How Uber’s wild ride may end up as Silicon Valley’s greatest start-up deception

Uber, the company rewriting the definition of disruption only three short years ago, is soon to list shares on the NYSE. Upon Lyft’s disappointing market entry, expectations are high regarding Uber’s future. Working with an exceptionally fragile model, it is questionable if the scale-up will be able to realize its ambitions. This article explains why.

Growth ingredients

 In order to understand the model’s vulnerabilities, one should first be aware of the ingredients for the growth Uber experienced within the United States. The American model of Uber is based on the fact that many cars are idly parked in driveways (whereas fixed expenses continue), as well as high unemployment rates, an inefficient public transport network, growing smart phone adoption, ambiguous regulations, and an inefficient taxi market –which had deleted the word ‘service’ from its vocabulary long ago.

Under these conditions, Uber was able to offer an excelling customer experience at acceptable rates and hence grow exponentially. It won the clients’ and investors’ trust and started an international expansion. In less than a decade a multinational business with an office hosting over 18,000 employees has been established with 24.2 billion dollar venture capital. 

Weak network effects

Platforms realize their growth by using network effects. I once switched from the the popular Dutch social network website Hyves to Facebook as I wanted to stay connected to my international friends Nederland. Facebook is a mighty platform, due to international network effects. Uber’s platform also works with network effects, but there are two important side notes to be made. Uber having thousands of taxi’s driving around London doesn’t influence pick-up times in any other city. As client and driver have to meet one another physically in a taxi, the company doesn’t benefit from international, but only from local network effects.

Secondly, transactions take place physically and locally, and a correct balance between supply and demand has to be created from city to city and sometimes from postal area to postal area. Uber has to deal with an asymptotic network effect. Growth in supply intrinsically shortens the waiting times before pickup and stabilizes the supply, yet a tipping point exists at which an additional taxi as supplier on the platform doesn’t add any value for the client. The arrival times will not shorten anymore, and the increase in service quality offered to the client will be brought to a halt, even when more taxis are added to the network. After this point, every newly applied taxi driver won’t benefit in competing against (local) competitors. 

Because of weak local network effects, it is relatively easy to launch locally active competitors. Last week new steps in Sony’s announcement to launch its own taxi service app in Tokyo appeared. By cooperating with 5 established taxi companies the app will start out with about 10,000 taxi’s, according to their words.

The affiliation with self-owned shared bikes and scooters, another of Uber’s ambitions, is a long shot again. This new form of mobility will go hand in hand with other billion dollar funded start-ups (of which some are already on the brink of failure) in each and every city, and has to be discussed with the local government to let this new form of mobility ground within a city. Uber Taxi shows us that the enterprise has had to adopt a more collaborative approach to be allowed to operate in several cities. In order to succeed with its ambitions regarding bike and scooter sharing, these kinds of collaborations will need to intensify drastically. That in itself is contrary to an easily scalable model. Regardless the question if this could function as a viable business model. An interesting read is this interview with Tony Ho, vice-president of global business development at Segway-Ninebot, by the Financial Times. He is convinced that “Electric scooter sharing start-ups, including Bird and Lime, are not sustainable”.  

Low switching costs

As long as a driver meets local requirements, the threshold to start working for any app is low. From the moment a competing app becomes available within a certain city, oftentimes we notice that a great amount of drivers switch from one app to another. The same applies to clients. After installing the the app and creating an account, it is extremely simple to switch between these apps to see which of the two offers you the best supply for the moment. Brand loyalty of users on both supply and demand side is utterly low. Many drivers are listed with several platforms at the same time. Combining this with local network effects, one can understand that there is much playing space for local or national competitors.

Of course, they won’t have the scale advantage of an internationally operating party, which can invest even more in the development of technology, but the local operating party may cooperate more easily with corporate clients like hospitals and residential homes. Yes, Uber’s technology has an advantage in ‘on demand’ orders, yet many orders could still be made and planned upfront. 

National and institutional context

The added value of an app is strongly dependent on the national context in which it operates. In the United States the market offered room to scale up a service we know as ‘UberPop’, a service banned from almost all European countries. Furthermore, many European countries do have well-functioning, tight public transport networks, lowering the added value of the service Uber is offering. 

One of the centerpieces of Uber is its reputation system which has to guarantee that the a trustworthy driver is behind the wheel. This is one of the main aspect of adding value in countries where the government lacks checking mechanisms, but in many countries such checks are solidly in place. The reputation system has become more or less an automated HR-manager filtering out the rotten apples, rather than a substantial improvement of the system.  

The app to access your mobility

Considering the above, it isn’t striking to notice that Uber has changed its strategy in desiring to become app that is your access point to mobility. A taxi service is exchangeable, but the homepage to your mobility is a much stronger starting point.  

Although Uber has a strong hand to play, and a great wealth in gathered data to work with, it will still be a huge challenge to realize its renewed ambitions. Whereas they entered a fragmented taxi market, being able to provide substantial added value to suppliers, it will now have to cooperate with the status quo and other newly entering players, which will stand their ground and most importantly: they won’t share their client contact and data with any other party. 

Even if Uber will reach the point it has mind, it is still questionable whether it will develop sufficient scale to make the circle come round regarding its revenue model, let alone the fulfillment of promises made to its investors. In that respect, Uber still has a long road ahead and it could definitely happen that the greatest start-up adventure in history, as described by Adam Lashinsky in the book ‘Wild Ride’, ends as a deception.

What will our working life look like in 2040?

Invited to a 5 minute pitch addressing attendees of the ‘Festival for Modern Workers’, I was asked to give a sneak peak into the future of work. What will our working life look like in 2040? Which are going to be our greatest challenges and opportunities? And what is going to be the major task of the Werkvereniging, a group professionals working towards modernization of the labor market, supporting modern forms of work, life and learning. I decided to form my speech as a plea for the future of work, which I gladly present.

Interestingly we speak about 2040, yet not even understanding our current times. 2040 is a long stretch away. In 2040, I may be grandfather and my children Joep, Sophie and Anna may have finished their studies. Although they won’t have stopped learning, neither will have I.

If one would ask a tech optimist what working life would look like in 2040, surely he would be of the opinion –I’m implying a he, as chances are he would be a man– that technology will have solved all our issues by that time. Wonderful, as we don’t have to take any responsibility right now. The problem lies in the fact that tech optimists tend to forget that ratio doesn’t beat emotion and that success of technology is found in facilitating people, not in leading them. Something, on a side note, many so-called leaders might want to reconsider.

 If one would ask a flex working optimist an identical question, the imagined worker would appear as an empowered happy individual, hopping from project to project. Someone who keeps learning for a lifetime and who works to live and doesn’t require much government intervention. He or she will fend for himself or herself. A beautiful utopia stemming from a certain bias of the world being equal and honest, all people being able to choose for themselves what they would like to do and everyone overflowing with ambition.

 If one would ask an optimist on social securities, say someone of a trade union, the same question again, the answer would be that everyone has a fixed job, would work in accordance with collective labor agreements and they would pay their monthly contribution without any delay. There is no need to wait for 2040 to understand that this model starts to crumble within the Netherlands and at many other places this system has once flourished.

 If one would ask a platform optimist, someone from the category I belong to, the what working life would look like in 2040, I would state that platforms lower transaction costs, solve information asymmetry, enable the individual to market his or her skills optimally, facilitates temporary cross-border and cross-bubble cooperation, and that data and review scores will have replaced diplomas by 2040, but hopefully even quicker. I would argue that those capitalistic platforms, where workers are dependent on, will have been replaced by cooperative and decentralized variants and the considerably downsized government will guarantee social securities ‘by design’, hence equalling the playing field for everybody.

Anyone claiming to know what 2040 will look like, lies like a trooper. All our statements on what 2040 could be are more or less wishes spoken from the perspective or bubble we’re living in at the moment.

All very well, so let’s be clear about that. What I may be able to share is what I personally hope working life would look like in 2040. And what the ingredients would be to possibly end up at that point.

What I hope to see, is that our working life by 2040 looks somewhat like the following: In 2040, we would have found a balance in ways technology is empowering the individual in a facilitating manner. Workers will organize themselves through platforms in a way that fits them well. Not confined to borders or descent, nor the temporary nature of a formation and giving equal chances to everyone. Continuously developing and simultaneously valuing and judging on actual added value. Not based on the privilege of the bubble you belong to and which bubble you support. With the correct, ever changing, balance between on and off, gearing up and slowing down.

When we would like to have a world of equality and equal chances as a central element, it implies that by then we will have take a step back. Which also means that the definition of success will have to be rewritten. However much we may be complaining, we are still part of the lucky 1% of the world’s population. Don’t feel guilty about it, but be aware of your position.

With a more fluid role of working individuals, a more fluid framework is needed to follow suit. All verticals, sectors and collective labor agreements will have been crushed by horizontal thinking and social securities will have been unlinked from their dependency on working relationships. I might even drop the B-word of Basic Income.  Better even: basic facilities and social securities for everyone. We will have noticed that all chit-chat about generations X, Y, or Z has been short sighted. Every individual has different needs during each phase of life. Generations differ, but we’re still humans after all, all clichés included. A more fluid system will be essential. I hope we’ll be at that point in 2040.

But hope buys you noting. Time to talk actions. What steps are there to be taken now in order to reach the utopian 2040 scenario?

Currently, I observe a world in which several parties with historical interests have entrenched themselves. And from that position beyond the reach of daylight they keep trying to survive. Living in a continuous phase of denial. I also notice that very few parties dare to take their responsibility and that new initiatives are received with great enthusiasm, but all stakeholders are greatly lacking urgency, the guts and the ambitions to pull through seriously. 

To achieve the 2040 scenario, a change of system will be needed. To reach such an objective it will show to be essential that our past, interests, fear and ego lose their dominant role in the debate and we all admit that we’ve realized, “We have no clue what we should do.” The good news is: you are not the only one. Starting from vulnerability, without being trapped in sectors and verticals, we can start building together. Recognizing that each and every one of us, coming from whatever background, is also a willing and good person. In the end with the same goal as the party he or she now despises and might even consider his or her greatest enemy. 

Exchanging our ‘have to’ for a ‘want to’, our ‘it’s impossible’ for a ‘how can we make it work’, our focusing on ourselves (single stakeholder) for a focus on us (multi stakeholder), and our ‘walking out’ for recognizing and taking on responsibilities. Ultimately, it is the responsibility of ALL stakeholders together. Nobody excluded. So it’s your responsibility as well. Even when 2040 sounds comfortably far away, it does not exempt you to keep burying your head in the sand.

What could be the role of an organization like Werkvereniging in all of this? I see a role as initiator, connector, catalyst, bridge builder, incubator and in ‘practice what you preach’. Even Werkvereniging has to exit its own bubble and step on the gas of ambition. If we want to make the 2040 scenario happen, we should all start the expedition together. Yes, I’m in favor of it.

Gig economy assumptions debunked. Or not really?

