There are over 26 million companies in the United States with fewer than 20 employees. The vast majority of those businesses have fewer than five employees, and often only one.
There are about to be a whole lot more of these very small businesses. Interestingly, it’s because big businesses are also going to become radically smaller.
Long before robots replace manual laborers and algorithms replace even the smartest knowledge workers, the disruption of the traditional economics that encouraged scaling up with more employees will be turned on its head.
Which means, a lot of people are about to become involuntarily unemployable.
My take is that’s an opportunity for many of you. Tune in to hear why.
In this episode I discuss:
- Why the disruption of “big benefits the small
- How Uber displaced 100,000 people with an app
- What Google’s shift to Alphabet means for you
- Why Richard Branson should be your role model
- The shift that makes freelancing way more competitive
- Why tiny production companies will earn outsized profits
- The Processes, People, and Production system
The Show Notes
- Networks and the Nature of the Firm
- The Future of Firms. Is There an App for That?
- The Habitual Startup Approach to Wealth Building
- Fast Company’s “Jobs of the Future
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Brian Clark: Hello, everyone, and welcome to another episode of Unemployable. I’m your host, Brian Clark.
Today, I’d like to explore the trends that are poised to disrupt the idea of the traditional company and why this is good news for solopreneurs, freelancers, and others of us unemployable types.
First, let me take a moment to remind you that this podcast is brought to you by the Rainmaker Platform. If you’re looking to implement a marketing system like the one we talked about last episode to attract new clients and customers like crazy without any annoying, sales-y tactics, you’ll want to check out Rainmaker. It helps you build a powerful website — yes, without code or the hassle of development — but it’s much more than that. The best way to see what it can do for you and your business is to take it for a free 14-day test drive over at RainmakerPlatform.com.
Now, on with the show.
Why the Disruption of ‘Big’ Benefits the Small
So, did you know out of the entire small- to medium-size business segment in the US alone, the largest segment — at over five million businesses — have five to 19 employees? Now, if you add in the very small business, which has less than five people, often only one — many of you out there — it’s over 26 million.
Now, the fact that the US Census Bureau doesn’t include the very small business within the SMB pie shows a lack of respect, but as we talked about in a previous episode, the number of single-person companies bringing in over $1 million a year keeps rising year after year. This is the power of smart people combined with smart technology and networks.
I’m pretty fascinated with — and have been for the last 15 years — the disruptive effect of the Internet and technology apps, all of this, on the traditional company. Tim O’Reilly has been writing about this quite a bit in anticipation of a conference they’re putting this fall in San Francisco. He says that the way that networks trump traditional forms of corporate organization and how they’re changing traditional ways of managing that organization are about to turn corporate America and corporate world on its head.
The article I was reading by Tim referenced another gentleman named Esko Kilpi, and he wrote this great article that I’ll link up in the show notes. He basically talks about there are three fundamental structures that govern the nature of all economic activity. You’ve got customers. You’ve got producers — companies that make stuff — and the mediating infrastructure in which value is exchanged between them. That’s kind of a mouthful.
What he is really referring to there is that historically, transaction cost made scaling up with lots of people more cost-effective. Nowadays, because of the network effects of the Internet and technology, the mainstream firm — the way we think about companies as we’ve always known it — is becoming the more expensive alternative, not less, which is interesting, right?
How Uber Displaced 100,000 People with an App
Let’s look at the taxi industry. Estimates are that half of the 350,000 people in the US taxi industry are not drivers. We’re talking about managers. We’re talking about dispatchers, all of these people that are required to help get the driver connected with the passenger.
Now, think about Uber. Uber eliminates all of that middle management and all those dispatchers with an app. An app just replaced, I don’t know, 100,000 people. Now, the taxi industry is still going. It is not going to just be destroyed by Uber or companies like it overnight. You have to imagine that they’re feeling the heat over there in that legacy model.
The weird thing, of course — and we’re not going to dwell too much on Uber. This is just an example of how a piece of software that’s on your phone can eliminate thousands of jobs in a new, networked, beneficiary-type model of a company. Someday, Uber is going to replace all the independent contractors that are drivers with self-driving cars, which is a whole different story.
You’re getting the idea of what I’m talking about at the organizational level, how technology and the ability to communicate through the network that we call the Internet is really disrupting the very idea of what a company is.
What Google’s Shift to Alphabet Means for You
In recent news, Google effectively formed a parent holding company called Alphabet. Google is just one of the companies that that holding company will own. Now this happens all the time, okay? Think about the Virgin Group. That is Richard Branson’s Virgin brand, but it’s a collection of over 400 companies.
