The start of June saw the influential LeWeb conference make its way back to London. The subject this time around: the new sharing economy. Never shy of investigating emerging trends within the technology sector, the forum's excursion into what seems to be a more philosophical realm could be viewed as a departure from the norm, but is it? The truth is that the ideas behind the sharing economy have their roots deeply entrenched in technological soil.
What is the sharing economy?
‘The Sharing Economy’ — you would be excused if you thought it sounded like the spiritual home of new age digital hippies, or maybe a step up from a barter system — might sound a million miles from traditional capitalist thinking. But in truth it’s a movement born and sustained by three things: the advance of technology, the ongoing economic pressures that face businesses, and the human imperative for simplicity.
The key factor for the growth in the sharing economy is the birth of virtualization and cloud services; these two paradigm shifts within the technology sector have changed our thinking irreversibly. We now operate in an age in which previously unrealized value is found in excess and redundancy, in which efficiency of a single asset (server or otherwise) has multiplied massively. More than that, we can access these resources when we need them, and only pay for what we use. No longer do we have to make large up-front investments in assets that are underused.
In this space, a new group of companies are looking to unlock these assets and capitalize on them. The companies in the sharing economy are creating platforms that help people create wealth from underused and excess assets —such as cars, houses and their own spare time — and in the process provide great customer experiences that are antithetical to the ‘traditional’ big corporate model, embracing the personal and social to the point where trust, not size, is the underlying measure of quality.
Who’s who in the sharing economy?
There are many companies that are part of the sharing economy; here are three that are making an impact in different industries.
ZipCar
ZipCar has changed the expectations for car rental services. Understanding that not everyone wants to rent a car for a whole day and that the experience was complicated (insurance or not, gas included or not, and on and on…), they created a service that allows people to get a car when they need it and for as long as they need it.
All users need to do is book a car online, selecting one that is near their current location, walk up to it with their mobile (which unlocks the car automatically) and drive away. Insurance is included, petrol is included, and they can have it for as little as an hour — it’s flexible and easy.
The ability to deliver the service is driven by technology, but the experience is 100% human; their website states “it’s like owning a car, without all the sucky parts." Companies such as BlaBlaCar have taken this model and changed it again, focusing on lift-sharing (and the social experience it creates) rather than car rental, to achieve the same end goal of mobility.
Airbnb
ZipCar and BlaBlaCar focus on automobiles, Airbnb focuses on that other essential asset — the home. Started in San Francisco in 2008 by two people with a spare airbed and an inability to meet the rent, Airbnb is now a leading platform for booking accommodation, operating in 192 countries.
With Airbnb, anyone can make their spare room — or spare house — available to rent. As a result they have booked over 10 million nights of accommodation in just five years. As with ZipCar, the experience is simple, as you can find, book, and talk to your host online through mobile applications and the desktop. It's disrupting the standard hotel model by offering experiences that are more personal, both in terms of being welcomed to a location by your host, and in terms of accommodation; your spending time in someone’s home, not a bland and same-all-over-the-world hotel room. Airbnb has, to date, raised over $120 million in seed funding. Couchsurfing is also working in this area, but with a more informal offering that caters for the global traveller.
TaskRabbit
TaskRabbit, formed by Leah Busque in 2008, is in some ways the most social and ‘sharing’ of the new sharing economy companies, based purely on human resource. TaskRabbits, as members of the service are known, are simply people for hire.
If you need a letter taken to the post office while you are at work, or someone to do your shopping, or someone to pick up your laundry, you can post your job online and a TaskRabbit will bid for the work. TaskRabbit has created an open marketplace in which you can monetize your own spare time.
Originally based in the US, they recently opened up to the London market following many requests to do so. They have also created a TaskRabbit for Businesses service, again as a response to customer needs.
Modabound and Pink Mothballs
Extending the shelf life and value of clothes is the prime goal of Modabound and Pink Mothballs. For those that have bought an item of clothing and only worn it once, who have changed their minds about the dress they purchased, or who have clothes that don’t fit anymore, these services provide the opportunity to make money from excess fabric. Modabound, who launched at LeWeb, offers college students a forum to buy and sell, whilst Pink Mothballs centres more around sharing and selling amongst personal and extended social circles.
Cookening
Cookening turns a home into a restaurant. Disrupting the standard models in the same way as Airbnb and CouchSurfing, it gives its users the chance to eat great food in a much more personal and socially-rich environment - something that chain restaurants struggle to deliver and that high-end restaurants can’t deliver at the same price point. Those that register to host a meal need simply to enter a few details about themselves and their cooking, and they can immediately be selling a place at their table, whilst a slick user experience allows potential guests to find a meal near them quickly and easily. The feeling of a social experience, rather than a commercial one, is strengthened by the online payment system, which means that no money has change hands during the meal.
Fad? Or lessons to be learned?
If this new sharing economy is forming the basis for the latest start-ups and attracting investment from venture capitalists, is there a lesson here for the corporate world? The answer may lie with the January 2013 acquisition of Zipcar by Avis, the second largest car rental firm worldwide, for $500 million. These businesses, taking different approaches to established markets or in some cases creating new markets, are disrupting established thinking, enabled by advances in technology and a more technically-savvy populace. They are changing the expectations of what a service should provide and corporates should take note. By building on real customer need and creating experiences that are human and personal, they are able to move in spaces that traditionally bigger companies cannot. This notion has been picked up by web strategist Jeremiah Owyang of the Altimeter Group. In his report, “Corporations must join the new Collaborative Economy”, he notes:
“Social technologies radically disrupted communications, marketing, and customer care. With these same technologies, customers now buy products once and share them with each other. Beyond business functions, the Collaborative Economy impacts core business models… For corporations, the direct impact is revenue loss that results from customers sharing products and services with each other.”
In a collaborative economy, companies must move from supplying a product, to providing a service - this can already be seen in the activities of Toyota and BMW (renting cars direct from dealerships) to name just two. They are not alone; Owyang lists over 200 companies that are involved in the collaborative economy, which goes to prove this is not a fad, but the start of a new business reality.
