#6 The Future of WorkAugust 4, 2016
“Who would have thought back then that was something that could happen?” Cori O'Steen, Founder and CFO of UPakNShip
This episode features:
Redd Horrocks, voice over artist on Fiverr
Diane Whitmore Schanzenbach, Director of the Hamilton Project at the Brookings Institution
Cori O’Steen, Founder and CFO of UPakNShip
Laura Chambers, Vice President of Consumer Selling at eBay
For tools and information about how to start or grow a business on eBay, visit ebay.com/openforbusiness.
This episode also cites facts and information from the following study:
- J.P. Morgan Chase Institute: Paychecks, Paydays, and the Online Platform Economy Big Data on Income Volatility
JOHN HENRY [tape]: Can you open the show for us?
REDD HORROCKS: Uh, sure. This is Open For Business, a branded podcast from eBay and Gimlet Creative about how to build a business from the ground up.
JOHN HENRY: I’m John Henry. And, as you just heard, this is Open for Business.
REDD HORROCKS: Today on the show, we’re tackling a big, broad topic that’s changing the future of work and entrepreneurship as we know it: the gig economy.
JOHN HENRY: So, that is voice-over actor Redd Horrocks reading the intro to today’s show, and this is what she does. People hire Redd to read their scripts, and she makes her living almost entirely through “gigs” she gets online. Which, as she just said, is the subject of this: our sixth and final episode of this season of Open for Business.
JOHN HENRY [tape]: So how much would that all cost me?
REDD HORROCKS: All of that, that would have cost you five dollars.
JOHN HENRY [tape]: What? [laughs]
JOHN HENRY: Today on the show, we’re going to be talking about a trend that’s helping shape the American economy as a whole and redefining what it means to be an entrepreneur: the gig economy. Let’s start here. What do we even mean when we say the “gig economy”?
DIANE WHITMORE SCHANZENBACH: I guess the way that I think about it is the gig economy is the opportunity to do small one-off jobs through some sort of an online platform. So I think that’s how most people would define the gig economy.
JOHN HENRY: That’s Diane Whitmore Schanzenbach. Diane runs the Hamilton Project at the Brookings Institution, where she’s spent a lot of time thinking about how this economic trend is changing the way people work, and what Diane is saying here is that for many Americans, work no longer means going to the same place every day and getting a paycheck at the end of two weeks. Work happens when you want it to happen, or when you need it to happen. It can even happen after your day job is done. So, if you have ever requested an Uber, or rented an apartment on AirBnB, or hired someone to run an errand on TaskRabbit, or sold anything on eBay, you are part of this phenomenon. You’re contributing to what some people say is the biggest transformation to the American economy since the Industrial Revolution. So, what are the official stats about the gig economy? What data has the US government been collecting on this phenomenon? Well, since 2005, not much. In fact, zero data.
DIANE WHITMORE SCHANZENBACH: The government stopped collecting official data on this right then, before the take-off of the online gig economy and so it’s actually been really hard to figure out how many people participate in that today.
JOHN HENRY: The best data that we do have about who’s participating in the gig economy as a whole actually comes from Chase Bank. They took a random, anonymous sample of a million Chase customers, and here’s what they found: the number of people who earned income through the gig economy grew 47-times-over between 2012 and 2015. That’s equivalent to 10.3 million people: more than 3 times the number of cashiers in this country. It’s about 4 times the number of waiters and waitresses. It’s more than 6 times the number of elementary school teachers.
DIANE WHITMORE SCHANZENBACH: What I can say as an economist is having that kind of opportunity to earn a little extra money in a very flexible manner makes workers better off. Especially, you know, at a time where incomes have been stagnant. Wage growth has been anemic, and so this is helping a lot of people make ends meet. It’s created a market, a very efficient, quick to serve market, in a place where there didn’t used to be one, and that’s how the economy changes.
JOHN HENRY: In this episode, we’ll explore the past, present and future of the gig economy. We’ll tell two stories of entrepreneurs who are thriving on this new frontier of entrepreneurship and we’ll talk about what every business owner can learn from their experiences. Starting with the woman we heard at the top.
