The "gig economy" has its drawbacks, as highlighted recently by Newsroom Pro managing editor Bernard Hickey, but it's also an unavoidable part of today's employment landscape. Especially for millennials and Generation Z, two generations that grew up in the internet era - and now have to earn a living in it.
I've questioned aspects of New Zealand's fintech startup scene before, but one encouraging trend is the rise of fintech startups that serve the younger demographic. I profiled Sharesies back in October, and recently I came across another promising local startup: Hnry.
Hnry is an app built for the gig economy. It automates much of the administrative parts of being a freelancer or independent contractor - in particular, paying your taxes.
In its marketing so far, Hnry has positioned itself as a kind of replacement for hiring an accountant. It's even set itself up as a registered tax agent with both IRD and ACC. This allows the Hnry app to act on your behalf when paying taxes and ACC levies.
Is Hnry automated or does it employ minions?
One immediate question I had when looking into Hnry was, how much of it is automated? I wondered if perhaps Hnry employed low-paid freelancers to do all this admin work in the background - which would be ironic in the extreme. But no, that's not the case according to Hnry's founding CEO, James Fuller.
Fuller explained that the app relies on automation and predictive analytics software.
"Most of our process is already automated," he told me. "All of the calculations are automated, as well as internal processes. The algorithm has been refined over two years of use, so it's already at quite a mature stage."
One thing Hnry deliberately chose not to automate is the review of users' business expense receipts.
"As a registered tax agent, we have a responsibility to check and validate business expenses as they come in," Fuller said, "and at the moment we need to gather more data on usage patterns before we commit to building the automation required."
So how does Hnry's automation work exactly? Too often in the tech industry we hear about startups using AI to power automation, but in many cases it's opaque as to how the AI is being deployed. I even coined a term for this trend last year: vagueware.
James Fuller is much more forthcoming about how Hnry uses automation - and thankfully he avoids using the term "AI" at all.
"The majority of the predictive algorithm we've built essentially analyses earning patterns and applies income forecasting models to it," he said, "to determine the most appropriate tax rates to apply for an individual."
Factors the algorithm takes into account include "how much and how often you earn, what sort of work you do, and your actual and predicted business expenses."
I asked Fuller whether he sees Hnry as a replacement for not only accountants, but New Zealand's own rock star tech company, Xero?
"Accounting software is great if you're running a registered business that has complexity such as payroll or inventory," he replied, "however if you are an independent contractor or freelancer, it can be overly complex and requires a level of accounting knowledge (and interest) to use it."
Fuller sees Hnry as a "fully-featured alternative" to software like Xero, at least for its target audience of freelancers and contractors.
Who's using Hnry
Like Sharesies, Hnry is a graduate of the KiwiBank FinTech Accelerator, a three-month programme for new financial technology startups. In early 2018, Hnry completed its trial period and launched in New Zealand. This year it has continued to expand and also recently announced a strategic partnership with ASB.
As for who uses Hnry, Fuller confirmed that "most of our early-adopters were aged in their late 20s and early 30s." Which is bang in the middle of the millennial generation.
However, as it has grown Hnry has begun to broaden its user base.
"Today our customers are pretty widely spread across all age and income brackets," Fuller said. "For example, we have pure 'gig economy' workers such as Uber drivers and Lime Juicers, through to those earning a full-time income from freelancing or contracting. These are people who don't want to have to learn about their taxes, or simply don't have the time to."
What we know about the gig economy
Statistics on how many people are freelancers or contractors can vary, but the trendline is undeniably going up. That's due to the growth of contractor-reliant companies like Uber and freelancing platforms like TaskRabbit and Upwork.
Nation1099, an industry blog that caters to freelancers and contractors, did a meta-study last year of all the statistics it could find about the gig economy. It concluded that "approximately 11 percent of the working adult population in the U.S. are working primarily as full-time independent contractors in the gig economy."
The New Zealand government is well aware of this trend and created the Future of Work Commission in December 2014 to track it. Finance Minister Grant Robertson is Chair.
"The very notion of what a job is has been challenged by the so-called gig economy," said Robertson in a speech last year.
Probably the biggest societal danger with the gig economy - and this is right in the Labour Party's wheelhouse of concerns - is the increasing loss of job security. It's not like Uber goes out of its way to protect the rights of its drivers...or indeed help them with their taxes.
In a way, companies like Hnry are doing their bit to address this. Hnry at least makes it easier for freelancers and contractors to cope with the administrative burden of self-employment.
Supporting the gig economy could also be big business for Hnry.
"Trends such as the gig economy and flexible working patterns are great for supporting our future growth," James Fuller said, "and we believe the majority of our customer base will come from industries where people earn the majority of their income independently - whether that's on a gig, contract or freelance basis."
So far, Hnry has attracted government contractors, personal trainers, photographers and project managers to its platform.
One suspects this list of freelancer or contractor job roles will expand exponentially over the next decade or two, as the gig economy takes full effect.