The Gig Economy Is Booming… for Now

BY ANDY SWAN

“It does not matter if you are a programmer, designer, product manager, data scientist, lawyer, customer support rep, salesperson, or a finance person – AI is coming for you.”

That was the “unpleasant truth” Fiverr (FVRR) CEO Micha Kaufman openly shared with the world in April.

AI is coming for you. It’s coming for your jobs. And no one is safe.

While I appreciate a guy who tells it like it is, I have to say – this wasn’t exactly a groundbreaking revelation.

Two years ago, Goldman Sachs analysts warned that artificial intelligence (AI) could disrupt as many as 300 million jobs worldwide.

Nine-to-five workers were up in arms from the moment ChatGPT started writing college admissions essays.

Lower-level work is fading. Proposal writing, first-draft copy, data sorting: These tasks are increasingly handled by AI.

For Fiverr, this is a dangerous spot to be in. Its business was built for speed: simple tasks, fixed prices, no hand holding. That model worked when the value was in turnaround time. Now those tasks – logos, social media captions, and blog posts – are being completed by generative AI in seconds.

Fiverr’s model, in its current form, cannot survive the next evolution of task automation. And leadership knows it.

As AI transforms the gig economy – and labor force at large – investors need to be selective about where they place their bets.

Today’s winners may not be the opportunities they appear to be… and tomorrow’s leaders are emerging in unlikely places.

Let me explain…

Recommended Link
Wall Street Pioneer Issues Shocking AI Warning
Louis Navellier has spent four decades building a billion-dollar empire on the back of big data and technology… Now he’s stepping forward with a shocking warning about how AI will soon impact the wealth of everyday Americans. Click here to watch his new video ASAP.

Winners and Losers in an AI-Powered Gig Economy

The freelancers gaining share now are doing work AI cannot complete on its own.

Upwork (UPWK) is capturing higher-value contracts, landing larger clients, and expanding margins through automation that empowers, not replaces, freelancers.

Upwork’s dedicated AI Agent product, Uma, along with AI-assisted features, are improving match rates, cutting time-to-hire, and increasing freelancer earnings.

One Upwork client, a mid-size Florida law firm, hired a team of freelancers to build a custom GPT that organizes their legal archive and surfaces key information instantly. Another, a top pharmaceutical firm, relied on a South Carolina-based agency to develop low-code healthcare apps using LLMs.

These tasks are domain-specific, technically complex, and deeply embedded in the client’s workflow. Upwork is becoming a launchpad for that kind of technical work to increase efficiency and capacity without taking on a full-time employee.

And it’s reaping the benefits. AI-related gross services volume grew 25% year over year in the most recent quarter, while prompt engineering alone rocketed 52% year over year, helping Upwork achieve record revenue and profitability.

You wouldn’t know it from Fiverr’s doom-and-gloom attitude, but the gig economy is actually thriving right now.

As businesses scramble to implement AI in their own operations, searches for independent “AI Agent” workers have surged 18,347%over the last six months, according to Fiverr’s Annual Business Trends Index.

Source: Google Trends

Some 38% of American workers freelanced in 2023, and that share is set to expand to more than half of the U.S. workforce by 2028, according to industry reports.

Source: Statista

On the surface, it looks like AI is driving a long-term shift in how people work. This could be a boon for companies like UPWK – and possibly even FVRR, if it can pivot quickly enough.

But there’s a problem: Most of this “side gig” demand comes from companies trying to build systems that remove the need for workers entirely.

Freelancers are training the AI models that could eventually replace them. Delivery drivers are mapping the routes that driverless cars will take over. Contract coders are writing the scaffolding that future tools will use to generate their own software.

These roles exist because the transition to an AI economy is incomplete. Once it’s done, the platforms no longer need the labor.

For companies with high exposure to the gig economy, the stakes couldn’t be higher. How these companies effectively (or ineffectively) integrate AI will be the difference maker that divides the winners and losers.

UPWK might be a winner in the short term, but we’re not confident these freelance platforms can sustain long-term growth.

A Better Bet for the Workforce Takeover

Uber Technologies (UBER), on the other hand, faces a different challenge and a different kind of opportunity.

Its business relies on physical labor. Drivers complete real-world tasks in regulated markets with high insurance costs. That model has limits. But Uber is already planning for what comes next.

In the past six months, the company has signed or expanded partnerships with Waymo (GOOGL), WeRide, Pony.ai, May Mobility, and Momenta. Fully autonomous rides are active in Phoenix. Additional cities are coming online in the U.S., Europe, and the Middle East.

Uber is an ideal partner, as it’s held a dominant share of the rideshare market for almost a decade – accounting for 76% of monthly rideshare trips.

Source: Bloomberg

If these autonomous “robotaxis” are adopted broadly, Uber will benefit from improved margins as driver costs fall and vehicle utilization increases.

Uber holds another key advantage: It excels at aligning drivers with peak demand schedules. That helps with efficiency in the near term. In the long term, these predictable peaks will help it create an efficient self-driving fleet, further improving margins.

Source: nber.org

It’s no longer just rideshare where UBER is dominating, either. Uber Eats now accounts for one-third of overall revenue. Every delivery only increases its lead over the competition.

And thanks to LikeFolio real-time consumer demand metrics, we know Uber is gaining momentum on Main Street. While peers like Lyft (LYFT), DoorDash (DASH), and Instacart (CART) fall behind, Uber web visits are trending higher as the company broadens its reach and boosts customer loyalty.

Long term, Uber wants to handle the routing, pricing, and interface layer for autonomous fleets. The vehicles can change. The platform stays in control.

If that model scales, Uber won’t rely on gig labor. It will manage transportation logistics the same way cloud platforms manage compute power.

The company isn’t there yet. But the direction is clear.

As autonomous vehicle partnerships continue to scale, Uber can transition from a labor-reliant model to a logistics platform with better margins and more predictable growth. That scenario is not priced in, even at current levels.

The Bottom Line

The freelance economy is growing, but not every platform is built to grow with it.

Fiverr is quickly fading into irrelevance. Its current infrastructure is not equipped to deliver automated work at scale.

Upwork is proving that AI can be a growth engine if leveraged properly. But its current momentum is tied to a learning curve – a temporary gap in AI capability.

Right now, LikeFolio’s forward-looking demand data raises concerns for both companies – each one is currently recording a -15% year over year decline in digital traffic:

Investors need to be selective in how they invest in the AI future.

At LikeFolio, we’re zeroing in on platforms that aren’t just enabling AI work but becoming AI infrastructure themselves, like Uber.

• Its business model improves as labor disappears.
• It is already onboarding autonomous vehicles through partners like Waymo.
• As more trips run without drivers, Uber expands margins, scales capacity, and removes its biggest operational constraint.
• And its brand is a clear favorite with consumers.

“AI is coming for you,” but it’s only a problem for the unprepared. (Looking at you, Fiverr CEO.)

With LikeFolio’s consumer insights in your corner, you’ll be ready to turn this challenge into an opportunity.

Until next time,

Andy Swan
Founder, LikeFolio