REDD HORROCKS: Hi there. My name is Redd Horrocks, and I’ll record any voice over for you in either an authentic British or American accent.
JOHN HENRY: Redd is literally the voice the of the gig economy. And, as we said at the top, she’s a voice over artist, and her platform of choice is called Fiverr. Redd reads scripts for all kinds of companies.
REDD HORROCKS: You love your truck. You use it to get around town and to move things from time to time, but usually your truck bed is empty. Well, how does making a few bucks and helping people in your community sound?
JOHN HENRY: Say you’re a music start-up that needs a promo. Redd will do that for you.
REDD HORROCKS: Welcome to Riv dot com, an open source music community.
JOHN HENRY: Or you want a jazzy outgoing message when people call your office? Redd’s got you covered.
REDD HORROCKS: Thanks for calling Fleedio. If you know your party’s extension you may dial it at any time.
JOHN HENRY: Redd is one of Fiverr’s “Top Rated Sellers.” She has more than 14,000 reviews and an average rating of five stars, the highest you can get on the site. And Fiverr is what economists like Diane call a “labor platform,” meaning people use it to sell their services. Uber and TaskRabbit count as labor platforms too. On Fiverr, freelancers post their services for a base rate of just 5 bucks. On average, Redd makes about twenty dollars per voiceover gig. The biggest job she’s ever had was for $2,500. For Redd, Fiverr has more than paid off. She now makes about $150,000 a year through the site. But three years ago, she’d never even heard of Fiverr. Back then, Redd had a regular job. Well, sort of. She ran a circus.
REDD HORROCKS: Uh, the show that I worked on had 65 performers. It’s a pretty intense job. Basically, we’d be in charge of handling all of the performers, handling schedules, handling training of performers, and also running the shows at night. So we’re the ones calling all the calls, making sure that everything is safe, everything is moving in the right place, everyone is where they need to be.
JOHN HENRY: Redd’s a natural performer. Since college, she knew she had a special talent for voice overs, but it was always a side job, something she could do in her off-hours to make some extra cash. That is, until she found Fiverr and started to build a reputation for herself on the site. She was landing more and more jobs. And, even though she was working a ton, on top of her day job, she was really happy.
REDD HORROCKS: I started spending a lot more time doing voiceovers at home and my hours started getting really long compared to work.
JOHN HENRY [tape]: Right.
REDD HORROCKS: But I found that even though it was going to be one in the morning when I got home, I was really looking forward to doing the voice over work, and I would, you know, check my voice over work email while I was still at work, and it was one of those things were it just kind of — it made me feel really empowered and it made me feel like I had no, no limits on me, and I really, really enjoyed it.
JOHN HENRY: So how did Redd transform those late night voice over recording sessions into a full-time business? The answer is, very very slowly. Gradually, Redd started to think she might be able to quit her day job. And, after a year and a half of methodical planning and working both jobs at once, Redd took the plunge into Fiverr full time.
REDD HORROCKS: And I did a lot of budgeting and ran the numbers a lot of times, and ended up giving four months notice, uh, in order to go ahead and leave my job because I was still terrified it would all fall apart. I wanted to give enough notice where I could actually switch to working solely off my voice over income and banking my paycheck from the circus.
JOHN HENRY [tape] : Got it.
REDD HORROCKS: To make sure that I was good, to make sure that I could do it.
JOHN HENRY: And that’s lesson number one: start slowly. If you can, make sure you have the runway to do it before you take that plunge, and the good news is that on-demand work allows you the flexibility to take your time. Because you can work when and how much you want, while keeping your day job. So you can experiment with what works best for you. You may never quit your day job, and that’s fine. It’s actually normal. The vast majority of people in the gig economy keep their day jobs. On labor platforms like Fiverr, the average person makes a third of their living through the gig economy. Redd makes ninety percent of her income this way. And Redd knew she’d made the right decision on the very first day after she finally quit her job at the circus. She still remembers the date. It was September 29th 2014.