The role of platforms can no longer be excluded from debates on the future of organizing work. I predict that labor of every sector will –at least partially– be organized by platforms over the years to come. Not only by external platforms, but also internal (white label) platforms catering for the organization of both the flexible and the fixed shell of organizations. The gig economy is a bright mix of flavors and more are to be added soon.

My personal unease with discussions on the gig economy’s future is in the way the current circumstances are projected on the future and mostly expressed in extreme scenarios. Harvard Business Review published this blog post debunking some mythes about the gig economy. These are the statements, which are reportedly untrue:

  1. Millennials love to gig;
  2. We’re all going to be giggers;
  3. Gig is better;
  4. Gig work is unfulfilling.

All in all, it sounds like an interesting list of statements and maybe you do experience it as a major setback we’re not all going to be giggers in the end. But, to say the least, this didn’t take me by surprise. Why? Because the listed items aren’t very substantial. I started to write an article on the individual points, but soon I realized that such wouldn’t contribute to a constructive and informative analysis. Therefore I would rather point out why these kind of generic researches do not contribute to the public debate.

1 . Labor and platforms are too manifold to be wrapped in one-liners

There is much talk about the ‘the’ gig economy, but it is hard to make any statement on the gig economy in general. Why? Because every industry and each kind of platform has its own dynamics, including its individual opportunities and challenges. Still we fall into the trap of generalizing. The very same thing happened during a meetup regarding a Dutch documentary on the gig economy (to be seen here) last Thursday in Amsterdam. Initially the conversation wisely started by mentioning these broad dynamics, just to throw all caution overboard and keep on generalizing. The way things happen to be.

A few random variables determining the dynamics of a platform:

  • Is the gig done online or offline?;
  • Are new employment opportunities created or is the platform eating off of the other’s part of the pie?;
  • Were gigs usually done on the black or the white market?;
  • Does the worker posses unique or commodity skills?;
  • Are the skills scarce or abundantly available (there could even be a scarcity in commodity skills)?;
  • Is someone’s income from the gig economy supplemental or main income?;
  • Is the platform willing to cooperate with established institutions or not?

2 . ‘The’ platform worker is nonexistent. Neither is there a platform generation.

At the meetup, a cleaner formerly working with cleaning platform Helpling (now suing the very platform) and a cook actively working with gig platform Temper joined the table. These two platform workers wonderfully illustrated the dynamics of the platform workers’ world. On the one hand the domestic cleaning lady feeling dependent and controlled by the platform, moreover carrying the feeling that she is unable to do anything else, and disappointment over the platform not hiring her. On the other, the cook possessing unique skills, exactly knowing how to squeeze out every little bit of what the platform has to offer, skillfully profiling himself and enjoying the optimal freedom and flexibility of working via a platform. Measuring both platform workers with the same yard stick would be pure nonsense.

Just like the enormous diversity within the platform economy, also ‘the’ platform worker is a very broad concept. Furthermore, it is very important to understand how this ‘worker’ would have functioned outside of these platforms. In other words, is the platform a worsening or (at least) some enrichment to the opportunities of supplier?

Resulting from EY study, quoted several times in the HBR article by the EY author, among the respondents of the generation of millennials ‘only’ 24% earn money within the gig economy and that “the percentage of millennials with full-time careers is rising at a brisk clip from 45% in 2016 to 66% in 2018”, according to their collected data.

I am in the blue of the origins of the assumption that certain generations would be more or less ‘gig’ sensitive, but I do think –which surely is an assumption as well– that it is not advisable to project such far-going expectations on a complete generation. Even though this generation is digitally a lot more skillful than the previous and is raised more self-reliant in believing the sky to be the limit –which does influence their mindsets– it still does not imply that this generation would massively show forth a change in behavior. Besides, every individual processes through several phases of life while his or her priorities shift between different areas. I compare it with the assumption that the ‘new’ generation does not like to own a car and prefers access over property. Nothing wrong with that as long as you do have but a few obligations, yet when time comes –as is my personal case– that you settle to start a family, have children, etc. the priorities begin to shift and other topics become important. Those priorities will logically change per life stage. Similarly, one changes his mind when looking for either greater flexibility or more certainty, independent of being a millennial, or generation X, Y or Z.

3 . An increasing amount of gig work is invisible

Talking about the gig economy used to be clear and straightforward. Platforms like Uber, Deliveroo and Helpling were all there was. It couldn’t be more convenient. The trend nowadays is platforms mixing in with the ‘traditional’ matchmakers. Dutch gig platforms Temper and YoungOnes platformize specific categories formerly organized by the employment agency industry. The next step being platforms organizing the flexible shell of organizations and consequently the full workforce of organizations, also because fixed personnel can be organized more efficiently by use of a platform. Parallel developments are found in the rising use of algorithms for selection procedures, as implemented by several publicly traded companies, and the use of artificial intelligence.

Whereas the gig economy used to be rather isolated about roughly one year ago, making it relatively easy to identify, I now predict platform thinking as a mindset and technique to play a rapidly growing role in every industry in the years to come, both behind the scenes and in the open. A movement not restricted to the platform start- and scale-ups currently using these techniques, but also within existing organizations. We should realize that there are great opportunities to a) redivide the market, b) increase the market and c) improve the opportunities and position of workers. I’m still disappointed about the measure of awareness within the entire sector, in strong contrast to the mobility industry.

It goes to show that the manifold gig economy is not to be wrapped up in a few one-liners and that it is high time to continue the debate on a different level.

Gebouwd voor de toekomst: Hoe Sharetribe het ‘steward ownership’ model omarmde

The shareholders quest to playing a constructive role in a company instead of shareholder serving company attitude, was the main topic of the ‘Ownership Conference’ I visited in Berlin last week. The centrally highlighted model during the congress was called the ‘steward ownership model’.

I’m discovering this model, because the platform economy is in hot debate about the extractive character of money. Venture Capital investors and entrepreneurs are often in it for the short-term profits only. This, in fact, can lead to perverse stimuli regarding long term decision making. Moreover, in many cases headed this direction the founders (as well as some employees of the first hour) will find their way out after a take-over, leaving the business crumbling.

The video below shows my interview with Juho Makkonen, founder of Sharetribe. Sharetribe creates (open source) software for anyone to build their own sharing economy marketplace, without the premise of any technical schooling. Sharetribe has gone through a transformation over the span of last year and became a Steward Ownership company. This means that:

  • the voting rights aren’t in the hands of the investors, but in the hands of the management team working for the company;
  • the company cannot be sold ever;
  • salaries have a ceiling;
  • the investment return for investors is capped at 5x and shares may be bought back with a maximum yearly rate of 40% of the company’s profit.

Although this model wouldn’t be a workable fit for every entrepreneur, it is a very interesting way of embedding securities within the business’ ownership model. The model is however not new; the 130 year old company Bosch also runs on a (partial) steward ownership structure.

Reshaping Work: 5 insights into the gig economy‘s most urgent issues

The early gig economy discussion has majorly been focussing on commodity skilled labor like taxi driving, household cleaning, and click working, but recently there is shift towards a more encompassing approach. A beneficial trend, as I’m convinced that platforms will soon be organizing work in all kinds of industries.

ING published a paper titled ‘Algorithms versus the temporary employment sector Is there a future for temporary employment agencies?’. Their prediction is that about 20-70 percent flex work market share is to be redistributed by the rise of online platforms. In this context it isn’t surprising at all to see a growing number of stakeholders joining the discussion.

October 25th and 26th, 2018, the second edition of the ‘Reshaping Work in the Platform Economy’ congress took place in Amsterdam. Although many congresses on this topic focus on one specific stakeholder only (e.g. academics, start-ups, unions, or the deployment agencies), this congress exhibits a unique multi-disciplinary approach. An approach worth copying.

This blog is devoted to the tweets I put out during the congress, highlighting and elaborating on the congress’ most remarkable insights into the gig economy’s most urgent issues.

1. What is the size of the gig economy?

Depending on definition and the duration of a gig, researchers find sizes for the gig economy from 0.4% up to 22% of the total labor market. You see: there isn’t any meaningful statement to be made. Does that matter? It actually doesn’t, as long as each and every research clearly states which variables are and which are not accounted for in the used definition for the gig economy, something apparently difficult in practice. It wouldn’t be a superfluous luxury to see a bit more unity established among researches.

One of the most important, yet still underemphasized, variables is whether a transaction is processed by an online or offline platform. When talking about the challenges and opportunities arising from a online platform processed transactions, it would by definition be perfect to include those transactions only. But when the size of the full gig economy is to be considered, and something is to be said about working conditions, it would surely be beneficial to have an accurate measure of the size of the entire gig market. No valid statement can be made about cleaners working through helpling in comparison to other unknown cleaners working through other intermediators (working without a platform or even by classifieds, etc.). A second example can be found in the food delivery sector. TakeAway.com has its own hired deliverers, for whom it has orchestrated all social securities and insurances, but they deliver only 1.4 percent of the total number of deliveries executed by the platform. The other 98.6 percent is being carried out by couriers hired by the restaurants themselves. Until we start gathering knowledge about the working conditions of this group, we can’t say anything useful concerning the market as a whole and whether a platform is a blessing or a curse compared to the status quo.

Another outstanding point of the opening keynote by my colleague Koen Frenken is the fact that many gig workers use these gigs as ‘supplemental income’. Lauren Sepoetro, public policy advisor at Uber, confirmed this later on in the congress. UberEats isn’t meant to be the main source of income. Which is virtually impossible, given the fact that work hours are generally around lunch and dinner times. It still is a plus to hear such facts confirmed by a leading platform.

2. Platforms, the new generation deployment agencies?

The ING paper ‘Algorithms versus the temporary employment sector Is there a future for temporary employment agencies?’ predicts, as stated before, that about 20-70 percent flex work market share is to be redistributed by the rising online platforms. Shocking figures. Existing deployment agencies surely aren’t passive, yet the message is clear: Their work is cut out for them.

Last week, I shared a blog on the Danish platform Meploy organizing both their own and the external flexible shell of organizations through one platform. And also the employment agency industry has published quite a few statements and editorials about their role within the platform and freelance discussion.

During the presentation of Oxford Internet Institute researchers, working on a fabulous research on online work within the gig economy, the presentation slide below was shown. Platform Sourcing (check their report ‘Platform Sourcing: How Fortune 500 Firms Are Adopting Online Freelancing Platforms’) is a term I had not yet come across, but it sounds good. The more I think about it, the more I talk about it with others, and the more I start to be convinced that the link between platforms within the gig economy and the employment agency industry is merely logical. I think that the answers to questions on social securities for platform workers could be found in this direction.

I assume all of us are convinced that the full labor system needs to be redefined. Matthew Taylor, Chief Executive of the UK based RSA (check this club!), shared his vision that no fiscal differences should exist for clients and workers between fixed and flexible forms of work. However, it is clear for such a shift to happen, we will have to wait a couple of years. And, for the time being, we will have to find our solutions…

3. Are official degrees still valid in the gig economy?

Platforms lower the threshold to enter the labor market. The majority of the gig platforms are open for use to anyone without any prior experience. No degree required. During your first gigs on the platform you’ll establish your reputation score, which will help you in receiving your next assignments.

