Miles Everson @ Harvard Club of Boston: How a Global CEO Reinvents the Workforce
July 16, 2021 | 1:00 PM - 2:30 PM EST
Joel Litman, President & CEO, Chief Investment Strategist, Valens Research
Miles Everson, CEO at MBO Partners
00:00 Introduction to the event and speaker
04:38 Why Miles Everson left PricewaterhouseCoopers and joined MBO partners
07:35 Four forces that are shaping the future of work
22:30 Why people are choosing to be independent contractors
25:48 Digital Nomads: Who are they and why they are growing
30:10 Asynchronous communication
37:10 How to win in a modernized workforce
01:14:41 Closing remarks
The rate of innovation is increasing with the development of technology, artificial intelligence, and computing power. This created a significant shift in the workforce, as many workers not only switched to a remote setup but also became independent.
In fact, according to the recent article published by Emergent Research and MBO Partners in the Harvard Business Review:
“The number of Americans describing themselves as digital nomads rose from 7.3 million in 2019 to 10.9 million in 2020—an increase of 49%. And the composition of this cohort shifted. In previous years, the ranks of digital nomads were dominated by independent workers: freelancers, independent contractors, and the self-employed.”
In this event, Miles Everson, CEO of MBO Partners, talked about what companies need to do to win in the future of the workforce. He shared why he left his 30-year career as the CEO of Global Advisory and Consulting at PricewaterhouseCoopers (PwC). He also mentioned the potential of the independent workforce based on the existing macrotrends. These trends show how independent workers are increasing because it is possible for them to become digital nomads, being able to work anywhere around the world. This was accelerated by the pandemic, wherein asynchronous communications are done through social media and educational institutions.
He found an opportunity in fractionalizing individual careers because it allows businesses to let knowledge flow from different perspectives. This is similar to what open source technology businesses are doing, wherein talent liquidity is ultimately created within the business.
The Q&A-style discussion covered:
- The threats to the independent market, and opportunities to further fuel the independent market
- How MBO Partners differs from Robert Half and other staffing companies
- Possible issues of confidentiality with independent workers
- What MBO Partners is thinking about to provide a fuller set of benefits for their employees while maintaining their complete independence
- How companies are embracing fractional workforce both in the blue collar and white collar space
Are you interested to learn more about “How a Global CEO Reinvents the Workforce,” and receive daily tips and content for independent professionals? Click here to learn more.
[00:00:08] Joel Litman 75%Thank you all for coming. We have new people here in person and we have a very big audience online, live streaming. I'm very happy to be here at Harvard Club. It's been appropriate. I more than 10 years ago, I published a case study in Harvard Business Review, and that was a big deal for me, my career. And I told everyone I sent it out everywhere. But, you know, also about 10 years ago, there was another Harvard case study and it was about this rising star at the time at PricewaterhouseCoopers. What people said, and it's the PwC, and in fact, the consultants they were talking about were just named in a consulting magazine, one of the Top 25 consultants in the world. And the title of that HBR case study was Miles Everson at PricewaterhouseCoopers. It's a big deal to get a case study written in HBR, but I've never had someone write a case study about me, which is very big. And it was interesting because at the time, I don't think those early 2000s, PwC sold their entire consulting group to IBM, almost the entire consulting firm. So there are only a few people left around, and Miles is one of them. Miles and the other team of partners over that timeframe rebuilt PwC Consulting over the timeframe to what is now a 14-billion dollar consulting firm. So they built the firm. They sold it and then from scratch, they rebuilt the thing. And in the mid, I think around 2013 or 2014, the team that was building this elected Miles to be the CEO of Global Consulting for PwC, which is when I met him because he was my client. Well, I met Miles and we had great work together. And then he says, Is this, by the way, Joel, I'm resigning. Now, I was shocked. Everyone was shocked they said, "So, Miles, you're 54 years old," they said "You're resigning. You're going to start having three-martini lunches. You don't seem like that kind of person." And he said, "No, no, no. I've got something bigger in mind." Now, PwC is one of the biggest consulting groups in the world, PwC, the firm is one of the biggest employers on the planet. with 290,000 people. So I said to him, "what's bigger?" He said, "nothing less than I have a re-imagining and a reinvention of the global workforce." Everything from recruiting to training to managing people to even the definition of people that he talks about; so when a company says we care about our people, who do they mean, exactly? It's really it's compelling. It's insightful. And he actually, as a small piece of this whole thing, just got published his full circle into HBR this week, if you Google it, a nice piece on digital nomads and handling that in the workforce. But that's it's a small piece. So anyway, it's my great pleasure to introduce to everyone online and in-person a great colleague and one of my great, great friends. Please join me in welcoming Miles Everson.
