Unbundling People
Much of the value in the early web era was unlocked by aggregating data into holistic platforms that improved transparency and made purchasing substantially easier. For example, Expedia, Priceline, and Kayak aggregated data for flights and hotels from across airlines and hoteliers into one centralized experience. Amazon aggregated products that were previously dispersed across retailers and Google aggregated data that was otherwise opaque.
As mobile phones proliferated in the early 2010s and the service economy began to boom through the rise of freelancers (gig workers), much of the value accrued to platforms that were able to aggregate people. For example, Uber/Lyft aggregated hundreds of thousands of drivers to provide a service of moving people from point to point. Instacart aggregated tens of thousands of pickers to select and deliver groceries. This was less about data transparency and more about the immediate access to a service anywhere, anytime. Our portfolio company, Cameo, which offers famous faces (celebrities), on demand, anytime, fits this profile as well.
Although the large marketplaces of the early 2000s are now larger than ever, a substantial amount of software has been built to help re-empower businesses to connect directly with their customers (rather than be wholly dependent on aggregators.) For example, Roadster is a fast growing software co for car dealerships that want to transact 1:1 with customers rather than rely exclusively on Truecar or Cargurus. For hotels, software such as Revinate and Mews is helping them reconnect directly with consumers to intercept and/or bypass third party booking platforms. And of course, Shopify itself is predicated on enabling smaller brands to reduce their dependency on 3rd party marketplaces such as Amazon or Walmart.com. Alex Taussig, Partner at Lightspeed has termed this phenomenon, “business in a box.
More recently, we’ve begun to see this unbundling of marketplaces proliferate towards the service economy – hence, “unbundling people.” See, it turns out that over the past decade, a lot of gig workers (or independent contractors) have put in thousands of hours at their respective tasks and have built the confidence that they are now qualified to be wholly independent, and not beholden to an aggregator marketplace with a take-rate on each good they produce. For example, Side powers individual real estate agents, and enables them to spin-up entire practices around their skills, “transform[ing] agents into businesses.” This enablement is provided for a monthly software fee, rather than a tax on each transaction. Similarly, recent YC grad, Nomad Rides, turns rideshare drivers into small businesses, transforming the per ride take-rate into a monthly subscription backed by software tools.
Another topical example of unbundling people is Substack, which provides any journalist or content creator a full suite of tools to build a subscription driven media business, instead of more traditional employment/salary at a media organization. In all of these the punchline is the same: individuals can transform into small businesses, empowered by software.
The challenge around unbundling people is that it is largely ineffective without some built in demand. This is why Substack makes sense – most media writers have some existing distribution on Twitter or Facebook. This is also why Side makes sense – most experienced agents have an existing book of business. But for gig workers such as Uber drivers or Instacart pickers, the opportunity to discover, intercept, and accrue demand will be vital to enable them to successfully transition into independent small businesses.
I believe we’re in the early innings of this transition, and we’re interested in meeting with startups that are helping talented workers spin-out from platforms and become professionally independent. If you’re working on this, drop us a line.