Why the Sharing Economy Matters
- Up to 48% of current skills are going the way of the dinosaur (EXTINCT)
2. Improves efficiency of current economy
3. Increasing demand for personalized and customized work by millennials
4. Enhances the offerings of major corporate incumbents while forcing innovation as it disrupts others
With rapid technological advances connecting the world in new ways and automating previously un-automatible tasks, the system of labor is undergoing a massive reorganization, akin to the Industrial age. The tectonic pressures applied by technological advancement in robotics, artificial intelligence, big data, portable computers, etc are forging a massive opportunity in an entirely new system of entrepreneurship known as the Sharing Economy.
Researcher Carl Frey, of the Oxford Martin Programme on the Impacts of Future Technology, forecasts that up to 48% of current skill sets in the US will be obsolete within the coming decades. Technology is not just transforming skill sets, but drastically reducing the number of people required to complete similar work. When the Kodak and Instagram reached similar valuations, Kodak employed 30,000 people, while Instagram employed 13. This disruption is consistent across every sector. The question is what happens to these displaced employees, whose skills face obsolescence? Skill obsolescence and the associated transition is a common problem regardless whether you are a military veteran or a leather tanner.
The McKinsey Global Institute (MGI) predicts that many of these people will be absorbed within the Sharing Economy as micro-entreprenuers. In India alone, MGI predicts that India will face job losses reaching 20 million people, yet up to 12 million will find new work as micro-entrepreneurs in the new economy. Every post-industrial country in the world is facing the same problem and as Carl Frey told me, he doesn’t know of anyone that has found the a scalable solution yet. MGI believes that startups, like Etsy, provide global marketplaces that will afford micro-entrepreneurs a global consumer base that makes their craft financially viable, breathing new life into skills once considered defunct or expanding the reach of formerly niche skills.
Alex Stephany writes in “The Business of Sharing: Making it in the New Sharing Economy” that the sharing economy improves the efficiency of the current economy, in any post-industrial world, by monetizing the excess capacity. For example, the international Parking Institute reports that the average car sits nearly 90% of the time in a parking spot. Services, like Blah Blah in France or Uber or RelayRide, or Lyft, now allow individuals to take that excess capacity and monetize it for additional income.
Sharing economy businesses allow you to monetize excess time, excess food, skills, crafts, anything. There is also another component to reforming the system of labor that addresses a uniquely millennial need. More than any other generation, millennials desire control over their lives and work. They want to be able to determine their own schedule and work as needed to support their life, vice living to support their work.
The sharing economy is also uniquely configured to meet the needs of the millennials. This isn’t a a trend that is unnoticed by investors and big corporations. Jeremiah Owyang details how investors have “shared” nearly $11.6 billion with technology startups working in this new economy.
Alex Stephany describes how BMW, Ford, GM, Google, and others combined with the venture capitalists are investing heavily in the future of these startups. The ability of BMW to integrate with JustPark to help their drivers find “shared” parking spots in crowded urban environments is a huge potential differentiator for BMW’s target buyer. Further, Amazon just rolled out Amazon Services to 48 states which means now you can 1 click pay to install that TV you just bought on Amazon or give music lessons to your daughter on that new violin. Amazon now has another great value proposition for customers without employing a nation wide army of service professionals.
Today, the sharing economy startups are primarily known in dense, urban population centers and little known or understood outside the technology sector, entrepreneurs, and select academics. However, as the economy continues to evolve and skills sets go extinct, the sharing economy will gain increasing momentum and attention by the world. As MGI reports, it may even become an entirely new labor organization that provides the key to sustainable employment for the masses.