[00:03:17] Miles Everson Well, I thank Georgia. Thanks, Joe. I think you just said I'm going to tell a really good joke is what it sounds like to me. So thanks, everybody, for coming out today. And I look forward to sharing some of the thoughts that I have here. I just want to get my machine up here, so make sure I hit them all. I see a number of faces here from folks that I haven't seen for a long time. Joe, surprised to see you here but pleased to see you. So welcome. Here we go. So I'm going to just I'm going to talk a little bit about why I left PwC, and it wasn't so much leaving PwC as to what I was going to do. And that's a really important distinction. And then I'm going to share some trends about macro trends that I think are happening in the world that doesn't relate to the workforce only. But the workforce is going to be dramatically impacted by them. And then we'll walk through about a decade of research that we've been doing. Don't get worried. It's not going to take that long. But MBO has been doing surveys on the independent workforce for the last decade, so longest-running survey in the United States on the independent workforce. And then I will share some predictions with you and then I'll do a little bit around what I think you need to do is particularly as companies, what do you need to do to win and go forward with the future of work? So let me get into why I left. So Joel kind of alluded to this, but, if you talk to almost any executive and you say, what is your most important asset? It's always my people. Right, and so you say, OK, so that your people and then the next question is, "Did I believe at the time that I was kind of going through my process of whether I should stay or leave is do I think that asset is being properly managed, managed, accessed, et cetera. And the short answer is no in most big corporations. And partly because it's too narrowly defined. And I'll get into that when I talk about some of the stats. So then after you think there's a problem, the question is, "Is there a better way to do it?" And I was convinced there was. I didn't necessarily have the answers on how that would work, but I knew independence was an important part of the equation because I had seen in the business more and more people were choosing to be independence. But then the correlating question is, what does it really matter to companies? So, actually, I had Joel's team do this, which the question I asked is, is there any correlation between, the number of independent workers that a firm has, and the enterprise value creation that it creates. And what they did, they went out and did the analysis and the answer is there absolutely is it's worth about a thousand ways, the basis points on enterprise value. So when you look at it by sector, the sectors that use the largest amount of independent contractors, it's not going to be a surprise - is technology companies. They're adopting modern business models and they're not trapped in the historical ways of doing business. The second-largest segment where the most successful segment is pharmaceutical companies, what a pharmaceutical company has been doing for years, maybe not as much on the independence, but they invest in small research companies. That's how they've been doing R&D and exploding the R&D. Is by using an extended workforce, i.e. talent pool, whatever you kind of phrase, you want to put around it, but it's not only relying on my full-time workforce for how I'm going to create value in my enterprise. And so with that, I decided to go to MBO partners, because MBO was the engine behind what was known as a talent exchange that I had sponsored and created while at PwC. I did that because I come from a financial services background. And so when you think of an asset and you say, well, how do I create a liquid market? Can I create a trading market in human work? And the answer is that's really what we're doing, is we're creating a trading market. And so when I think about these four forces, I have four forces that I believe are shaping the future of work that I've talked about now for nearly five years, I guess maybe seven years. And those four forces start with the first one is the rate of change is accelerating. That's not a news bulletin to anybody in the room. OK, I wrote my first thought piece on the Rate of Change Accelerating in 1998, which was published by Federated Press out of Canada. And I talked about the implications on business models because everyone talked about change. But there was an absence of sufficient discussion on that, the rate of change was accelerating. OK, when the rate of change is accelerating, what correlates with that is that the rate of innovation also accelerates. And what happens when you have more innovations? Innovations start to converge. When innovations converge is when you get demonstrable impact. AI's invented in 1959. After four attempts for mass adoption on AI, nothing. It doesn't become meaningful until the mid 90s when you had structured data that you could use for electronic trading. First, mass adoption was electronic trading of A.I.. So think about it. '59 to basically the mid-90s. It took 35 years. Twelve years later, we were all using AI with what we now call Smartphones. So once its convergence is all about for AI, it was because you had tech systems, data systems that could handle the data so I could run the AI in the data. By the time you get to 2009, what's happened is you've got nano-technology, you've got mobility technology, you've got the telecom networks that can handle the bandwidth. So now I can put more computing power in my pocket. Then we could, in a big supercomputer in 1969; it took somewhere around 12 years to make that happen and it's only because the innovations converged with any of those innovations on their own is meaningless. Right, and so what happens when innovations converge and they have a demonstrable impact? Progress is deflationary. That you might be sitting there saying, "Miles, like everyone talking about inflation right now." People talking about inflation are people that don't have a liquid asset trading for. Anyone else who has liquid trading is not going to be hurt by inflation. It's all tied to a fixed-cost structure. And by the way, where innovation is outstripping your cost of capital, it will be deflationary. 2000 cost 100M to decode the genome. What can you get it done for today? A thousand dollars, less. Some people say it's like two hundred. Twenty years, and that's a change, and it's not just because of the decoding of the genome, it's because of all the technology that goes with it. So the third I'm sorry, the fourth or third, the third megatrend is this, migration from Knowledge stocks to Knowledge flows. What's a knowledge stock? A knowledge stock is where you pick up a single asset and you trade it in binary transactions. It's a pipeline business, it's the way the industrial era was built. I have an asset, I trade it in a binary transactions. Knowledge flow is a trade-off of the flow of the information associated with the transactions. And then that started to happen when you get into human capital, so you can look at GitHub. GitHub runs, I don't know, it's north of 50M dollars a year now or I mean 50 million in revenue. 29 million people, not revenue projects that they're working on in any given day. 50, 50+ million. That's a knowledge flow. It's not a knowledge stock and where are some of the greatest innovations coming today? Open source technology. That's a knowledge flow business model. 25 years ago, what you did is you wouldn't share your technology with anybody, and now if you're not sharing your technology to get the world to help improve it, you look like a fool. So, and these trends are long trends, are they were here well before covid. And the last and final megatrend and this has been going on for hundreds of years. But the rate at which it is occurring is accelerating, and that is the fractionalization of everything is upon us. Right, so the first real fractionalization that I'm aware of in trading markets occurred with the Dutch East Indies Company back in like 1602, when they were what would happen is an individual investor would support the financing of a ship. And that ship would move silk and other textiles around the world, but the problem is they'd have disease on the ship or you'd have bad weather, so you were single-threaded. If that ship didn't make it to its destination, you'd lose your entire money, your investment. So what they did is they started to share investments. So five people get together and finance five different ships. So they minimize their downside risk. And then what happens is certain other assets. You have stock exchanges in all trading exchanges or fractionalization of assets. So I got a question for the room. How many people in here own their home? Just a show of hands. OK. How many people have the deed to their home?
