
If you Gig, you share
Jump out of the box you just put that last sentence into in your head and come on back to facts. You know you did, think about it. Unless you are physically doing something for a customer (labor) that you are paid for or you are physically making a thing and selling it one time (goods), you are being paid because you shared something you have that has value with someone else who pays you a fraction of what your asset is worth so that they do not have to pay for the asset themselves. This could be a car, a camper, a boat, a house, software, a room, a video, information, anything of value.
If you are working as a laborer or producing widgets and selling them yourself, then that is a straight up classical small business. If you use Technology Platforms to run or enhance that business, you probably qualify as a Gig Economy worker. This would be things like Tasker, Fiverr, Etsy, eBay, YouTube and the like. What is being shared is YOU.
If you perform a service via a platform, you are sharing the asset that you own that allows that service to be performed. Move me from point A to point B. Lend me your car for a week. Let me stay in your house. Let me use your software, ad infinitum. You share your stuff with others so that they don’t have to have to buy the same stuff, but they get the benefit that the stuff provides. The economics are quite simple. It is cheaper for both parties to do so. Why? (always ask why). Because the cash requirements for a given lifestyle is orders of magnitude cheaper for the user and orders of magnitude cheaper for the owner (he only has the original capital outlay which he has either way). Cheaper always wins. Not sharing your stuff is a psychological choice, not an economic one. I have a boat and you don’t, neener neener. When the social status psychology is removed, it is what it always was, an Asset. Assets shared communally is defined as Socialism when enforced by a government, but what is it when it is done voluntarily? Simple economics says: That is a business. The result is still shared communal assets no matter how it is accomplished, the rest is just your brain boxes barking at you.
Some personal examples
I work from home. I did not used to, but I do now. I travel when I want to. I work when I want to. I work for lifestyle, not for money. I run many businesses and I suppose all of them can be considered Gig jobs. I consider any economic activity that you personally provide using a technological platform as the basis of commerce, to be Gig. If I make enough money to support my lifestyle, then I make enough money. If I don’t, then my lifestyle is affected, and I am motivated to do something about that. I do not track ‘how much money I make per hour‘. That is for monkeys working making widgets, not a Gig entrepreneur. You need to get your head space correct to not be an employee anymore.
Software as a business
I am a software engineer as my skill set. It is what I am paid to do. I am good at it. I have been paid very well indeed in the past to do it. However, the people who paid my wages always did better. I had no choice but to work for a large company if I wanted to make a living writing software. Why? (always ask why). Well it took millions of dollars to do. From having the servers and software tools alone costs more than my annual salary. You also needed to sell something and that something was usually worth millions of dollars. Million-dollar software was not sold to individuals; it was sold to corporations or it was paid to be built specifically for corporation or governments. While I could write software, my skill could not be transferred to a business consisting of just me or even me and my friends because of the scale of what it was we were doing would not meet the scale that the market required. And writing software for public consumption was even worse. You needed to be self-funded to build a product, then package it, market it and deliver it to consumers with no guarantees that you would get a dime back. That is why there is a Microsoft, Intuit, Adobe, and that lot because they could. The whole process is absurdly expensive, but also absurdly profitable. Ok, there are a few small software companies, a few, and it was really hard to do, and they were rare. You could be a for hire contractor, but usually that was under the umbrella of a consulting company like Accenture, or IBM and still you were just an ’employee’ without benefits.
Apple introduced the App Store and in doing so, disrupted all software development. They did not intend to do so, but they did it anyway. What they really wanted was to be able to deliver their applications to their new smart phones. But a phone needed a carrier to actually make a call (its purpose in life). The phone carriers had always prevented this. Remember the old flip phones? They used to have apps on them too, but only those sanctioned by the carrier. As a software developer, you could ‘try’ and write an app for a flip phone, but you would never get it to a consumer. It was still a Big business to Big business model, and if you were not a big business, you’re out. Apple (a big business) demanded that they control apps, deployment, and app revenue or you (the other Big business phone company) don’t get our new, snazzy, cool kid phones. AT&T relented, and the rest is history. Soon all carriers relented and now there is no such thing as walled garden software on phones. That change occurred in less than one year. A new technological platform emerged and not just one, many once Android and Microsoft followed. This is the reason smart phones changed history. Software made by millions of individual small businesses selling directly to millions of different customers. The result of that changed human history. No kidding. YouTube lets you sell content over the same wire that the cable company sells content. Same thing and the list go on and on.
