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The Gig Economy Preparation Guide

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In Corporate America and the Gig Economy (Part 1, Part 2 and Part 3) I outlined at a very high level the Good, the Bad, and the Ugly of Corporate America and how that is and will impact the Gig Economy.  I used the following categories to do discuss these corporate elements: The Entrepreneur Spirit, Infinite Growth = Infinite Profits, Job Creation, The Cold Sweeping Hand, Infinite Profits > Life, and The Race to the Bottom.  Amazon, Whole Foods and the Gig Economy (Part 1 and Part 2) covered The Entrepreneur Spirit.  Part 3 will delve into Jeff Bezos’ unique approach to Infinite Profits = Infinite Growth and the reason why that unique unending approach continues unabated.

Amazon: From Book Seller to The Everything Store (Part 3)

Infinite Growth did not always equal Infinite Profits

True to being a scalable endeavor, Jeff wanted Amazon to be more than just retail, he also wanted it to be an online community which led to allowing users to add their own book reviews for everyone to view which is a mainstay to this day albeit the constant barrage of fakes ones, yet if you take the time to discern you can manage your way around it which I do all the time.  He got affiliates into his game early on starting in 1996 with the Associates Program.  The Initial Public Offering (IPO) occurred on May 15, 1997 as AMZN “targeted at $18, but by the end of the day, public demand had pushed the share price to more than $24 per share.” (Techwalla)  In that same year they added movies and music.  The following year began their international quest with sites in the UK and Germany.  The year after, 1999, they “opened four order fulfillment centers in Fernley, Nevada; Coffeyville, Kansas; and Campbellsville and Lexington, Kentucky to handle the large mass of orders” which was followed by Jeff being features in Time Magazine as “Person of the Year in 1999, calling him “king of cybercommerce.” (Techwalla)  He also expanded his product line to now include Consumer Electronics, Toys & Games, Home Improvement, Software, Video Games, and Gift Ideas Stores.  The turn of the century continued his “relentless” expansion along with the now famous logo of the curve “smiling” arrow from A to Z.  Starting out with one category of books, they eventually expanded to 17 main categories and 143 sub-categories. (Techie Sense)  Check the Amazon Timeline Infographic in the Techie Sense link in the Resources Quoted and Referred section at the end of this post for more details of his year to year growth.

Yet unlike many other successful publicly traded corporations, this infinite growth didn’t translate to infinite profits or even just plain ol’ profits for some time and it was all part of his plan. “Amazon’s initial business plan was unusual; it did not expect to make a profit for four to five years. This “slow” growth caused stockholders to complain that the company was not reaching profitability fast enough to justify their investment or even survive in the long-term. When the dot-com bubble burst at the start of the 21st century and destroyed many e-companies in the process, Amazon survived and grew on past the tech crash to become a huge player in online sales. The company finally turned its first profit in the fourth quarter of 2001: $5 million (i.e., 1¢ per share), on revenues of more than $1 billion. This profit margin, though extremely modest, proved to skeptics that Bezos’ unconventional business model could succeed.” (Amazon.com: Get Big Fast by Robert Spector)  “In 1995, when Bezos started to raise money from outsiders…he projected that Amazon would, if things, turned reasonably well, have $74M of sales in 2000 and be modestly profitable. In 2000, Amazon turned in sales of $1.6B and had a loss of $1.4B.” (LinkedIn)

These quotes would make it appear that once Amazon starting turning a profit that it would follow that infinite profit growth model that the majority of publicly traded companies adhere to.  To some degree that has happened because as of September 21, 2017 the stock is trading at $964.65 making it a major player yet when reading over the analysis at that time at amigobulls.com one can easily see that this adage of not adhering to that is still in play.  Here’s some quotes; “Amazon’s revenue has constantly climbed higher as the company is putting all its efforts to expand its topline. This has led to the creation of massive infrastructure causing Amazon’s assets to increase to over $65 billion. Amazon’s stock analysis highlights the contradiction in the exponential growth of its topline and its non-existent bottom line. After over two decades of operations many investors had started questioning if the zero profit business model of the company will allow it to survive in this heavily contested arena in the future.”  (emphasis added)  The final sentence clearly indicates Continue reading

This post marks the return from a very long and unexpected hiatus from regularly posting my blogs. At first it was only supposed to be a small one of a couple months while I put all of my focus on creating a course on Udemy called The Gig Economy Preparation Guide which is essentially a “One Stop Gig Economy Information Central”. It’s primarily an analysis driven course of 4 hours yet I consider it to be a “Living Course” that will constantly be updated and expanded as I continue to explore this phenomenon. That being said, I already have plans for updates and a major new lesson on the AI impact. Shortly after the course was launched essentially my life informed me that it had other plans all of which were related to dealing with becoming The Reluctant Gigger which I will go into in future posts. I’m now permanently back with lots to say so let’s get on with it…

It’s not too much of a stretch for anyone who takes even a few moments to ponder the relationship between Corporate America and the Gig Economy that they are interdependent.  The purpose of this post is to bring forth elements of companies that feed into this expansion of the Contingent Worker and to some degree have caused the expansion of what has now come to be known as the Gig Economy including its many various nomenclatures.  It also shouldn’t be too much of a revelation that much of this revolves around its financial aspects.  Before I embark upon this little adventure I want to emphatically state that I am not in any way an economist or financial analyst.  Everything I will be discussing comes from over 18 years of experience as a Metrics & Reporting Analyst coupled with my innate analytical ability to take in large amounts of information, see their eventual patterns, and from that construct well thought out conclusions.