REDD HORROCKS: I was having lunch with a friend, because I was like, oh I don’t have to go to work, I’m going to have lunch with a friend.
JOHN HENRY [tape]: Right.
REDD HORROCKS: And I was sitting in the restaurant and we were having a beer in the afternoon, because I didn’t have to go to work, and, uh, my phone rings and it’s a studio that I’d auditioned for a couple of times, and they were like, hey, we’ve got a project for you, can you be here in half an hour? And I’m like, yes, yes I can. I’m going to get a glass of water, and I’m going to put my beer away, and I’m going to hightail it over there. And great. So that was literally the first day. And if I’d have been working at the circus I wouldn’t’ve been able to take the job.
JOHN HENRY: [tape]: Wow.
REDD HORROCKS: So that was very, that was very rewarding. It was like an immediate, like, okay, we’re good, we can do this.
JOHN HENRY: Since that day, Redd has bought her own home and she’s been able to support her boyfriend while he goes back to school full-time. Actually, they just got married. They’re going on their honeymoon, and Redd doesn’t have to ask anyone for vacation time. But, when starting a business, not everyone has the luxury to take their time.
CORI O’STEEN: I don’t know if I’d be considered having skills. I didn’t graduate from college. I didn’t come out of a career, ever. I kind of got married really young and so that’s a lot of the reason why I ended up divorced, was I was just very young.
JOHN HENRY: That’s Cori O’Steen. In 2003, Cori’s life turned upside down when her marriage fell apart. At the time, she had two small kids to take care of.
CORI O’STEEN: It was horrible. It was really bad. I never anticipated ever getting divorced. It’s not something I ever expected, and I never thought I was ever going to anything but a stay-at-home mom. That’s what I always wanted to be. So, I had to make money, I just had to find a way.
JOHN HENRY: And that way was eBay. Cori knew about eBay because she used it to look for name brand kids clothes she couldn’t afford at full price, which, back then, most people didn’t do. Remember, this was 13 years ago: eons in internet time. People were still getting used to the whole idea of buying and selling stuff online.
CORI O’STEEN: I was finding nice clothes and also they were new and used, and so since I saw the same brand I was looking for, I started selling my kids’ old clothes. Because I didn’t, I really didn’t know what I was going to do, and when I started, I wasn’t starting selling on eBay as trying to create a business, I was just trying to, just trying to make ends meet.
JOHN HENRY: Selling her kids’ clothes online was helping Cori stay afloat after the divorce, but she had an inventory problem. She ran out of clothes to sell. Once the hand-me-downs were gone, she kept her store going with whatever she could find, and it was at this point when lightning struck for Cori. The first items Cori ever bought online were a dress and a matching hat for her two-year-old daughter. This was before she’d sold anything herself, back when she was just a customer looking for a deal. The outfit arrived at Cori’s house wrapped in tissue paper with a pretty ribbon and a handwritten thank you note, and the memory of this personal and beautiful packaging stuck with Cori. When she started her own eBay store, she wanted to use that same kind of packaging for her customers. But, there was a problem.
CORI O’STEEN: The packaging was, that was the one thing that I couldn’t find.
JOHN HENRY: Like any savvy entrepreneur, Cori identified this gap in the market, and she seized the business opportunity. She figured if she, an eBay seller, couldn’t find the packaging she wanted to ship her stuff, other business owners probably had that same problem, and she was right. So, Cori pivoted away from selling children’s clothes to selling shipping and packaging supplies. To make that pivot, she did tons of research. She relied on connections she already had, and then, eventually, she started designing her own personalized, decorative packaging that she sells today. It was a hugely profitable move. Cori had hit on a need that lots of other entrepreneurs selling online also had, and so it wasn’t long before her new business took off.
CORI O’STEEN: It’s kind of exciting when people are buying your stuff, and I think it helped me get through just a really difficult time because it helped take my mind off of, you know, what I was going through. At first it was just me, and then, you know, it wasn’t too long before I had somebody helping me pack. Like, before the internet, who would have thought back then that was something that could happen? It’s exciting that you could just go pull something out of your closet and make money. And just a regular person with no business expertise,
JOHN HENRY [tape]: Right.
