The Uber for…
The Uber for hairdressers, the Uber for chefs, the Uber for auto-mechanics, the Uber for strippers and the list goes on.
There is a more and more predictable trend emerging at the various Pitch Competitions I am requested to judge. Without fail, there will be The Uber For…. (TUF…) in the lineup. A few years ago, the Judges would lean forward and listen with interest as to what the TUF was all about. By 2014 the Judge’s eyes would roll back as a TUF was pitched. Now, as the audience has become more sophisticated and exposed, you can see them sigh as they lean back into their chairs and half listen whilst checking their social media, waiting for the next pitch.
I think Uber and Air BnB are phenomenal business ideas. They have changed the way the world thinks and works. The idea of a company being worth billions without owning any major assets other than a sophisticated piece of software and a phenomenal brand is something few could comprehend fifteen years ago. Despite the tidal wave of TUFs being conceived the world over, very few (as a percentage – I would wager less than 0,001%) see the light of day and even fewer see the red turn to black on their balance sheet. Yet the fascination with TUF’s is as strong as ever.
Three TUF experiences – Tough news for the TUF’s
Michelle is a pretty decent massage therapist, she used to work at a spa, but decided to create a mobile massage service based on the number of positive indications of support she received from her clients. She bought a fold-able massage table, made some business cards, changed the message on her mobile phone and started her own business.
A Little Deviation
I like massage to relax but it generally creates the opposite effect during non-holiday periods, it stresses me out that I am lying there when I have so much work to do. Check out Carlson Dudtz
Ok I’m back
So Michelle started pretty well, but then things started to get a little quiet and she was now making less money on her own than when she was working at the spa. She heard about a particular TUF that acted as an intermediary between the client wanting a massage and the massage therapist who had extra capacity. She signed up, sent her qualifications and even some endorsements to the TUF and voila she was now a registered massage therapist on the TUF for Massages platform.
My wife registered me on the TUF platform and Michelle arrived one Saturday afternoon to do some reflexology. We started chatting and I learned that she pays the TUF 20% for the appointment. We pay the TUF and the TUF pays her less 20%. Sounds like a good deal. Michelle pays 20% to the TUF for them marketing to find her clients.
After just 3 reflexology appointment the CABOS (Convenient Amnesia Based on Greed) appeared.
CABOS is the the enemy of the TUF model.
“If you pay me directly, you can get the service 10% cheaper than if you pay directly to the TUF.”
My marketing department was at capacity, I needed some design work done. A simple posting on Facebook gave me a variety of options from freelancers to 360 degree agencies. But the one that caught my attention was a TUF for designers. Based in Australia with designers across the world, this TUF promised 20 designs for $X guaranteed. You simply registered your brief, pay, and the brief would be sent to the universe of registered designers. They in turn would decide whether to bid for your work, with a design, or not.
I got my 20 designs. I then had to drill down to the top three and finally to the winner. I had the opportunity to finesse the brief with the designers by communicating with them. My designer came from Bulgaria, he could hardly speak a word of English, but his design work was great. In the design finessing phase (you are allowed to chat to one another), he asked for my email address which I gave him.
A week after he won the pitch, I received an email from him asking me to consider him for any future design work, and that it would be 20% to 30% cheaper than if I went through the TUF. (He would not have to be compete and potentially lose work).
CABOS is the enemy of TUF.
Then there’s Uber
There are two types of Uber drivers, the one’s that own their own vehicle and the ones that are driving for someone else whilst saving up to own their own vehicle. I enjoy chatting to the drivers, finding out where they worked before and why they made the switch.
Recently my car went in for repair and I was taking Uber regularly to work. In the standard conversation I mentioned this to driver. “I can meet you here every morning at 7:00 and take you to work Sir, and I will give you 10% off the price. We do not have to switch on the Uber. Take my card and call me directly.” was his response.
CABOS is the enemy of TUF
It could happen in your regular business- in fact it is
The confusing part about this is that entrepreneurs know that many of our staff are running their own businesses on the side whilst in our employ. Some of them overtly and some covertly. The difference here is that in a “regular” non TUF business we are paying a salary and expect the employee to focus all their efforts on achieving their KPI’s and exceeding these. Any “other” business is seen as a diversion, a de-focus, a theft of the hours we pay for.
So are we deluding ourselves that we are able to control the amount of hours in a day that our teams spend on our work as apposed to managing their stock portfolio’s, managing their property portfolio, managing their ebay sales, responding to their own client queries? Are we able to manage the resources they use, our paper, our telephones, our offices, our bandwidth, our staff, our time?
What makes the regular business model any easier to manage than a TUF model? Is it that we can see them (our employees), and therefore have the illusion that we are monitoring (or managing) them? Or is it that the concept of working for someone is now so different to what it it was 50 years ago, that entrepreneurs need to adjust our mental models? Is it a leadership thing? Is it a purpose thing? Or have things simply changed? Lets spend some time exploring this.
Intrapreneurship – The Nexus between being Employed and being Entrepreneurially minded
The term intrapreneurship was first coined by Gillford and Elizabeth Pinchot in a paper written in 1978. The definition of an intrapreneur according to the American Heritage Dictionary is”A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”.
