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Home > MashTalk > Why the gig economy was doomed from the start, with guest Sarah Kessler
Podcast: MashTalk
Episode:

Why the gig economy was doomed from the start, with guest Sarah Kessler
Category: Technology
Duration: 00:36:06
Publish Date: 2018-06-14 15:22:49
Description:
For a while there, it seemed like "Uber for X" was the only pitch that mattered.
 
To many, the rapid rise of Uber wasn't just a major tech success story -- it signaled a wholesale change that was coming to how people thought of work. Traditional jobs, the thinking went, would soon become less and less common, with predictable, inefficient employment getting replaced by the flexibility of independent contract work. The "gig economy" was underway, and it was unstoppable.
 
Except that it stopped. In her new book, Gigged, reporter Sarah Kessler chronicles the ascent and decline of the gig economy, starting in the early 2010s, when it seemed every service -- from grocery shopping to cleaning offices -- could be "app-ified" to be done by easily scalable contract work, to the death of many of those services a few years later, when their models proved unsustainable.
 
Kessler, a former Mashable startups reporter, visited the MashTalk podcast to talk about the gig economy, and its failure.
 
One of the main problems, she observed, is that for many jobs outside of driving people from Point A to Point B, the work requires more skill than you think. It turns out that even something as seemingly menial as grocery shopping has nuance to it, and individuals tend to be very particular about the way it's done. Finding the best avocados for you might not be the same as finding the best avocados for me.
 
"People saw Uber making this business model work, and you had a bunch of people who are experts at starting tech companies launching a service business for cleaning or washing your clothes or whatever," says Kessler, "And it is a lot more complicated and requires a lot of expertise to do those things, and so a lot of them did get in trouble."
 
Not only did the jobs require more skill than expected, but the gig economy is set up in such a way that work is inherently modular, sometimes varying wildly from contractor to contractor. The problem is customers generally want consistency and reliability, and for many of these tech startups, creating an environment that encourages that -- while also offering a cheaper product than traditional employee-driven industries -- was too tall an order.
 
Not all gig economy companies failed, though. One of them, a cleaning company called Managed by Q, ended up pivoting to an employee model, just with the same conveniences enabled by technology that the original contractor model had. There was some sacrifice in nimbleness, but the shift resulted in a better business overall.
 
"They did make that change, and decided there was a business reason to do so," Kessler explains. "They wanted their cleaners to have relationships with people whose offices they were cleaning, and through those relationships they would start to sell other services like supplies. And you needed to have happy workers who liked your company in order for that to work."
 
The danger of pivoting away from the original gig economy promise is that it's a much tougher sell to investors, who tend to fixate on scale, scale, scale. While there will always be tech startups based around centralizing contract work -- and some may even succeed -- the central lesson of the gig economy is that it's much harder than it looks.
 
"You could see in the reviews of some services that they would be raving about one person but then talking about getting your jewelry stolen by the next person. The acquisition cost of trying to go find people, who have no allegiance to you and then pseudo-train them to do what you want to do but then they leave the next week when they find a real job, is pretty high."
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