[00:13:50] Miles Everson One, two, so might be now I see three because but here's the reality - in the United States today. Only 75% of American homeowners will ever hold the deed. Why is that? It's because, in the late 80s, we created these things called Mortgage Backed Securities. What is a mortgage backed security? It's fractionalization of home ownership in the housing market has fueled the US economy for the last 30 years. The fractionalization of that asset, the good news is for those that don't own a home, if you're invested in a fixed income fund or balanced fund, you probably own a part of somebody else's home, ok? But that's what happened. So now today, when I talk about fractionalization of assets, people say what you're talking about Uber and you're fractionalized in the cars of. Sure that's in there, too, because that's a fractionalization of an asset, that this is not new news. And especially in the United States, when you think about how the US economy has been fueled, it's been going on for over 30 years in the United States. And so when I think about what's happening in the opportunity to why did I decide to go chase something else? I believe that there's a massive market to fractionalized for the human, the workday in the human career. And for the companies to fractionalized, their most valuable asset, which is their people and their workforce. And so that's the mandate that I'm chasing right now and I'm going to share a few additional more recent trends here with you that I think will help put some framing on this. So there's another trend that we see right now that I believe has been accelerated by covid, which is the erosion of employee tenure. Right, so if you're under 45 in the United States today, you will change companies every 4 and a half years. If you're under 35, you will change every 2.8 years. So my question for business leaders, do you really believe that you have a stable workforce? Well, if you did pre covid. Just look at what's happening with the great resignation of 2021, where 46% of employees say they plan on changing jobs within the year. That's a massive change. How can anyone conclude that they're good at managing a variable workforce if their primary focus when they talk about their people and their talent is their full-time workforce? I'm not saying you forget your full-time workforce. That's not my point at all. My point is, don't pay only attention to that at the peril of the other assets that are available to help grow and create value in your company. The other thing is the increasing demand for hot skills, so two weeks ago by the Department of Labor, 9.3 million jobs open in this are open in this country today. Now, they're not all high skilled workers, etc., but 9.3million jobs in this country that can't be filled right now. So you think I got too many people, but I don't have enough of the right people? Is a common problem in corporate America. And so I'm going to get into how you solve that problem in a little bit, so let's hit the real common topic today on the subject of work and covid - remote work. Does anybody believe that the way we work is going to be the same as it was in February of '20? Of course not. And the reason we adopted the innovations in the change is because we were forced to. In a year, people went from going to work every day to frankly, now you have a hard time getting employees back in the office. And so, that's a real challenge. So but the important thing from my perspective, to keep in check. We were going to get there anyway, it just would have taken a decade instead of a year, it was going to happen. And so when I think about the other trend that we're seeing and you hear and this was the article in HBR earlier in the week, is Digital Nomads. Right, and so what's a digital nomad? Well, basically, once you conclude that you can work remotely, then the worker says, well, why do I have to, like, just work out of my house? Why can't I go work from somewhere else? I mean. Case in point, Joel Litman, he's not an independent contractor, he's an entrepreneur. Joel hasn't been back to his primary residence in 16 months, 17 months down in Turkey, United States, Mexico. But not home, but not home. So he's been a digital nomad for the last 16 months. During the pandemic. And so now people are starting to say, well, maybe I'd like to be a digital nomad. In fact, when you asked full-time workers, which is what we did in the last two months, do you think you would ever want to be a digital nomad over the next two to three years? 65 million American adults that are full-time workers today said that's in their plan. The implications on the workforce and how you think about your most valuable asset are significant and it's not just quoted, you know, they have to be "digitally savvy." There are all kinds of other things that need to be considered. So one last piece of data on this before I get into our 10-year trends, which is we keep a really close eye or I do anyway on new business applications. That is getting reported out by the Department of Labor every quarter. They have been on a record pace since about October of last year. And in April alone, which is the most recent data available, new business applications for professional service LLCs and sub-assets are up 42% year over year. Which is an early indicator that more and more people are preparing to go do their own thing. That's what's happening and so, you hear all the time, especially I would argue in two-income households, one of the two people is going to work as an independent. It's just it's so common now and so well, we have a really good security program at MBO because this thing keeps timing out on me. So let's maybe take a move the direction and talk about the 10-year trend, and I'll give you a couple of highlights and I'm going to get into a bit of some dense data for you. But what we know from the ten years is that there's the growth of independent workers. The demographic and social changes have led to more people just wanting to be socially acceptable. Ten years ago, if you said you're an independent contractor, the next question at the cocktail party was, "Where you work before you get laid off?" That's no longer the question. Usually, the conversation goes more like, "Well, how's it going? I mean, I've thought about doing that myself." It's no longer a negative to be an independent contractor, and so then people sometimes say to me, well, "Why are people choosing to be independent?" Well, let's start with because they can. Because of the innovation, convergence, the social adoption's, it's just it's possible so you can do it and then, of course, you not get into the data. There are some direct benefits that we've seen that have come out of that. And so as a result, you see businesses using more and more independent labor contractors to do their work. So there are some consultants in the room. So, Michael. The global market for consulting is give or take a $500B market. And I watched that number like a hawk for years. OK, it grows about 7% a year, roughly. The global market for the extended workforce, which includes consulting all independent contractors, temporary workers, is six times larger. It's over $3 Trillion and that's we're just getting like the tailwinds are just coming into the sales right now on this, and so that's going to continue to grow. It's a mess. It's such a big market. You almost don't want to talk about it. Justin, I've had the discussion like, why talk about a $3 Trillion market like that, just talk about something else that's smaller. And so combined, these are just going to continue to drive up growth in the independent workforce. So I just want to share some data now on demographics. So this is comparing 2011 to 2020. So in 2011, 30% of the independent workforce force is baby boomers. OK, 12% were millennials, 48% were Gen X, and then the last 10% was a category that I didn't know it existed, which is called matures. So I guess that must be somebody that's older than a baby boomer. And then when you look at 2020, the boomers go down to 26. So they go from 30 to 26% of the workforce, the independent workforce. Millennials are now a third of the workforce, 33% versus 12% 10 years ago. Gen X went from 48% to 25%, a big drop in the Gen X pools, and then of course the new entrants were the Gen Zs, which are 16% of the workforce today. And it's frankly, it's early days for them in terms of being in the workforce. And they have been determined by a number of people to likely be the most entrepreneurial generation that we've yet seen in this country. And if they are truly is entrepreneurial is what's being predicted, they're all going to be independent contractors or professionals or they're going to go on their own business and start something. So I think I think we're in