Supplying the Sharing Economy
Last week I wrote about the Ride Sharing economy and its “Musical Chairs game” competitive landscape. This week I will focus on the supply side of the Sharing Economy — the drivers, the hosts, the service providers.
The booming success of the Sharing Economy is happening because of both, the demand- and supply-side disruption. On the demand side, the power comes from the ease of selection, ease of payment, and the high transparency. Whether Airbnb, or Lyft, or Rover, the user will find what she is looking for very quickly. The payment will happen automatically in the background, and the satisfaction will most likely be high. That’s why all of the above services have thrived to become leaders and disruptors in their respective industries. (Disclosure: GSV owns shares in Lyft, Rover).
Dog Sitting as a Side Job

Source: Rover
On the supply side, the Sharing Economy offers an attractive ROI to the service providers; whether a host, a driver, or dog-sitter, all those providers make extra money from offering something they already own or do. In most cases, service providers offer the services as a second job, and only few specialize in being a Lyft driver full time, or in renting out on Airbnb as a primary profession.
In some case, competition on the supply side is intense. The best example is the ride sharing service in the U.S.; rivals Uber and Lyft are not only battling for passengers, but also for drivers. Over the last years, the two leaders have fought for drivers by offering sign up incentives, or premium incentives for a minimum number of rides.
Every-time I get into an Uber or Lyft, I ask the driver which service they prefer to drive for. A few years ago, the responses were mixed, with 6 out of 10 preferring Lyft because of the tipping feature. Over the last year however, the ratio has shifted dramatically to Lyft’s favor, at about 9-to-1. The obvious reasons include Uber’s bad image, its bad internal culture against women, the aggressiveness of its management, etc. To the contrary, Lyft’s driver-friendly attitude combined with its hip and cool culture have pushed it up in that race. Clearly, Lyft is winning on the supply side, and is starting to to gain strong traction on the demand side as well.
I recently read an interesting article in Forbes, looking at the supply side of the Sharing Economy. The article compared different Sharing Economy service providers and how they fare in terms of distribution of income. Airbnb hosts are those who make most money, on average, obviously as the price tag of housing exceeds that of a ride or that of a day service. The average Airbnb hosts in the U.S. makes $924 per month on average, while the average Lyft driver makes $377, and the average Uber driver makes $364.
Another interesting observation is the distribution of income; across most services, the majority of the providers (drivers, hosts, etc.) are in the lowest income bracket of the service, meaning the majority of providers do the job rarely and infrequently. But in Airbnb’s and Lyft’s case, the majority of hosts and drivers are in the next higher income bracket, indicating these services have better stickiness and more power providers.

Source: Fortune

Source: Fortune
The ultimate winners in the Sharing Economy will be those with the best marketplace for both — the users and the providers. We continue to be very bullish on marketplace leaders Lyft, Airbnb and Rover.
As published in this week’s A 2 Apple: http://www.a2apple.com/quantum-leap/
