Twenty years ago, the dot-com economy was going gangbusters. Hundreds of small companies offered thousands of products online, driving a feed frenzy of investment, with little if no attention paid to whether those firms were financially viable.

Back then, the pundits claimed it didn't really matter if a company was making a profit or had a viable business model, because the disruptive power of the Internet would create such incredible growth that traditional financial measurements wouldn't matter.

The "dot-com economy: collapsed in the early 2000s and is now known as "dot-com bubble." Despite the carnage, though, Amazon.com made the "lose money until you make it" business model actually work, creating a 21st century powerhouse. 

Today's "gig economy" closely resembled the "dot-com economy." Dozens of small companies have staked out individual service categories and, just like then, few or none are profitable.

If history repeats itself, the "gig economy" will become the "gig bubble," and most of those companies will either fold or merge. The result is likely to be the same as with e-commerce: a market dominated by a single company. 

Will it be Uber?

Uber is today focused on transportation services, similar to how Amazon originally focused on selling books. But Uber certainly could expand into other service categories. If so, the company's "Uber Eats" service is a sign of things to come.

If that's Uber's plan, it better move fast because if Uber doesn't become the Amazon of the gig economy, another company is sure to do so eventually: Amazon. Unless Uber moves quickly, it may find itself in the same position as eBay--a niche provider at best.

Amazon is already edging into the gig economy with its package delivery service. Once the infrastructure is built, Amazon could easily expand in services beyond delivery. Amazon could easily do to the gig economy what it did for e-commerce.

With this clash of the titans in the offing, entrepreneurs who've founded gig economy companies would be well advised to sell before the bubble bursts. As for starting your own "Uber for x" business? Fuggedaboutit.

Published on: Mar 16, 2019
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