for a continued a lot of change here. So I talked about digital nomads a minute ago, but let's look at some of the data on digital nomads. So in 2020, the number of people that declared that they were digital, no match compared to '19 was up 49%. It kind of makes sense covid people decide they're going to go be independent. But most compelling in that is that 96% of the people, the full-time employees grew 96%. Much, much more so than independence. And again, it's because they had the job and they could. Right. What's interesting is Nomad's have 90% job satisfaction, which is extremely high in any job satisfaction criteria and 76% satisfaction with their income. Which also is very high. So if you look at some of these 10-year trends that we have from MBO, we ask a question about are you an independent by choice? This is the "Or did you get laid off question?" And in 2011, 55% of independence said they were independent by choice. You've got to remember, we're coming off the Great Recession, right from the financial crisis. By 2020, that was only 59%. But here's the anomaly in 2019, 67%, 2/3 of the independence said they're independent by choice. Now that changed in 2020 because in covid a lot more people became independence because they got laid off. We believe that the pendulum is going to swing back because between 2011 and 2011, it was continual growth each year. And in that response that they're independent by choice. Then the correlating question comes out, which is, are you more satisfied as an independent than you were as a full-time employee? 2011, 63% said they were more satisfied. By 2019, that was 70%. It dipped again last year to 59% We'll be watching it closely, but I think we're going to see it's going to start to tick back up towards that 70% mark. And then three things we say as an independent versus an employee. Are you happier? 83% said they are. 71% said they felt like they had better health and 56% said they felt more financially secure. The significance of the financially secure, I think, is a really important point, because in 2011, only 32% of independence felt financially secure. And today, it's 56%. Because what I would argue is the best independent, I say best independent, the successful independent that I see, they typically have four or five clients that they work for. I'm talking about high skilled, college-educated white-collar workers right now. I'm not talking about an independent that is selling hot dogs at the sports stadium on Saturday. I'm talking about people that have chosen it as a profession. And then we said, well, is there any independent data that would tell us something about the financial well-being of independence? And so the CFPB has an index that they use, they've published, and so interestingly enough, there's absolutely no discernible difference between the financial well-being of an independent and a full-time employee. In terms of how they feel about their well-being, they're the same like 52 and 53%, it's the same number. So so my point I want to restate, which I made earlier, is - Covid has accelerated remote work, which we believe remote work has a correlation to being independent. But the macro trends, the stability of those trends has been going on for a long time and that they're not going away. So really important. So now I'm going to get to some of my predictions. This is the dangerous part. So I believe that asynchronous interactions will prevail. And what I mean by that, let me just define synchronous and asynchronous, most people probably know synchronous means it happens at the same time, asynchronous means it happens at different times. It's usually terms used in technology. However. Asynchronous communication has been going on since we got social media, our smartphones, but it got rolled out in mass in the education systems, in the last 15 months. The only way you can communicate is asynchronously, not the only, but it's being done and by most education institutions today. So now we're testing technology. I mean, the technology exists. We're testing the application of it is how do I do asynchronous interviewing? Because most companies, when they do interviews, they're the presumption is it's going to be a synchronous communication. The reality is it doesn't need to be and it you can't be successful managing a fluid, transient workforce, doing synchronous interviews, you can't you don't have the capacity to do it. You got to go to asynchronously to drive productivity into your workforce. So I think that's going to when I say prevail, I think it's I don't know that it's going to take over asynchronous communications, but it's going to be a significant form of communication in the conduct of business. Digital nomads, that growth is going to continue, as I said there, 64M adults that say they're going to convert to being nomads over the next 2-3 years. Here's one that might be my most profound prediction. Which is, I believe, in the white-collar professional workspace, we are going to see a normalization of global wage scales. We're seeing signs of it already in India, so a number of large Indian companies that we've talked to are having trouble getting the best talent. And the reason is because at best, talent can work from home and command a higher pay rate by working for a Western company. Now, I think that will take a decade or more just to be candid. But having said that, once you've decided that somebody can work remotely and you can communicate asynchronously. Why do they need to be in the same time zone? Why do they need to be in the same zone? So what this is going to do, though, there are two things that are going to happen. I think first is it correlates to more digital nomads because the humans will move around you. You get your contract for pay and a high pay rate geography, and you go live in a low rate cost of living. That's one. The second is I believe that we will see an even more increase in politicians pursuing protectionism and tax revenue policies. Because a significant amount of tax revenues come from salary and wage taxes. And if you can't track those you don't know how to collect them becomes a problem, so they'll be policies adopted where we see some of this happening. Right. So that's going to happen. But that trend will not overweight human's desires to live the way they want to live and work the way they want to work, which correlates to my next prediction, which is I believe that we're going to see an acceleration in the balance of power moving more towards the individual and away from companies in the worker company relationship. And part of that we shot look, we shot in the industrial area with formation of unions. Right, and now what so so what does it do? It gives you an opportunity to organize. Well, in today's world with technology, I can organize in a matter of minutes. It's so easy to organize that the workers are going to get their balance of power, is going to continue to get more power relative to the corporations. And we'll see this. I mean, first of all, they're not going to work there for two and a half years, so but we saw it, I would argue we saw it during the last presidential election. A lot of pressure from employees on companies' behaviors and what they were doing or not, with the election. And they influenced decisions at the corporate, when somebody when the employee base says we're walking out, the corporation has to do something different. Right. And so I think that balance power is going to continue to move that way. And then the last prediction, it's more of a quantitative prediction, which is if you look a the number of people that have either worked as an independent or are an independent today, it's about 45% right now. So 45% of workers in the world, or not in the world, the United States has either been an independent, or they are one now. That's going to go to 54% over the next five years. We're going to see about 8-9 point tick up in that. That's a 3.6% annual growth rate, which is 2 1/2 times greater than what the employment growth rate will be in this country. So you look at what is the fastest-growing segment of the workforce, and I think we're going to see it be independent. And so if you go back and you look at it and you say, again, if I'm a company, "How can I possibly ignore the role of independence?" because in most companies today, I would argue that the independent contractor base is viewed much more as a transactional relationship than a strategic asset. And what I'm saying is they are strategic assets because of the quality and extent of people that are choosing to be independence and you have to view them that way. It can't be something you delegate down to middle management and say, make sure that we do this stuff just compliantly and cost-wise, get to manage my risk and manage my