advertisement
advertisement

The last recession gave us the gig economy. COVID-19 could help reimagine it

TaskRabbit founder Leah Solivan argues that we need to rethink the freelance economy moving forward by focusing on what independent workers need.

The last recession gave us the gig economy. COVID-19 could help reimagine it
[Photo: Brett Jordan/Unsplash]
advertisement
advertisement

That future of work we’ve been talking about this whole time? That future is here. One need only consider how you got your last restaurant meal or grocery delivery to see that.

advertisement
advertisement

It’s time to stop thinking about the gig economy as some novel idea, and to start addressing the reality that this is how millions of people in this country earn some or all of their livings. That’s why I prefer to call it the freelance or independent economy. “Gig” suggests a temporary, transient sort of work, but if this type of work had a more permanent name, perhaps we would be more inclined to look for longer-term solutions—especially now.

The COVID-19 crisis has helped shine a bright light on the heroic efforts of the essential people on our front lines—the shoppers, drivers, and independent service providers keeping things running while medical teams and local officials steer us to the other side of this pandemic. This crisis has also revealed what’s broken in the independent economy. Lack of hazard pay, sick leave benefits, and safety protections are no longer abstract complaints. We’re going through a major pressure test right now, and companies can use this time to find a better path forward for the independent service workforce we’ve all come to rely on.

While companies in this space are making topical changes to address the immediate concerns of providing in-person services during the coronavirus, this pandemic provides a good opportunity for a broader evolution of the independent economy. Finding that better path will require a shift in how we think about building technology for freelance workers. Specifically, there are four areas that seem prime for reconsideration.

Account for nuance

Those working within the independent economy are not a monolithic population. Some people do gig-based work to add another source of income. Others get involved as a way of contributing to their communities or meeting people. And many have chosen the path of solo entrepreneurship as a means of earning the entirety of their livelihoods within the independent economy.

During and after the financial crisis of 2008, we saw a surge in people relying on TaskRabbit to fill in income gaps, replenish savings, or gain flexible income while starting up a different type of business. I suspect that the economic fallout from this crisis will spur even more nuanced reasons that people dip their toes into freelance work. Every type of individual operating in this space has different requirements, and service marketplaces have work to do in accommodating the behaviors, pain points, and goals of these diverse groups.

Center the people

It’s so easy to use terms like “labor” and “supply” when we discuss service marketplaces, but the reality is that we’re talking about a human-driven sector. Yes, there’s been incredible technology built to operate these marketplaces, but the actual engines powering them are the people performing the services. Companies that treat the supply side of a service marketplace as a customer and build for their needs are at a distinct advantage.

advertisement

At TaskRabbit, we decided early on to build for humans: to give Taskers the flexibility to determine their own schedules, set their own prices, and build ongoing relationships with repeat customers. Philosophically, this empowers Taskers to have agency over their work. Practically, this means that individuals can decide whether they want to work during a crisis and how much they want to adjust their rates as they assume more risk. It hasn’t been the popular model to date—instead, most marketplaces use algorithms to determine how much independent workers get paid. But post-pandemic, I suspect we’ll see more and more companies begin to center workers as well as customers.

Reclassify freelance work

Much of the vulnerability of independent workers today arises from the fact that they’re stuck in a gray area between traditional W9 employees and 1099 contract workers. In all of our research at TaskRabbit, the number one reason (by a vast margin) that Taskers used the platform was flexibility. They liked working on their own terms—their own schedules, their own rates, their own discretion about whether or not to accept a task. You don’t get that kind of flexibility as a full-time W2 employee, so shifting these workers to employee status doesn’t feel like a one-size-fits-all solution.

On the other hand, 1099 status simply doesn’t offer appropriate protections for these types of workers—something that we’re now seeing COVID-19 illuminate more than ever. Measures such as PPE, hand sanitizer, and contactless delivery options help in the immediate crisis, and I’m happy to see so many companies have started to implement these practical measures, but it’s ultimately not enough. I’ve long been an advocate of a new classification for independent workers—something that exists between W9 and 1099—and my hope is that we’ll finally get this vital structural change moving forward.

Challenge the old models

The service marketplaces that made up the first wave of the independent economy might have been the pioneers of the space, but that doesn’t mean we got everything right. We understand so much more today about the nature of this type of work, and companies starting up now are well positioned to challenge the old models. An example of a startup really disrupting the gig economy space is Dumpling—a company providing tools for people running personal grocery delivery businesses. (Full disclosure: My venture capital fund Fuel Capital is an investor in Dumpling because I was so impressed by its approach to turning the gig economy model on its head.)

On average, Dumpling shoppers make three times the amount that shoppers on other grocery delivery platforms make—about $33 per delivery. Dumpling’s model considers the shoppers the primary customers, which empowers shoppers to do things other platforms don’t allow, such as shop at multiple stores, take on recurring clients, and even shop sales. The Dumpling founders arrived at this model by taking a look at what was broken in the current gig economy and gathering insights directly from the people doing the work. This type of user-focused reflection could benefit gig companies new and old.

As we search for that better path forward and start to have the vital conversations necessary to evolve the independent economy, I’m encouraged by the possibility of this moment. In 2008, we saw the emergence of service marketplaces such as TaskRabbit, Uber, Lyft, Airbnb, and others. That time marked an exciting inflection point in the history of work. The financial crisis turned our worlds upside down, massively shifted consumer and professional behaviors, and primed the population to seek new and innovative ways to do things. It was those conditions that made the first wave of the independent economy possible, and we’re seeing similar conditions today.

advertisement

This is an unprecedented time to make bold moves. For many, that will mean striking out on their own and becoming a solo entrepreneur within the independent economy. For others, it might look like taking the step to turn an idea into a startup. As an investor, I’m really excited about the next generation of entrepreneurs and companies that will emerge out of this crisis.


Leah Solivan is the founder of TaskRabbit and the general partner at Fuel Capital.