The Expanding Markets Enabled By Remote Work

Jun 18, 2021

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For every movement, there is a countermovement. Take the Equal Rights Amendment in the 1960s. The proposed amendment sought to guarantee legal rights for Americans regardless of sex, and was largely intended to help level the playing field for females. Yet some of the staunchest critics were women. I won’t get into the details, but the oppositionist argument focused on how gender roles may actually benefit women (e.g. women were exempt from military drafts).

There are also countless second and third-order effects that stem from each trend. One trend that’s been top-of-mind in recent years is the growth of e-commerce. Importantly, as e-commerce grows, so too will the demand for return shipping. There’s almost a flywheel effect: as online retail eats brick & mortar, physical storefronts will close. Store closures reduce the number of in-person locations people can return items at while growing e-commerce sales mean overall shipping volumes increase.

I find thinking about these effects quite exciting. Where there are trends, there are countertrends. For both, there are second and third-order effects. And where there’s growth and derivative growth, there’s opportunity.

Recently, Paul Graham hinted at these concepts with regard to remote work:

Paul Graham @paulg

As well as the obvious new generation of startups enabling remote work, there will be another new generation doing things enabled *by* remote work.

Companies like Zoom, Slack, and honestly even Airbnb play a clear role in enabling remote work. There will be countless more that emerge, too. (I actually wrote here about how Clubhouse could help facilitate spontaneous, communal interactions in remote work settings).

Figuring out what’s enabled by remote work is a bit tougher to predict and hinges more on the derivative impacts of what remote work enables. One useful comparison is to consider the impact of the iPhone. Of the many features included in the initial 2007 release, few people (if any) likely predicted that a GPS in everyone’s pocket would lead to the ability to call a stranger, on-demand, to drive you from one place to another.

Same type of concept goes for remote work. To figure out what types of businesses might emerge, it’s useful to ask: what does remote work enable?

One amusing response to this question appeared in a comment on Hacker News recently:

Is that what people mean when they say they want a “10x engineer?” *chuckles* I wouldn’t want to be this person’s accountant. But hey, if a bunch of people start working several jobs simultaneously, maybe there’s a business opportunity there.

On a more serious note, if people working remotely embrace the nomadic lifestyle, consider the second-order implications. For instance, how do these quasi-nomads get things shipped to them and how frequently do they have to update their addresses? As a recent college graduate, I’m in the middle of the moving process myself. Updating addresses is a pain. It’s tedious and, quite frankly, I don’t remember all of the places I’ve listed my old address. I can only imagine the headache for someone who moves every few months. But where there’s pain, there’s an opportunity. Maybe one business enabled by remote work is a service that acts as a one-stop-shop for updating your address (kind of like LastPass - you enter your new address once and the system updates it across all accounts/places you previously listed an address).

Similarly, if people are doing long-term stays more often and in more cities, maybe they’ll want recommendations on where to stay and what to eat from friends rather than strangers. Maybe there could be a social app where people can log and rate restaurants they’ve been to - kind of like a mix of Yelp, Instagram, and Google Maps. Picture this: you’re visiting Salt Lake City and you happen to have a few friends who lived there at one point or another over the past few years (low cost of living, beautiful scenery, great place for a stint of remote work). You see two (let’s call them Jim and Pam) of them have logged restaurants they enjoyed - but because you know them well, you know that you and Jim have similar tastes, while you dislike most of what Pam recommends. If you were looking at strangers’ reviews on Yelp, it’d be nearly impossible to tell whose recommendation you’d align with better. In theory, such an app could have existed pre-pandemic. But there likely wasn’t a critical mass of people moving frequently enough for the service to provide sustained value (this idea is, after all, essentially just another version of a social network). In a world enabled by remote work, however, that might change.

Neither of the above are business advice (although I do think they are good ideas). The main point is to simply keep asking yourself: what does a world in which people work remotely look like, and what are the new pain points that exist? What can I do now that I couldn’t before?

You also might be wondering why I’m writing about this topic, considering this newsletter is supposed to be (primarily) about market sizing and so far it seems like I probably haven’t done much market sizing. That’s largely because sufficient data and analysis already exists:

According to the Pew Research Center, 71% of Americans worked from home during the pandemic, and 54% said they would want to continue working from home post-pandemic.
In a study conducted by BCG, 89% of respondents expect their jobs to remain at least partly remote after the pandemic ends.

When a market is this nascent, knowing the direction of growth is often more important than trying to pin down an exact size. There’s a good chance more companies will adopt remote working models if they see success stories in the first year or two after COVID. As a result, size estimates conducted today will likely be way off.

Importantly, where there’s a trend, there’s often a countertrend. Often, as with the ERA example, the countertrend is an attempt to maintain or reinforce the status quo. We see that type of dynamic now, as companies announce their plans to return to in-person work (the pre-COVID status quo). Countertrends are worth noting because they create the main constraints on markets enabled by new trends. It’s unclear how much of a limiting factor this countertrend may be: markets are dynamic, the push to return to in-person work will likely persist in certain industries more than others, etc. But just like no customer is the same, rarely are all aspects of a market the same. Recognizing the nuances of a countertrend can help inform what areas of a new market are worthwhile targets.

The data also suggests that at least some remote work is likely here to stay. The velocity of adoption forced by COVID pushed many companies through the friction of digital adoption and now that they’re there, they’re willing to stay. As such, this adoption opened up new markets and new opportunities.

This seems like one of those rare industries where a company launched today could one day be larger in size than the entire market that exists today. Notable examples include Stripe, Airbnb, Alibaba, and Amazon. These types of companies tend to start in small markets that have strong tailwinds. They often add rocket fuel to the growth of the market they’re servicing, expanding the market even further. And where there’s growing TAM, there’s opportunity.