rate, which is how they approach has been today. It's going to become a strategic lever in businesses. So what do you have to do to win with a modernized workforce? The first thing I would say is you have to as a corporation, you have to be relevant to as many worker work styles as possible. This is this balance of power thing, the individual no longer needs to conform to the corporation; the corporation needs to be capable of dealing with a much more variable type of work style. By the way, now I'm kind of going off script, but so think of the irony of this. How many companies talk about their support and their commitment to diversity, inclusion? OK, everyone, let's start with that. And how many of them, when they hire their college graduates off campus, put them through a training class to make them more homogeneous? Every one of them. Because it's easier to do that than it is to actually embrace the differentiation and use that as an asset instead of trying to make people homogeneous. I find it completely ironic is probably a polite word that's what's happening. So, you have to be relevant to many works style; I'm saying work styles its many workers and work styles as possible, which means it's not just your full-time workforce, is what I'm getting after there. The second is you have to build organizational muscle. To strategic leverage, a hybrid workforce. You have to get good at it, so I'll use the example of offshoring. So '90s, 2000s we're doing offshoring. Frankly, Western companies stunk at doing offshoring. And how much of that problem was because of the traditional workforce versus where the work was getting sent to? Because you have to change the way your work and the way your organization thinks, operates, the rhythms, the expectations. The same thing has to happen when I say organizational muscle. You have to become good at managing people that are coming in and out and are not necessarily long-term workers, which historically was synonymous with a full-time employee. But I think we're seeing evidence in the data today that that's not synonymous anymore. Right. By the way, I didn't come in earlier and I should have. One of the other trends that's happening is a continued migration to project-based operating models, largely driven by agile systems development that have been gone. But it's getting well beyond system development projection and efforts. Right. And so the way I like to think about it is. You will see, I'll say in the next five years instead of an operating model dictated by org charts, it will be dictated by my strategic initiatives and squads of people that need to get the work done, you will have a much thinner layer of org charts and you'll have a much deeper layer of these are the programs that I'm driving. And that's going to dictate your operating model. By the way, the most successful companies in the world are doing it today. And so then the last thing is you have to create talent liquidity. And what I mean by liquidity is if you want to try to match your ability to scale up and down your workforce again, your most valuable asset with the rate at which the demand of your business, i.e. your revenue, for the most part, can move, you need to have liquidity in your supply side. In other words, you ought to be able to scale up and down faster or at a greater rate than the volatility of your revenue stream. And if you can't, you're going to get caught. With excess cost or the missed opportunity of not being able to grow fast enough when the opportunity comes up. So those are the macro things on what you're going to need to do to win. You know, I obviously have opinions on this stuff, but that's Joel had said he thought it was worth a discussion on why I would have made a move over to do what I'm doing today from where I was. And I think, as you can tell, I have a passion for it. And I think there's a lot of data that supports the macro trends. As I said to Bill earlier, you should never confuse an upmarket for a good strategy. So I think we're in an upmarket as it relates to the way work is going to change and get done. And I'd like to think that we've got a good strategy for it. So we'll take questions like that. So, you know.
[00:42:34] Speaker 3 Sure, we can some questions and I'll repeat some of feel.
[00:42:38] Speaker 3 So do you see any threats to the growth of the independent market ot what opportunities to fuel it even further?
[00:42:45] Joel Litman so, Miles? Do you see any threats to the independent market or what opportunities to fuel it even further?
[00:42:54] Miles Everson Yeah. So let's start with the threats. And I'll say to you, I'll probably come up with three. Oh, so so one threat is obviously the regulatory threat. And I say the regulatory threat. Let me start with the other one first. My regulatory threat will make more sense. The first mega threat is that the independent market or the gig market is painted with one brush. Right, so you have if you think of it, you have highly skilled, highly educated people and then you go all the way down, down the stack, around the continuum, you have unskilled, uneducated people. And I would argue that much of the political and the regulatory push is driven to help protect the little person from the big person. OK, and I admire that. OK, so if big companies are taking advantage of uneducated people, that shouldn't happen, OK? But when you have people that are highly educated, and highly-skilled, don't put them into a box under regulation, let them go build their own business, because this country, this country was built on entrepreneurs. And it fuels growth in small businesses because what we're talking about in the hot on the high end, highly comped individuals. There are entrepreneurs that are driving the economy. And so it's I think the political risk is the biggest issue. So one is it's its view to generally not specifically enough. And what will happen is you will squelch the growth that can come from entrepreneurs, highly educated people that want to go grow businesses because you're trying to deal with the protect the little guy from the big guy scenario and you got to separate the two. And that's not being done very well right now by the politicians.
[00:44:55] Joel Litman That's the biggest threat, biggest threat, anything for an opportunity that you'd imagine, given the question?
[00:45:02] Miles Everson Yeah, well, look, I think the opportunities probably mostly around continued innovation so that you can work as independence and technology to make its technology to make it happen. And I do believe that we will continue to see an adoption of project-based operating models and so will this that will feel the use of independence. I mean, you don't so let's just try to play this another way. For the hottest, deepest skills that are needed on the planet, not every company needs all of those people all of the time. And if by definition, if you're the best at what you do, you will be an independent. Because you will trade yourself at your own price.
[00:45:51] Joel Litman Interesting.
[00:45:52] Miles Everson You won't be employed.
[00:45:55] Joel Litman So if you're only hiring employees, you miss out on all those people that
[00:46:00] Miles Everson you absolutely do
[00:46:02] Joel Litman who consider themselves the best of what they do and therefore take the chance. If you're if you treat them transactionally. Yeah. Yeah.
[00:46:09] Miles Everson I mean, the human is going to get to choose what company they work for.
[00:46:14] Joel Litman Yes.
[00:46:15] Miles Everson It's happening today. I mean, I talk to independence and they'll say I'm not working for their company because they're jerks. They get to choose.
[00:46:26] Joel Litman Great, something else from. But from the here
[00:46:31] Speaker 3 Question, how do MBO differentiate itself from something like Robert Half in terms of staffing per se?
[00:46:42] Joel Litman I'll say, how does MBO differentiate itself from something like Robert half in terms of staffing company per se?
[00:46:49] Miles Everson Yeah, so Robert Half is a staffing company. You have consulting firms, obviously, but, what MBO is really doing is here's the best analogy, we are an enterprise gateway solution. So what's an Enterprise Gateway solution? It's a solution that enables multiple buyers in a company to buy from a large quantity of suppliers. Think Ariba. Right, because it's a big company, you want to have the rails to enable all your buyers to buy freely, but you want some minimum kind of practices and standards like you want the workers properly classified, you want their taxes paid properly. All that's needed. That's what an Enterprise Gateway solution is, is enabling a mass of buyers and sellers to operate in one company. And that's what we do.
[00:47:47] Joel Litman Somebody else or online?
