The Death of the Salaried Employee

By Wayne Mulligan, on Thursday, June 25, 2015

Every spring, investors from Wall Street to Silicon Valley wait in anticipation for one of the most important reports of the year.

They’re not waiting for the jobs numbers, GDP data, or any other conventional economic indicator.

These investors are waiting on The Internet Trends Report—a report that’s predicted nearly every major technology trend for the past 20 years.

The woman behind the report has been named “one of the ten smartest people in tech” by Fortune and listed as the 77th most powerful woman in the world by Forbes.

And in this year’s report, she made a shocking prediction.

It could impact every facet of American life—from how we save and spend, to how we retire and invest our money.

Today, we’ll share this prediction with you, and we’ll show you a specific way to profit from it.

Meet Mary Meeker

The woman behind The Internet Trends Report is Mary Meeker.

Mary began her career in the technology sector at Solomon Brothers in 1986. By the early 90s, she’d moved over to Morgan Stanley to start covering Internet companies.

By the mid-90s, she’d made her mark by helping Morgan Stanley land Netscape as a client, and Morgan ultimately led the company’s IPO.

This marked the beginning of the dot-com era where Meeker’s star continued to rise—and this is when she started publishing The Internet Trends Report.

Her first report became so popular and so widely read, that for the first time ever, Morgan Stanley began selling it at retail.

The Death of the Salaried Employee

In Meeker’s 2015 report, she discusses a number of trends that are taking shape right now.

But one trend in particular has the potential to impact our lives and our country more than any other.

Many are beginning to call it The Death of the Salaried Employee.

As financial analyst and author, James Altucher recently wrote about it, “The median real salary today, adjusted for inflation, is almost 10% lower than it was in 2007 […] It’s lower than it was in the year 2000. And average hourly wages are lower than they were 40 years ago, according to recent U.S. News & World Report article.”

And according to the Bureau of Labor Statistics, the ratio of full-time employees to the total population is at its lowest levels since the 1980s.

While this data may sound troubling, Meeker has a different take on the situation...

Rise of the Freelancer

The economic boom of the 90s brought high employment, and made it expensive to hire employees. But post-recession, it’s a different story...

Today, according to Meeker’s report, “34 percent of the workforce in the United States, 53 million people, now consider themselves independent contractors, short-term hires or other kinds of freelancers.”

Given this environment, it’s easier to hire staff as contractors: they don’t receive expensive benefits, and they can be let go or re-hired as needed.

And in brief, Meeker predicts this environment will give rise to a new type of economy:

A robust economy that’s fueled by freelancers.

What’s Allowing This to Happen?

This new environment wouldn’t be possible without the proliferation of the Internet and mobile communications.

This trend started in the dot-com boom, with companies like eBay.

For the first time, someone could host an “online garage sale” while working part-time from home.

And nowadays, millions of people use eBay as their full-time job.

More recently, we’ve seen the emergence of companies like Uber and Lyft, which allow nearly anyone to become a full-time or part-time taxi cab driver.

All you need is a car, a driver’s license and a mobile phone—and Uber or Lyft operators will direct you to customers.

And now there are online marketplaces for various types of freelance workers:

Engineers, designers, and even clerical workers can find work without leaving their home.

The largest freelance marketplace is called UpWork. It helped generate over $1 billion in income for freelancers last year.

And in the next six years, its goal is to grow that number to $10 billion.

How You Stand to Gain

If Meeker’s predictions prove accurate, online marketplaces like eBay (NASDAQ: EBAY) and relative newcomer Etsy (NASDAQ:ETSY) will make strong, long-term investments.

So will companies like Uber, Lyft and UpWork, which haven’t gone public yet. In fact, because these companies are still privately-held, they have even more upside potential.

You might be wondering how you can invest in these companies, since they don’t trade on a stock exchange...

Well, one of my favorite ways to get access to private shares is through something called a “Business Development Company” or “BDC,” for short.

BDC’s are publicly traded investment vehicles that invest in private companies, and pass the majority of their profits onto shareholders.

One BDC in particular, GSV Capital Corp. (NASDAQ: GSVC), gives you an attractive way to play Meeker’s trend.

If you look at GSV’s portfolio, you’ll see that it owns stock in both Lyft and UpWork, as well as a number of other promising private investments.

In the coming weeks we’ll share more insights from Meeker’s Internet Trends Report with you—and most importantly, we’ll share how you can turn those insights into profitable investment ideas.

Happy investing.

Best Regards,
Wayne Mulligan
Wayne Mulligan


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Tags: Lyft Uber GSVC Ebay Kleiner Perkins

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