How Startups Mix Tech and Incentives To Get More Out of People

Automation and algorithms. These “two A’s” are central to what many of today’s startups are trying to do, as they put software to work on tasks once done primarily only by humans.

For example, ridesharing services like Lyft use algorithms, mapping data and payment info to seamlessly automate the experience of getting from one place to another. Then there are companies like IFTTT, which has opened up endless possibilities for automating interactions between services like YouTube, BuzzFeed, Pocket and Twitter. You can, for instance, have any new long-form BuzzFeed story automatically saved to Pocket, or automatically share any favorited YouTube video to Twitter.

What does this overarching focus on automation and algorithms mean for the workplaces of tomorrow? The knee-jerk reaction may be that companies are likely to have fewer employees over time as software and perhaps even robots (self-driving cars could possibly fit into the latter category) become more prevalent.

But many startups have a more people-centric outlook. The presence of open plan offices, such as Facebook’s massive Frank Gehry-designed spillover campus for its Menlo Park, California, headquarters, demonstrate the continuing importance of human collaboration to businesses of all sizes. Plus, many startups now work in labor-intensive spaces such as transportation or home delivery, which, even with automation and algorithms everywhere, require large numbers of feet on the ground.

How startups have made people the next infrastructure
“Infrastructure” is usually a dry technical term referring to servers and networks in IT or to roads and bridges in transportation. Either way, it refers to something that provides support; for many startups, a flood of new hires and/or contractor partnerships has become its own type of “human infrastructure.”

A quick glance at your phone’s home screen probably reveals at least a few apps that could not exist without lots of support from workers and contractors:

• AirBnb: Uses underutilized apartment and home spaces for hospitality.
• Lyft and Uber: Turns cars, taxis and limos into on-demand vehicles, summonable from an app.
• TaskRabbit: Allows a wide range tasks to be assigned to nearby people who are interested.
• Instacart: Provides grocery delivery to the home.

Basically, many of today’s most successful startups have found their niches not simply by creating massive productivity gains (which often involve the introduction of more automation and algorithms) but by recruiting plenty of human beings to share in the day-to-day work. The term for this phenomenon used to be the “sharing economy,” although publications like The Wall Street Journal have recently floated alternatives like “New Infrastructure.”

It’s an interesting approach if only because enlisting help from users and the community has enabled smaller firms to compete with much larger, entrenched incumbents, whether that means hotels (in the case of AirBnb) or taxi and delivery services (in the case of ridesharing apps). For small businesses outside of Silicon Valley, there is perhaps something to be learned from how high-profile startups have made the most of what’s available to them.

From there, that infrastructure contributes to the development of algorithms and machine learning. Delivery routes, customer advertising preferences, etc. can be further optimized to grow revenue and profit. Ultimately, however, there has to be incentive for stakeholders (i.e. employees, contractors and customers) to participate.

Mixing technology and incentives
More specifically, businesses can succeed if they have a strong technological base upon which they can build and promote incentives for participation. The base starts with strong video, voice and data connectivity that supports everything from video conferencing for collaboration to cloud backups.

Ridesharing services have done this through measures such as surge pricing, whereby prices are higher during times of high demand in order to encourage more drivers to get on the road. Softer versions of such incentives can also come in the form of gamification, such as the various badges that Foursquare once awarded to active users that helped build the service’s database of restaurants, stores and other venues.