CORI O’STEEN: Without having the funding or the knowledge?
JOHN HENRY [tape]: Exactly.
CORI O’STEEN: Or having to go get a loan from a bank or or write up a business plan? You know? Just a regular person can throw whatever they have up online and really instantly turn it around and make money off of it.
JOHN HENRY: And this brings us to lesson two. Whether you’re selling online or offline, your best move is to find your niche. Ask yourself: what is the thing that no one else has noticed but you or that you are especially equipped to provide? This question is so important for any entrepreneur starting a business that we spend a whole week on it at the start-up accelerator I run, Cofound Harlem. And you know what I like to tell those guys? There’s riches in niches. Case in point: Cori. Today her business, UPakNShip, is a multi-million-dollar packaging company with over 34,000 positive reviews on eBay in the last year alone. Eventually Cori got remarried and her husband, Beau, helps her run UPakNShip. They have 13 employees and 2 locations: one in California and one in South Carolina, near their summer home. Today Cori is running her company exactly the way she wants to.
CORI O’STEEN: I’m still home with the kids to this day.
JOHN HENRY: Right, right.
CORI O’STEEN: Because I couldn’t leave them, that was the most important thing to me.
JOHN HENRY [tape]: Absolutely.
CORI O’STEEN: Was being home with them. And then when something comes up, say the kids have an event or a doctor’s appointment or something, I mean, I can just go.
JOHN HENRY: Cori falls into the capital platform part of the gig economy. A capital platform lets you sell or lease goods instead of services. eBay is a capital platform, so is AirBnB. Capital platforms make up the majority of the gig economy. According to that Chase study, roughly three-fourths of people who made money in the gig economy have done so on capital platforms. The stories we’ve heard so far are about entrepreneurs who’ve been wildly successful on gig economy platforms: Redd on Fiverr and Cori on eBay. And they’ve done that, like any business owner, by building relationships with their customers, except in the gig economy, you build those relationships through reviews and ratings. Online, those reviews and ratings are your reputation. We’re going to spend some time here talking about this because every provider in the gig economy is trying to figure out how to deliver service that gets the best reviews, and every platform is trying to figure out a fair way to deal with those reviews, because a lot of times, in this online economy, there are customers reviewing people who they’ll likely never meet in person.
LAURA CHAMBERS: When you have an anonymous person connecting with another anonymous person and they’re relying on each other, it’s important that they find some way to trust each other. And so, right from the start, um, our founders came up with this concept of feedback, and it was really the original mechanism for helping people understand how to trust each other in that, in that marketplace’s environment.
JOHN HENRY: That is Laura Chambers, Vice President of Consumer Selling at eBay, although over the years, she’s held lots of job there.
LAURA CHAMBERS: Manager of — hang on, I’m going to have to think this up. Manager of Corporate Strategy, um, General Manager of Paypal Mobile.
JOHN HENRY: But throughout her time at eBay, Laura’s been working to perfect their system for feedback.
LAURA CHAMBERS: Head of University Programs, and Vice President of Trust, and Vice President of Consumer Selling.
JOHN HENRY: And because this is so tricky, they’ve been working on this for nearly 20 years, since 1997, when eBay was pioneering how to let customers leave feedback for sellers online
LAURA CHAMBERS: It was absolutely revolutionary at the time. I mean, no one had a marketplace, um, and certainly no one had developed a feedback system before. You know, if you think about the time, people were sending each other cash in envelopes. Like, that’s how did they payments. So this was always a marketplace that was built on trust.
