I had an interesting debate this weekend with a friend of mine who’s also in tech which triggered this thought: will software in itself be worthless in the future?

The paradox is that software is finding its way into everything in our lives – from how we order food, a taxi, to how we run a business and increasingly recreation, gaming, education… virtually nothing is left untouched by software. And as hardware becomes more pervasive it literally will be distributed everywhere, from our attire to our kitchen appliances, the couch we sit on, the toys we play with and so on.

Yet the cost of writing software is also dropping exponentially, or seen conversely, the ease of writing software is increasing exponentially.  The cost of building a simple website in 1995 was easily in the tens of thousands, would have taken months and would require deep technical knowledge. Today anyone can build a website for free on sites like Wix.com, or WordPress, or even from scratch with minimal coding.  Or if you’re lazy you can hire someone for a few hours on PeoplePerHour.com and be done with it within hours.

Moore’s Law, one can argue, applies to software too.  But whereas for hardware what powers that is advancement in microprocessor technology, in software it’s mainly the open source phenomenon.

Coders are willing to work on projects for free, for the greater good of the community. Equally the sheer number of coders is increasing exponentially as writing software becomes easier and easier and penetrates into our earlier education system. Kids now can write programs that were a challenge to software engineers in the 90s. That trend will only grow.

Microsoft which arguably was the first software company has been battling with this for decades as has its founder Bill Gates who’s always been very vocal about coders writing software for free. Yet the business model of selling pure software has been undermined largely by that trend. Operating systems, word processors and spreadsheets are now accessible for free (Linux, Google docs is just one example of each). Microsoft in the end had to adapt its business model – arguably the most powerful business model in the world to date – to survive and launched Microsoft 365.

That’s scary: even the most powerful business model in the world, that created the worlds richest man (or vice versa arguably:) was eventually undermined and had to adapt.

Equally, compilers that translate code to a functioning program have – and will carry on – becoming more sophisticated. Its quite imaginable that soon we will be able to input English language  which gets translated into the end product by the magic black box in-between. The need to be able to code in zeros and ones (Assembly Language) has already become virtually extinct. The first coders had to write in zeros and ones; now there’s a myriad of ‘higher level languages’. The cap for that trend is simple written language – the first language we learn as kids. So if one can explain what is needed to be done by the program, the compiler will do the rest.

Seen differently, we’ve gone from a world where companies had to go to specialist to write their software – the Accentures & IBMs of this world – and spent hundreds of millions on bespoke systems that enables their business to function. Now, they can rent Software as a Service (SAAS) at a click and tailor it to their needs with very little coding needed.

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Operating in the labor / outsourcing space for almost 10 years now (first with an offline business and then online) this is something I’ve spent a lot of time thinking about and in many ways have been part of its evolution. What does the Future of Work look like? In this post my aim is to highlight the trends that I think will shape it versus the applications and solutions it will manifest itself in.

1. The West-East playing field will level out

The outsourcing industry has its origin in the labor rate arbitrage between developed and developing economies. The first labor marketplaces like Elance & Odesk were in essence online versions of the Wipros & Infosys’ of this world, connecting businesses in the more developed Western economies with cheaper labor where it was abundant in the East, mainly in IT services. They emerged to piggy back on the newly minted IT industries in India in the 90s.

That rate arbitrage is narrowing today as the economies of India & China and other emerging markets are growing faster than the West inflating prices (including that of labor) and hence closing the gap.

Secondly, as these economies mature they start developing a middle class and an SMB (Small & Medium Sized Businesses) sector – the backbone in any economy that’s the essential channel for distribution of wealth downward from the gorillas at the top of the food chain – the big corporations and national institutions.

Much like those gorillas, these SMBs turn to the west to adopt some of the best practices that have matured over decades. The ‘freelance consultant’ is to those SMBs what the McKinseys of this world and the Harvard MBA franchise has been to the gorrilas at the top. They hire them to help with the things they are weakest in, from basics  like writing sales and marketing collateral, design & UI, to business management advice social media marketing and so on.