[00:47:50] Speaker 3 What considerations do organizations need to take toward confidential information and IP, even the more workforce than traditional approaches like these are the challenges
[00:48:01] Joel Litman When you have so many people work for the company that are independence, what issues they have over NDAs or non-competing or just confidential information with independence who are independent from the company versus your own employees?
[00:48:14] Miles Everson Yeah, so it sounds like some bit of sarcasm and some part of defensiveness. Nobody has ever been able to show me that they've had more data breaches or security breaches from independence than they do from full-time employees. So if anybody has them, I'd love to see them. It's not about the work arrangement, it's about the background checks. It's about the expectations you set, about security protocols you put in place. So, here's another great example. Just before covid, everyone had to get their device that they use for their company set up by the company and hand it to him physically. Now it's OK to do virtual data in virtual machines. All of a sudden the security is OK. And the reason I'm saying that is companies. IT departments have put themselves into the asset management and distribution business because that's the way they've always done it, but when they couldn't be setting up the machines and handing them to the I'm talking about full-time employees now having full-time employees, all of a sudden it's OK to bring your own device to work and we'll put you on a virtual data instance. So, by the way, this week, Amazon, Microsoft both came out with solutions for that they say are good, DC in the market, VMware is in the market on doing this. I know this because. Part of what we're doing is making it possible for an independent to use their own device to go into a company. And still maintain and I'm getting into in a sock to security level. So it's mostly big data breaches are not because an independent stole data.
[00:50:03] Joel Litman And there's a defense working all these companies.
[00:50:05] Miles Everson All the time,.
[00:50:06] Joel Litman It's actually the employees. So generally better protection of data for your people, whether they're independent or employees, shouldn't presume that one is riskier than the other.
[00:50:16] Miles Everson Right? I'm not downplaying the risk. I'm downplaying why it would be higher with an independent than why it is with full-time employees.
[00:50:23] Joel Litman Yes. Very good. Thank you.
[00:50:26] Audience/Speaker 4 Miles that's great. Question. With your thoughts, as you think about this shift, I'm going to come back to the independent. Then the benefits that employers typically, traditionally have and to be able that another business opportunity to transition to these types of services is.
[00:50:47] Joel Litman Yeah, just now, but also one of the issues is the government doesn't allow companies to provide the same benefits or to treat non-employees as if employees otherwise get triggered for the employee issues. So what is MBO doing or thinking about to help independence get a fuller set of the benefits that employees get while still, from a regulation standpoint, still being independence?
[00:51:14] Miles Everson Yeah, so. So you kind of have to decompose what you mean by benefits, first of all. Right. So I presume you were tilting towards health benefits, but I'll add comments on the other one. Yeah. Yeah. So so when you go down the health side, the easy answer for me would be to say, well, they can go to state exchanges. It's fine, OK, but since I got to MBO, I've been pushing, I say pushing probably weekly meetings with providers and really payers and brokers to get a solution for independence. And I think we're months now away from having multiple solutions in the market. And here's how I think about it. And I think this is going to happen and independent will be able to procure their health benefits at a cost equal or better than what a five hundred person small business can provide the health benefits to the employees. That's where it's headed. It won't be as good as the big companies on health benefits, right? That's not going to happen when it comes to life insurance. And so life insurance, they can buy their life insurance. That's there's plenty of very favorable pricing on life. When you think of pensions, first of all. Yet corporate America eliminated pensions, which is part of the reason people don't have loyalty to their corporations anymore. The handcuffs are gone. Right. So then you have to say, well, but how about tax-deferred structures? And there's plenty of tax-deferred structures for the independent business owner, which is what you are when you're an independent fact. They're better and put more money away as an independent. So, I mean, it's been a long-standing challenge. It is interesting, though, we asked our folks that were independence because there's always this noise about will you offer health insurance? We asked them how many of you would like to buy health insurance at this kind of rate, which is a favorable rate. It wasn't one we could find at the time. It's very low, very low. That said, they wanted it, needed it, so it's one of these issues where everyone asks the question, but when you say sure, are you ready to cut a check and pay for it? Like I'm getting it from my spouse or I got it. I'm on a retiree health benefit plan. Like, I'm not going to buy it if I'm young. So the solutions will be there. But I think the noise is louder than the substance on the health insurance for independence.
[00:53:56] Joel Litman Well, what about things like, you know, when employees join a company, there's onboarding and introductions and then every year there's training and things like that. What about that for independence? Is there anything to it in terms of what companies are thinking of doing if they are embracing their independent workforce as part of their people? Right.
[00:54:17] Miles Everson Correct. Well, they're definitely doing things on onboarding. And so this happens to be one thing that we're doing, which is. You give, I say give, you give the independent. A few hours of training on company culture, etc., and once you've done that. Then you can do all of the other regulatory checks that you need to do, like background checks, et cetera. So what you do is you build you do that for the areas where you have the hottest skills and you build a virtual bench of on-demand, ready-to-go workers for those hot skills. And so this is when I said earlier, we're a network of networks. You go billed that dance pool of liquid talent that you need took, not generalism, doesn't work here, folks. You have to be specific. I know that I'm going to need 50 creative UX designers at any given time. Great. Then you go build a virtual bench of 400 of them and you'll have 50 in your liquidity pool. Somebody else might say, I need 25 Hedge Fund accountants twice a year because I have a push on Hedge Fund. Fine. Then you go build a pool of hedge fund accountants as independence. Generalism doesn't create a liquid market because you've got to have a buyer and seller that match on a quality trade. And so that's why you've got to build micro dance pools many, many times across the company. That's what our platform does. I mean, that's what it is.
[00:55:55] Joel Litman That's MBO.
[00:55:56] Miles Everson So. Yeah,
[00:55:56] Joel Litman Yeah. Very good, thanks. Other questions? Hello? Bill.