The question at hand is: are degrees still valid in the online gig economy? The answer by colleague Andrea Herrmann of Utrecht University is clear: “No”, as she concludes after extensive research on data from one of the world’s biggest gig platforms. Moreover, the number of years of experience on a platform and the reputation score are important, the latter to no surprise. Gender, on the other hand, is sadly also of importance; men do earn more than women for the same kind of work in the online gig economy like elsewhere.

It is, on the other hand, interesting to experiment with these things. Swedish social services experimented in drawing up traditional resumes from the experiences and reputation scores of gig platforms CV. A very interesting experiment.

4. How satisfied are workers in the gig economy?

Juliet Schor, Professor Sociology at Boston College, has been researching the platform economy with her team over the last year. I met (and interviewed) her in Utrecht before, about three years ago during the first International Workshop on the Sharing Economy. Juliet shared her keynote results from the research on satisfaction, autonomy and income of workers in the (offline) gig economy.

Interestingly, those who use the platform for supplemental income, without developing a dependence, are usually very satisfied and have a great sense of autonomy and earn a decent amount. Why? Because they profit from their position to only choose the well-paid gigs and don’t fear getting lesser scores; even deactivation of their account would not have a much of an impact on their lives. They are skillfully ignoring the control mechanisms of the algorithms. Likewise, a deliverer working for Postmates who lets the client come to her car to collect the delivery. She finds it too dangerous to go up to the door herself at such a time of the day. She doesn’t mind ignoring the rules of the platform, because she isn’t dependent on the platform for her income.

The situation for those that are dependent on the platform. They have to take every available job and will choose for the lower paid gigs as well. Additionally, this group suffers from the fear of the negative consequences of a bad review and how it influences their feeling of working autonomously.

5. The gig economy from a worker’s perspective

Special to the Reshaping Work congress is the fact that all stakeholders are present and involved in the development, host round tables –of course I joined the table with the Dutch Trade Union FNV after writing my last week’s blog about them– and on the second day I shared the stage for the debate called ‘meet the gig worker’. (Watch last year’s video).

In this edition, representatives of Deliveroo and UberEats shared the stage with 6 of their ‘own’ gig workers. Some of the findings:

Scheduled or really on demand?

Deliveroo works with scheduled services. Three variables can give the deliverer an advantage in his application for a gig:

  1. Does the deliverer act on the agreements and did he work for earlier reserved sessions;
  2. Last minute cancellations (if anyone cancels a session more than 24 hours in advance it does not effect their score);
  3. Does the deliverer work during peak hours (Friday, Saturday, and on Sunday between 6 p.m. and 8 p.m.).

Of course you can sign up spontaneously, but when the maximum number of deliverers within a region is reached, newly logged in workers won’t be scheduled. UberEats doesn’t work with scheduled services and is purely on demand. You may expect the Deliveroo model to lead to better income for the couriers; because the supply is regulated, it will never be possible to have too many couriers working simultaneously in comparison with the number of assignments. At UberEats there is less grip on the supply side of the platform. It would be interesting to research which of these models shows to be most profitable to the deliverer.

To be or not to be a freelancer, that’s the question.

The foremost discussion of the moment and the years to come is on whether the platform worker will be a considered a freelancer or is to be hired by the platform? The Attorneys I spoke to about the Dutch context predict this issue to remain unclear for the coming years.

Although there is much talk about the worker, there is but little place for them to express themselves. Inviting them to speak up, may lead to interesting results. Their response on the question if they prefer to be a freelancer or to be hired, their unanimous answer is: “Freelancer.” Especially interesting as the very same workers asked for more clarity on income and tariffs earlier in the conversation. Their motives:

  • The results of your efforts show forth immediately. Cycling faster, earns more. The competitive element is experienced positively;
  • The flexibility: work when as long as you want;
  • Autonomy: be your own boss, make your own choices.

Although the choice is clear, it remains questionable if the individual deliverers are able to understand the risks concerning insurances, work disability and pension first of all, and secondly, if we would ultimately like to pay the price for the uninsured worker as a society. A number of platform representatives I talked to during the congress were open to compulsory insurances for workers. As long as it would not be considered as them becoming the employer. Bottom line, the choice is between flexibility and security. Which is no desirable case.

What is the bottleneck?

Right in the middle of this discussion, a to me unexpected and rather underexposed  stakeholder with an enormous influence on the bicycle deliverer’s fortune showed up: the restaurant. Platforms like Deliveroo and UberEats give restaurants not yet active in food delivering the opportunity to tap into their network of couriers on the platform. However, this does not prepare their processes to having their food delivered. A few points of consideration:

  • • Long waiting times: commonly other clients take precedence over the bicycle deliverers and their waiting is at their own expense;
  • • Restaurants aren’t yet accustomed to packing meals for transport. The result: flooded, mixed, neither very attractive nor tasty meals in lousy paper bags. Something the couriers will be judged on in their evaluations on the platform.

Deliveroo indicates to help restaurants with advice, but there is still much to improve for both platforms. I’m, however, interested whether these negative experiences also hold for restaurants with their own hired deliverers. I assume not to the same extent as a result of an increased feeling of ownership.

Wrapping up

Over six years ago, I decided to start working on the platform economy full time. All based on the conviction this development would be influencing every industry over a span of the next decade. First crowdfunding, secondly the sharing economy and consecutively the gig economy. I also predicted, reasoning by pure logic, the last of these to be the most interesting and to offer the most relevant issues. For, surely, the heavier someone depends on a platform, the clearer the pain of a suboptimal model.

It was wonderful to see so many different stakeholders become visible on a personal level during the debates and to noticed how they opened up for each other’s opinions and challenges. This way of communication is much more pleasant than the one in court cases. The stakeholders’ next step is to take a more constructive attitude towards the outside world on an institutional level, as that is the road to success for all who are involved.

I recognize myself taking on the task of bridging gaps by bringing several parties within stakeholder groups together and by connecting stakeholders with one another. I am excited to do so from an independent position and honored to play this part.

Meploy is showing businesses the future of organizing flexible work.

Many discussions within the gig economy focus on platforms connecting the individual demander with an individual supplier. The one-on-one transaction. A taxi driver and a traveller, a cleaning lady with a private citizen, and the babysitter with a family with children. Platforms lower the threshold for these kind of activities and pave the way for markets to grow. It has caught my eye that recently such discussions mainly focus on the individual client. There is hardly any word on the opportunities such platform developments could offer to business clients.

Slightly over a year ago, I travelled to Copenhagen to meet up with the founder of gig platform Meploy. Initially founded as a platform to connect freelancers to businesses for short term gigs, it soon they made an interesting switch. By converting to a staffing model, they hired the ones who would execute the gigs and became a completely digital first employment agency.

I kept following Michael, Meploy’s founder, and met him several times throughout Europe, just like last Thursday in Brussels. He told me they now facilitate fixed clients with their complete flexible hiring. And during last year only they have grown by a factor of 10.

Meploy is a platform that more or less shows how I expect the gig economy —though I rather call it the platforms facilitating the organization of work— to develop over the next couple of years. Beginning with the facilitation of gigs for (and between) consumers, slowly evolving to a means of organizing the flexible shell of organizations, whether or not white label. This is highly interesting to organizations, because the benefits of those platforms in lowering their transaction costs can now also be applied to a business HR environment.

Besides taking the flexible shell into their own system, another extra interesting plus for the organization is that it can additionally benefit from the platform’s talent pool. In doing so, the platform takes over the whole organization flow of the flexible shell. This development may have an considerable impact on the temporary work agency sector. Whether this impact will turn out to be an opportunity or threat is to be determined by the industry itself. This area of the gig economy has not yet been part of the discussion, but will, in my opinion, have great impact in the near future.

P.s. A couple days ahead of my conversation with Michael, I read his latest blog in which he announced to yearly share 10% of the companies profit among those that worked through the platform over that year. He has given thought to a cooperative model, but with the impermanent relation to workers on the platform, it would not provide any added value in his opinion. With this, I believe he has created a finely unique solution.

Case analysis: Dutch Trade Union sues gig platform.

It had been in the air for some time already, the rumor mill had been grinding for over a year, but it only happened last week. On the day home cleaning platform Helpling was to announce a newly received investment and expansion to Switserland, the Dutch Trade Union FNV pooped the party by their announcement to sue the platform.

The message of the union’s press release was very clear: FNV is of the opinion Helpling should hire cleaners that are using the platform. What struck me is that the article contained quite some factual errors. Statements in such a measure incorrect that it could not just be coincidence. Throughout the article, the FNV speaks about freelancers, which is incoherent with the Dutch legislation which describes these workers under the domiciliary services act.In the case of small-scale services and home related gigs between private persons, this act is an exemption provision on mandatory financial burdens employers are supposed to carry. Besides this, the article states that each cleaner earns €11,50 per hour, although each and every one is free to set their own price on the platform. Although there is a lower bound to avoid a race to the bottom, there is no maximum price. Only recommended prices are shown as an indication of how other cleaners in the same region have set their rates.

Apart from quite a few suggestive statements —as former marketeer, I know very well how to exaggerate things in your own favor and that, when receiving a message, the sender’s agenda shouldn’t be overlooked— the reasons behind these errors are highly questionable. The overall message is clear anyhow and would not have been less clear if facts had been presented correctly. These mistakes are simply unnecessary.

Is it a random choice to sue Helpling?

Helpling is not the only platform mediating between individual demand and supply working under on the domiciliary services act with a revenue model based on a commission per transaction. Similarly, cleaning platforms iemand.nl, ziso.nl, and babysitting platform Charley Cares use this combination. Although this is a separate discussion from the one concerning the employment of workforce, I do notice more platforms working with the same construction by profiting from the margin on transactions. In this respect, FNV could have been less picky.

This case in perspective: is the Helpling model really that revolutionary?

What does Helpling do? It enables households to order a cleaning help by means of an online platform (market place). Besides this, the platform supports in quality control (intake by phone, ID checks, and a reputation system), in back office (complaints, questions, replacement help in case of leave), a planning tool, and payment module. The company earns money by skimming off a small margin of every transaction. A widely used model, although I am aware of different forms such as subscription models used by other platforms that offer household cleaning services.

Is Helpling unique in its way of working? It definitely isn’t. This kind of service has existed for years. One example is the Dutch company HomeWorks; a business exploiting the same model as Helpling for the last 25 years. The only difference is in the fact that it isn’t an online market place, but a company that deals with supply and demand in the market manually. It also has service coordinators checking on the quality and are even coming along on the first cleaning; this surely is an interesting case in the discussion on hiring or not. All of this makes HomeWorks’ model expensive, with a final commission of about 39%, compared to Helpling which receives about 23%.