Apple provided 2 legs of the 4-legged stool of entrepreneurship. Marketing and Delivery (access to customers) and Payments (App Store). All that was missing was the third leg Labor (that’s you) and the Fourth leg Capital (money). Now to be an Apple App Development Company, you needed someone with skilled labor (money or personal) and the tools to do it (money). Your success was up to you. Build flappy birds, you are rich, build a flashlight app, you get nothing. Basic economics at work when Monopolies are disrupted. Then the iterations started. The building of the next layer on the one built before it. Apps turned into platforms like Uber, or Square, or Netflix, or Twitter, or WhatsApp, and on and on. That iteration created the Gig Economy. The next iteration is coming, but we will wait until the end for that.
The business model changed
This software business was always, and will always be, a method of increasing of individual productivity or entertaining an individual. In a Big business, someone would design, build, or buy software for every individual that worked for them with the ROI calculation that this software would make everyone a better performer (make more product for less hours worked). Thus, making the corporation more money than the cost to buy the software. The individual using the software never had a say in how the software worked, how it was to be used, what they liked about it, nothing. It showed up on your desk, you had some training, and that was the extent of it. Individuals only purchased games (Like PlayStation Games) or personal software (like Word) and with those, they had control over what they liked or did not like. But now the consumer is completely in charge of almost all software. They use the phone they want, the apps they want, when they want. Businesses, begrudgingly, simply bent to the new paradigm because people had choices provided by Technological Platforms. The world is now a BYOD world and that includes most software. Businesses control data nowadays and apps provide access to it at personal levels. I can’t write an App for every problem or business, but I can for most, and that is more than enough. In today’s world, the best App wins, not the one with the biggest pocketbook or who knows who.
In essence, all the independent software companies now compete with Microsoft (et. al.) and Microsoft (et. al.) competes with us, directly for each customer/app. Therefore, Microsoft does not really build apps anymore, they host apps using the cloud and they help all of us Gig Developers do it by providing tools and access so that we use their platform. Amazon is the same with AWS. They make recurring revenue on their platform versus single sales on the web. Which do you think makes them more money? The other example of this phenomenon is Uber. What was once a Big Business (City) to Big Business (Taxi company) monopoly was transformed into a free for all of company to consumer free market of transportation. All because a Technological Platform came into existence that provided tools to bypass the closed market. Now anyone could form their own Taxi company.
The tools changed
When producing a product, you must have the materials and tools to make said product. Software does not need material per se, but it does need labor and development tools to produce and deliver a product to a consumer. This involves Computers to build, design, and test the product. It requires special software to write the code and perform specific functions. It requires source control systems to manage intellectual property. It requires packaging and promotional materials and access to customers so they can see and purchase your product. It requires payment processing, refunds, currency exchange, tax collection and reporting. This used to take an entire company to accomplish. Now, I can do it myself from any computer on the planet that has internet. I can buy the best computers for next to nothing amortized over 5 or more years. I get the best enterprise development tools for free if I have 5 or fewer employees. The best that there is. I get telemetry data that tells me the who, what, when, where, and how people are using my software in real-time anywhere on the planet. Free. I get online usage reporting, user feedback reporting and release downloading data. Free. I get automated testing and manual testing for each release to ensure my software meets acceptable criteria. Free. I can deploy new software, updates and bug fixes to all my customers from a single upload. Free. I get this because there are multiple Technological Platforms are competing for developers to use them. If there was only one (a monopoly), I would not be able to do this. What isn’t free is my Labor/Skills. None of the free stuff is worth diddly unless I make something worthwhile that people want. There is a difference between skill and knowledge. I will let you think about that.
Technology platforms have made everything available to me to be my own software development company. So, I am.
That is all well and good, but you still need to get paid. There are three ways. 2 require platforms, 1 requires old school sales.