[00:56:02] Audience 5 Miles. First of all, great. I'm happy to help you in the room that might trace back from us. But, you know, if that's the thing that I love, some of the trends that you're discussing, you articulated for a lot of the things I was feeling in terms of seeing these trends. I remember early in my career, the only way you would get to a computer was with a GE timesharing, first went to Wall Street. And then, of course, you have so many of some of the trends that are just up with the software. Now to the fashion might head the software. Right. And then I also noticed you just it's so much easier to facilitate being an entrepreneur today. I mean, there are a lot of reasons for why people want to be independent today and can be independent today. Those things were more difficult when I was starting. Right. You didn't have those kinds of technologies. You didn't have that technology, didn't have Zoom. And some of the other things in the world, such as things such as the phone and the social media and so on and so on so I'm saying is I just see it accelerating. This is it for me. Even though this is about the beginning of my career, I think it's the most exciting time I've seen in our entrepreneurial economy. And to me, I think writing something that would be very exciting to be involved with because it's a pleasure and it's got to be to now.
[00:57:45] Miles Everson Repeat that.
[00:57:48] Audience 5 Do not.
[00:57:48] Joel Litman I want to repeat that.
[00:57:52] Audience 5 Don't repeat that.
[00:57:52] Miles Everson Yeah. Well, thank you.
[00:57:53] Joel Litman Thank you. Thank you. Thank you. That's great. Questions or thoughts or anything or. Yes, sir, please.
[00:58:02] Audience 6 I think they talk like this. I was wondering from your perspective, what are the challenges around standing national workforce and the enterprise? When I see enterprises embracing the talent, that is more for a time when it comes to practical work. Do you see more in the blue-collar states, in bipartisanism? What we're can do is, yeah.
[00:58:29] Miles Everson Do you want to repeat?
[00:58:29] Joel Litman Yes. Sure! So how are companies embracing fractionator forces, both blue-collar and white-collar space? Yeah, so.
[00:58:42] Miles Everson I agree with the easy answer, by the way, I was trying to not say quite this straightforward. The problem is not the independence. The problem is the existing workforce. They're not willing to change. It's kind of like that example I gave with offshoring. Right, it was always what we can offshore, you know, Michael can offshore his people, but you can't offshore mine was kind of what everybody said. And so you need to drive this. So let me back up in the world of contingent work. 9x out of 10, when an enterprise is trying to drive that, they're driving that through a procurement function. And the procurement function is doing its job, which is to manage the rate and risk associated with that transaction. So the first thing they need to do is change how they think about the role of the independence and it needs to become part of your overall talent strategy. So you need to that's almost like, I'll say, a lateral move in most organizations and head of procurement and your talent acquisition, your head of H.R., and then you got to get to the PNL owners and the PNL owners need to need to embrace it. And that's how you actually drive the real change. And it sounds almost too simple, but that's where it has to start. And that's where we're seeing companies find the greatest benefit is when they get that more senior sponsorship. Because when you I mean, I didn't even get into the math, but I can get into the math of the value of disrupting a historical contingent work supply chain and its material. So there's economics. I didn't talk about that today. I just basically talked about why you want to have access to independent talent for more strategic reasons. But that's how you have to do it.
[01:00:37] Audience 6 Now, you're talking about the talent pool a moment ago.
[01:00:42] Miles Everson Yeah.
[01:00:42] Audience 6 And I think the most important thing in the talent pool is vetting. Because unless you've got a medical manager has a bad experience three times, right, then I'm gonna go back to that pool again. That's right. And it's very frustrating for people who do the hiring. And in order to do that, then you need to really recognize people so that one company cannot do both marketing and engineering.
[01:01:19] Miles Everson That's why I talked about density. To create liquidity in the actual skills that you need is so important. By the way, one of the things I found that was really interesting is everyone in the recruiting business are their recruiters in here probably are online, but in the recruiting business talks about how you're going to use AI to match people to jobs. And if you're in a conversation with 2/3 of the conversation is centered around what we have to parse the resume and we need all the skills so we can do what I found. We did a study. I say study. I ran five different companies, competed against each other because I wanted to run with AI. The problem is companies are not good at writing job descriptions. It's not the resume. So because what happens is they basically said, well, we need five more accountants. So they pull out an old job for accountants and then they say, go find me, people. But that's not really what they wanted. So by the time you get to the interview process, you're like, well, you don't have any good people. No, you don't know how to write a job rec. And so that's a very tactical thing. But when they get good at writing the job record, what they need done, that match goes way up.
[01:02:35] Joel Litman You're saying that the process if you're going to have these pools of talent, you have the vetting process? Absolutely. Well, you're saying the vetting process isn't really an issue on the employee or the worker side. It's that you don't have a good description with which to vet the potential worker against that. That's the main issue, is that description for vetting.
[01:02:54] Miles Everson I believe that the description of what people want need should be improved first, and then you'll start to get a better result on the quality of the talent that you bring in. You've got to address both. So I'm not [01:03:07]describing [0.0s] it, but the industry's way over-indexed on the resume and the parsing of the resume instead of on the job rec.
[01:03:17] Joel Litman Very good. Let me can I just bring you? Miles Introduce me to someone, and he was a former director of the Johnson Space Command Center and he said something very interesting. And just I don't have a question so much as a comment and just about what he said I found fascinating in front of Miles. And he said he said, you know. The US military is a former general, he said, and the space center NASA will have more contractors here than we have employees in many different cases, departments. And then he said and for instance, he said, so we'll have a contract explicitly said he said with Lockheed, that goes over a few years and there'll be some contractor working for Lockheed and we'll switch vendors to Boeing. And we don't realize that the same contractor switches to Boeing and then we switch a third time. So in the course of 15 years, we'll have three different vendors. But we didn't realize that the same contractor who really knows what we're doing, what we're all about was switching, getting a job. And then we had this lifelong value of the independence that we were thinking, well, it's our employees that really know what's going on. And we didn't realize. Now, it may not be the vendor, but it's definitely the contractors that really we started tapping some knowledge of what was happening inside. You any thoughts on that, that this longevity of independence versus an employer would have?
[01:04:34] Miles Everson Well, I would just I would put it this way. If it's true, which it is that, you know, if you're under 45, you change jobs every four and a half years or so. What's better, people that are changing jobs every four and a half years or a contractor that works 30% of their year with you for 10 years, what provides more continuity? Right, because, again, the best contractors that I see, the most successful ones, they'll have 5 or 6 clients. They're not if, in fact, it's actually an indicator, if they have too many, there's a reason and the reason is they're not getting called back. So. You actually want to find the ones that don't have a high churn rate on their own customer base?
[01:05:27] Joel Litman Interesting. Now, the other question.
