Gig Economy Allows Entrepreneurs to Start on a Dime

Cloud Computing Lowering Barriers to Entry, Allowing the Gig Economy to Thrive

Startups have traditionally been capital intensive ventures and most have had to wait until they got big to look big.  Not anymore. Web services in the cloud have made start-up costs not just affordable, but in some cases free, and they are the same software packages being used by major corporations. This puts any Tom, Dick, or Harry piecing work together from elance, odesk, and Amazon’s mechanical turk on par with popular startups like Color. As long as they are running WordPress and Google Apps, the world does not know the difference. And some Gigger’s as they are called are now starting their own business using the very tools they used to get jobs. Matthew Stibbe, a serial entrepreneur, combined cloud computing and long hallways to start his third business, Turbine: The Company Built With Elance.

Enough time has passed for BestVendor to do a survey of 550 startup staffers — most in marketing and executive administration positions — on their favorite tools for email, accounting, web analytics, CRM, productivity, design, storage, payment processing, operations and so forth. Their answers, in aggregate, speak to the growing trend in startups moving toward predominately cloud-based operations, the most popular being DropboxPaypal, and Salesforce to name a few, although I was glad to see Square in the running. Google Apps, Google Analytics and Quickbooks each garnered a majority of the votes in the email, accounting and web analytics categories, respectively. Salesforce bested its CRM competition with 59% of respondents selecting it as the application of choice, and consumer-friendlyEvernote proved hot with startup-types, too, in the note-taking category. For netbook and MacBook Air users, utilizing cloud storage programs like Spotify and DropBox is key to maintaining enough disk space for maneuverability.

Cloud computing is a relatively new model with lots of benefits and a few drawbacks. For example, it’s scalable, the provisioning cost is near zero, and you don’t need to hire a tech team, which saves money on payroll, benefits, space, insurance, supplies, and equipment, but with cloud computing, if the service or product you are using goes ‘down’, there is little to nothing you can do about it. You’re essentially trading control, security, and privacy for cheap, convenient, up most-of-the-time software running on hardware that you didn’t buy and will probably never see, let alone have to upgrade.

The Gig Economy

While a study by the Kauffman Foundation indicates startups create an average of 3-million jobs per year (about four times more than any other group), cloud computing and its reduced need for workers is creating a new economy. Sarah Horowitz, the executive director and founder of the Freelancers Union, says the employment picture in the U.S. is changing quickly. “People are working gigs now, but the BLS is tracking jobs. They’re two different things,” Horowitz explained to the LA Times. “We are really moving towards a gig economy.” The bureau of labor and statistics now tracks self employment (giggers) – and the number now stands at 14 million. And that number is set to grow. A Forrester Ressearch survey of small- to medium-size businesses found that 40% of businesses with 2 to 19 employees said using cloud service offerings was a “very high” or “high priority.” For medium-size businesses (20 to 1,000 employees), the figure was 25%.

Bulldozers: 5 Serial Entrepreneurs That Only Know How to Push Things Forward, Make Meaning, and Change the World

Bulldozers, a term coined by Jason A. Cobb in January 2011, refers to employees who do one thing and one thing only: push things forward – and if their company doesn’t let them, they leave, but continue pushing forward.  Employers need to learn to recognize bulldozers and fuel them, not throw stumps in their way (stumps don’t stop bulldozers anyway, they just make them leave faster).

Let’s take a look at five bulldozers – employees who pushed forward, right on out of their former company:

  1. Ian Rogers – left Yahoo! to form his own business when Yahoo! failed to heed his advice.
  2. Joshua Schachter – left Yahoo! after they failed to upgrade (and eventually killed) Delicious.
  3. Lars Rasmussen – left Google for Facebook after Google killed Wave he helped develop.
  4. Jyri Engeström – left Google to “make meaning” after Google dropped support for Jaiku.
  5. Dennis Crowley – left Google to form Foursquare after Google killed Dogdeball for Latitude.

Ian Rogers, the former General Manager of Yahoo! Music, left to form Topspin Media, a company that makes marketing software for music artists to maximize their fanbase and brand exposure.

Rogers bucked the industry trend to ‘shove bad products down consumers’ throats’ like in October 2007 when he addressed a number of music executives. He explained that consumers aren’t willing to adopt inferior products (namely subscription music services) saying, “I won’t let Yahoo! invest any more money in consumer inconvenience. I will tell Yahoo! to give the money they were going to give me to build awesome media applications to Yahoo! Mail or Answers or some other deserving endeavor. I personally don’t have any more time to give and can’t bear to see any more money spent on pathetic attempts for control instead of building consumer value. Life’s too short. I want to delight consumers, not bum them out.”

This fits the model we’ve seen with serial entrepreneurs, which seems to also apply to bulldozers: they want to change the world for good and won’t put up with the bad ‘cause ‘life’s too short’.