One way to get paid is to have people pay you to use your apps. This requires that they pay you to download it and the platform takes a cut. This is like Uber for Apps, except I only drive once, and get multiple people to pay me to do it. The platform takes their cut, as they should. I can sell these apps to the entire World.
The second way to get paid is to host advertisements within your app. This too is simply leveraging of another platform, this time it is Google (or some other ad provider). I get ad revenue from users all over the world when they use my Apps. If they don’t use them, I make no money. I am motivated to make Apps people use.
The last way to get paid is to have someone contract you to build an app. You hustle the work and do all the customer interaction. Very standard commerce but the platforms still make it possible. I get paid by a single person. Once.
Technology platforms make it easy for me to transact commerce and be paid in non-traditional ways to a much wider audience than ever before.
Customer acquisition changed
The key to any Gig job is “How do you get a customer?”. Always. Starts there.
If a platform helps to get a customer to pay you money, it is doing its job. If all it does is introduce you to a customer, it is working. If it does that and manages a sale for your, shit, even better. Getting customers is hard, expensive, and tricky. Never take that for granted. What happens once you do get a customer is usually up to you or your product. When you work for a company, the company worries about all that and your job is to not screw that up. Just lose a customer at work tomorrow when you go to a regular job, see what happens.
Software income is generated mostly on a residual basis from previous work completed. In other words, you get paid nothing to do the work but get paid for the resulting product repeatedly over time without much additional labor. It becomes a form of passive income.
Technology platforms make it easy to get customers. Do not get upset that you must pay them to do it. It is a cost of doing business.
Rideshare as a business
Some people say they ‘work’ for Uber (as an example). But they don’t unless they go to work at Uber headquarters and get an Uber paycheck for building Uber platforms and support. What they really do is make money using the Uber platform.
And if you want to get specific, what they do is transform the use of a personal asset (car) to money. To do this, you must fuel the car, endure wear and tear on the car, buy the car, fix the car and use the car to move a person from point A to point B. To make the car perform this feat, you must hire a driver to make the car move. Normally, that is you, the owner/operator. Doesn’t have to be, it just usually is. The more you drive, the less your asset is worth, until at some point it is worth nothing. Without any asset, you cannot drive for Uber. Uber does not want drivers, they want cars. Still think you ‘work’ for Uber? No, your car does with the implied contract that it will move people to and from locations agreed upon. Your labor is necessary only to access the asset’s value, so you are paid whatever is the remainder of what the customer pays minus what the car costs to do the service. You work for the car (or more specifically the car’s owner). If you own the car, then you own an Uber-Taxi business with 1 employee. You.
Uber simply finds you a customer. Provides the means to perform the point to point service that they negotiated for you and then bills the customer on your behalf and takes a fee to do it. If you make money, or not, it is simply up to you. Use the platform or don’t use the platform. Accept the job or don’t accept the job. Drive a Monster Truck or Toyota Prius. Totally up to you.
Income generated per labor hour is not the greatest, but consistent income potential is very high.
I drive Uber from time to time as it is the best way to make money quickly. Once my business was setup and operational, I can roll out my lemonade stand any time I want and be sure I could generate revenue for my effort. I can, and do, drive in multiple cities and even continents when I travel. You just have to set it up. That just does not happen anywhere else for any other business. It is unique. Uber is like having a personal bank that requires that I do some work to get my money back (plus some) when I want some fast or easy cash.
Technology platforms allow you to transform your car (asset) back into money if you are willing to do the work to make it happen. How much of your car you transform is completely up to you. If you run it like a business, you would know if that is profitable or not.
Renting Assets as a business
Another Gig job is to rent your assets to other people for money. Uber is essentially renting your car to others, but it requires a lot of labor to make it happen. Just renting the car is more profitable. I have a Model 3 Tesla that I rent out using the Turo car rental platform. I live in Australia, but my car lives in Denver. I can use my car anytime I visit, for as long as I want, for free. When I am not in Denver, I park the car at the airport and I use another platform to manage the entire process of renting and maintaining the car.
The income generated involves little, to no, labor at all. All income is usually passive. ROI rates depend on the type of asset, depreciation or appreciation rates, and revenue frequency and revenue amount.
