The Shared Start-Up: How The Next Wave of Start-Ups Will Be Built by Provisional Teams

17. September 2015



Fair warning: this is not an article about the on-demand economy and the independent contractor as a means of labor. This is about the dramatic shift of how start-ups are currently being built. The story of the lone entrepreneur driven by a prophetic vision of the future, mindful of every step of masterful execution, while slowly converting each and every doubter into joining his/her mission of world domination is, to put it frankly, over. (It does, still, make a killer plot line for a superhero flick.) I am not saying this dream no longer exists, I am saying that plot line may look a bit different.

Remote Collaboration: Matching Talent With Opportunity

Today’s entrepreneur lives in a much smaller, more connected world than his/her predecessors. With the increase in platforms that have revolutionized remote collaboration (like Slack and Trello), working with someone five time zones away is instant and seamless. Gone are the days when offshore working was equivalent to baby-sitting a toddler on a sugar high: frustratingly impossible. The chance for miscommunication was larger than anyone focused on quality preferred and accountability became as petty as faulting the exact diction of an email. It wasn’t worth the time or money. So one could see the opportunity that it presented to start-ups, where those two resources are used most sparingly.

Today, remote work is nearly ideal for start-ups. The ability to work with specialized talent without having the added stress of relocation and financial stability is a big deal. Imagine that you are a talent interested in joining a start-up mission, but in order to “feel it out” you have to completely commit to moving across the world. You may want the company to be more financially stable before you make a global transition. As a start-up, that talent may be pivotal for you to push the company towards stability. It’s a chicken and egg scenario. Remote working allows for both parties to meet halfway. Just like time and money, energy is a pivotal resource for start-up success. The ability to tap into fresh energy without taking large risks has reduced startups’ chances for failure.

It became quite clear that a company seriously looking to adopt remote working habits needed to make the proper investment of communication infrastructure and technology to be successful. Thanks to pioneering companies such as WordPress and 37 signals, have begun to embrace remote working cultures. Matt Mullenweg is often seen as the father of remote working. He faced constant doubt when WordPress was growing at a rapid pace. Many people thought it could not support x amount of people. When it reached 50 users, they said it would surely break after reaching 100. As this argument became more and more redundant and the number predicting when it would be unable to scale became bigger and bigger, people harped on the details instead. They argued that remote work was “industry specific”, mistakenly labeling programming as an isolated craft, where collaboration was not present or necessary. That is far from the truth. It is a myth, created to support a weak argument. It is undeniable that remote work is becoming exponentially popular in many industries and continues to assert its place in the world economy. Mullenweg says it perfectly: “ We aren’t anti-office, we are location agnostic.”

Lean and Mean: Increasing The # of Start-ups

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”

— Tom Goodwin

Any time in history where building has become cheaper and faster, there has been a great boost in the supporting ecosystem. In the 1920’s, Henry Ford’s assembly line created a huge demand for the Model T, opening up the road for Americans. Traveling was no longer a luxury, but a lifestyle. The ecosystem responded with the creation of the open road and entrepreneurs took advantage by creating businesses to accommodate the traveler.

Creating a start-up used to be the wild west. Now with cloud-based server space and just about an API for everything, it’s the new assembly line. Conditions are ripe for start-ups. Thanks to the lean entrepreneurship movement, boot-strapping has become the rule rather than a fad. The benefits of contracting a worker versus full employment favors the entrepreneur’s wallet. (As I write this, California’s courts reached a decision to treat Uber and Lyft drivers as employees rather than as independent contractors, a decision that will have far-reaching implications for the entire business model for the shared space economy.) Freelancing has become so popular that VC’s have dubbed it the “1099 economy” marking its recent impact on the landscape. It goes back to the basic entrepreneurial principle of optimizing input while minimizing risk. In this case, entrepreneurs are optimizing talent, while minimizing the risk of full employment (which includes benefits and additional perks).

