Chapter One

1. Evolution of the Gig

The gig economy feels like a modern phenomenon, but it didn’t just materialize out of thin air. “Gigs” have been around since even before jazz musicians started using the word to describe their performances. If we consider gig work to be any part-time, freelance work, we can see that all kinds of people have been taking all kinds of gigs for a very long time.

In the 1930s, for instance, the Great Depression forced many farmers to sell their land and become migrant farmworkers, moving from farm to farm to help with the annual harvest. Temporary jobs became popular in the mid-1940s, with agencies like Russell Kelly Office Services and Manpower, Inc. placing workers in various gigs on an as-needed basis. These short-term gigs allowed mothers to help provide for the family, introducing a new balance of staying at home with their kids and working.

After that, society’s attitudes about work changed dramatically. Traditional salaried jobs, once the default option for most workers, were no longer the only game in town. Anyone looking for work, and anyone hiring, now had to consider contract work—gig work—as a given and accepted part of the business landscape.

Initial Surge

Throughout the 1990s, independent work became even more accessible through online classified ads on boards such as Craigslist, and through exchanges on websites such as Elance and oDesk (now Upwork), where employers advertise their needs and workers respond. This kind of crowdsourcing brought visibility to independent, remote workers and gave employers reliable access to an ever-growing global talent pool. Soon, there were crowdsourcing sites for all types of work, including the simple, repetitive tasks on sites like Amazon’s Mechanical Turk, that offered as little as 10 cents per task. By 1995, 10 percent of Americans worked in alternative, or gig, employment.2

During the dot com boom, we saw a lot of people throwing money at new internet companies simply because they sounded interesting or promised revolutionary disruption. There was a general FOMO (fear of missing out) mentality that I liken to what North America saw during the California Gold Rush of 1848. When gold was first discovered in California, a wave of FOMO swept the minds of thousands of men who left their wives and homes in search of vast fortunes. In the late 1990s, that same mentality swept investors to invest in various internet companies, thinking the return would be highly profitable. And since the internet was a new phenomenon, people feared missing out on this new technology that was sure to take over. Some companies, like PayPal, did alright, but most ended up failing by 2002.

I see the same thing happening today with startups, especially those in the gig economy. SoftBank is an example of a company that suffered from FOMO as they entered the gig economy. SoftBank threw a ton of money at gig employers, like WeWork and Uber, for example. Unfortunately, internal mismanagement within some of those companies caused SoftBank to lose nearly $4.5 billion with WeWork and $5.2 billion with Uber3.

Gig work entered the mainstream steadily at first, chugging along but moving slowly compared to what would happen in the early 2000s. A decade into the new century, the gig economy became more of a runaway train, moving much faster than most people had anticipated.

How fast? This fast:4

• Airbnb, founded in 2009 by roommates hoping to make the rent by taking on part-time boarders, began with 2,500 listings. By the beginning of 2012, the company boasted over one hundred thousand listings. By 2018, they were worth $38 million.
• TaskRabbit, created in 2008 as a site for hiring people to run errands and do simple chores, quickly grew to cover nearly any task, from repairs to wake-up calls. By 2017, sixty thousand taskers offered their services through the platform. The company was eventually purchased by Ikea.
• In 2010, when two entrepreneurs noticed how hard it was to find a reliable and inexpensive ride, especially in bad weather, they designed an app called Uber that let users request a ride with the tap of a button. Five years later, Uber drivers had accepted 1 billion rides, and the company is now one of the world’s most popular and valuable transportation and logistics companies.
• Lyft, Uber’s main competitor in ridesharing, served 1.56 million annual riders in 2013 and an astounding 265 million in 2017.

How Did They Grow So Fast?

How did all these companies manage to grow despite the financial recession of 2008-2009? There are a couple of reasons: They adopted a growth mindset and took big risks in order to capture as much market share as possible, despite costs, and they had technology on their side.

Growth Mindset

While the financial world seemingly crashed around them in 2008, most gig companies adopted and made decisions that revolved around a growth mindset as opposed to a short-term strategic one. Instead of worrying about how they would make money right off the bat (strategic), they wanted to capture as much of the market share as possible (growth). At the time, that growth mindset was far more important to them than profits alone. Once they successfully captured enough market share, they would figure out the operational efficiencies that would allow them to be profitable at a later time.

In order to capture the market, these various gig companies ran incredibly aggressive affiliate and referral programs, which offered huge incentives.

Rideshare companies experienced astonishing, unheard-of growth by leveraging their rider and driver bases to promote their affiliate programs among their friends and family. Uber, for example, gave out $1,000 cash bonuses to anyone who successfully recruited other drivers that had previous Lyft experience. This was pivotal. If I recruited an existing Lyft driver to switch rideshare services to drive with Uber, not only would I get the $1,000, but the driver I recruited would get $1,000, too. That’s a lot of money for a new company.

When you think about it, Uber’s affiliate program was pretty savage; they shelled out a total of $2,000 just to poach each driver from their competitor. My friend Jonnie made tens of thousands of dollars in just one month by taking Lyft rides and converting the drivers to Uber. It was a two-way incentive—and it worked.

This became one of my revenue streams as well. Instead of monetizing Ridester.com through pay-per-click ads alone, I also used the site to educate drivers about these incentives. I kept tabs on each of the rideshare companies’ affiliate programs and wrote articles about them. I then encouraged my readers to click the links on my pages to sign up to be a driver, and when they did, we would each get a payout from the programs. With each successful sign-up, I would get up to $1,000, sometimes even more. These affiliate programs were a strong source of income for me for several years—until the companies offering them put a global limit on how much any one person could make on their programs. That’s why it’s important to never put all your eggs in one basket; more on this later.

Airbnb, TaskRabbit, Postmates, Instacart, and DoorDash ran similar programs, although not as lucrative (see box). If you referred a friend on TaskRabbit, for example, you and that friend would both get $50 credit added to your account. I viewed these programs as grassroots guerilla marketing. People would invite their friends and family members in order to capitalize on the incentives. By doing so, these companies increased their market share and rapidly grew—even during a recession. Pretty brilliant, really.

All of that growth, however, came at an expense. The companies that grew during the recession took billions of dollars in losses in order to capture as much market share as possible. They wanted to become a household name before they achieved profitability—and it paid off. Uber’s founder, Travis...