Technology platforms allow you to transform your Assets of any kind directly into passive money generators. Use as many platforms as you can to operate your business the way you need it to best work.
As we have demonstrated: What determines a Gig Economy business as a Gig Economy business is the use of technology platform tools that enables you to share assets or yourself for cash flow under the guise of being an independent business. A business gets taxed on what it generates in profits. A person (labor) is taxed on what they are paid, period. Big difference. BIG. HUGE difference. Our society does not equate the two in any way and that is just historical in nature. Workers paid taxes, Business made jobs and then paid dividends to asset owners (who pay no tax on dividends) and then paid taxes only on any remaining profits. Smart people ran businesses. ‘Other’ people had jobs. Governments want businesses to create jobs, because that is where the taxes are. It also sounds great when giving speeches: Jobs! Jobs! Jobs! (they always say it 3 times, watch and you will see it now that you know. It is a psychological trick involving brain boxes). Businesses on the other hand get tax breaks, expense exceptions, dividends without tax, and generally lower tax rates on what they do report as profit. Oh, by the way, Profit is just Income minus Expenses. Make them equal or near to equal and you pay no tax no matter how much the income is. I know businesses that have been around for 50 years and have never made a profit. Why? (always ask why) because they can. Deductible expenses can be almost anything you can think of, if it applies to your doing business and that covers a lot of ground. Profit is not required to having a successful business unless you have shareholders. However, if you ‘earned’ $1,000 as an employee, you pay taxes on $1,000 and that does not count FICA, Social Security deductions and on and on. You must pay taxes on income as you earn it.
You really want to be a business, but the government really wants you to be an employee.
Australia for example is mystified as to why so many people are claiming the full 5000-mile tax deduction all of a sudden on their taxes. They just assume these people are cheating. They are not, they drive Uber (over 70 thousand people drive Uber in Oz) and are taking a legitimate deduction. They are being taxed like a business and not as a worker and the brain boxes of the government employees have not adjusted yet.
An independent business is defined as independent when the owner/operator has the economic freedom to sell its product(s) when, where, and how they like. The use of platforms makes the ‘how’ part a challenge and is the basis of the recent lawsuit in California to classify Uber drivers as Employees. Any sane Uber driver would never want that to happen, but the government would. The ‘how’ part is hard because generally they have ‘rules’ that govern your behavior, your access to the platform, your assets that are allowed, your pricing (sometimes), and other restrictions. In a full-on free market, you would not have these restrictions other than those placed on you by a government and those are typically almost nothing. Logic dictates that these restrictions are not only fair (they apply to all), but that they facilitate good commerce (customers like consistency, not chaos). These ‘regulations’ are created and applied by each platform as they see fit. Some even restrict you from using a competing platform! They serve the old function of government for this purpose of market control. You don’t get a vote in how they are created or applied, your only choice is using the platform or not. No one holds a gun to your head to do so unless they become a Monopoly.
As a Gig Business owner, you have virtually no say in how a platform you use operates. They make the rules; you just agree or not. You only have leverage by not helping any platform create a monopoly. Always use as many competing platforms as possible within a sector. Remember, they have NO business, at all, without you sharing assets for money. If you don’t participate, they can’t take a piece. Only monopolies (or Company/Employee relationships) take away your power away by removing the power of the tools from you, the individual.
Also, as a Gig Business owner, you should be able to distinguish yourself from other businesses within the same marketplace platform. This is generally true for most platforms. On Turo for example, I can make my car a good or bad car, change the marketing and pricing (to a degree), and basically separate myself from the herd. The same can be said of AirBnB, Etsy. eBay and almost everything else. The major exception is Rideshare Gigs. You get a rating (not controlled by you), a description of your car as described by the platform (what the customer is buying), and a mention about you the driver (the least important piece). You could be the best, or the worst, at what you do, and no one would know. The worst of the lot are usually kicked off the island, so the remaining contestants have the same basic rating: 4.8 or so. Which makes it worthless as a differentiator between businesses to consumers, but great for HR management internally. You can’t set prices either (good for customers). It is just a commodity of transportation and that is the real economics of it. As a business owner, this platform serves the same purpose as a Bank where asset value can be converted to dollars on command, otherwise it would just be Turo and car rentals. Unique and doomed to ultimate failure once technology catches up. You’ll see.