The strongest variable of all is the way society has responded to the lean movement by managing their expectations. “Beta” has become a part of everyday conversation while “iterate” is the new launch. This embrace by society has changed the way products are released and developed:  quicker to market, faster to traction, and turnover rates between builds are the new ad heavy, elaborate, high budget launches. Even the biggest companies have resorted to the strategy of asking entrepreneurs directly: “What do we build?” As open source is the new proprietary IP, start-up acquisitions are the new pillars of expansion, and multiple integrations are the only means to survival.

All of the this has created the “perfect storm,” enabling startups to fail faster and cheaper. This may seem counterintuitive, but as Dan Senor and Saul Singer stated very effectively in their book Start-up Nation: The Story of Israel’s Economic Miracle:

A 2006 Harvard University study shows that entrepreneurs who have failed in their previous enterprise have an almost one-in-five chance of success in their next start-up, which is a higher success rate than that for first time entrepreneurs and not far below that of entrepreneurs who have had a prior success… Israeli culture and regulations reflect a unique attitude to failure, on that it has managed to repeatedly bring failed entrepreneurs back into the system to constructively use their experience to try again, rather than leave them permanently stigmatized and marginalized

In other words, more failures equals more success. We will witness more failures today than ever before, which will in turn create the highest chance in history to succeed.

The New Work Force: Breaking Up With the System

Millennials are the newest face of the workforce and must therefore accept responsibility, just like the current administration is “responsible” for the most recent state of the country. From a nearsighted perspective, it seems like they are reluctant to pay their dues and immediately want to work on things they are passionate about. Can you blame them? It’s like being in a relationship with no trust or love. If you have one, you have a fighting chance, without love or trust, it’s pretty hopeless. The previous generation may have proven their grit by barreling through passionless work, but at least trusted that they had a job. Millennials have neither and they are not settling for that.

Since Britain’s industrial revolution, the model of the traditional work force has seen very little innovation. The 9-5 work schedule was set in the 18th century to optimize factory production and time for recreation. But as the whole world rapidly changes to create a more custom experience, why is work limited to such a finite structure? The question has been asked many times, but now people demand an answer. Pointing fingers to “laziness” rather than acknowledging the changing times is no longer sufficient. The new work force is building a new system to house their new set of values. They prefer improving a skill set over a job title, time and excitement over money and redundancy, and autonomy over hierarchy.

This has created a new lifestyle movement for independent contractors. No longer are they bound by the restraints of their employers. You want unlimited vacation? Become a digital nomad, living and working from an Asian coast. Do you prefer waking up at 8 a.m. and hustling to catch a bus before settling down for an hour commute? Or would you rather set timeframes where you are the most effective, creating a task-based mindset rather than obsessing over a ticking clock? Not only are flexible options more beneficial for workers, it creates a higher quality of work and trims fat from internal bureaucracies.

Many companies are not willing to consider giving up that initial control that is the proper foundation for this lucrative, mutually beneficial style. Some can’t let go of having complete control over their employees. I can assure these folks that as this terrain becomes more and more developed and more companies and workers adapt to reflect the change, they will have a very small talent pool to choose from, making them unable to sustain their growth and leading to their eventual demise.

The Future, Said Everyone

There are a thousand predictions one can make about the future, including extractions from Sci-Fi movies or references to how history is destined to repeat itself. I, myself, think change happens in minuscule degrees, over time, like a child’s slow growth. One day you look at your 10 year-old daughter and wonder how your little baby has suddenly turned into a preteen. The trick is not to wait until history reveals the verdict. By then, it’s too late and you have missed the boat.

Simply take a look around – a real look. We are living in a society where the future generation is being taught to constantly question social constructs. Twitter accounts are infamously revealing more facts than our own trusted media publications, and group messages are becoming more of a symposium than our very own classrooms. Truth can no longer be hidden behind physical boundaries or be the products of manufactured intentions.

How long will it be before an outright rebellion against an outdated working structure breaks out? More importantly, what will it take for companies to begin investing in this inevitable future? Has it already started?