A Proprietor’s Economy
By: Amrit Singh
Tags: Economics, Venture Capital, Technology, VC, Startup

A Proprietor’s Economy

City Building — Thomas H Benton

Here’s the premise: If everyone becomes their own boss, where can tech add value? Already, we see nearly 20M Americans participating in the gig-economy, with 20M additional self-employed or non-gig contractors. What kind of tools will become relevant in an economy of ‘Solopreneurs’?

A new class of no-code tools is being built to serve internal teams at SMBs and enterprises. However, the secondary effect is that these new tools will enable new, independent businesses by increasing the capabilities of the individual. As the line between developers and operators begins to blur, so too does the line between the SMB and proprietorship. There exists a long-tail of hidden entrepreneurs who have been unable to execute against a digital vision because the tools (JavaScript, Python, and C/C++) were too complex.

As @Naval suggested recently, the Information Age is going to reverse the socio-cultural effects of the Industrial Age as it relates to profession. Information technology is making it easier to outsource micro-transactions, which results in what Naval calls “the atomization of the firm”. Many startups are formed today by shaving little pieces of business away from larger companies and subsequently creating enormous markets by offloading that function across many enterprises.

“The information revolution, by making it easier to communicate, connect, and cooperate, is allowing us to go back to working for ourselves”

Simultaneously, the sun is rising on agnostic “Lego-Block” tools that allow non-developers to create databases, messaging apps, and marketing tools pointed at specific use-cases and customer segments. It is interesting to observe the way non-technical folks can leverage the power of programming to a greater extent. The recent launches of companies like Parabola, Glide, and Retool confirm this growing trend. Should we consider these tools to be “enterprise-grade”? It feels like the incorrect bucket.

Instead, these tools are for the individual regardless of the contextual enterprise, SMB, or proprietorship. Many folks posit that tools like Airtable and Zapier will contribute to a new-age Accenture or KPMG. Instead, I think it means that independent ‘no-code’ consultants will have a field day selling their services to enterprises in one-off engagements.

TLDR: More people are more leveraged.

This is also reflected in Product Design —

Siva Sabaretnam, Head of Product at Facebook describes the convergence in designing for enterprise and consumer.

“A lot of designers’ ideas about enterprise design are based on traditional enterprise software — the complex, clunky kind. Back then, CIOs made purchase decisions largely on the number of features offered, without much consideration for end users. Now that paradigm has completely flipped: the people using the software drive adoption [enterprise-wide]. Useful, usable software that plays well with the ecosystem wins the day.”

Request For Startups

Assuming the premise is correct and we continue to move to a self-employed economy, what kinds of business models will succeed?

“Business in a box” solutions

There are many segment agnostic, functional solutions. (Thunkable, Glide, Bubble, Retool, Airtable, etc)

There is also an opportunity to take this a click deeper and to develop plug-and-play, verticalized solutions for the proprietor. This means creating a simple, intuitive tool to help a sole proprietor complete a particular job function. Many of these begin with — or can transform into — marketplace models after enough proprietor aggregation.

Examples:

Struct Club: Helping fitness instructors design and manage their classes.

Streem Pro: Helping home service technicians provide remote support

Caterease: Helping event planners manage events and source catering

New Benefits Managers

Most proprietors who are fully self-employed must figure out a way to get access to insurance. For entrepreneurs, obtaining health insurance can be tricky. New regulations are in place that purports to make it easier, however, in reality, things have become more convoluted. Solopreneurs often only qualify for Individual insurance, which gives them extremely limited HMO plans to choose from. If they miss the open enrollment period, folks can go up to a year without coverage.

Health Cost Sharing

Health co-ops are not a new concept — akin to a local credit union or a thrift bank, a community comes together to share the costs of a system and diversify risk. Co-ops started as a way for people who are generally healthy to protect themselves against unexpected health events. Digitally enabled, co-ops can be far more accurate with risk pricing and reach a wider risk pool.

Examples:

Stride Health has made great… strides.🤓 Having gone through the process of receiving a quote, Stride offers insurance benefits pretty comparable to the package I receive through my employer today. The company had raised more than $40m at a post valuation near $90M (as of 2017).

Scale as a Service

As individuals step outside of traditional enterprise models, they lose the leverage that comes with being part of a large organization- Access to workspaces, health packages, perks, job security. The former -workspaces and healthcare- are being built today. Perks and job security solutions are less robust. Perhaps there are opportunities to build there? — Maybe, Gig-economy unions? Decentralized strike platforms?

Examples:

TopTal: The platform guarantees base pay even when contractors are between projects.

SafetyNet: Offers job loss insurance. This insurance will become more valuable when an economy hosts individuals with greater individual job risk.

Enterprise <> Consultant Interaction

Full disclosure, this one is half-baked —

Sourcing and evaluation tools might be necessary to evaluate the arm’s length workforce. Let’s imagine that today, approximately 2% of the corporate workforce is outsourced to independent consultants. Most decisions to hire independent contractors outside of the big consultancies are made at the functional/ departmental level. If this figure reaches 10–20% in the future, enterprises might need a centralized entity to review — This could look similar to preferred vendor lists or vendor management systems.

This list isn’t meant to be exhaustive. I plan to add additional thoughts as they come.

Thanks for reading!

I’m always open to chat, learn, and collaborate. Feel free to reach me — 2amritsingh2@gmail.com