We wrote last week about Ardent’s take on the future of the worker-employer relationship. In that piece, we hypothesized an overall shift to a more “authentic employee experience” and that companies shepherding this shift would help bring on the future of work. This post is the first in our series where we deep dive into Ardent’s four key areas of interest within the Future of Work, starting with The Re-Imagined Labor Marketplace.
The demand for skilled labor has historically outstripped supply. Finding capable workers within reach is both time-consuming and expensive. Labor marketplaces enable enterprises to source skilled talent in an efficient manner. The first wave of marketplaces created the gig economy; rideshare (Uber), food delivery (DoorDash), and small home renovations (TaskRabbit) were the first to benefit from job matching platforms. As time goes on, labor marketplaces will become more sophisticated and the jobs will increase in skill and complexity, just like NFX writes about in The New Generation of Labor Marketplaces and the Future of Work. In the re-imagined marketplace, workers will offer more complicated tasks, some requiring special certifications. They will be smarter, using data to match better and machine learning to automate certain tasks. There are countless ways in which this industry can continue to innovate and we are excited for what’s in store.
Marketplace Benefits to Businesses
- Specific needs met by proven skills: Labor marketplaces enable enterprises to source skilled talent faster and more efficiently. For those looking for specialized or project-based work, marketplaces are the ideal place to quickly find workers because they aggregate the labor supply in a way that allows for granular search.
- Broader supply: Labor marketplaces extend past the regional search that businesses would normally conduct and open up the available talent pool to a global supply of workers looking for projects to complete.
Benefits to Workers
- Lifestyle Flexibility: Workers can now choose how many and which hours of the day to accomplish their tasks.
- Earning Flexibility: The independent economy has enabled some to earn more than they previously would have as full-time employees.
- Geographic Flexibility: Project-based work doesn’t have the same location requirements — workers can now complete tasks for companies across the world.
The Pandemic’s Impact
The pandemic has only accelerated the rise in demand and usage of labor marketplaces. The Great Resignation has left employers searching for more workers, driving up the demand for labor solutions that can efficiently help source solutions. Three outcomes have come out of the COVID-19:
- Comfort with Remote Work: Lockdown and COVID-19 health measures have ushered in a newfound comfort with remote work from both the worker and employee perspective. Companies now use connectivity tools like Zoom to maintain efficiency, no longer needing shared office space to collaborate.
- Global Supply of Workers: With remote work a new normal, supply for skilled workers becomes global and leads to liquidity in the labor marketplace.
- Less connected worker-employer relationship: Remote work and The Great Resignation has led many to take on contractor and consulting roles in which they work for multiple employers that can be found using marketplaces.
Given this recent acceleration, here are the opportunities that Ardent is excited about:
Specialization by vertical or function
Platforms such as MarketerHire (marketing professionals) and Core (construction workers), that zero in on a specialization by vertical or function are compelling because they can deeply embed themselves into organizations by expanding from simple job matching to discovery, training, and vetting. Their specialization allows them to become experts in their vertical by keeping up to date on changes to regulatory and certification requirements and industry-specific trends.
Preference for roles that are regulated / require certification
Marketplaces that specialize in roles that are regulated and/or require certifications will set themselves apart due to the high fragmentation of labor supply. Roles that require certifications ensure baseline quality of work and therefore transferability between employers. An example of this is TempMee (dental hygienists) and NurseDash (nurses). Regulated and certified roles are in just as high of demand and marketplaces can help to streamline the process of required verification and vetting.
Next wave of consulting: “NextGen McKinsey”
We imagine a “NextGen McKinsey” that combines all the skills of a typical consultant with the flexibility of a freelancer working together with other freelancers on project-based work. This could empower consultants to earn more, set their own price, and be able to reuse their content. Businesses could cut out the costs of paying high-end consulting firms to work on-site and exorbitant pricing that goes to the firm and not the consultants. We are following web3 closely and believe DAOs like Twali and Vector DAO are interesting solutions looking to tackle the space.
Clear unfair advantage for access to labor supply
With a global labor supply due to remote work, labor marketplaces will compete for talent with many workers cross-posting on multiple platforms. Marketplaces with an increased advantage to capture these workers will attract more businesses and rise to the top, especially if they can highlight the best workers. Merit-based marketplaces are one such way to accomplish this, by comparing workers based on reported skills, reviews, and number of successfully completed jobs. Workers are rewarded with higher rates for more experience and even incentivized to complete additional training. Coupling a high rate of captured labor supply and with proven high-quality workers will lead to increased enterprise satisfaction, therefore retaining the demand side of the market.
Tech enabling labor through payments, workflow and automation
In the age of tech, the best labor marketplaces will use tech to enable labor through workflow and automation of tasks, improve job matching process using data-driven machine learning, and streamline payments between parties. Embedded financial services can unlock additional meaningful sources of revenue for the company by integrating financial products such as checking accounts, working capital loans, or pay advances.
If you are interested in labor marketplaces as a founder, investor, community builder, or operator — we would love to hear from you!
