Recruiting The New Labor Force
I wrote this piece in September 2012 on TC, looking at how structural — not cyclical — changes in our economy have helped startups create new jobs for the unemployed and laid off.
Most Apple fans become slightly uncomfortable at the sight of Apple’s latest television commercials featuring celebrities talking aimlessly to their iPhones. A subtle message in these ads is that consumer technologies can now place virtual assistants in the palms of our hands. The advertising logic is as follows: get a new iPhone, ask it for information or to run tasks, and it will oblige. In the case of those celebrity commercials, it almost feel as if they’re talking to a digital version of the real life assistants they employ.
When it does work, Siri helps Apple create a deeper emotional bond between the consumer and their technology. While handheld technologies are providing varying levels of assistance to users, a similar wave is taking over the San Francisco Bay Area, not just with bits, but humans, too. A number of separate forces are converging to make segment, organize, and mobilize human workforces for just about any human-powered task one could imagine.
Companies such as Task Rabbit and Zaarly, for instance, have been well-covered, so I won’t go into them here, other than to set the context for new models that have recently emerged, such asExec (on-demand labor at a fixed, hourly rate), Postmates (delivery within an hour), and Instacart(groceries within an hour). One could also argue services like Lyft and Sidecar, which allow ordinary citizens to drive their cars around like taxis, or Cherry and YourMechanic, which send people to wash or fix, respectively, your car, all fall into a similar category
Stepping back to observe the trend, there are three large forces converging simultaneously to make this all happen now. First, the obvious force is the continued proliferation and advancements in mobile, handheld technologies, with more and more people owning not just one mobile device, and endlessly searching for newer applications and models to deliver better experiences than traditional websites, customized to our location, context, and other variables. Think of the “services” tab on Craigslist, but now on your phone. On my iPhone, I have a folder dedicated entirely to housing the apps listed above, which I’ve labeled “Services.”
Second, many of these companies seem perfectly positioned for the future when seen through the lens of how a company like Amazon may expand in the future, especially as it pertains to local delivery. Amazon is investing significant resources into various aspects of local delivery, whether it’s groceries, lockers, or maybe even drones (couldn’t miss a Tacocopter reference). Aside from Amazon, this is also a type of mobile marketplace where handheld technologies can help organize excess labor supply to generate, route, track, and complete these tasks, where entirely new companies are formed, complete with consumers’ credit cards for seamless payments, double-sided rating systems for better customer service, and the ability to more efficiently route requests for work and pair those requests with a new labor force.
Third, the structural inefficiencies in the American labor market provide an opportunity for these new companies to capture both labor and supply quickly. We are all painfully aware that in recent years, the U.S. economic output has slowed, that more and more citizens are not only out of work, but go unemployed for longer stretches, and as those stretches increase in length, they exponentially impact the ability to find the next gig. There is also growing income inequality in the U.S. Just five years ago, in 2007, the richest 1% of the American population owned just over a third of the country’s wealth, a ratio that gives the country one of the highest GINI coefficients in the world. Politics aside, what this means financially is that rising unemployment, combined with lopsided wealth distribution, creates a new labor supply that can be organized and routed, to pair those with extra time with those who have disposable income.
With armies of willing freelancers ready to complete all sorts of tasks, paired with efficient routing networks built on the backs of iOS and Android, what we have is, effectively, Siri for real life, a digital assistant transformed into a personal assistant. You can hire a Task Rabbit wait in line at the Apple Store to hold your place for an iPhone 5, call on a Postmate to have a jar of Grey Poupon delivered, use Instacart on the nightly Caltrain commute to delivery the groceries you need, and take a Lyft or Sidecar out later that night — all done with just a few simple taps of the finger, and you have Siri in real life. (I thought I’d try to infuse one of these services into the post, so a very special thanks toDavid Sament, whom I found on Task Rabbit, and helped me research some of the economic statistics and indicators.)
As with any new wave, there is an underbelly. These new companies are more efficient at routing a freelancer’s time, assuming there’s enough demand. Being an actual freelancer may suit some just fine, for a while, but eventually, I’d imagine many of them may want more predictable, more reliable forms of employment — a sentiment many Lyft and Sidecar drivers expressed to me during my many rides with them. These folks often were in between jobs, or in some kind of transitional phase of their lives. The way forward could be that companies like Postmates or Instacart provide that softer landing for those moving in and out of the formal labor market, or perhaps they themselves turn into real companies that fully employ freelancers, more along the model that Exec seems to be carving out, as a staffing solutions company.
It’s uncertain where we go from here, and that’s the exciting part. Right now in the Bay Area, which itself seems to be quite open to experimentation in these new business models, it’s unclear how these services scale to other geographies, maintain quality, and whether both sides of these marketplaces will provide enough liquidity to grow as fast. Here, in and around Silicon Valley, a great deal of wealth has been generated, and many can opt out of services, such as transportation. Or, perhaps, the income inequalities here serve as a petri dish for what is happening all over the country right now, and rather than fight about which government policies will help reduce unemployment or whether certain jobs will ever come back, it will actually be companies like Exec, Postmates, Task Rabbit, Instacart, and others that will actually provide the much-needed structural economic backbone to help people either between jobs, or make this a full-time job in an entirely new economy.