Most people by now will have heard some buzz about the ‘sharing’ or ‘on demand’ economy. Few will realise how staggering it’s growth has been.

Consider this. There are now more Uber rides in NYC than in yellow cabs. There will soon be more Airbnb nights than the world largest hotel chains. And according to Mary Meeker’s recent report more than 1 in 3 of the US Workforce are freelancers, sharing their spare time on sites like PeoplePerHour, Upwork, Fiverr and others. And these are all companies that are less than a decade old!

We are going from a nation of ‘making’ things for consumption, to one of ‘sharing’ them. There is no question that whatever the underlying commodity is – transportation, food, accommodation, or your skills & time, – more of it will be shared than bought within the next few years.

Production, retail and traditional distribution as we know it will therefore shrink. The divide between a Producer and a Consumer is getting blurred and will only carry on doing so until it breaks down completely. Producers now compete not just with other Producers of the same or similar thing, but with Consumers who already own and share it. A cabbie competes with anyone who has a car and rides for Uber, Lyft etc; an in-house employee competes with the now estimated 54+ MM people who freelance in the US alone and are available to be hired on-demand; and hotels compete with your and my spare bedroom or vacation home.

In that evolution, power in the value chain has shifted dramatically, from the craftsmen & blacksmiths who possessed scarce skills of production; to corporations that commoditised those skills, powering mass production and driving craftsmen to virtual extinction; and now to consumers whose ‘cost of production’ is lower than both and in many cases  virtually zero.

I predict that the birth sharing economy will be cited 10 years from now as equally disruptive and revolutionary as the industrial revolution itself. By the end of the decade the consumption on such C2C (consumer to consumer) platforms will radically belittle that of the ‘making’ economy as we know it today.

Another trend that’s ‘in the ‘making’ will accelerate that as it becomes more economical for mass consumption (or production, however you want to viwe the glass) is 3D printing. Already this drivable car was printed in just 44 hours, and researchers are making 3D printed jet engines!

Moore’s law will prove right in 3D printers much like it did with personal computers, meaning that the power of 3D printers will double every two years and cost will halve. Eventually they will become mainstream – everyone will have one churn out stuff they need ‘on demand’ in their back yard. Even body organs!

This will have major implications for practically every industry, from medicine, food, fashion, the making economy at large and, yes, EVEN the sharing economy.

We may just find ourselves go from sharing things that companies make or build, to things we make entirely ourselves!

Operating in the labor / outsourcing space for almost 10 years now (first with an offline business and then online) this is something I’ve spent a lot of time thinking about and in many ways have been part of its evolution. What does the Future of Work look like? In this post my aim is to highlight the trends that I think will shape it versus the applications and solutions it will manifest itself in.

1. The West-East playing field will level out

The outsourcing industry has its origin in the labor rate arbitrage between developed and developing economies. The first labor marketplaces like Elance & Odesk were in essence online versions of the Wipros & Infosys’ of this world, connecting businesses in the more developed Western economies with cheaper labor where it was abundant in the East, mainly in IT services. They emerged to piggy back on the newly minted IT industries in India in the 90s.

That rate arbitrage is narrowing today as the economies of India & China and other emerging markets are growing faster than the West inflating prices (including that of labor) and hence closing the gap.

Secondly, as these economies mature they start developing a middle class and an SMB (Small & Medium Sized Businesses) sector – the backbone in any economy that’s the essential channel for distribution of wealth downward from the gorillas at the top of the food chain – the big corporations and national institutions.

Much like those gorillas, these SMBs turn to the west to adopt some of the best practices that have matured over decades. The ‘freelance consultant’ is to those SMBs what the McKinseys of this world and the Harvard MBA franchise has been to the gorrilas at the top. They hire them to help with the things they are weakest in, from basics  like writing sales and marketing collateral, design & UI, to business management advice social media marketing and so on.

PeoplePerHour.com was founded largely on this premise. From the start we focused on nurturing a freelance workforce in the West which is still over 70% of our total. Most of hiring happens ‘semi-locally’ (i.e. not onsite , the work sill gets done remotely, but in same geographic region) or from companies in the emerging economies  hiring talent in Europe or the US.

As I argued in a previous post I also believe that this may well be the rebirth or the once might export economy of Western nations.  With manufacturing on the decline and unable to compete with lower cost economies in the East, the next wave of exports may well be skills and services that are more in abundance in the West and scarcer in emerging markets, the gap being bridged by the emergence and growth of online labor marketplaces.

2. Marketplaces 3.0: the rise of End-to-End (e2e) solutions

We are entering what I believe is the third generation of marketplaces. The ‘1.0’ era was all about liquidity (Craiglist). ‘2.0’ was about building trust via reputation systems, social validation (eBay, Airbnb, Etsy) to help in the discovery process as inventory exploded making discovery more challenging. Now, ‘3.0’ is making discovery redundant or unnecessary altogether (you don’t interview your taxi driver on Uber or Lyft and equally you don’t select your tasker on SuperTasker). These are what have been termed e2e solutions, going deeper at both ends – supply & demand – to remove friction in the experience.

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Marketplaces are some of the hardest businesses to build (as our own testimony at PeoplePerHour shows). They are complex beasts with lots of moving parts, the parts need constant tweaking and polishing, and the sum of the parts – when they are put together properly – is greater than the whole (the ‘network effect’). It takes a lot of hard work, analysis, creativity and most of all persistence to get to what’s commonly called ‘critical mass’. But once you do marketplaces are some of the most defensible and beautiful businesses.continue reading »