Let’s Look Deeper at the Future of Work
3 Future of Work themes to transform entire ways of working… and we’re just scratching the surface
November 17, 2020 by Clint Chao, Moment Ventures
Since we launched our firm in 2013, we’ve had countless conversations with entrepreneurs and investors regarding our investment thesis around the Future of Work. At first, it took a little explaining as to what we meant, but things are quite different now as the Future of Work has sort of become a thing.
Big Opportunities When You Dig Deeper
Ammar and I love the more familiar description of the Future of Work: the configuration and geography of how we organize as teams and the tools and technologies enabling us to be as or more productive, happier and in better communication with each other.
But… we always thought that it could be even more interesting to find a different batch of entrepreneurs working in the trenches of a large established industry such as logistics, food and healthcare who could apply technology solutions towards solving big, gnarly problems that impact the operations or labor efficiencies of that industry.
We’ve connected with thousands of startups that fit our deeper description, coming at us from many different domains, geographies and diverse sources, and things have recently really picked up. To properly organize our efforts over this exciting pace of deal flow, we’ve developed three investment themes to drive our process for the Future of Work. These are meant to be high level, broad concepts that represent how we view opportunities, and they could evolve over time.
Here are our 3 current Future of Work investment themes.
Theme 1: Business at the Speed of Software
For those in established industries, work often still means clipboards, spreadsheets, phone calls and clunky software; working with “middlemen” intermediaries like distributors and billing agencies; and oftentimes dealing with exorbitant fees and weird rules just to get your products or materials from point A to B. Incumbent providers aren’t terribly motivated to bring technology in to make things run better, and efforts from those that have tried feel about as nimble and user friendly as the dashboard software provided to me by my hundred year old car company.
A Startup’s Opportunity
Without the burden of legacy infrastructure or pressure to protect an existing revenue stream, agile startups can integrate technology using a fresh perspective and a consumer’s mindset to solve a given industry operations problem.
I love that Uber has become an $80B transportation technology company that will celebrate just its 12th birthday in March 2021. And when they first burst onto the scene, they built a full stack software solution to transform every expectation about transportation for both riders and drivers, all hidden behind a simple app on your phone that summons a ride in 4 minutes (I know, they broke a bit of glass getting there, but new Future of Work companies will likely not have that luxury).
Building a Business at the Speed of Software company is definitely not easy, but can be transformative if you can really figure out how to get the industry humming.
Case in point: After Larissa and Fiona struggled to bring an innovative cookie brand with a deep fan base to stores around the country, they realized that the distribution infrastructure for food and beverage brands hasn’t seen much innovation in decades. The dominant analog distributors had opaque pricing, inventory and data rules that were impossible for upstart brands to deal with, so they decided to launch Pod Foods, a fully digital distribution and logistics marketplace platform for food and beverage brands to connect directly with store buyers.
They weren’t the first to try this, but given their firsthand experience, they knew that they had to be much more than just a digital matchmaker. They built Pod Foods to streamline the entire experience for store buyers and brands: fully digital ordering, distribution, fulfillment and data visibility on inventory and sell through. While still young and building, their conviction is to change everyone’s expectation of what the supply chain can do. Today, even large established brands and grocery chains are using the platform.
Theme 2: Masters of the Machines
First there was the Internet of Things or “IoT”, then came “things” with names: sensors, drones, VR/AR, robots with arms and legs, and more. While some dazzled, most early entrants were just looking for a problem to solve and have been a difficult sell.
Don’t get me wrong: Machines are very effective for automating tasks that are mundane, remote and unsafe; empowering people to manage that automation to handle the more complex decisions that require a human’s more empathetic touch. As such, we see opportunities for people to become masters of these machines, usually coming as a result of powerful and intuitive software to enable workers to get the most out of these things.
The Power of Machines is in the Data
Machine-generated data will account for over 40% of internet data in 2020, much of it generated in places that were previously unattainable, disorganized, or sitting in disparate repositories. New connected devices are being deployed in hard to collect areas, and startups are emerging with the capability of merging this data with other sources to provide workers with the ability to perform with unprecedented levels of insight and analysis.
Case in Point: Rune Labs recently burst onto the scenes with a powerful data platform to help medical companies develop advanced therapies for serious mental health ailments such as Parkinson’s, Alzheimers, and depression.
Hundreds of thousands of brain images and brain signals are captured from patients during clinical trials and in the course of routine care via wearables and apps — none of which has been historically applied towards efficiently finding cures for these ailments. With its data platform, Rune Labs brings precision medicine to neuroscience by making this brain data useful at scale, enabling medical and pharma companies to master the data needed to develop advanced therapies to combat serious mental health ailments in ways never before achievable.
Theme 3: The Future of Workers
This is a broad category, as we meet many tech entrepreneurs building solutions to provide a brighter future for workers: how to find work, how to get started to build the necessary skills to maintain work, how to manage and plan their for their future, and so much more.
One common type of Future of Workers company: vertical labor platforms or marketplaces. Vertical markets can be very nuanced and require dedicated platforms to help workers with many of the specialized needs to find stable work and manage fruitful careers. While they can be tricky, these platforms can potentially unlock huge value for the industry that they serve.
The Future of Workers’ Futures
The Institute for the Future (IFTF) reported that 85% of jobs that will exist in 2030 haven’t even been invented yet. And how will companies in general train employees to obtain the necessary skills to stay relevant in this rapidly evolving world? Amazon plans to spend $700,000,000 to upskill its 100,000 employee base to keep pace with what’s required. How do we help job seekers find the right role for them as they contemplate a career change? What new fintech solutions are emerging to help workers plan and manage their income, spending, savings and retirement?
As you can see, there’s a lot of room for innovation in this category!
Case in Point: According to Rescuing Retirement, only 37% of young workers surveyed believed they were saving enough for retirement, and the median retirement account for workers aged 40–55 is $14,500 — not even 4% of what the median-income worker will need for retirement.
Alto got its start with a conviction to help workers plan for financial security by democratizing access to alternative investments: VC, private equity, real estate, even crypto — products historically unavailable to individual retirement accounts, but in huge demand.
According to the Institute of Retirement Research at Boston College, a balanced IRA portfolio with access to alternatives would have 10-year returns of >3x annually and 25-year returns of >4X annually without that access. That’s 3x or 4x annually!! Workers deserve the same access that’s powered the fantastic returns of endowments, foundations and professional funds over the years. Alto built the technology platform to make it point-and-click simple to invest in alternative assets using retirement funds, so that workers can generate the necessary returns to ride into the sunset in style and with security.
Threads and Connectivity
We also develop threads or patterns of connectivity from learnings in one industry or theme and apply them to others. This approach interestingly enabled us to invest in a digital labor platform in EdTech, apply learnings towards an analogous problem in warehouse logistics, which subsequently enabled us to hone in on a groundbreaking mental health platform. It’s been fascinating to meet innovative entrepreneurs across these domains, as we have so much to learn from their perspectives.
It’s Still Early
The Future of Work is still in the very early innings, and in these more traditional industries, the game may just be starting. Of course, one of the challenges in established markets is that you can’t predict whether something new will take off in a year or three or five. But we can be pretty certain that most industries will be dramatically impacted by technology in the next ten years, and because of that, what better time than now to be investing specifically in this movement?
What are your thoughts on the Future of Work and does our description bring any interesting companies to mind?
Clint Chao is a General Partner at Moment Ventures, an early-stage venture capital fund based in Palo Alto, CA. You can reach/follow him on LinkedIn, Medium and Twitter.