If it is of importance to the FNV to fight for the rights of this target group, why didn’t they speak up much earlier at the establishment of companies like HomeWorks, or even at the turn of the century?

This example shows that that the gig economy has existed for ages, but the emergence of platforms has shifted the matchmaking to become automated or even outsourced to the client by a market place model. Solely taking into consideration the matchmakers working with a digital first platform strategy when it comes to the gig economy, most of the gig market is being ignored. And that, that is a missed opportunity. Read more about it in my blog: “Is the discussion on the gig economy still on-topic?”.

What would happen if the FNV will prevail?

Not being a jurist myself, I haven’t read the charges and can’t make any predictions in respect of this case. Yet, when the FNV prevails and Helpling will be ordered to hire the domestic workers, the consequences are obviously foreseeable. As Helpling starts hiring the domestic workers, the final price per worked hour will surge to at least 20 euro. As hardly any individual is willing to pay this amount per hour, the platform won’t receive any further bookings and Helpling will soon go bankrupt. Would that solve the problem? Not at all. The cleaning will still be done, but moved to black market.

(The domestic service act has been criticized more often. Another interesting system is in place in Belgium: the Service Cheque. After all the good I’ve heard about it, I’ll soon delve deeper in its ins and outs.)

Does the FNV burn its bridges with this approach?

Every unionist I’ve spoken to in person is convinced that the rise of work mediating platforms (in the broadest sense of the word) isn’t stoppable anymore. I also see many opportunities for cooperation between platforms and trade unions in a way of ensuring collective agreements in algorithms. In the end, both of them should focus on their common interest, especially in markets where workers are scarce. Everyone understands that if the market really wants to grow, it will be necessary to eradicate all unclarities and uncertainties. Investors want clarity above anything, for unclarity equals risk.

Being convinced that both stakeholders will have to find common ground more often in the future, this isn’t quite a desirable start for their relationship. Furthermore, I’m convinced that the FNV has burnt its own fingers by choosing this approach. A solution to these kind of cases only arises when all parties (platforms, interest groups, unions, and government) take their responsibilities. FNV already has an interesting track record in relation to platforms:

  1. Charged Deliveroo (soon to be decided);
  2. Cooperation of Temper and FNV Horeca, about which the FNV board ventilated its dissatisfaction publicly;
  3. Here, the case Helpling.

I can’t imagine any platform willing to start a cooperation or join in an experiment in which the FNV is involved. If I would be working for a platform, I wouldn’t take the risk and rather look out for another cooperation partner. This, in my opinion, really is a missed opportunity. Mostly because a cooperation between platforms and unions could create opportunities to work on an inclusive labor market. Mainly in industries known for their fragmented workforce, we have no official figures on what working conditions look like, but we do know that they would be up for improvement (including those in the cleaning and food delivery industries).

Conclusion

The main conclusion is that the cleaner, described by the FNV as the ‘brave individual’, will not be better off in the end, even if the union prevails in their charges against Helpling. Moreover, it is clear that suing Helpling alone appears as a random act; the example of HomeWorks shows that this way of working has existed much longer. The gig economy is much, much larger as what is happening on a platform like Helpling.

All in all, the predominant purpose of these charges seems to be the raising of awareness of the problems behind the platform economy. FNV is not choosing an unknown route, although it surely isn’t the one I would have chosen.

To see if there will be room for a more mature and constructive debate, we will have to await the outcomes of this court case.

Is the discussion on the gig economy still on-topic?

The greatest frustration for policy makers and researchers on the platform industry is the lack of access to platform information, such as user data and more general data, like transaction numbers and gross revenue. Luckily, there is an interesting exception in the Amsterdam based platform company TakeAway.com.

As this platform is publicly traded, it is obliged to publish their (officially audited) results. Moreover, the investor calls, the question time by phone in which investors can ask all their questions which are to be answered directly by the board, is public. These calls are extremely interesting and educational.

The takeaway —how appropriate— of the call regarding the yearly figures of 2017 is that the platform doesn’t see the rather purely logistic platforms, like Deliveroo and UberEats, as their competitors and doesn’t really believe that these models will ever be viable.

TakeAway got involved in the discussion by announcing that they will hire and insure their own deliverers and give them an honest salary. In such, they openly distance themselves from the freelance solutions exploited by Deliveroo and UberEats. Delving a bit deeper into the numbers, one sees the beauty of this thought, yet that it is of little or no effect practically.

Out of the total number of executed orders in 2017, grossing around 68,3M, only 1.4% has been dealt with by the platforms own deliverers. In 2016, it accounted for only 0.5%. The end goal is to grow to a maximum of 5%. Why? Well, according to TakeAway, organizing the logistics of this activity will always be a loss-making business. TakeAway uses their own deliverers as an acquisition tool for new clients and restaurants and as a branding tool; they want their own deliverers to be visible to the outside world and to contribute to their ‘brand awareness’. Something of greater importance since the appearance of Deliveroo and UberEats, I assume.

We have no clue about the working conditions of the other 98,6% of the executed orders. Are they hired? Have they been paid under the table? Are they insured? Etc. Etc. In the case of TakeAway, you can’t say anything relevant regarding the working conditions of couriers in the food delivery sector as long as you don’t know the first thing about the situation of the majority. Especially when taking into account that the company considers direct phone-ordered meals at the restaurant as their largest rival. Their estimate presumes that 70% of the total take away orders at restaurants (so, ordered by phone to be taken home by the individuals themselves or the courier hired by the restaurant) are made without the interference of any platform. With this being clear, you may conclude that the number of deliverers working for the platform of a dominant market player is almost negligible.

Bottom line: 

In discussions on the gig economy, the complete picture is hardly ever taken into account. We notice, for example, that bicycle couriers working through an app are just a fraction of the whole market. Trying to have an informed discussion about food delivery couriers while forgetting to include the market’s majority, makes the conversation completely useless. The food delivery sector is not an exception; I see more sectors with the same massive bias in the discussion.

Looking at the market from this perspective, it is of interest to see how platforms could centralize a fragmented market in order to do something beneficial for the sector as a whole.

Staying on point regarding TakeAway: the platform has a respectable number of 32,929 affiliated restaurants. Assume that about 30,000 restaurants have their own (hired) deliverers. TakeAway, as a platform, could easily offer these restaurants extra services in order to take better care of the protection and rights of these couriers. This centralization (through a platform) of a fragmented and uncontrollable existing market could first provide for possibilities to enable automated enforcement by means of reviews or obligatory security videos at profile creation, and secondly for the potential of making certain existing legislation superfluous, since the centralized character of the platform and the technical possibilities have made them superfluous (providing the platform can be audited by, e.g., a trusted third party).

All of this might be far-fetched, but with foregoing example I would like to stretch that one should have a broad perspective on things and consider all variables of a market. The gig economy isn’t a separate market, but part of THE economy. Work provided via platforms is in many cases not new. Platforms centralizing a fragmented and uncontrollable market in one way or another, can contribute to the benefit of the market as a whole in making it meet social needs and desires.

Airbnb as a cooperative: a viable scenario?

In the midst of the tidal wave of discussions about the holiday rental website Airbnb, a highly remarkable message appeared on September 21st. In a letter addressed to the US Security and Exchange Commission (SEC), co-founder Brian Chesky shared his vision that Airbnb believes “that twenty-first century companies are most successful when the interests of all stakeholders are aligned.” Consecutively, he revealed the ambition to reward the platforms’ hosts with shareholdership. Such would allow them to profit from a successful IPO. Irrespective of the question whether this is part of a spin-doctored marketing initiative or Chesky & Co showing sincere intentions, he surely opened the door for a discussion on a new generation of sharing and gig economy platforms.

Taking a free ride

Platforms like Airbnb, Booking.com, Uber and Facebook are marketplaces which in principle don’t own anything themselves. They make use of resources provided by the users of their platform. Although these users are indispensable for the creation of value of the platform, the profits of the platforms disappear in the pockets of the shareholders. Which, in most cases, are not the users. Moreover, the focus on maximizing shareholders’ profit forms an incentive to impair the users of the platform.

Platform cooperatives

Chesky’s plan is in line with a internationally growing desire for more equal models. His ideas aren’t completely new. In recent years, several experiments have been executed with so-called platform cooperatives. On such platforms users, mostly suppliers, unite themselves as a cooperative. They collaboratively invest in the technology on which they depend. Likewise, a group photographers owns and manages the stock photo website Stocksy, about 800 Denver-based taxi drivers started a local Uber-competitor under the name Green Taxi, and cooperative experiments of counterparts to Deliveroo and UberEats are rolling out in France. Although there are only a few successful platform cooperatives at hand, it is a soothing thought that platforms are faced with alternative possibilities.

Not new, but unique

Chesky’s idea turns out not to be new, yet it is unique. Where many platform cooperatives start out as cooperative and are having a hard time to sufficiently scale up, Airbnb would finds itself in a reversed situation: the platform started as a commercially and centrally managed platform to be handed over into the hands of the users. Where many experts expect these kind of developments from start-ups using complicated blockchain technology, it is interesting –and disillusioning– that a two hundred year old model can also be found to be the solution.

Alternative scenario: May it be a bit more ambitious?

The ambition of Chesky, given that he would proceed, is groundbreaking. But is his plan as ambitious as it could be? The redistribution of ownership is new, but it still has focusses on the same old goal of Airbnb going for an IPO in 2019, to in turn be consumed by the day-to-day affairs of the stock exchange. Why not a bit more ambitious with a transformation to a cooperative with voting rights? ‘Because investors with an IPO want to have a solid return on the risks they were willing to take,’ could be an answer. Although most ‘alternative’ thinkers despise the making of great profit, I am of the opinion that an entrepreneur or businessman should be rewarded for his effort and the risks he has taken. =

What if a hosts would receive the option to automatically exchange, say, 25 percent of his profit into stocks? Effectively, hosts could slowly acquire a growing share in the cooperative. With an average of 500.000 overnight stays per day for an average price of 80 dollar hosts could, calculating for the expected growth, pay up to 32 billion dollar over the next 10 years. The gross value of Airbnb nowadays. This would make the cooperative the sole owner of the platform. At the time the hosts become co-owner and co-manager of the platform by means of a cooperation, a better equilibrium in making decisions about the future and its place in society can be achieved.

First step

However, this is a first step, and also this model wouldn’t be perfect. The current focus on hosts and not on neighborhoods and cities has shown its dangerous sides when not all stakeholders are involved in the decision-making processes. Alternative platforms like FairBnB do try to involve all stakeholders, but they have a hard time getting established. All in all, we have to experiment with new ways of ownership and management models of platforms. On the other hand, cities like Amsterdam, The Netherlands, figured out that they don’t have to blindly expect the (voluntary) support of a platform like Airbnb. It is time for them to take matters in their own hands.

Whether consciously or unconsciously, Airbnb has surely started an interesting discussion.

The New Uber Model: Best or Most Foolish Choice Ever?