[01:05:29] Audience 7 I have worked for in the consulting affected by the crisis here is I have left I work a commercial bank not with the management team of both lawyers and workers. And very interesting that you talk about vetting problems. So it's cheaper to produce that productive combined that more than one worker. That's kind of traditional thinking for what I'm thinking about. What kind of independent workers could be blocked by the Republicans that typically they are more expensive than you probably do. You are you always facing an expensive budget constraint, working a typical big corporation populist style that the vetting problem issues are?
[01:06:26] Miles Everson Yeah, so when you say they're more expensive, almost every time I get that. The hypothesis is that what's happening is the company is applying typical overhead charges of a full-time employee to the independent worker. The actual pay rate. So the pay rate might be higher when you divide it by 280, 2080 hours in a year. You can't apply the overhead to the independent worker. Because you're only paying them when they're producing. And you're not providing them all their training, you're not providing them all the incremental benefits, because in most companies that overhead charge is somewhere between 33% and 50%. So you got to compare apples to apples
[01:07:13] Audience 7 We have an overhead cost to go with that, some premium on top of that
[01:07:19] Miles Everson Because almost by definition, you're going to have an actual pay rate, a higher number with an independent. But you don't have to pay for all of that overhead that comes with the company because that independent. Because they're not you're not actually delivering that cost they actually make your full-time workforce look less expensive. Does that make sense?
[01:07:46] Audience 7 Yeah, I do not find that all the time and be productive in that perspective. Right.
[01:07:55] Joel Litman Was that pay thing or said that produced that let's presumes you're comparing its independent onshore, but you can have independence offshore also right? Offshore workers, will you still get paid a bit onshore?
[01:08:09] Audience 7 I think it might be MBO platform you mentioned. Yeah. People can work anywhere. If not. Yeah. Find that workers that have the same skills to work in the lower wage region. Correct. How that. But that's a lot of obstacles and regulations, HR, on its labor, public relations or MBO will help you.
[01:08:38] Miles Everson Yeah. Yeah. So we, I mean we have an international offering that we have. So if you have people that are working internationally to get control over that, this is the article that he referred to that we published on Monday, which was I think companies are going to have to have effectively, you know, we said a digital nomad policy, but. What I can get fairly technical on this, but if you have people working that are I'm going to say US residents technically, but they're nomads and they're working in other countries, if you have enough of those and you're paying enough of those people, you'll create a permanent establishment. The situation in the foreign country, so you have to have like companies are going to have to have a policy that says you need to report where you actually conducted your work. They need to know because the tax collectors are not going at the individual, they're going to go after the corporation and say you had 4000 people or 400 people last year that worked in Country X for more. They were working there for more than 180 days. You've got a permanent establishment in that country and it'll be that country that comes and says, you owe me money because you got to establish an entity in this country and you need to pay your fair share. Now, I'm going to switch it because I think we're talking about international and cost, one of the things that we've done is. Is a is an inner is the ability to access offshore talent. Through our platform. OK, so if you're a US company today, you kind of have two options for offshore, you can either stand up a captive offshore. Or you can go buy a committed capacity contract from a big offshore provider, which usually means you're committing a significant amount of capital. What work? I think you still most companies still need to use both of those to be clear. However, the strategy on a committed capacity contract is you buy it from the provider and they will then try to reduce that cost as much as possible to serve the service agreement, service level agreement so they can maximize their profit. I get that. I do the same thing. So what you should do is you should supplement that your offshore skills with a virtual offshore capability of independence so that you can tap into the specific skill needs you need. So you might say, I need 10 Python engineers that have no consumer credit. And why would you pay somebody in the US those rates when I could get a virtual independent offshore? So that's the other offering that we have. International gets messy because you always have to say, well, yeah, but what country are they actually doing the work in and what's the pay rate on it?
[01:11:41] Audience 7 Thank you.
[01:11:42] Joel Litman One last question? We'll do one more?
[01:11:44] Audience 8 Of this kind of conversation, what KPIs do you use for customers track around their workers and what kind of admin costs, etc are saved by using your solution.
[01:12:01] Joel Litman And so, KPIs, let me ask topline, what do companies save when they have given this workforce organization? I mean, part of it is cost savings, as well as quality of worker and then what other KPIs other than just things like cost savings we're having?
[01:12:18] Miles Everson Yeah, so I wasn't I wasn't planning to go there, but I will, which is, in the world of contingent work. There are two places where the real money gets made. It's staffing firms and recruiting process outsourcing firms. That's why I say firms in that when you buy that function, so staffing firms. We'll take your job rec and they'll send it out to a group of people and they'll mark it up anywhere from 35 -100%. So they're going to use your brand. Whatever company you're with to go recruit it and they're going to turn around and charge you 30 to 100% markup, I'm using round numbers, but it can be very significant. So instead of doing that. I mean, what we're doing is we help companies directly source that talent, use your brand directly, source them, and our folks are saving 17% on their independent talent. On average, it's 17% savings
[01:13:27] Joel Litman that's independent versus independent.
[01:13:29] Miles Everson That's just independent versus independent. I'm not even talking about the flexible work, as I'm saying because that's a very that's a supply chain cost question. Right. That is different. Then why should I strategically think about my workforce utilizing a more extended workforce through the use of independence?
[01:13:47] Joel Litman On that note, what would the KPI's be? How does a client of yours like these big enterprises think about success? Because it's not just cost, it's also quality of work and worker.
[01:13:57] Miles Everson And, well, part of it is just solving the problem of how do I get the people I need with the right skills? And that's through the virtual bench discussion that we had. Right. So you got to build many virtual benches of liquid, create liquidity in those assets that you need most. I mean, it's kind of like. It's a trading market, I don't know how else to say it. If if you're offering. ETFs, yeah, you got to have enough people that want to buy ETFs to create a liquid market or the ETF is not a market traded security. It's the same thing. If I need a hedge fund account and got to have enough of them and I got to have enough demand create a liquid market. I mean, the company. Yeah, the big company
[01:14:41] Joel Litman Enterprise has to have that pool. Yeah. That's very interesting. I think that's it. Miles, thank you so much.
[01:14:49] Miles Everson Thank you. Thank you, Joe. Yeah, thank you. Thank you. Thanks, everyone.