Though this isn’t revolutionary on Google’s part, I would say it’s necessary. They want to divide out all these different lines of businesses into separate companies so that one company’s failure or disruption cannot take down the whole ship. More importantly, they can even have competing companies with different models and different philosophies engage in this kind of Darwinian exercise where the one that works survives and the one doesn’t goes away, again without affecting the existing stable businesses. Either way, Google wins.
You’re like, “Okay, Brian, all of this big-business stuff again. What has this got to do with me?” The Google strategy that is exemplified by Alphabet is exactly the same model at a different scale than what we talked about weeks ago with the habitual startup approach to wealth building — same thing, same concept. Holding company, different projects. Some live, some don’t, but no failure takes down your entire business.
The Shift That Makes Freelancing Way More Competitive
Fast Company has been covering, in their future of work section, some of the ramifications at a more personal level of this disruption of the traditional company. When it becomes smarter to be smaller, what happens? What happens to all the people that had those jobs?
Well, one thing that Fast Company talks about is the acceleration and rise of the on-demand worker. That’s just code for freelancers, consultants, basically people who come in and work as needed as opposed to being traditional on-staff employees all the time.
They’re extrapolating out to 2020 and 2025, and this is where you see these amazing numbers of people being displaced out of their jobs. Now, the big conversation is always around robotics, and that’s going to replace manual labor, and then even algorithms are going to replace some knowledge workers, but I would suspect that the disruption of the company, the ability to be more efficient and more profitable by not having employees, will happen much sooner than a robot talking your job necessarily.
Why Tiny Production Companies Will Earn Outsized Profits
The other thing is that Fast Company was surveying a bunch of futurists about the professions of the future. This is another outside, solopreneur job, which they call the ‘professional triber.’ Now, I don’t want to get off on a rant here, but that is the stupidest name I’ve ever heard. It’s a meaningless buzz phrase by some guy who is basically paid to predict the future.
Now, I’m not saying he’s wrong. I’m saying there was no need for that silly title, okay? He says the ‘professional triber’ is the Hollywood model dispersed across the general workplace. Just as Hollywood studios don’t themselves hire the individual cinematographers, editors, screenwriters, actors, to make a film, neither will companies of the near future want to hire individual components of a team to get a job done.
Okay, I agree with that, but we have a name for that person. It’s called a ‘producer.’ That’s what it’s called in Hollywood, and that’s what it should be called now. There is no need for a special title here. Producers are the ones who make things happen, and ultimately, as we mentioned earlier in the episode, producers are another name for people who make stuff, right?
This is an entrepreneur opportunity to work with larger companies who will need this type of organizational project management and visionary expertise, but at the same time, you don’t have to work with big companies. Reflect back on what we talked about with the producer model. This is how you do anything. It basically boils down to being able to spot opportunity, assemble a team, produce what needs to be done, and then perhaps move on to the next thing or continue to build that thing up.
Fast Company was saying that freelancers are going to have to work really hard on self-management, self-promotion, relentless marketing, administration, and personal development in order to be competitive in a world where everyone — not everyone, but a lot — where there’s an explosion of freelancers in the work space.
The Processes, People, and Production System
This show, I certainly hope, is going to help with that. I also think that some of you may be interested in more of this producer concept. It really all comes down to three things: processes, people, and production.
Last episode, we talked about marketing processes, and our upcoming webinar on August 25th is about management in technological processes. Well guess what the second webinar in September is going to be about? People. That’s right. First, you need processes before you can plug people into the process, and also, how do you find the right people?
Then our third webinar, coming in October, is going to be a case study of a true-life person in his 20s — the guy is amazing — who has adopted the producer model and is doing amazing things with it. You get where I’m going with this.
Again, there’s going to be opportunities at every level in every role if you’re willing to realize that you’re going to have to up your game. We all have to up our games, but those of us who are already outside the traditional J-O-B are at a huge advantage, because when people get unemployable not by their choice, they’re going to have to get up to speed just to tread water. Hopefully, we’ll be swimming for the finish line.
That’s what I’ve got for you today. If you are not signed up for the webinar, all you have to do is go to Unemployable.com, and if you’re not a member yet, register. You’ll get instructions on how to say, “Yes, I’d like to attend the webinar.”
If you are an Unemployable member but you haven’t raised your hand and said ‘yes,’ it’s a one-click thing. Go to the member area, scroll down to ‘webinars,’ click the blue button, and we’ll see you on August 25th.
All right, everyone, thanks for tuning in. I’m loving doing this show. I hope you’re loving and getting valuable stuff out of it. Feel free to send me an email, leave a comment on the episode, leave me a review at iTunes, whatever you would like. Let me know what you’re thinking so far. All right, take care. Have a great week, and keep going.