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October 3, 2017

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These Startups Are Ditching the Uber Model and Hiring Full-Time Workers A second generation of gig economy startups is abandoning a dependence on contractors in favor of full employees.

Editor's Comments:  This article highlights an important trend.   The gig, freelance or contractor economy can offer an individual flexibility coupled with attractive compensation.  For many individuals, depending upon where they are in their career,  this can be very attractive.  Personal experience has taught me that when organizations go this route exclusively (i.e. no full-time employees) they are only interested in one thing ...the bottom line.   They will tell you otherwise but If you look under the covers you are unlikely to find an organization that values corporate culture, engagement, wellness, social responsibility and most importantly employee growth. Think carefully about joining such a start-up company.  We spend a lot of time and energy at work - make sure that you understand what is important to you as a person and work with a company that shares these same values.  

 

When Dan Teran set out to launch an on-demand office services startup in 2014, the model to follow appeared obvious. Companies like TaskRabbit, Handy, and Uber had fired up the gig economy by hiring thousands of workers as independent contractors. In doing so, the startups benefited from a cheaper workforce, and workers got to enjoy greater flexibility in when and how they worked.

 

But Teran had just read management expert Zeynep Ton’s newly published book, The Good Jobs Strategy, in which she held up companies like Zappos and Trader Joe’s as proof that investing in a workforce can make a company more profitable in the long run. Teran couldn’t shake the feeling that Ton was right. On top of that, the 1099 contractor model was just starting to show signs of weakness, as Uber had recently been slapped with a class action lawsuit alleging it was exploiting drivers. So in launching Managed by Q, Teran decided to make what seemed like a gamble: He would make members of Q’s workforce full W2 employees, eligible for company-paid health insurance, a 401K with match, and paid family leave.

 

That was nearly three years ago. Today, Managed by Q is at the forefront of a growing trend of on-demand companies that support full-time workforces. Some of these startups began by embracing more traditional labor models, like Q, while others decided to switch mid-stream, overhauling their business practices to bring workers on board as employees.

 

By Uber standards, this second generation of on-demand platforms is minuscule, and its approach has yet to stand the test of time. Some companies that switched employee models have failed entirely. But the trend is clear: It’s become dangerous to build a business purely on the backs of contractors, and a growing number of enterprising companies are betting their futures on marrying the appeal of the on-demand world with the security of traditional employment.  Read the entire article...

 

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