Wanted: Sharing Economy — Dead or Alive?
With hot money spinning press headlines such as last week’s Grab new $750 Million round and with some its poster-children — such as Air B’n’B or Uber — already household names , it feels like the sharing economy is fast establishing itself as global phenomenon. Impressive for what started as an alternative vision…
And yet, outside the bubble of tech-savvy & millennials, the numbers seem to tell a different story: less than half of US adults know what the sharing economy actually is and less than 20% have actually engaged in an affiliated transaction…
So the question is, are we looking at a simple fad or at a shift in the way we consume and architect our lives?
Summer time sadness
Some would argue that going on Air B’n’B vacations, just like fixie bikes and ironic handlebar mustaches are just the hallmark of millennials. And so these are merely a way of expressing some rebellious spirit before inevitably returning to the fold. The same way the baby boomers went from the 60's summer-of-love ethos to finally fully embrace the consumer society by getting mortgages and full-time jobs at the office…
And uncannily enough, outside the hush-hush world of corporate marketing speech, most the hippie/peer-to-peer community spirit has been tuned out & dropped off. While John Zimmer’s & Logan Green’s initial vision for their company was all about reducing environmental footprint and fist bumps, Lyft is now mostly competing on price… And a look at the most successful start-ups hailing from the sharing economy makes it is clear that the winners have all been the ones who focused the most on efficiency and transaction models — not community building.
So should we be disheartened and lament the end of what could have been a brilliant idea? Well here a 3 reasons why I think the sharing economy is here to stay:
1. Thus spoke the data
Unfortunately, we don’t know ourselves as much as we like to think. We might have clamored for “more community” or wanted to ”help the environment” but when things got real our choices can be different from that (“just get me there cheaper”). So then we can despair from society and blame our fickle human nature or try to adapt, learn and nudge it. And looking at what the key players are doing, to me, speak volumes about adaptability, maturity and business acumen. As product designers we should do more than taking declarations at face value. To quote Henry Ford:
“If I had asked people what they wanted, they would have said faster horses.”
2. The rise of the platform
Even as usage picks up, there are still key concerns around trust and consistency. Sharing with family or friends comes naturally because we know them quite well and for quite some time. Unfortunately building this kind of connection takes time. So what to do? Turns out that this is a perfect play for platforms or marketplaces. For consumers, knowing there is a selection or vouching process and a third party arbitrage are the best guarantees of a consistently good experience. As for vendors, it takes the pain out of reaching out to customers. So in the same way the introduction of money revolutionized bartering, platforms drastically facilitate and accelerate exchanges.
3. Power (and Kan-ban) to the people!
While being instinctive, owning actually has its fair share of disadvantages… As an example, owning a car requires you to also have a garage/parking at home and another one near work if you use it to commute — and is your car useful to you or earning you any money while it sits idle? Nope. In effect both garage and parking are ‘wasted space’ 90% of the time and have the car ‘waiting’ for you to finish working is also waste of a resource. Wouldn’t it be better for you to hitch a ride, cab or even why not renting it out to a potential driver during you work day?
Access is more and more being seen as the key aspect of consumption. I assume you also don’t walk around with some coffee beans in your pocket and a grinder strapped to your waist just because you might want coffee sometime in the day… So now that concepts such as leasing or Kan-ban (‘just in time’) have been widely proven effective in companies, so too are people starting to use them.
This is also further helped by another trend which is the generalization of the subscription model pushed by the SaaS (Software As A Service) industry — where companies like AWS now start to even charge at the 100 milliseconds level of use. Once you have moved your mindset from ‘owning’ to ‘renting’, then it is much easier to simply borrow or consume only when you truly need.
In conclusion, the sharing economy is not just some bizarre trend that will wash out, it is here to stay (though it might be getting some re-branding as ‘access economy’). And despite all the past tumbles and meteoric rises, we are in my opinion only at the start of the curve…
While competition is getting fierce in some segments (such as ride share) there are still sways of blue ocean available. It might not be a consumption mode suitable for everything or everyone but it can only become more prevalent with the current economic conditions… Where both a depressed job market and a gloomy economic outlook, it pushes a lot of people and businesses to be more creative and seek out new revenue streams to make up for a loss of income or just simply cope with rising costs.