Over the course of my career, some of my reporting has gone from the “worker bee” to the C-Suite and all points in between.  Because of that level of visibility, some people in management would befriend me to get an “inside track” of their information.  From that relationship they sometimes would relate some of the “inner workings” of the company.  For example, one company was involved with a proposed merger that would give them a better predominance in a region they didn’t have.  The news was all a buzz about how this would be used to dominate that market driving prices higher.  Their response was that this was not the case and just business expansion.  Yet after the merger didn’t go through, I was secretly told that dominating the market and driving up prices was exactly their intention contrary to what was said in public.  A combination of these “Whispers at the Watercooler” in conjunction with various news items over the years has resulted in this perspective.

This will not be a one sided account on the “Evils of The Corporate” as I will be covering elements of the Good, the Bad, and the Ugly.  I will be using these as a foundation when exploring the recent merger of Amazon and Whole Foods where you’ll see they have participated in these elements to some degree.

The Entrepreneur Spirit

Many companies start out with what can be called the Entrepreneur Spirit.  One or more people have a vision that fulfills a need or even can see a need before anyone knows it and then embarks on the creation of this vision.  There are many examples of humble beginnings in a living room, garage, basement, or small store with little or no startup cash, long hours and loads of diligence.  This can also easily start out as freelancing.  Seth Godin says, “Freelancing is the single easiest way to start a new business.”  It is the Business Model that determines if the initial business is entrepreneurial or just an independent business.  The determining element of this Business Model is the concept of scalability.  The vision must be able to expand beyond the initial efforts of those that initiated their vision to the point that they eventually oversee it such as becoming the CEO.  This then brings in the element of “money while you sleep”.  Referencing Seth again, “Entrepreneurs make money when they sleep. Entrepreneurs focus on growth and on scaling the systems that they build. The more, the better.”  This then can go in one of two directions.  The Entrepreneur(s) either sell the business and move on or continue to have a hand in its ongoing development as it continues scaling.  Eventually outside money becomes involved in order to reach the higher altitudes of scalability.  “Entrepreneurs use money (preferably someone else’s money) to build a business bigger than themselves.” – Seth Godin.  Throughout several videos and articles Seth gives multiple examples of how businesses can appear to be entrepreneurial but are not because of this fundamental concept of scalability.  One reference to this is “infinite growth” which is an important reference to the next foundational element, Profits.  Without this, there is no business no matter how big, small, or scalable. Continue reading

My research into what this “Gig Economy Thing” is all about continues to uncover more and more interesting aspects that I’m not sure are truly being addressed by any one person or organization resulting in a myriad of opinions some of which appear thought out and others not so much.  Some of this is due to it not just being relatively new but also as a result of these activities, there appears to be a new employment designation arising as a result of these confusions as this continues to iron itself out which I will explore in a future post.  The first question was the most obvious; “What’s the difference between Gigging and Freelancing?”  I discovered that although they are frequently used interchangeably, digging deeper demonstrated that is not the case especially due to the persistent growth of the On Demand App aspect which doesn’t necessarily require a specific skill set whereas Freelancing does.  You can review that here.  The one thing that differentiates a traditional employee from those in the Gig Economy is their tax status of 1099 from which I discovered that this is not a simple tax designation as evidenced by the number of various tax codes.  This then brought up the fact that technically those that are considered “entrepreneurs” are also under the 1099 designation so how does that play into the Gig Economy thus explored?

Interestingly and amusing that poor ol’ Freelancing is stuck in the midst of this contrast again, yet when being compared to entrepreneur there appears to be better definitions which at the onset would make one think that it’s better defined but not so much as it appears that many are stuck on the allure of the word “entrepreneur” with some of them either refusing to accept it or at the least not happy about it.  The illusion comes from the misconception that anyone who is in business for themselves is an entrepreneur and even further compounded by attempting to understand if one is better than the other or that there’s a wide gap between the two or putting the two together as if they were the same thing but never delineating it.  Frustrating when all you want are answers on what they are and how they are different so as to know how it all applies to this Gig Economy.

The dictionary definitions that many articles use further compounds this confusion because although they all have similar initial definitions, it’s when you look at the second definition that it becomes apparent how this definition is being confounded due to “cherry picking” the one you like the best.  I’ll use the version from dictionary.com for my example:

  1. a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.
  2. an employer of productive labor; contractor.

Its origin comes from the French word entrepredre which means to undertake (1875-80; < French: literally, one who undertakes (some task)).  There’s also an indication of its use in connection with theatrical production; 1828, “manager or promoter of a theatrical production,” reborrowing of French entrepreneur “one who undertakes or manages,” agent noun from Old French entreprendre “undertake”. The word first crossed the Channel late 15c. but did not stay. Meaning “business manager” is from 1852”.  In contrast to this is the Oxford online dictionary’s definition; “A person who sets up a business or businesses, taking on financial risks in the hope of profit”.  This definition only references “business” with no reference to enterprise, both mentions risk, yet the latter “hopes” for profit.  Using the French derivative of “one who undertakes or manages” you can understand how some would think that if they are in business for themselves in any capacity they are “undertaking or managing” a business yet its use has continued to expand over time.

That’s enough of these “Blathering Vernaculars of Confusion” as the more you look, the cloudier one’s understanding becomes.  A post on Seth Godin’s SAMBA Blog titled “Freelancers vs Entrepreneurs” Continue reading

Disclosure:We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.

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