Last week, the ‘new’ Uber CEO published their new model in which the company will start focussing on transportation methods other than cars only.

“During rush hour, it is very inefficient for a one-tonne hulk of metal to take one person 10 blocks,” he told the Financial Times in an interview. “We’re able to shape behaviour in a way that’s a win for the user. It’s a win for the city. Short-term financially, maybe it’s not a win for us, but strategically long term we think that is exactly where we want to head.” An important step and confession is made regarding Uber’s future as an “urban mobility platform”.

Across media outlets the news was received as the ‘turn’ of the Uber model. In my opinion exceptional statements, given the fact that this ambition didn’t appear out of thin air. (As was also covered in an interview with me in one of the major Dutch news outlets.)

This blog will be dedicated to a thought experiment (as I used to do in my weekly Dutch newsletter with a commercial move Deliveroo made) in which I summed up several points why this step would be the best or the most foolish choice ever. Not so in order to judge, but in order to make one or two things clear.

Why this would be the smartest choice ever for Uber:

  • The growth of taxi’s is very limited in every city: As we noticed in New York last week, it is only a matter of time until cities will limit the growth in number of cabs. In other words: The growth model has its boundaries;
  • Within cities roads are generally very busy, moving by car is in many cases not the best option;
  • Therefore it is much more interesting to offer several forms of mobility. Cars for the longer rides –in being more profitable for drivers as well– and other forms of mobility for the shorter ‘last mile’;
  • Whereas Uber is strongly dependent on (freelance) drivers in the current model, the company will have a much tighter control over supply side of the platform with shared bikes, scooters and walking bikes. (Except when everyone will trash the bikes in canalsand other waterways. ;-))
  • Currently, the Uber model is, regardless of their dominant position in many areas, particularly vulnerable. The network effect is weak (check video below). For both demand and supply, the switching costs of changing platform are extremely low. US based drivers usually rely on several at simultaneously. Altogether not the most reliable model make the step onto the stock exchange;
  • The one owning the leading app (the ‘urban mobility platform’), has a strong market position. It makes you less sensitive for competition (like Google being the platform almost everyone uses to start their searches) and with all data gathered, you should be able to create many benefits for both your client as your own organization.

Why this step could be Uber’s most foolish choice ever:

  • Despite weak network effects, Uber has built a unique brand. They control –up to a certain degree– the rides, have a launched a wonderful app, and even their turbulent past is slowly fading away. They also were the first on the market. So, why would they sacrifice their strong market position?;
  • Although Uber was the frontrunner on the taxi market, we notice many active strong players in other parts of the mobility market. Large platforms for bike sharing, shared scooters and walking bikes have some years of advantage. On top of that, these platforms have invested billions into this market. Where Uber entered a enormously fragmented and dropped off market, we now have a very different situation at hand. Which unique value can Uber offer in comparison with these platforms, which most probably have plans to expand their supply as well?;
  • The Uber taxi model is fueled by the capacity of others, which is managed by others and in which others cary the risks. The Uber driver will have to arrange for a car, make sure it is insured, tidy, well maintained, etc. That is the model which made Uber great. With this new step, the model is rigorously changed (maybe this is the biggest news about this step) to a model in which Uber will buy and manage the assets themselves. Will Uber be able to do so? Surely they have made the necessary investments in similar start-ups, but will they be able to roll out such a model globally?;
  • Although Uber’s arrival has lead to resistance in many cities, the company entered an already existing taxi market. People already ordered taxis, rules for taxis already existed (even though Uber didn’t always agree on them). To put it shortly: Uber entered an existing and reasonably stable market. The market of shared bikes, walking bikes and scooters is a entirely new market. Many cities don’t have any policy regarding these new forms of mobility and will have to start forming it in the years to come. On the other hand, users will also have to get used to it and adopt it into their ‘system’. This really is a long term project. Does Uber (and its investors) have the endurance to pull this off?;
  • This model is simply less scalable. It requires more time, human effort, adaptability and money to become successful in your own strength in a new city. Moreover, you are dependent on the legislation which still has to be written. They seem to be crazy….

When adding things up, I think Uber doesn’t have much to choose from. As the platform seemed to be the first app to combine all self-driving cars, it has meanwhile become clear that this is a too long-term scenario as well. On top of that, it has shown that this method won’t provide a solution for the growing mobility problems in our inner cities. They will have to come up with something different. Of course, there is an options for them not to invest in shared bikes, walking bikes and scooters themselves, but it is questionable if the larger parties that have joined the market are willing to offer their supply through a different platform. As this includes that they would provide a third party with their client contact and all their data. They will never do so. Actually, a model which makes participants offer their capacity to others on a central platform only works when the supply is fragmented. Something that isn’t the case in these market segments.

Will Uber be able to realize their ambitions? I don’t know. With Softbank as investor (which is taking part in almost all forms of ‘on demand urban transportation’) they might stand a chance, albeit with a heavy and interesting task to accomplish.

What we can state at this point is that almost all platforms had an overly ‘asset light’ start, but are investing more and more in owned material. Which indeed is a very interesting trend…

An Uber-app of the people? Success criteria of platform cooperatives highlighted

Following the sharing economy, now the gig economy, the ‘Airbnb of labor’ with platforms like Deliveroo, Helpling, and Uber, is on the rise. In the United States, the growth of the gig economy, with jobs like taxi drives, bicycle couriers, online translation services and ‘local home services’ for cleaning, babysitting, and dog walking tasks, outnumbers the growth in Europe. Platforms like Uber, Deliveroo, and Helpling lower the thresholds for consumers with smart technology, so they can buy services conveniently and cheaply. Ideal for the end user, but how about the labor providing worker?

Urgency

Although everyone agrees on the fact that these platforms are a strategic and technical masterpiece (as well as in their marketing effort), there also is an ever growing amount of critique. Parallel to the well-known debate about power concentration, privacy, and data, more and more questions are asked about the fact that users, who add value to the system, build up a dependency relationship with the platform, but don’t get any profit of this return. Combine this with the billions of dollars in venture capital invested in these platforms, and logically some of them go looking for alternatives.

The urgency is the strongest within the gig economy. At the moment you, as laborer, are strongly dependent on a platform, the impact is the greatest.

Platforms with cooperative ownership and management

In recent years there have been discussions and experiments with an alternative decentralized model in the United States, in which the ones adding value to the platform will indeed be rewarded with the ownership and management of the platform. Trebor Scholz, ‘scholar activist’ and associate professor at New School in New York, christened this philosophy ‘platform cooperativism’.

The philosophy behind this idea sounds simple an pleasant: What if the Uber drivers would be the owners and management of the platform? With the diminishing costs of technology and growing international interest of users, discussion about and experiments with cooperative platform models are taking place in several industries.

Highlighted examples

1. Green Taxi

Back in 2016, 800 Denver taxi drivers gathered to invest a 2.000 dollar each for the development of the Green Taxi cooperative. This is about one-third of all cab drivers in Denver linked up to this organization. Regardless of the total investment being overover a million dollar, Green Taxi hasn’t invested in their own technology. This is being bought from Autocab, a SaaS provider of central taxi systems.

Besides ‘honest’ ownership and control over their own central unit, the unification in a cooperative also provides a strong united voice in debates around, for example the allotment of taxi stands at the airport.

2. Up&Go

Whereas the majority of platform cooperatives invests in technology and the management of the system themselves, Up&Go from New York changes tack. Up&Go facilitates existing cleaning cooperatives in New York with an app to better help their customers. The cleaners keep the control of the contact with their customers and determine also the price, without being bothered by the (further) development and maintenance of the technology.

Up&Go is a initiative of several ‘do good’ organizations; the company who built the app is a cooperative itself. However often Up&Go has been mentioned as an example, it still isn’t a cooperative itself. The developers, I communicated with, told me that the cleaning cooperatives using the app will in turn become the owners of the platform by a cooperative model over time. In the end a similar result, albeit with a different approach.

3. Stocksy

The market with stock photo websites grows rapidly and suffers from a lot of dissatisfaction about the power and the margins on these kinds of websites. This inspired two photographers, previously owning a traditional stock photo website themselves, to take the leap to a new model in 2013.

At Stocksy photographers who are affiliated with the platform, with a maximum of 100 at the time of writing, also became co-owner and manager of the platform via a cooperative. Stocksy tries to profile itself as an exclusive stock photo website: there is a strong selection at the door and every picture that is published is judged by an in- house committee. This is the way photographers build a high-end brand not only distinguishing itself in the market by its model, but also by quality and exclusiveness.

Prerequisites for success

The promise of a platform managed and owned by its users sounds attractive, yet isn’t as easy as it sounds and is definitely not a fit for every industry. Following a in-depth analysis of several cases I’ve composed the next 6 considerations that could lead to a successful cooperative platform model:

1. Market

Platforms are successful due to network effects. The more people join, the better a platform functions. The fact all of your friends are on facebook, makes it the best platform for you to join to connect with them. Breaking the network effect is generally speaking extremely difficult, as you have to convince everyone to switch to an alternative platform.

Although a monopoly position in a growingly internationalizing world is the best way to optimally create added value for its users, part of the playing field of the gig economy looks differently: the gig platforms facilitating labor in physical ‘offline’ places. The taxi driver has to meet the customer in order to complete the transaction and the cleaning lady has to come to your home in order to clean it. As supply and demand are physically located close to one another, there is no leading national or international effect, but only a local network effect. This differs completely from platforms like Airbnb (sharing homes) and Upwork (online labor) where supply and demand are usually situated in different parts of the earth.

The fact that in many segments of the gig economy the meeting has to take place in an offline environment determines that these segments only need a (hyper) local network effect. This offers opportunities for new players and existing local organizations like taxi companies and cleaning cooperatives. Green Taxi is a wonderful illustration of this point.

Platforms lacking a requirement for a physical meeting between supply and demand, oftentimes even being located on different continents, it is much harder to make a decentralized initiative work. As for now, it only seems possible when the workers offer a unique and exclusive product, as is the case with Stocksy.

2. Technology

The platform cooperatives I’ve researched thus far have shown me three variants of dealing with technology:

  1.    Individual development (Stocksy)
  2.    Joining a cooperative providing the technology (SaaS) and support (Up&Go clients)
  3.    Using existing technology within your industry (Green Taxi)

To develop and successfully launch your platform (multisided marketplace) is an art in itself. It is questionable if a group of cleaners or drivers –the same counts for lawyers or accountants– possess the needed qualities to develop successful technology that is able to compete with the current generation of apps on the market. I doubt it and consider it a risk to have about 100 taxi platform cooperatives with 100 poorly functioning and hideous apps or mobile website.

Personally, I find the Up&Go model the most interesting of them all. Existing, and in times to come maybe also occurring, labor cooperatives being empowered with a platform model, which in turn continues as a SaaS-solution. Following the saying of ‘let a cobbler stick to it’s last’, laborers should rather focus on what they’re good at and developers behind Up&Go at what they do best.