Joshua Schachter, created Delicious (a social bookmarking site), GeoURL, Tasty Labs and was co-creator of Memepool. Schachter released the first version of Delicious (then called del.icio.us) in September 2003. The service actually coined the term ‘social bookmarking’ and featured tagging, a system he developed for organizing links. On March 29, 2005, Schachter announced he would work full-time on Delicious. On December 9, 2005, Yahoo! acquired Delicious for an undisclosed sum, but according to Business 2.0, was close to $30 million – with Schachter’s share being worth approximately $15 million. Prior to working full-time on Delicious, Schachter was an analyst in Morgan Stanley’s Equity Trading Lab. He created GeoURL in 2002 and ran it until 2004.

Schachter left Yahoo! in 2008 after Yahoo! refused to move forward on Delicious development and began working for Google from January 2009 to June 2010. In November 2010, Schachter acquired startup funding from Union Square Ventures for Tasty Labs. Yahoo! announced plans on December 16, 2010 to shut down Delicious, but as of January 26, 2011 is in talks with Kevin Rose of Digg about Digg possibly taking over Delicious.  Rose asked Schachter if he would be interested in working on it, but Schachter was too busy with Tasty Labs.

At Tasty Labs, Schachter is joined by co-founders Nick Nguyen and Paul Rademacher. Rademacher is a former Google and Dreamworks engineer who will be heading up engineering for Tasty Labs. Nguyen previously worked with Schachter at Delicious and just recently left Mozilla to serve as VP of product for Tasty Labs, which plans to put “the useful back into social software,” according to their website. Since then, Andreessen Horowitz, Marc Andreesen (a serial entrepreneur) and Ben Horowitz’s venture capital firm, has also invested. Schachter says about Tasty Labs, “I’ll grow it organically,” said, noting that the company is called “Labs,” and not a specific product. “This could end up being multiple applications.”

Of course it will. That’s what you do.  You’re a serial entrepreneur and a bulldozer.  No one is going to stop you from making things useful.

Lars Rasmussen, co-creator of Google Maps and Google Wave, announced on October 29, 2010 that he had left Google, and was moving to San Francisco to work for Facebook.

In 2003, Lars and his brother, Jens, with Australians Noel Gordon and Stephen Ma, co-founded Where 2 Technologies, a mapping-related start-up in Sydney, Australia. This company was bought by Google in October 2004, to create the popular, free, browser-based software, Google Maps. The four of them were subsequently employed by Google in the engineering team at the company’s Australian office in Sydney.

In October 2010 Rasmussen was hired by Facebook to create a “Modern Messaging System” after Google killed Wave just under a year after publishing it.  Facebook’s new messaging system, which combines wall posts, email, and SMS (text) messages, was codenamed “Titan”, and rolled out on November 15, 2010.  As of January 26, 2011, Facebook Messaging is still invitation only.

Rasmussen said about his move to Facebook, “Obviously they’ve already changed the world and yet there seems to be so much more to be done there. And I think that it’s the right place for me to be.” Once again we see this desire to “change the world” as a key characteristic of serial entrepreneurs and bulldozers.

Jyri Engeström, co-created Jaiku, a Twitter-like service, which was sold to Google in 2007 when it was the leading European microblogging service. After the acquisition, Engeström continued to maintain Jaiku but Google focused his efforts on creating systems that power Google Buzz and related products. The original Jaiku code base was ported to Google App Engine and released as Jaiku Engine, a free open source microblogging platform, but in January of 2009 Google announced it was no longer going to support the platform, although the site would live on.

A sociologist by training, he has also developed the term social objects – a label for “things that people socialize around,” including text, images, videos, and other shareable Web content.

Prior to Jaiku, Engeström worked as Senior Product Manager of Internet Handhelds at Nokia. At Google he was responsible for mobile applications including Mobile Calendar and the Gmail Mobile client, while also spearheading Google’s efforts in social media, starting up Google Buzz, Google Profiles, and Google Latitude. He left Google in October 2009 to become an angel investor and start his own new company, Pingpin, but is also active in the following companies: Appsfire, Betrabrand, Mobclix, Superfeedr, Xiha, Sofanatics, and Thinglink (his wife’s business).

Engeström wrote on Twitter in October of 2009 that the reason he left Google was in order to “make meaning” out of another project, which is another characteristic sign of a bulldozer.

Dennis Crowley, co-founder of Dodgeball and FourSquare, both location-based social networking services. Dodgeball was sold to Google in 2005, which discontinued it in 2009 in favor of Google Latitude (partly thanks to fellow bulldozer, Jyri Engeström). Crowley co-founded Dodgeball with fellow student Alex Rainert in 2003 while attending New York University. Both were hired by Google in Dodgeball’s acquisition in 2005 and both left in April 2007, Crowley and Rainert left Google, with Crowley describing their experience there as “incredibly frustrating”.

