Understanding The Bootstrap Economy

the bootstrap economy

This is the first of a series of blog posts on a new, effectively hidden, but fast growing phenomenon in our current economy.

I call it “The Bootstrap Economy”.

According to the Bureau of Labor Statistics, 68% of hiring in 2010 was contract-based. According to the recent issue of Businessweek, independent workers now make up 31% of the nation’s workforce (over 40 million are self employed in the U.S).  The BLS predicts that this will rise to 40% by 2019.

Most of these businesses are NOT venture-funded. In fact, according to the BLS report on self employment, two thirds are not even incorporated.

The Kaufman Foundation tracks new business formation and reports that approximately 558,000 new businesses PER MONTH were created in 2009.

According to the most recent Non-Employer Statistics published by the U.S. Census Bureau, on average 2,356 people go into business for themselves EVERY DAY. Their firms account for 78 percent of U.S. businesses and $951 billion in receipts.

I’ll break down these numbers in a future article to dimensionalize this fundamental shift in our country’s labor force and business activity.

For this article, I want to point to one aspect of The Bootstrap Economy that has been creeping up on us for some time. It is the idea that professional work – consulting, creative, administrative and technical work – is now almost exclusively digital output and can be managed 100% remotely.


What this means is that the people who do “professional work for hire” can do it from anywhere in the world. Skilled, experienced professionals can be recruited, hired, briefed, managed and paid without any physical meeting of any kind. And the output can be created and reviewed digitally as well. What this enables in a whole new kind of “e-channel of distribution” for the contracting and completion of professional project work.

This is the “e-tailization” of professional work…and it is moving from being an “underground economy” to an emerging trend driving business formation, innovation and the future of work as we know it. Millions of these professional projects are bought and sold in online marketplaces every year.

I’m talking about thousands of new web-based businesses being created this way. New software products are coming online…blogs, Facebook pages, legal opinions, data analyses, business plans, financial reports and marketing presentations are all being contracted for by strangers, meeting “virtually” for the first time.

On a daily basis, millions of independent business people are engaged in an electronic marketplace to get professional project work completed…work that might typically have been done by full time employees.

Let’s just take one snapshot of this emerging industry.

There are thousands of general and specialized “Work-Marts” that have been launched in the last 10 years. Here’s a look at three of the biggest and their economic impact.

Using numbers published by the sites elance.com, freelancer.com and odesk.com, I’ve attempted to normalize the data:

  • Number of Contractors: 4.8 million +
  • Number of projects completed annually: 2.3 million +
  • Annualized value (in dollars) of contracts: $520 million +

The net effect is, for those who are bootstrapping their businesses – using their own means for funding their business – professional work can be completed for fixed and more affordable prices than ever before. Logos, business cards, brochures and social media campaigns that might not otherwise happen are being developed and launched.

There are more fascinating dynamics in The Bootstrap economy, around demographics of these business owners and the types of work they are contracting for and performing, just to name a few.

You’ll be hearing more on this market in the weeks and months to come. If you’d like to stay up on the activity and dynamics of the bootstrap economy, email me at blieber@originalthoughtllc.com and I’ll add you to our notifications list.

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