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This past year, we saw the initial public offering (IPO) of Upwork, a freelance marketplace giant. The company was met with immediate interest with a debut that was more than 50% above its expected opening price as a publicly traded company. It is currently relatively stable at roughly $20 per share as of March 28. I believe 2019 could be a landmark year for the gig economy as well, thanks to some of the biggest names in the private sector— including Uber, Airbnb, Postmates and Lyft — that have gone (or are expected to go) public.
What do these highly anticipated Silicon Valley IPOs have in common? Three of them are among the most valuable startups in the world. They all come from the tech sector, and they are all gig economy titans. From my perspective, these IPOs are important because they help validate and highlight the explosion of the emerging gig economy.
In the case of these prospective IPOs, valuations range from $1.85 billion (Postmates) to a massive $120 billion (Uber). I believe this type of scale indicates a number of factors, primarily that the gig economy is no longer a fringe workforce. It’s here to stay. This lends credibility to an arena that I’ve observed many people, business owners and workers alike, haven’t quite acknowledged as impactful.
As the founder of a company that helps contractors pay their freelancers, I believe thrusting these companies into the public with huge markets validations illustrates one thing: Everyone now needs to understand how this new paradigm could change the workforce as we know it.
From my perspective, the growth of these companies is indicative of the freedom and flexibility contractors are presently seeking in our increasingly advanced tech job sector. According to a 2019 study on the state of remote work, flexibility is the top benefit of working outside the office. I predict this newfound prestige among observers after the launching of each respective IPO will command an even more competitive job market complete with higher pay and more benefits and perks for contractors. Each of those pillars will then provide an advantage for workers who are looking to leave antiquated job models.
With the onset of more contract workers, I believe this will contribute to a larger pool of talent and potentially siphon away workers who would otherwise be in more traditional markets. The nature of the gig economy is rooted in a sense of ownership — value driven by the innovation catalyzed in our modern economic climate. When workers discover they can receive similar benefits in an economy that allows them to take more control over their labor, they could opt for the freedom that grants them.
That said, legislation is one factor on the horizon we can’t ignore. With all of the aforementioned platforms preparing to go public at some point in the near future, we’re forced to confront ourselves with the topic of misclassification. For example, is the gig worker a W2 or a 1099 employee?
With more successful IPOs coming to the forefront, I believe the perception of the gig economy could shift and eventually spur new legislation that protects the modern gig worker. Gig economy workers don’t often receive the benefits many traditional employees do, such as access to health insurance, worker’s compensation or paid time off.
This topic is poised to be addressed by the tech sector, which gives way to broader questions on the nature of labor protections in the 21st century. From my perspective, good policy will start to acknowledge our modern challenges to arrive at a compromise that ensures workers and platforms can move forward with fairness.
I’ve observed that the gig economy has been driven by technology innovation, such as mobile and social media. I believe it will be technology that helps solve current problems in the gig economy. The speed at which the market is moving will require innovators to build fluid solutions that can grow as well. As legacy industries, such as the insurance sector, continue to be digitized, technologists could start to leverage tools to distribute services in modern ways.
IPOs are generally considered a strong indicator of profitability and growth potential within one specific company. The IPOs of Lyft (which began trading near the end of March), Uber (which is expected to officially file in April), Airbnb and Postmates represents a much larger trend and a huge step forward for the gig economy as a whole. Our previous labor models are becoming outdated. I believe they are slowly being replaced with flexible (but currently unstable) contract work in areas of the economy as diverse as professional services, food and transportation. From my perspective, preparation and adaptation is the best recipe for success. Those who adapt to the workers of tomorrow will better prepare themselves for the future of work.
April 8, 2019 at 08:56AM
Forbes – Entrepreneurs