PeoplePerHour.com was founded largely on this premise. From the start we focused on nurturing a freelance workforce in the West which is still over 70% of our total. Most of hiring happens ‘semi-locally’ (i.e. not onsite , the work sill gets done remotely, but in same geographic region) or from companies in the emerging economies  hiring talent in Europe or the US.

As I argued in a previous post I also believe that this may well be the rebirth or the once might export economy of Western nations.  With manufacturing on the decline and unable to compete with lower cost economies in the East, the next wave of exports may well be skills and services that are more in abundance in the West and scarcer in emerging markets, the gap being bridged by the emergence and growth of online labor marketplaces.

2. Marketplaces 3.0: the rise of End-to-End (e2e) solutions

We are entering what I believe is the third generation of marketplaces. The ‘1.0’ era was all about liquidity (Craiglist). ‘2.0’ was about building trust via reputation systems, social validation (eBay, Airbnb, Etsy) to help in the discovery process as inventory exploded making discovery more challenging. Now, ‘3.0’ is making discovery redundant or unnecessary altogether (you don’t interview your taxi driver on Uber or Lyft and equally you don’t select your tasker on SuperTasker). These are what have been termed e2e solutions, going deeper at both ends – supply & demand – to remove friction in the experience.

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Marketplaces are some of the hardest businesses to build (as our own testimony at PeoplePerHour shows). They are complex beasts with lots of moving parts, the parts need constant tweaking and polishing, and the sum of the parts – when they are put together properly – is greater than the whole (the ‘network effect’). It takes a lot of hard work, analysis, creativity and most of all persistence to get to what’s commonly called ‘critical mass’. But once you do marketplaces are some of the most defensible and beautiful businesses.continue reading »

It’s been a good year

2014 has began well. Partly because I was skiing with my family as I usually do in the beautiful alps. The fresh air and the mountain always helps me self-reflect and think more. Without a shadow of doubt that one week skiing may be the most productive of my entire year. And whilst I always push myself to self-reflect that time of year – and this year in particular- is the deepest and most meaningful retrospection of all.

As I reflected on the past year I realized how much had actually happened. We started the year on steroids, the typical ‘go go’ top line investor fuelled growth mode. We operated on vanity metrics instead of sanity metrics.  We were fat and over-bloated. We were management heavy and inefficient. We were shooting for the stars and developed tunnel vision.

And then something painful but retrospectively lucky happened. The investor appetite changed, some of the assumptions, promises and myths came out sour. Some hidden realities came out of the wash. The froth came off the cappuccino.

I’ve said time and time again that the true test in life is what one does when that happens. In our case I’m proud to say that we just picked ourselves up, implemented some drastic changes, got real and elevated sanity above vanity.

It wasn’t easy.  We had to let go of team members, change plans and direction, scrap a lot of things that had emotional equity built in, and especially for the guy at the top who gets the shit from both ends – investors on one and team on other – I can tell you I had more than a few sleepless nights.

But we pulled through. We turned the business into cash-flow positive, we became leaner and meaner, the people staying over being part of the earlier hires who had more dedication and passion about who we are and what we stand for. Who share our sense of purpose.

We made drastic changes like moving from two split locations to one, which meant making our support team in London redundant. We dropped a few balls in the process with some metrics temporarily dipping but overall we came out a winner. Our costs overall halved and our revenue trebled in the year.

For this I am most grateful to the team that’s left over. They are warriors, with heart, passion and dedication. To reward them I doubled the stock pool and allocated a much bigger chunk of equity to the team that stayed for the fight. Some of the more senior management voluntarily took salary cuts in exchange for more stock.

The difference I’ve seen in mindset and perceptions is that from night and day. Its almost a different company now. Before I had employees. Now I have partners. Co-owners. And I push them to look at me more as a peer than a boss.

But good is the enemy of great !

Yet with all of that, I was still troubled at the end of the year. I had a niggling piece of the puzzle missing somewhere. I felt we did good but not great. continue reading »

2013 was without a shadow of doubt the most intense, eventful and transformational year for my company PeoplePerHour since it’s founding in 2008. And so as the year comes to an end I reflected as I usually do on what the key learning from the year have been for me. continue reading »