Work Future 6: The Gig as Startup

Reading Time: 4 minutes

There are few concepts that embody the ethos and optimism of Silicon Valley as well as the accelerator.

Accelerators are programs that typically last 90 days and seek to scale startups quickly. They do this by infusing capital (usually in exchange for equity), providing access to connected mentors and their networks, and giving technical assistance both to develop the product and the business. Due to the intensity of programming, accelerators generally demand total devotion from their participants. This all-in commitment is built on the startup trope that says the truest entrepreneurs prioritize their business over all else. Accelerators don’t claim to be the end-all and be-all for starting new companies, but anyone with commitments that cannot be put on hold (e.g. spouses, children, mortgages, student loans) is ill-suited to participate in them due to this all-in culture. The average age of entrepreneurs funded by Y Combinator, the original and most successful accelerator, is 26 years old1. This is a demographic that is delaying marriage, children and mortgages (students loans are another thing). Yet research from the Kauffmann Foundation2, the preeminent foundation for entrepreneurship, notes that the average and median ages for successful business founders are both 40 years-old, and a majority are married with children.3

So why does this matter? And how does this relate to the gig economy?

This matters because as economic development policy and practice seek to emulate the successes of Silicon Valley, it is important to understand the context within which those successes function. The tendency is to shine the spotlight on the Y Combinators of the world and ask how we can make that happen here (wherever “here” happens to be). But in reality, the accelerator model works well for two very specific segments of the population: youth with few responsibilities and those with the means to support their commitments while they work on a business.

For most everyone else, the better business startup model is the gig.

By some estimates, over 50 million Americans do some type of side work while employed, be it part- or full-time. These are the people with spouses, children and mortgages—commitments than cannot and should not be put on hold—who are interested in expanding their economic potential. Gig work allows individuals to test the waters of a business idea or passion while simultaneously allowing them to keep up other commitments. If 1% of the people who currently work on the side have interest in starting a business (we know the number is higher than 1%), that would be 500,000 potential businesses. If only 10% of those potential businesses were successful, that would still be 50,000 new businesses.

The flip side of this overlooked potential for new businesses is the reality that 90% of startups fail4. The fact of the matter is the all-in approach of Silicon Valley mythology means betting the farm, and a very small percentage of the population is willing and able to do that.

Unfortunately, this prioritization of the all-in entrepreneur isn’t limited to contemporary tech startup culture. It is the main archetype applied in existing economic development efforts across the country. It is a significant oversight that more business startup and support efforts do not embrace gig work as a more patient and inclusive path to economic development.

This is not to say there aren’t already steps being taken in this direction. A specific example that supports and encourages gig work is Wisconsin’s Pickle and Cookie Bill5 that is currently being considered by the state legislature. This bill would allow gig workers to produce and sell up to $7,500 in canned or baked goods without having to go through the regular licensing requirements. In essence, the bill invites individuals interested in expanding their economic potential to test the waters of entrepreneurship without the high stakes of the all-in route. Variations of the Cookie and Pickle Bill have been passed in Wisconsin and other states establishing precedence for this type of thinking. Economic policies and practices need to evolve to support the gig economy.

I would like to note that accelerators should not be simply thrown to the side as business summer camps for the select few. They can work well for investor-driven business development. But what can immediately be taken from accelerators and applied more broadly to gig workers and beyond are some of their practices. The ideas of the lean startup, iterative design, customer validation, cloud technology and coworking apply to all businesses (both non- and for-profit), not just tech companies in accelerator programs. These “how” practices of tech startup culture are excellent tactical innovations.

The gig economy is currently touted as the result of Silicon Valley innovation, but the gig economy is much broader and more established than the current tech boom (and the one before that…and…). There is real opportunity for economic development approaches to embrace and encourage gig work.

Questions for further consideration:

  • 6.1 What could communities do to further activate the economic potential of all their citizens who are working on the side of employment?
  • 6.2 How could existing business development and support services be adapted to the gig work approach?

  1. http://business.time.com/2013/03/14/ask-the-expert-the-best-age-for-a-start-up-founder/ ↩︎
  2. http://www.kauffman.org/ ↩︎
  3. http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and%20covers/2009/07/anatomy_of_entre_071309_final.pdf ↩︎
  4. http://www.forbes.com/sites/neilpatel/2015/01/16/90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10/#679fb19855e1 ↩︎
  5. https://docs.legis.wisconsin.gov/2015/related/proposals/sb330 ↩︎