In January 2009 Vic Gundotra, Vice President of Engineering at Google, announced that the company would “discontinue Dodgeball.com in the next couple of months, after which this service will no longer be available.” Dodgeball was shut down in February 2009 and succeeded by Google Latitude.

After leaving Google, Crowley, with the help of Naveen Selvadurai, created a service similar to Dodgeball and Google Latitude, which became known as Foursquare.  While Dodgeball was available in limited cities (Seattle, Portland, San Francisco, Los Angeles, Las Vegas, San Diego, Phoenix, Dallas–Fort Worth, Austin, Houston, New Orleans, Miami, Atlanta, Washington, D.C., Philadelphia, New York City, Boston, Detroit, Chicago, Madison, Minneapolis–St. Paul and Denver), Foursquare is available everywhere. Crowley later hired Rainert as Chief Product Officer (head of products) in 2010.

Rainert, a co-founder of Dodgeball, is also quite the bulldozer and is quoted as saying, “We’ve found that people with judgment trump rockstars. You need people who can make decisions. You hire smart people because they want to make an impact, but everyone can’t weigh in on everything because then you’ll never get anything done.  Our employees have had to learn not to take things personally; things just need to keep going.” That’s another perfect example of a bulldozer: “make an impact” and “keep going [forward]”.

20 Serial Entrepreneurs: An Analysis

Serial entrepreneurs want to change the world and “make meaning” but successful ones also make money, and lots of it.

Here is a list of 20 serial entrepreneurs and the companies they helped create:

  1. Andy Bechtolsheim: Sun Microsystems, Granite Systems, Arista Networks
  2. Biz Stone: Twitter, Xanga, Blogger
  3. David Duffield: PeopleSoft, Workday
  4. Dennis Crowley: Dodgeball, Foursquare
  5. Elon Musk: PayPal, SpaceX, Tesla Motors
  6. Evan Williams: Blogger, Twitter
  7. Jack Dorsey: Twitter, Square
  8. Jason Calacanis: Silicon Alley Reporter, Weblogs Inc., Mahalo, Launch, OAF/TWI
  9. Jim Clark: Silicon Graphics, Netscape, Healtheon, MyCFO, Neoteris
  10. Kevin Rose: Digg, Pownce
  11. Marc Andreessen: Netscape, Opsware, Ning
  12. Mark Cuban: MicroSolutions, Broadcast.com, 2929 Entertainment, HDNet, Magnolia Pictures, Landmark Theatres
  13. Mark Pincus: Tribe.net, SupportSoft, Zynga
  14. Max Levchin: PayPal, Slide, WePay
  15. Nick Grouf: Firefly, PeoplePC, SpotRunner
  16. Niklas Zennström and Janus Friis: Kazaa, Skype, Joost, Atomico, Rdio
  17. Scott Jones: Boston Technology, ChaCha
  18. Sean Parker: Plaxo, Napster, Facebook, Causes, Founders Fund
  19. Steve Jobs: Apple, NeXT, Pixar
  20. Wayne Huizenga: Blockbuster, Waste Management, Auto Nation

Birds of a feather flock together

Of the companies listed, you may have noticed some repeated names. When we sort the list by the companies with at least two serial entrepreneurs from our list, we get three companies:

  1. Twitter: Biz Stone, Evan Williams, Jack Dorsey
  2. PayPal: Elon Musk, Max Levchin
  3. Blogger: Biz Stone, Evan Williams

Similar Industries

And of the companies listed, another trend emerges, which is the similarities in industries.  The companies can be narrowed down into a surprisingly small number of groups, which could be categorized as ‘Technology’ and ‘Other’, but broken we see a large amount of Web 2.0 and Entertainment companies as well as Transportation:

  1. Software: Twitter, Blogger, Xanga, PeopleSoft, Workday, Dodgeball, Foursquare, Netscape, Ning, Plaxo, Napster, Facebook, Digg, Paypal, Slide, WePay
  2. Hardware: Sun Microsystems, Arista Networks, Granite Systems, PeoplePC, Apple, NeXT
  3. Entertainment: Pixar, 2929 Entertainment, HDNet, Blockbuster, Zynga, Magnolia Pictures, Landmark Theatres
  4. Transportation: SpaceX, Tesla Motors, Auto Nation

This follows a pattern in economics called ‘barriers to entry’ of which software has the lowest barriers in terms of cost and transportation, the highest.  Hardware and entertainment, it seems, falls in the middle, which is what you would expect.  So in the future, we can probably expect more serial entrepreneurs in the software arena, probably culminating up through app makers, which has the lowest barrier of entry and the highest audience: a combination ripe for the next round of serial entrepreneurs.