How The Financial Crisis Created The Hottest Trend In Silicon Valley

Earlier this week, venture capital firm Andreessen Horowitz invested $US44 million in Instacart, a grocery delivery company.

At its core, Instacart is just an app that connects people. If you want groceries, you go to Instacart, and punch in what you want. Instacart then finds someone who can pick up the groceries and deliver them to you.

Instacart is the latest example of venture investors pouring money into what is being called “people marketplaces.”

Uber and Lyft are the biggest, best know examples of this phenomenon. Lyft connects people looking for a ride in a car with people that own a car and are free to drive other people around. It’s like a cab, but operated by non-cab drivers. Uber just raised $US1.2 billion in funding. Earlier this year, Lyft raised $US250 million.

Then there’s TaskRabbit, which gets people to do random tasks for other people. It has raised over $US30 million in funding.

There are plenty of others. This sector has exploded in popularity.

All of these companies are the children of eBay, more or less. eBay allowed people to sell their stuff to other people online. In the mobile world, people are now selling themselves and their ability to deliver services and labour.

There’s two reasons this trend formed.

The first is the explosion in smartphones and apps, which was driven by the iPhone. We now have little computers in our pockets that track location and deliver information instantly.

The second is that the economy remains weak. Andreessen Horowitz partner Jeff Jordan explained this on a podcast this week.

“Today, you got this mobile army of underemployed people,” said Jordan, who was CEO of OpenTable before joining Andreessen Horowitz. “If there was full employment, this might not be quite as interesting. The whole employment relationship between the U.S. worker and employers has changed and there are a lot of people looking for decent paying jobs.You’ve got a bunch of potential people who want to earn money all with mobile phones.”

So, in a way, Wall Street kick started this trend. It was Wall Street that inflated the housing bubble, which then burst, which sank the U.S. economy. The economy remains weak from an employment perspective. The people in search of work have given up on trying to get traditional jobs, and are now pursuing alternative employment options like what Uber, Lyft, Instacart, TaskRabbit, etc. offer.

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