JOHN HENRY: Ratings are the key to building that trust, and therefore they determine whether people can make a living through these platforms online, because virtually every gig economy platform is designed around giving customers the opportunity to rate their experience, and that’s great if you’re a customer or if you’re provider with a top score. It’s instant credibility. But what if you’re not? What if you get a terrible review? Did that one-star review actually reflect the service you provided, or was your customer just having a bad day, or did they not like something vague about you? Right now, there’s no good way to know. This is such a big issue that the academics we talked to have a name for it. It’s called “data Darwinism.” So, if you’re a leader in this new economy — an Uber, or a Lyft, a TaskRabbit, or an eBay — how do you deal with the problem of potentially biased reviews? Laura says eBay is tackling this issue head on and trying to come up with some industry best practices…
LAURA CHAMBERS: And so one of the things we did a couple of years ago is actually go out to the industry. There are so many great gig economies coming up and so much great innovation, so we love connecting with folks that are doing it differently to learn about it, and so we went out and we spoke to everyone. We spoke to the Ubers and Lyfts of the world, the Etsys and AirBnbs, all those guys.
JOHN HENRY: And here’s one thing they talked about in those meetings: these platforms have the ability to weigh different kinds of feedback. For instance, eBay used to let subjective reviews like ‘what was my overall experience with this seller?’ play a much bigger role in the seller’s standing on the site.
LAURA CHAMBERS: What our sellers felt that that wasn’t very fair to them. Because it is, those are actually fairly subjective, and they’re not always accurate, and sometimes there can be some bad behavior that goes into negative reviews and so forth. So we completely changed our standards program to just look at much more objective data.
JOHN HENRY: Objective data, like: did you receive your items on time? Or, did your driver drop you off at the right address? Did your tasker make the delivery you requested? Platforms have the power to collect all of this objective data, plus the subjective reviews, and decide how much weight to give which kinds of feedback, so your overall rating is a mix between facts and feelings, and this is important because even Laura knows how easy it is to make a mistake when leaving a review.
LAURA CHAMBERS: I remember the first piece of feedback I gave, and I got it completely wrong. I bought a microwave, and it arrived, and it was blue, and I was furious, and so I left feedback for the seller saying, you know, I bought a silver microwave, and it arrived blue, and obviously I was mad. And the seller very politely replied that that was the protective cover for the microwave and I could just peel it off. So my first experience of leaving feedback was a little bit of an embarrassing one. But, you know, that’s kind of what happens. That’s how we learn. And that’s how the marketplace gets better. So, that’s the first one I remember leaving.
JOHN HENRY [tape]: So, what’s your takeaway from that?
LAURA CHAMBERS: Look, people are human. I think that that’s basically it, right? When you have a marketplace, you have a human interacting with another human and we all do our best, and we all assume the best, but sometimes we make mistakes.
JOHN HENRY: And this brings us to our final lesson: the gig economy runs online but it’s still a human to human interaction, and humans have bad days Sometimes a provider will make mistake on the job. Sometimes a customer will leave a review that isn’t fair. That happens. But, as a gig economy provider you have to do everything you can to make sure that your overall feedback is as positive as possible, so one or two human mistakes won’t make or break you. The good news is these gig economy platforms are also trying to do their part so that customers have their say and providers are protected. So, to recap today’s lessons about the gig economy. Lesson number one: Start slowly, and in the gig economy you have the option to do that. You can build your business at your own pace. Lesson number two: Find your niche. Or, as I like to say it, there’s riches in niches. This is true online and off, but online, there are lower barriers to entry, which means it’s easier to pivot when you find that niche. Lesson number three: Ratings matter, and in order to succeed in the gig economy, you have to take them seriously, whether you’re a customer or a provider, and remember these are human to human interactions. There are people on the other side of those stars. Special thanks to Chris Hoch, Gary Henderson, Arun Sundararajan, Kingsley Obi, Gabi Perez, Bianca Cado, Nephresha Singletary, Maggie Mistal, Rebecca Germain, and Libby Reder. We couldn’t have made this episode without all of your insights. And thank you to all our listeners. It’s been so great hearing from so many of you. Let us know what you think of the show on iTunes and Google Play. Just like on the gig economy, reviews matter. They help new listeners discover the show. Open For Business is a branded podcast from eBay and Gimlet Creative. I’m John Henry. Thanks for listening.
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