An additional advantage is found in that investment can be shared among several cooperative clients, which will greatly influence the quality provided to the customers benefitting of it while using the platform. Important note on the side is that this entity should have a cooperative approach itself, or the story would start all over again.

3. Government

In order to realize a more democratic playing field, there are plenty of opportunities to seize for governments. Governments can lower thresholds by behaving like a platform themselves and facilitate local platform cooperatives with APIs with a link to their identity checks, a ‘certificate of good conduct’ database, and so on. On top of this, governments can use means to break data monopolies of larger players.

The government could, e.g., change the taxi meter by an app in which drivers have to log in and which by means of camera continuously checks if the driver behind the wheel is the one with the linked registration. In the background, data used by companies like Uber to feed their algorithms can be released publicly enabling each and everyone building a taxi app to use such.

4. Cooperation exceeding the Cooperative

If you want to make impact as (platform) entrepreneur, you may choose by making impact with the growth of one organization, or by putting up a replicable model. As for the local impact of platform cooperatives a replicable model looks most viable.

But how to offer a spoiled Uber customer who got used to use only one app in every city in the world for ordering a taxi? By cooperating. This is the reason it will be necessary to make agreements exceeding the platform itself, e.g. about data standards, reputation systems and the more. In that case a customer form city A will be able to book a taxi in city B. Hence a dozen Davids may be an alternative to a Goliath.

5. Support

The power of a platform falls or stands with the grace of its users. When the supply or demand group unites, it can be done in no time. Existing associations, sector organizations, or trade unions can play an important role in supporting or setting up platform cooperatives. Look for support your platform cooperative can obtain from partnering with such organizations — and also what your company can offer them in return.

6. No handicap

The fact that an enterprise is owned and managed by a local group of workers should not compromise the quality and convenience of the app, the service, or even the price levels. Before starting a platform cooperative, take a deep look and decide whether your platform cooperative would actually be able to offer an honest alternative to the larger, venture-backed platforms before starting it.

Tricky, but never impossible

Although there are many opportunities for successful platform cooperatives, of which the interests of the user are leading, it has become clear that the model is harder to realize than initially indicated. Trickier doesn’t mean impossible, and hence it encouraged me to see a diverse group intrinsically motivated professionals taking up the challenge during my visit at the  ‘Platform Cooperativism’ congres in New York last November. Because real entrepreneurs and do-gooders avoid challenges.

Crash and burn: this is what I learned from my failed crowdfunding campaign.

‘It’s allowed to make mistakes’ is a lofty phrase used by many managers and business leaders, but in practice there are only a few stories to read about the lessons learned from failures. What a waste it is; therefore, I’m willing to discuss and share mine with the associated lessons I’ve learned.

I’ll be talking about crowdfunding. In 2011, I have been the first person in the world to finish a share-based crowdfunding campaign. 171 investors accumulated 20.000 euro for translating, designing, and printing of the English version of my book, Brand Expedition: A Journey Visiting Europe’s Most Inspiring Brands, within 10 weeks. A book as a business with the ambition to be marketed as an international bestseller. Now, more than 5 years on, the project of the English book has been discontinued officially. The enormous ambitions and the boundless energy haven’t resulted in the desired results, and both the investors and I are left empty handed. In this article, I’ll look back on the crowdfunding adventure and share my ‘lessons learned’.

Crowdfunding lesson 1: Why people invest?

This book campaign was marked by the choice for crowdfunding with shares through the Symbid platform. First of all, this hasn’t been a strategic choice, but one that came by happenstance. I know someone involved in Symbid and he convinced me of the idea to crowdfund. To me, an interesting chance to realize my ambitions for an international bestseller and a great success case for Symbid. The book and the story of my journey were quite well-known (150+ publications in all imaginable media).

In hindsight, one may ask if the choice for crowdfunding with shares had been the best option. The question I should have asked myself is: Why would people invest in my dream, and help me realize an English version of my book, which was successful in The Netherlands?

Of course, I posed the question to quite a few investors. What turned out is that the broad majority took part because they fancied the idea or they were in for their own benefit in a signed copy of the book, an consulting session, or a presentation. The expectation of ‘an overwhelming profit’ wasn’t mentioned by anyone. Not so surprising in itself as the value of the book will only decrease over time; and, with an average investment of about 50 euro, it wouldn’t have made anyone rich.

If most investors weren’t in it for the profit, the choice of crowdfunding with shares, being wise after the event, hasn’t been the right choice. Maybe I would have accumulated a couple thousand euro less, but for the choice of a shares campaign I had to pull up Book BV, a private limited liability company, and Book Cooperative UA, an official cooperative, and my sole proprietorship had to be turned into a private limited liability company forcefully. This just because the 80% of the remaining shares for me, with a paper value of 80,000 euro, were perceived as profit by the tax authority. I was almost forced to pay tax over this amount. Without this construction, only half of the money would have been sufficient.

Crowdfunding lesson 2: The valuation?

Coming up with a decent valuation of a non-existing company is a troublesome task. In my case, I sold 20% of the shares in Book BV for 20,000 euro, which implied a valuation of my book of 100,000 euro. Despite the great ambitions we had for the book, one may say that the valuation was still quite sassy for a book of an obscure author, regardless of his reputation within the Netherlands. And by the way, he had decided to publish the book independently and solely sell it on the internet.

CONTEXT : At the valuation of the book, we presumed an ambitious, and in retrospect vulnerable, scenario in which the book would become an international bestseller. Nowadays, there are crowdfunding variants on the market in which the valuation is postponed, a so-called ‘convertible loan’. One raises funds from the crowd in exchange for a loan with an x interest rate. At the time the next bigger investor joins, the previous investor will be offered the opportunity to convert the the loan into a share. The initiative has usually lasted for some more months or years by which the valuation can be based on far more information. Moreover, the mostly young and inexperienced crowd benefits from the knowledge and negotiation power of this investor.

 Crowdfunding lesson 3: Choose the right funding target.

I had chosen a funding target of 20,000 euro for my campaign. This amount was reserved for the translation (5,000), the design (2,000), the print of the book (10,000), and the establishment of both the private limited liability company and the cooperative (5,000). Besides, 20,000 euro was also the minimum amount to crowdfund at Symbid, partially based on the fact that 18,000 euro was needed to establish a private limited liability company.

20,000 euro was actually to little, as the sum of the costs mentioned above already accounts for 22,000 euro. In addition, I needed an office, ICT infrastructure, diverse subscriptions, and I had to put bread on the table for myself. I, furthermore, employed a complete team of interns and volunteers, incurring considerable costs.

In order to give the project a chance, I invested over a year of my time (excluding the time for preparations and the campaign) and bore many of the cost personally.

I could have chosen a cheaper solution or should have raised more money. The assumption that additional cost would sufficiently be covered by book sales coming into swing, was, looking back, a risk I should have arranged for with a bigger margin.

Crowdfunding lesson 4: Does your crowd match the audience of your project?

Although the audience of my English book would not be in the same country, the overwhelming majority of my investors lived in the Netherlands. Of course it was logical to raise money among the Dutch as my network and reputation were mainly directed to the Netherlands, but it made it much harder to set the stage outside of my home country.

Realistically I think that It wouldn’t have been possible to crowdfund the project fully outside of the Netherlands, for my reputation and network weren’t sufficiently established there. Next time, I will be looking for a better mix between the two.

Crowdfunding lesson 5: Community management is an art in itself.

Crowdfunding sounds fancy: you’re obtaining, besides the ‘funding’, also an involved ‘crowd’ with your campaign. In my case 171 investors. But at the time you’re busy establishing your company or project, it will be hard to keep that audience involved. I have invested in several hundreds of crowdfunding projects to see how others deal with this. Conclusion: the number of project owners communicating well with their supporters can be counted on the fingers of one hand.

Reflecting on my whereabouts, I’ve send an update to my investors about the progress with a certain regularity. I also made an analysis of the several areas in which the investors are actively involved and which of these could be beneficial in finding answers on certain questions. But as the ambition to market a translation slowly showed less and less feasible, my contact with my investors worsened rapidly.

This is my main lesson: Plan ahead for ways to involve the crowd and devote time to it. Also when you’ve got the feeling things won’t work out as planned. Perhaps, even more so in such cases.

In the end, Book BV and the Book Cooperative UA have existed for five years, although it was clear that the project would not meet the ambitions we used to have. The reason? I didn’t want to admit things had failed to work out. I also dreaded the administrative hassle[4]  associated with the termination of the private limited liability company and the cooperative, which wasn’t necessary at all. Quit as soon as you know that things won’t take a turn for the better anymore.

Business lesson 1: Don’t immediately write off the status quo.

Crowdfunding is often seen as: ‘Power to the crowd and fuck the status quo’. Initially, this was my perspective too. By releasing my English book, I would neglect banks, publishers and book stores on my way to international success.

Although an individual with a common sense may achieve a lot these days, one has to question himself if his choice is the best. Something being possible, doesn’t automatically imply that you should do so[5] . Regarding the publishing of my book, I organized everything concerning the translation, design, print, distribution, and marketing myself. If I would have asked myself where my strengths are and what it is that gives me energy, it wouldn’t have been the negotiations with printers and distributors. Exactly that part took most of my time.

For my (upcoming) books Crowdfunding, de hype voorbijCrowdfunding voor DummiesWavemakers and Platformrevolutie I did ask myself that question. Hence, I became aware of what I expected from a publisher (editing, production, access to sales channels and access to an events network). This has benefitted the quality of the productions.

Keeping everything in your own hands has the advantage of teaching you how everything works and what is and isn’t possible.

Business lesson 2: Don’t let success be dependent on only 1 idea.

My plan to make my English translation world-famous seemed infallible. For the promotion of the book I challenged over a hundred million Facebook fans of the 20 brands, described in my book, to make my book the first video-audiobook in the world. Every fan would read a fragment of the chapter about their brand on camera. Thousands of readers would realize this audiobook. That in itself should boost the sales of the book.

Practice turned out to be more intractable; it was hard to reach the fans. I didn’t succeed in convincing the brands of the added value of this campaign and the threshold of putting yourself on video to read a piece seemed too high. Through many detours I collected a few hundred videos. I hired people from several countries through Fiverr.com to contribute, made deals with discounts on presentations in exchange for movies of the coworkers and more. Unfortunately, it couldn’t bring the viral effect to the campaign like I had in mind.

Subsequently, I tried to catch the attention of bookstores in the UK with a targeted guerilla action, hired a scout to gauge the interest of publishers in Germany and the UK, tried to allure brands with great deals, and opened up a box of other ideas to ultimately get sales up, but I didn’t make headway.

Business lesson 3: Borders remain existent even in the internet era.

Although it seems that borders are inexistent because of the internet –I contact people from at least 5 countries on a regular day– such is not the case for the physical business world. My idea, to sell my book from the Netherlands to anyone in the world, turned out to be opportunistic. It proved that Germans prefer German books and the French population prefers to read French books. On top of that, it was hardly possible to get the attention of the media and other partners as an obscure newcomer to another country. You rather build your reputation and network in a country first, before eventually launching a book (especially when published by yourself).