Your Gig business probably falls into one of the following categories. You probably have more than one (if you are doing it correctly, you are).
These are businesses where you make money passively using a technology platform.
Money generated is not directly related to effort. In fact, effort is meant to be nearly zero. This type of business is usually capital intensive, but income is reoccurring.
These are businesses where you use an asset that you own and convert it to money by sharing.
- Rideshare (sort of)
- YouTube. Yes, by creating content you are making an asset.
Money is generated from ‘sharing’ your asset with others for a fee. Same as short term ‘rentals. This type of business is usually capital intensive and requires some manual work to manage. Revenue is reoccurring.
These are businesses where you do something physical (that includes typing, writing, coding, picking stuff up) for money.
- Uber Eats
- Rideshare (sort of)
Money is generated by physically performing some work task. Little to no capital is required and returns are limited to the type of work and amount of time spent doing it. Do the work once, get paid once.
These are businesses where you provide a physical product.
Money is generated by physically providing some product. Little to no capital is required and returns are limited the margins you can make between your cost to produce and sell. Sell once, get paid once.
This is the odd-ball business of all businesses ever devised, but a business just the same. By far and away the largest economic market that a Gig business entrepreneur can tap into as it is estimated to be worth $17 Trillion dollars in revenue per year worldwide by 2025. It requires some capital to start (the car) that you are going to burn up and ongoing Operating Expenses (OpEx) to run. Generates easily repeatable business and income with minimal effort but also requires a lot of time. Creates great cash flow and low profits as almost all expenses are deductible. Easiest business to start and generate money but almost impossible to scale. This is the first business sector that will be transformed back into a Monopoly by Big Business because of the incredible amount of money spent on transportation. This one got away from them. They want it back and they will get it.
Money is generated by driving someone from point A to point B. All costs are carried by the asset owner. Easiest way to generate the most amount of income with the least amount of effort in the shortest amount of time. This is why so many people do it. It is Easy. Quick. Profitable. It is also going to be the first to go. This business will quickly transform into an Asset based business soon, which is your next opportunity if you are paying attention.
If you Gig, and you don’t drive or at least are setup to drive, you are doing it wrong. This is your bank, your lender, your VC investor. You need money for your lifestyle, project, to eat? Drive, but do it for a reason and as a business. If you just spend all the money you make, then you can’t get ahead of this game. Use this while it exists and never, ever, consider it a ‘career’. Have another job, any job other than Uber and use Uber as a BANK. If you don’t do this, you are doing it wrong.
Assets and Passive Investments
The long-term goal and only sustainable option for a Gig business is to transition into Assets and Passive investments. Manual labor is non-scalable and the pay sucks. You can’t be in two places at one time. The pay will always get worse for the rest of history, as you are competing against everyone and everything (robots). If you pay attention to the news, you have heard how we have full employment but stagnant wages to the confoundment of all the experts. Why? (you should always ask) Well because technology tools have removed barriers between work and labor. It now goes to the lowest bidder. Cheaper always wins.
The world is transitioning to this new economic reality called the Share Economy. It makes more economic sense to use something when you need it than to own it and use it rarely. This is a no-brainer. If I want to go camping say, I can own an RV and go a few times a year or rent one when I want one. The RV will cost me hundreds of thousands of dollars to own and keep and store, but the rental will only be in the hundreds. I can enjoy something I could never, ever afford now. My lifestyle is better, yet my costs go down. Same thing if I want a boat, or plane, a mountain cabin, a beach house, or almost anything you can name for a fraction of what it would cost to own.
In this world, there are people who will pay to use things and there are people who have things to use who get paid for owning them and sharing them. That simple. It is cheaper for everybody in the equation and one of those somebodies makes some cash and owns an Asset that they could never afford alone. Assets can generate revenue over and over again and mostly still retain their original value or in some cases actually increase in value. Any asset that can be shown to generate revenue will increase in value as the value proposition will change from what can I sell it for to what will it make me over time.
You want to be an asset owner, but you need to own the right assets and for the right price and on the right platform in the right place. That takes some thought, planning and knowing what changes are really happening in our world. If you do not own shared assets, you are doing it wrong.