The idea of intrapreneurship evolved, as a class of employees was emerging that thought more like entrepreneurs than corporate functionaries. They took risk like entrepreneurs, they thought laterally like entrepreneurs, they coalesced resources like entrepreneurs.
Purists, and of course many entrepreneurs (see previous blog post), would argue that intrapreneurs were not entrepreneurs because they never took the final leap of faith, they always had a salary to fall back on even if it might have seemed to be threatened by the consequences of a project failure.
Stories of massive business mistakes or miscalculations that were rewarded by a “try again” rather than the traditional “you’re fired” flamed the culture of risk taking within corporates.
Freelancing – The Nexus between being Unemployed and Employed
The internet created a cultural shift in how people work. From the shift to working from home (based on outputs), to working whenever, during the day or night, you needed to. Today there is an industry based on “Working Holidays” where you travel, go on adventures, but also have scheduled stops where you have access to wifi, electricity, coffee and a comfortable seat so you can catch up on the work you need to do.
Freelancing works for those who either want flexibility or need flexibility in their lives. From mothers (and fathers) who want to be home for their kids, to millennials who don’t subscribe to the 9 to 5 lives they saw their parents and grandparents pursue.
Some see freelancing as a stepping stone to the creation of a business. I do not. By far the majority (in fact all in my experience) of the freelancers I have encountered, or have made use of, over the years have remained one-man-bands. The pay per hour or pay per output model allows for a pack up an go lifestyle, where they have the flexibility to travel, holiday, deal with family issues, without the encumbrance of employees, rent and related overheads.
I would argue that on the whole (and of course with exceptions), that freelancers do not become growth entrepreneurs. They value “freedom” more than “financial legacy”. They are a category of entrepreneurs that Michael E Gerber might call “People who have created their own job”.
This is not a judgement on freelancers being better or worse than growth entrepreneurs. Freelancers represent a relatively new and large contingency of the business landscape and need to be considered when thinking about models of the future.
Growth entrepreneurs will need to work out how best to cooperate with freelancers into the future.
A Little Deviation
I have always held the belief that your company’s core competencies should never be outsourced. They should be preciously held inside your company, nurtured, evolved, and used as the sharp end of your competitive edge in the market. Your core competency mostly comprises of processes, culture and people skills. Today employees are more migratory than ever before, so how do you keep your core competency intact? Some might argue training or culture is the answer. This is becoming more and more expensive to maintain. In many instances, by the time you have trained someone, they leave, leaving you with little or no return on your training investment. And all those retention strategies cost too. To be quite frank, from the entrepreneurs (many of whom I would regard as far better leaders and entrepreneurs than myself) I have engaged with, they find that most of the retention strategies they embark on have mediocre results that are often hard to attribute to the so-called strategy itself. So what’s the future of the concept of retaining core competency? I need to give this more thought.
Ok, I’m back
So where was I? Oh, the freelance thing. Is there perhaps a way to use freelancers as your core competency? I’m not talking about the software that manages them, but rather their innate skills. Could Core Competency be collaboratively outsourced in the future? Is this a practical model?
Intralancers – The Nexus between Employed and Entrepreneurial.
Lets be clear, there is no such word. This is a concept that I am thinking about right now. As I mentioned before, many of our employees are running their own gigs on the side (and some unfortunately not on the side but using our resources for their own gain). Many of these employees are intrapreneurial and entrepreneurial at the same time. Our businesses are used as a stepping stone to launch their own, by either gaining experience, confidence, clients, knowledge, or just a regular safe income whilst they set up their systems and processes.
The difference between the Intralancers and the Freelancers is that there is more of a likelihood that these people will build out decent sized businesses of their own. The same issues around core competency retention applies with Intralancers. When Intralancers make the final jump, they take a piece of your core competency with them.
The concept of people leaving to start their own thing is not a new one, its been around for centuries, but I would argue that the percentage of people doing their own thing whilst employed is exponentially higher than it was a decade ago. The cost to our businesses in terms of lack of focus, the requirement for better management tools, and the eventual loss of those intralancers is at an all time high.
So is the model to think about, a model where we can work with these intralancers in a mutually beneficial manner. Is there a model where intralancers can come out from the shadows and declare themselves early on in their journey with out businesses, so that we can support their transition from intralancer to entrepreneur? Is the model intralancer to supplier, is the model intralancer to division, intralancer to investee? Of course we must not remove the risk element in this arrangement (the fact that they could lose it all and that there is no guaranteed salary), and we must not restrict the reward element either. The key is how we manage the retention of our core competency in the arrangement.
I don’s know about you, but I find it very hard to conclude well. We were taught at school that when we wrote an essay, there had to be a conclusion. I always feel a huge pressure to write a conclusion that is commensurate with a Hollywood closing scene.
So here is my attempt.
Entrepreneurship is not immune to changes in social constructs. The internet, the mobile phone, the nuanced psychological outlooks of generation, X, generation Y, the millennials, and whatever comes next, all affects how we build businesses of the future. It is important for us to at least think through these changes and try decipher what is fad and what is trend so that we can build more robust business models that capitalise on the new realities of being an entrepreneur today.
And he rode off into the sunset….