Business lesson 4: Know when to quit.

The money of the crowdfunding campaign had been spent on the production costs in the first months. I had spent over a year on the project and still a stack of a few thousand prints filled my office space. Moreover, nothing indicated tides would possibly change.

The question, “Shouldn’t I quit?” ran through my mind several times, but accepting that the adventure had ended and the process of finishing the project, for which 2 limited liability companies and a Cooperative were established, with which I had to deal, caused me to remain indecisive year after year.

At some point, earlier this year, I decided on the termination. As I communicated this to the investors, reactions were generally very positive. Most often, the feedback I received sounded: “Why did you leave ends loose for so long? My most important lesson: Quit when you have to quit. Leaving things unfinished only cost unnecessary energy and money, and in the end you do know –being honest with yourself– which solution is best. So, also reminding myself, get yourself together and have the guts to quit something!

Business lesson 5: Success is found in the bigger picture.

The English book project has cost, besides the investor’s money, almost 100 grand of my own money as well. An estimated accumulation of the cost I’ve personally contributed to the project consistent of ‘lost’ hours, extra paid taxes, the additional notary and accountant costs, and the expenses of campaigns; all was I paid from my own pocket.

Economically you may say: “It has been a massive failure.” You feel the ‘but’ coming. Without this crowdfunding campaign I wouldn’t have had a chance to beat John de Mol in the Sprout challenge for ‘best entrepreneur of the year’. I wouldn’t have been invited to become one of the ‘40 Young Potential Leaders under 40’. I would have never written two books about crowdfunding. And, finally, my interest for the platform economy, of which crowdfunding is a part, would not have been aroused in me. This subject has had my attention for the last four years. Since November 1st, I’m working at the Universtiy of Utrecht, in the conviction that the platform economy will influence all imaginable industries in the years to come.

If I would look at the financial result of the English translation of the book only, while answering the question “Are you successful?”, I would say: “No. Absolutely not.” But when I look at the bigger picture, I’m sure that without this campaign I wouldn’t have achieved as much as I have achieved. In this regard I don not see myself as a victim of the mistakes I made; the mistakes I made ultimately contributed to a better version of myself. And I’m thankful for the fact that these chances have been created and been given to me.

In conclusion

Although some lessons sound no less than logical in today’s context, it is important to recognize that the crowdfunding landscape looked completely different in 2011. This puts a ‘which is logical’ in a whole other perspective.

When looking back to this educational adventure, in which I have not been able realize the huge ambitions of the English version of the book as a worldwide business success, but including the pocketed experience, I have achieved things of which I had not dared to dream or think.

I couldn’t have made this unforgettable trip without the support of the crowdfunders; thank you for your trust. Also a big ‘thank you’ to Schuiteman Accountants & Adviseurs, the office I’ve been working together with over the last few years. They make sure, in exchange for insights in the platform economy, that I don’t have to worry about putting up a Christmas tree, which has been taken down already. Additionally, I would like to thank Wim Kiezenberg of DesignAgain, Paul of Jool.nl, Kim of Hosting on Demand, and Alfred of Imagine People for their contributions. Finally, I’d like to thank all volunteers and interns who have worked together with me during this part of the expedition: Germaine, Dave, Tamara, Peter, Martin, Maarten, Bjorn, Stephanie, Jos, Jurgen and Kelly. Thank you all!

Header photo: Martijn Arets, expedition leader of Crowd Expedition, photo by Sebastiaan ter BurgCC BY 2.0

The beginning of Crowd Expedition phase 2: Platform cooperatives and inclusiveness through platforms

In 2012, I started my Expedition into the platform economy. Embarking with the conviction that the rise of the platform economy would influence every sector within the next 10 years, I took it on me to discover and describe the landscape, to analyze the dilemmas, and to figure out future scenarios. The expedition’s key question has always been this: What has to happen in order to see the platform economy reach its full potential in a way in which all stakeholders will take the right advantage of it?

Since 2012, I’ve traveled 13 countries where I interviewed and talked to over 400 entrepreneurs and experts in regard of this development, I visited dozens of meetings in the role of speaker or researcher and published hundreds of videos, articles, blogs, and news letters to share my views and thoughts. With this unique knowledge, the renown and the network in the pocket, I now advise many local and national government bodies, corporates and nonprofits, and the media refers to me as an expert about two to three times per month.

Crossroads

Although I dare to say that I’ve gained unique expertise, I also know that many of my questions haven’t been answered yet. On the one hand, I had the opportunity to choose to capitalize my knowledge and the investment of 5 years of my life and the energy by advising organizations on how to make the transition to a platform model. Financially interesting, but it didn’t seem a good idea to me to leave the exploration of such an amazingly interesting development at a time like this.

Pressing platform questions

When you’re looking at the biggest challenges of the platform economy, baring the reaching of full potential in a way in which all direct and indirect stakeholders take fair advantage of it in mind, the following two questions stand out:

  1. Although the platforms we know nowadays facilitate the ‘empowerment’ of the individual, the ownership and the governance of the platform is in the hand of a small group of shareholders. Prioritizing stakeholders’s interest, combined with the dependency of the user, may entail unwanted (social) effects. Are there any other options?
  2. Where the beginning of the era was marked by paying much attention to the technical part of (the impact of) platforms, the discussion shifts more and more to the chances as well as to the threats of platforms to our society. Platforms lower thresholds and offer opportunities for education, work, care and social contact. The key question is: Do platforms really increase the chances on work, income and meaning of life.

These are the most important question which contribute to a sustainable and inclusive platform model. Questions that haven’t been answered yet.

Digging deeper

Although I cooperated with many different parties and individuals over the first 5 years of the expedition, it still was pretty much a ‘solo’ expedition. From today onwards this will be different. With due pride, I announce the second part of my expedition within the platform economy. During the coming 18 months, starting from today, I’ll be dealing on a part-time basis with two researches regarding both questions mentioned before at the ‘Copernicus Institute of Sustainable Development’ at Utrecht University.

One research will focus on the chances and obstacles of platform cooperatives and will be a exploration of platform models based on shared ownership and governance. Users of platforms gathering together to cooperate and invest in their own app to provide a local alternative to huge platform monopolies happens in the USA more and more frequently. One famous example is Denver’s Green Taxi; 800 drivers invested 2,000 USD each in order to develop their own app, with which they currently possess a market share of 34%. I’ve been dealing with this topic for some time now, and visited platform cooperative congresses in London and New York last year. Now I’ve been given the opportunity to fully focus on this topic.

The second research focusses, under the title ‘Platform society: new chances for inclusiveness’, on the extent in which different platforms create new chances in society. The research aims to gain insight in the effects of platforms on the economical and social position of the youth, and on the policy options and instruments to increase the inclusiveness of platforms. With this research, I focus on sharing platforms, labor platforms and knowledge platforms.

Both researches will be under the leadership of –and in cooperation with– Koen Frenken, Professor in innovations science at the Utrecht University. Our cooperation has started quite a few years ago; among others, we co-wrote an article in The Guardian, and now created the opportunity to really work together.

The other half

While dedicating three days a week to the Utrecht University, two more days a week are left for other tasks. This scarcity forces me again to make decisions and to focus all the more. Which is convenient. I’ll be using these days to continue writing the books ‘The Platform Revolution’ and ‘Wavemakers’, and I’ll continue to share my knowledge and vision as a speaker on (international) congresses and meetings. I will also be available as an advisor and sparring partner to governments, corporates and start-ups in respect of the developments within the platform economy. Besides all this, I will definitely continue to share my insights through video interviews on my YouTube Channel (meanwhile there are almost 400 videos available), my weekly news letter and through my role as expert in the media.

Appreciation!

This wonderful step forward is also a great moment to thank some of the ones that have made these first 5 years of the expedition possible. Without their help, I would have never reached the point in which I am now, and from which I can make this step. Seats2Meet.com, Schuiteman Accountants, MKB Servicedesk, DOEN Foundation and all Crowd Expedition interns and volunteers (Dave, Claartje, Kelly, Roel, Rosanne, Gino, Eva, and Jurgen). And the 300+ contributors to my 4 crowdfunding campaings to fund my expedition. For the first research, I’d like to thank the “Strategic Theme Institutions for an Open Society at the Utrecht University”, and for the second research “NWO National Science Agenda”. Of course, I’d like to thank Koen Frenken for granting me this opportunity, and most of all I thank my family, Jannette especially, as they have been supporting me during the last 5 years. Thank you!

sharing economy

Check: This is how the expectations about the sharing economy in 2016 turned out

As an entrepreneur you’re looking ahead, yet you also reflect on past events to learn to analyse what has happened, and to adapt your strategy accordingly. When entrepreneurs reflect, why do experts hardly ever follow their example? I’m taking the challenge by reviewing my ‘5 predictions about the Dutch sharing economy in 2016’.

1. ‘Traditional’ companies take the step into the sharing economy

The prediction:

“Traditional (corporate) companies will join in the sharing economy themselves. The automotive industry will be taking the lead. Also corporates like Facebook and Google will join the sharing economy.”

The reality:

The first steps into the sharing economy by corporates where as expected mainly investment and acquisition based. AccorHotels acquired the high-end Airbnb variant onefinestay.com for about 170 million and directly promised to stimulate the development of the platform with another 70 million.

In the land of mobility, corporates knew to find the start-ups as well. A great way stay current with the newest developments. General Motors, for example, invested 500 million Dollar in Uber rival Lyft. In time, the company wants to use Lyft as a platform for its upcoming self-driving car’s.

Own initiatives were deployed by BMW, among others. The company announced a pilot with 40 self-driving taxis in Munich just before year’s end.

Especially insurers have been exploring their future during this year. A Dutch insurance company, Centraal Beheer, started a pilot by offering insurances for shared cars in late December and OHRA experiments with Clixx: an insurance that allows you to insure your car for a single day for sharing purposes.

The prediction that sharing activities would be started by Facebook and Google has turned out to be mistaken. Only Facebook launched Marketplace this year and Google experimented in ‘ride sharing’ with Waze. Both (still) with minimal impact. And that’s about to stay that way for a while, I expect.

In many segments corporates are clearly not taking the lead, but like BMW’s vice president Klaus Buettner said, “Someone else spent the money to educate the market and then we came in with a cool product. We will not be the largest, but we can be the coolest.”

Question of definition:

However the sharing economy is the most frequently used name for this development, I also see a rise in the the terms ‘collaborative economy’ and ‘(peer2peer) platform economy’. The core of these developments is that individuals find each other through platforms in order to make transactions. In this article I’ll be using both sharing economy (things) and ‘gig economy’ (labour/tasks). To keep this story accessible for the reader, I decided to use sharing economy as an all encompassing term, knowing it might not be the ideal terminology, although it’s most recognizable.

