Second Thought: Gig Economy

Let’s think of a scene working in a famous vacation spot working on a freelancing job and having a party in the evening. Quite many people around me have a fantasy of a freelancing job. In recent 10 years, the booming era of the gig economy boosted these freelancers a lot. Initially, freelancers had freedom in choosing what kind of work they deliver and when and where to work. Most of these VC-backed startups have massive scale-up by burning money to seize the market. However, the moment comes when the unicorns have to collect money heavily. Most of the time, the unicorns don’t force a lot to customers, but to their partners. Here partners mean those who make money from the trade of service. For example, uber drivers, AirB&B’s host, fiverr’s experts. Initially, companies leading the gig economy focus on increasing the supply of services. In the basic economics law, when supply surpasses demand, price drops. The amount of drop is complemented by burning VC money. However, when partners belong to the platform, then it’s time to force them to sacrifice. After a few iterations of a similar concept of the unicorn case, it’s become a clear pattern. From a macroscopic perspective, who are winners and losers? First of all, investors who wisely found the winning unicorn startup had +10 times of return. Okay, it makes sense, high risk and high return. Customers seem to have more option but sometime (quite often) the process of burning money expel existing business. For instance, Uber pushed away tuk-tuk in a few Asian countries. Not to mention partners because most of them strive to survive.

Then, what is the right business model to enhance the life quality of overall society? One or two examples might not be enough to fully explain but I will address two points.

• It defines a new industry.
• It increases the efficiency/productivity of the existing solution.

The business I build should belong to both categories.