Planning for the future
This is where everybody fails. Everybody.
You must have a plan for what the world looks like in 5 years. Not 10 or 15, 5. We will make our target date 2025. I can’t get my head around 2030.
Do you think the world is fundamentally the same today in 2019 as it was in 2014? What about 2009? No, you do not. Well, 2025 is going to shake your cage. Things are changing so fast, but where we are going is actually easy to see. Well it is if you just look at facts and not the Dogma boxes in your head. Stay out of your brain boxes for just a little longer. Human induced change is not linear, it is exponential. Your personal experience tricks you into thinking otherwise. Your brain is constantly trying to build a world view story that it lives in so it can take it easy and just look out for dangerous changes, and an exponential story is not natural, so your brain won’t build exponential boxes on its own. Evolution does not work that way. That is why any change is scary, we are built that way to survive. But humans together (never alone) do change exponentially. We are changing outside of evolutionary timescales for the first time in history, because we are able to use information that we learn to build the next bit of information, that then build the next. Each iteration is better than the last because we take no steps backwards as our communal information systems advance. I don’t need to read every book or go to every class, be where every new thing is happening, but one of us will and make that available to the rest, I have google, twitter, facebook, youtube, and on and on and so does 7 billion other humans who are constantly sharing information. I literally know almost everything going on anywhere on our planet that is even the tiniest bit important. In real time. I am not special. You are doing it too. That’s not ‘normal’ from an evolutionary or even human history perspective. We like to think things take time to change, well they don’t. We are all changing in real time. These iterations used to be measured in millennia, then centuries, then generations, then decades, and now years and even days. You must adjust your time estimates to reflect that. Not because I say it, but because that is how it works now. Fact.
- Almost all new cars will be Electric. Cheaper always wins and half the car companies that exist now, wont then.
- AI will be almost universal. It is now, but you don’t know it. In 2025 you will not be able to ignore it.
- Drones will be delivering who knows what to who knows where.
- Another president will be one year into his/her second term.
- Robo-taxis (which is just a robot with wheels and an AI brain) will have been on the road for 3 years, in multiple cities, in multiple countries.
- Tokyo will have used air taxis in the 2020 Olympics and Qatar in the 2020 World Cup opening their use worldwide. In another 5 years after that, you will be riding in one.
- We will have been back to the Moon.
- Space tourism will be commonplace.
- The computers you use will be 3 generations better than what you have now. At least 8 times faster and better than you are used to now and they are scary powerful now.
- Blockchain and crypto currency of some sort will be dominant.
- Economics will seem to be very, very different than today. And yet the same.
- And who knows what the hell else!
And sure as the Sun rises, the Gig economy will still be here. Some Fortune 500 companies won’t, but your Gig business will. In some form. Put that in the bank.
So, my question to every Gig entrepreneur is: What is your five-year plan? You don’t have one? Well, then you are not doing it right!
Are you doing it right?
So, in the end, how can you be doing the Gig Economy thing right?
- Everything you do is a business. You do not work for anybody. Use that to your advantage. Capture all your expenses, every one.
- Drive Rideshare while you can. At least be setup to do it. Best part time job on the planet and this will be gone in just a few years and seem quite quaint.
- Do more than one thing at a time. If you can’t, you are doing it wrong. No single gig will pay the bills so don’t try.
- Use multiple competing platforms. Fight Monopolies of all kinds, or you will go back to having a job.
- Be open to change to do something different as it arises, because it will.
- Do more with assets and less with labor. If you don’t have assets, plan to get some. You can not grow using labor alone.
- Have assets that make money passively. Even if it is just a little. They add up.
- Work for a lifestyle, not a number. Easier said than done.
- Be able to answer the What is your five-year plan question to anyone who asks you. Ask everyone you know what their plan is. If they have one, listen carefully.
Ok, I am done. You can discount everything I have said and put your boxes back in the order in your brain to suit your personal reality story now. Make your comments about how “How I.. or I would never… or That is just (x) or (y) bullshit. But, if you really did get out of your own way, your brain will have a couple of new boxes in there that seem to be out place….