2. Greater supply of sharing platforms

The prediction:

“A huge growth in the number of sharing platforms.”

The reality:

However the supply in absolute numbers has grown, the growth in number of platforms is disappointing. Especially in segments that are already well represented (accommodation and mobility) fewer companies started. All in all, it seems that the sharing economy market for platforms with serious growth ambitions has been satisfied.

In case new sectors are added, more entrepreneurs are starting at the same time. This year sharing platforms offering storage space launched. In the Netherlands, both Djeepo and Storage Share started at almost the same moment. It was the very same story with Dutch based campervan sharing platforms Camptoo and GoBoony in 2015. See here the complete overview of sharing platforms.

3. Growth through partners and APIs

The prediction:

“Platforms will open their APIs for others, so they may grow faster.”

The reality:

This prediction can clearly been filed in the category ‘the wish is the father of the thought’. To me, growth through APIs and opening up to others is a reasonable step within the sharing economy. Entrepreneurs still don’t seem to have their business organized well enough to take this step. Many platforms enforce their own market position first, and are only then looking beyond their own abilities. Sharing within the sharing economy is still hard.

4. More on-demand working platforms

The prediction:

“A growth in platforms facilitating (lower educated) labour. Rising discussion about the durability of these kind of platforms.”

The reality:

However Uber, Helpling and Werkspot made again good progress in 2016, the growth in number of platforms for temporary work in the Netherlands stalled. The growth occurred mainly in the ‘on demand’ delivery of fresh food, where UberEATS, Foodora and Deliveroo launched in a number of larger cities. The battle in the delivery market is turning towards the question, who is not only going to have the digital, but also the physical contact with the customer. This, again, can be seen in the acquisition of the German Resto-in by Takeaway.com just after the change of the year. In the United States, many more similar platforms are active and I noticed a strong growth over the last year. Additionally, the discussion about the inequality of these platforms was stirred.

Laborers are earning less and less in the USA, though platforms offer employees the opportunity to change their fate. 2016 has been the year of ‘platform coops’, i.e. platforms being owned by the people on the job. In Denver, a taxi platform cooperation of about 600 drivers had put together 2.000 USD each to build their own taxi-app. In the meantime the have grown an impressive market share of 34 percent in the region where the cooperation operates.

5. The market will mature

The prediction:

“Platforms can’t hide behind their ‘disruptive’ character any more, and will take their responsibility.”

The reality:

This prediction has absolutely been fulfilled. Although platforms grew exponentially in their first phase, I noticed a few platforms making choices that impact their short term growth negatively in 2016, this to strengthen their raison d’être on the long run.

For example, Airbnb made agreements with the governments of Amsterdam and London, amongst others. The company programmed local legislation into the platform. According to Financial Times the company hence forfeits a yearly income of about 382 million euro in London only. Calculating these short term losses is a characteristic of thinking short term. In case Airbnb wouldn’t have done so, other measures and legislations would have affected the business anyway. Now they’re working on a solution together, i.e. this step has been essential to the company’s long term raison d’être.

Every well-thinking entrepreneur could have anticipated this move of Airbnb. Under the cover of disruption and innovation, platforms like Airbnb were able to grow rapidly in a very short time, also due to the confusion about legislations, though they knew that the time would come they had to conform to existing rules.

You may also recognize smaller platforms that use the hard lessons large pioneers like Airbnb have learned. AirdDnd, a platform for home restaurants, proactively offered a legislative proposal in order to direct the discussion with the status quo into a manageable environment from the very beginning.

Additionally, public authorities are taking the sharing economy more and more serious. Last year I’ve been speaking with Dutch institutions like the The Social and Economic Council of the Netherlands (SER), Netherlands Bureau for Economic Policy Analysis (CPB) and the Dutch Ministry of Finance about the impact of this development. It truly seems that the sharing economy is maturing and that offers a more durable perspective for the future.

How Estonia became the most digital country in the world.

Agile processes, Minimal Viable Product, speeding up and embracing uncertainty. These are the words you mostly hear in IT-company’s offices, but this time they’re uttered by Estonian government officials. The government of Estonia is very digitally engaged and open. Late 2014 they made their country available for the rest of the world. The government wants to grant everyone on earth a digital identity and excess to the ICT-infrastructure of their country through project e-Residency.

ICT as USP

E-Estiona’s story starts with the collapse of the Soviet Union and its independence in 1991. At that time the country faces two challenges. Firstly, the leadership of the country, with just over one million inhabitants, recognizes their obscurity. This makes their state vulnerable. To become known, the country has to stand out. To use marketing terms: Estonia needs a Unique Selling Point (USP).

The second challenge is the establishment of a whole new governmental apparatus for relatively small number of in inhabitants. A traditional approach would be unaffordable for the government. There must be another way to organize this.

The answer to both questions became: ICT.

A clean slate

However budgets are limited, the Estonians do have one great advantage: they can start with a clean slate. So, the government is building a basic platform on which al ICT-infrastructure might be connected. Data for a new ICT-project will be retrieved from this source which prevents for duplications. Inhabitants receive an ID-card with a chip which, in combinations with a pin code and an USB-reader, forms the digital identity of the inhabitant. Once logged into the system the inhabitant has access to all his data. And he is able to see who has seen his data. The majority of violations of e.g. curious doctors or officials will be discovered by the inhabitants themselves.

Thanks to this approach, 97% of all schools are online in 1997 and the government has constructed a free WiFi network in all inhabited areas in 2002. Since 2007, it is possible to vote digitally, and by 2017 the average Estonian takes only three minutes to complete his tax declarations. That 71% of Estonia’s GDP originates from services might have to do with it. All this is facilitated by the safest, privacy friendliest system ever build by a government.

All this has put Estonia high on several international lists:

  • 1st in ‘International Tax Competitiveness Index’
  • 2nd in Internet Freedom (Freedom House 2015)
  • 8th in ‘Index of Economic Freedom 2015’ (Wall Street Journal/The Heritage Foundation)
  • 16th in ‘Ease of Doing Business Report 2016’ (World Bank)

No paperwork

E-Residency Managing Director, Kaspar Korjus: “In digitalization, most often you find processes being digital, though finally something has to be signed on paper. Not here, as even new laws have to be signed digitally. I can’t remember myself going into a voting booth anymore, everything here works digitally.”

That the approach is bringing forth its fruit is described by journalist Jeremy Epstein and Shai Franklin in their article ‘How Estonia can save Western civilisation’: “The investment in infrastructure has not only reduced government expenditures by the equivalent of 2 percent of gross domestic product (GDP) (500 million dollar), it has also given rise to one of the world’s most entrepreneurial and innovative countries, with the second-largest number of startups per capita.

Thinking outside borders

In December 2014, an idea is launched by the ‘governmental startup project’, which states that not only Estonian inhabitants, but everyone in the world, may use the country’s infrastructure. The literal goal is to give every person on earth a digital identity. The advantage for Estonia is that the country becomes well-known and it stimulates the economy.

Korjus tells how that project is handled: “We like to keep things simple and do not directly think in terms of end products. For the idea of e-Residency we created a page on Launchbase: a platform to share your idea briefly and where people can subscribe to be kept up to date. When the managing director woke up the next morning, 4.000 persons from 150 countries had already subscribed. It was beyond doubt, we had to continue with this plan.”

“We developed the idea, and build a Minimal Viable Product. Therefore we had to change some laws. By working with a dedicated team ánd with the support of the government it worked to set out with this plan within a few months. None of this would have been possible without a total commitment to technology and innovation by both the public and private sectors in Estonia.”

e-Residency

Through the website, every non-Estonian of 18 years and above can request an e-Residency. Against the cost of 100 Euro, you are able to pick up your card an code from over 200 locations worldwide. The Physical contact moment (don’t forget your passport!) is the moment the link between your physical and digital identity is made.

With your card and pin code you’re granted access to Estonia’s user interface and you’ll receive a digital authorization tool. Besides this, anyone on earth can acquire access to European payment providers. And you may, wherever you are on the world, start your company digitally. Korjus: “The e-Residency could give financial and technological inclusion to 73 percent of world’s population excluded from financial tools.”

Jeremy Epstein and Shai Franklin: “With e-Residency individuals can start their own company within the European Union within 24 hours, open an European bank account, and subscribe digital documents to be accepted within Europe and beyond.”

New projects come with setting goals. At the start of the e-Residency project the team set themselves the goal to reach 10 million e-Estonians in 2020. Korjus states it is not a ‘mandatory goal’ though. He tells over 17.000 e-Residents are registered, who together started over 2.000 companies. “In comparison: In Estonia are 30.000 companies listed. So even this is a huge number for our country”.

Growth by facilitating others through APIs

“However our speed, as government, is above average, we do understand very well that we’re always 10 times slower than the market,” tells Korjus. “With cases like the payment provider and digital identity we now cover 80 percent of the inhabitants needs. For the remaining 20% we’re building APIs in which others can create their own solutions. We currently offer two APIs. One can be used to integrate the ID card with a website to offer secure login and user authentication. The other is a more niche API that can be used by business service providers to register companies for e-residents in the Estonian business register.”

Positive side effects

The population is proud. “Technology is almost seen as a religion here,” says Korjus. “In case you would ask an Estonian where he is from, he’ll answer: from the country that created Skype and Transferwise.”

The great international attention in the media about the e-Residency project definitely contributes to this pride and Estonia’s profile as important ICT-nation. Something on which marketing smartly utilizes. E.g. they invited the Britons after the outcome of the Brexit referendum to remain digital Europeans.

Lessons learned and future

Kaspar: “Whenever you try to disrupt the status quo, in this case questioning the traditional notion of residency and citizenship, you run into problems. We have learned to be patient and to work through the big problems as they come, one at a time. Although our team is backed by the government, we approach our work with a lean startup mindset.”

“A study conducted by the American company Intuit suggests that there will be over 100 million new online workers by 2025. Through e-Residency, countries like Estonia will be in a position to attract people like this by becoming the best place to run a location independent business in the world. We think that countries will soon be competing for citizens, residents, and e-residents just like private companies compete for customers now.”

Conclusion

In a time that governments attribute more value to country borders than to entrepreneurs, I think Estonia has taken a unique and promising road. By making clear choices, facilitating others, and by simple doing, they achieved impressive results in a relatively short period. Will e-Residence be a success? I do give them a chance and just requested my e-Residency. Simply, because it is a beautiful project to be part of.

Food4thought: Country as a service?

April 1st, 2016, Estonia jokingly launched the website ‘ Country OS ’, where countries may get a ‘country as a service’ subscription. Maybe this sounds crazy, but when you read Ben Hammersley’s quote in this article in Wired, he might provoke you somehow: “In other words, a nation is now competing with its neighbours on the basis of the quality of its user interface. Just as you might switch your bank to one with a better mobile app, the Estonians hope you’ll switch your business to a country with an infrastructure that is easier to use.” 

 

This blog was published in Dutch on Intrapreneur.nl