People, like businesses, want predictable revenue.

Jul 15, 2015 | Business, Politics

Let me set the record straight for you deluded millionaires of the world: For most people most of the time, working in the “Gig Economy” is an act of desperation that you do only because the alternative is unemployment or an even worse job.

Working a gig is exactly like being a temp. It sure as fuck beats unemployment, but unless you’re a teenager or a bored housewife, temping is not desirable.

People –like businesses– want predictable, recurring revenue. 

In business, we call this “quality of revenue.” Investors pay a premium for companies with high quality revenue. Here’s how Bill Gurley of Benchmark Capital (led Uber’s Series A) described

Investors favor pricing models that provide a high level of predictability and consistency in the future. It is easy to see why revenue visibility would have a positive impact on a Discounted Cash Flow analysis. The more certain you can be of future cash flows, the higher premium you will put on a business, and as a result, you will see a higher price/revenue multiple.

-Bill Gurley, All Revenue is Not Created Equal: The Keys to the 10X Revenue Club

Working in the Gig Economy is the worker equivalent of an transactional eCommerce company reliant on SEO. Times may be good now, but you never know what tomorrow will bring. The flick of a programmer’s switch can leave you ruined .

And while the same can & does happen to full-time employees, with employment comes a financial safety-net called unemployment compensation.

A financial safety net… yeah, who would want that?

1 Comment

  1. Kevin Hiraki
    Kevin Hiraki on August 5, 2015 at 10:22 am

    Excellent post. In the tiered hierarchy of preferences, most people prefer stability over runaway expected value. The “Gig Economy” is beneficial for many but stress-inducing for others, and as you have highlighted in other posts, often leads to uneven distributions.

    Under the assumption that innovation requires a certain level of risk (instability), how might we supply the broad population with enough revenue stability that fosters innovation without instilling complacency (presumably an impediment to innovation)? Does full-time employment offer a safety net that actually deters people from innovating?