The Sharing Economy Goes Public. Now What?
In less than a decade, the sharing economy has gone from a fringe term to daily headlines worldwide. It has disrupted and even transformed entire sectors: from transportation to hospitality, office space and fashion. Knock-on effects include new insurance solutions and tax conundrums. Perhaps nowhere have the implications of the sharing economy been felt more clearly (albeit too often belatedly) than public policy, with cities and governments scrambling to keep up with the pace of change.
And now, sharing economy companies are preparing to go public, with Lyft (founded in 2012; valued at $23 billion) and Uber (founded in 2009; valued at $120 billion) leading the way. Airbnb is expected to follow, though beyond that is anyone’s best guess. Beneath these milestones lies a deeper question: now what?
As an advisor to startups, governments and investors focused on the sharing economy for nearly a decade, I’ve had a seat at the 50-yard line of these developments. By all accounts, the sharing economy has become something bigger, more nuanced and complex than even the most enthusiastic supporters could have predicted back in 2008, when it began to emerge as a way to earn income and save money in the post financial crisis.
Today, in 2019, with IPOs on the horizon, what’s next? Here are a few theories.
(1) The sharing economy is not dead.
Weekly, one can read about how the sharing economy is (or even “always was”) a sham or irreparably broken. But that oversimplifies what’s going on. We must probe deeper.
Many people, myself included, would agree that much of today’s sharing economy bears little resemblance to its original values of resource efficiency, sustainability and community building. There has been a growing amount of “sharewashing”: slapping “Sharing Economy” onto a platform or product because it sounds good, rather than because it truly espouses such values. Even Lyft and Uber fall victim to this tension. Yes, they help people avoid owning cars — but that’s different than actually sharing rides.
The sharing economy is not dead. There is plenty of bona fide sharing going on all over the world, from BlaBlaCar (inter-city shared rides: the only way the platform succeeds is if everyone involved saves money, meets new people, and boosts green transport) to Silvernest (homesharing focused on the elderly: again, cost savings and community), thousands of local co-working spaces and scores of platform cooperatives. But when we allow the sharing economy to include anything that anyone wishes to call “shared,” without scrutiny or reflection, then of course we run the risk that it will wither. It is up to all of us — customers, leaders, and policy makers alike — to look through the surface of taglines and press releases to the substance of what is actually going on. When we do so, we would find that the sharing economy is alive and well, without the headline-grabbing valuations.
(2) The sharing economy is now mainstream (almost).
Think about the sharing economy from the vantage point and history of the smartphone. The first smartphone, Apple’s iPhone, launched in summer 2007. Within a matter of years, one could find, solicit and “share” almost anything with a tap or swipe of their phone. Is it any wonder that the sharing economy’s popularity has grown in lockstep?
Sharing economy business models and mindsets have piggybacked on smartphones’ ubiquity extraordinarily well. In 2019, certain features seem so normalized that we may wonder why we call them shared at all. When the sharing economy epitomizes “access over ownership” and we can now access everything from home decor to handbags and hardware through our phones, it’s almost business as normal.
But only almost. The sharing economy remains not-yet-mainstream for some very practical reasons. First, public policy for the sharing economy remains woefully outdated. Integrated and responsible policy alignment — from authorization to conduct business, to tax policy, privacy, insurance and more — is urgently needed. (The Sharing Cities Alliance is a good start, and interestingly the International Standards Organization (ISO) has a new sharing economy technical committee. Sign of the times?)
Second, at the risk of stating the obvious: the sharing economy is about mindset shifts, and shifting mindsets takes time. When we factor in youth, the emerging middle class and digital literacy improvements overall, it is clear that every day, more people are ready and able to participate in the sharing economy. But that doesn’t mean that everyone will do so, nor in the same ways.
I have long argued that the true sign of the sharing economy’s success is when we no longer need to call it that, and rather it becomes simply part of “the economy.” We’re not there yet, but every day we nudge a bit closer.
(3) The sharing economy is complicated, and language really matters.
Of all the debates raging about the sharing economy today, IPOs or not, the fundamental one is what is: what is in and out of scope. To highlight but one example of this conundrum: PwC calculates that the global sharing economy will be worth more than $335 billion in 2025. The Chinese government claims that China’s sharing economy is already worth more than $700 billion today. China defines the sharing economy roughly as the West defines the digital economy. If we’re not comparing apples to apples, then of course the sharing economy will look distorted, defunct or delusional.
In reality, however, the sharing economy is still in its adolescence, or perhaps early adulthood at best. It has yet to fit its skin, know when to speak (and when to listen), or comport itself with grace. Upcoming IPOs provide a very real opportunity to pause and take stock of what needs to be done to regain its balance, power and potential.
From where I stand, we should start with language and accountability. Every time you hear the phrase sharing economy, stop and ask yourself: what’s being shared in ways that enhance sustainability and community? If a platform can’t pass this test easily, without overthinking, it’s probably sharewashed. Beware of blind spots, too; just because media is in the business of in sharing news and information, that doesn’t magically create an “information sharing economy.”
Accountability applies to both platforms and participants. Here we might do well to think like policy makers. For example, If a sharing economy company professes to be inclusive, do they have the data to back it up — and will they share the raw, non-tampered data set publicly? If not, consider it an immediate pink flag (never mind shouts of competitive catastrophe).
Sharing economy advocates promise a brighter shared future. When harnessed responsibly and aligned with the core values of community, sustainability and resource efficiency, it is hard to find a more powerful business model. Upcoming IPOs will test this thesis, and the integrity of the term itself. We should all be watching closely.