Sharing is Caring

The sharing economy is a paradox. The two concepts sit uncomfortably with each other: sharing suggests abundance, while economy implies frugality. Together they promise a new utopia, where altruism meets efficiency. A practical definition would be using technology to connect people so that resources can be shared. How could that be a bad thing? The groundswell of organisations joining this broad church have yet to turn the world upside down, but some are taking small steps in a promising direction. Others are falling foul of legislation, and facing criticism for taking more than they give.

This brave new world seems so full of opportunity. As Airbnb hosts, we’ve made friends; at Food Assembly we’ve tasted the difference; through Echo we’ve bartered our time; with GoodGym we’ve given our energy and enthusiasm. Each experience has been so enriching, and such a stark contrast to traditional institutional life. We all have horror stories of corporate life: credit crunch crises, cubicle alienation, fruitless mergers and acquisitions. Social ties wither when our incentives reward only individual achievement. Community grows through recognition of our reciprocal dependency. Modern capitalism has left the haves with few needs, and the have-nots with little to give. We believe there is a better way of living and working: more collaborative, more decentralized, more meaningful.

Here’s a simple framework to explore possible paths for the sharing economy. Two axes help us categorise contrasting approaches: shared usage versus shared ownership, and shared purpose versus shared value.

Shared usage

Resources that were previously private are made available for a wider user group. Common examples are assets such as houses or cars. They are still privately owned, but a sharing platform allows them to be used when they would otherwise lie idle. Access can be free or paid. If paid, the model is often either rental or subscription. Airbnb is probably the most celebrated success in this space.

Shared ownership

Resources that were individually owned are moved into collective ownership. The co-operative movement has been using this approach for over two hundred years. It works within the established legal framework of respect for property and ownership, but recognizes that for rewards to be fairly distributed, there must be formal recognition of each person’s stake in the project, and democratic governance.

Shared purpose

The motivation for joining is intrinsic: the group shares a common goal or mission. These are usually the more altruistic organisations, working towards an environmental or humanitarian aim. Money may still change hands, but the ethos is more like a non-profit.

Shared value

There is an incentive for participation: a share of the profit or other monetary reward acts as an external motivator. Many existing corporations fall into this category. The challenge is to distribute rewards fairly: are proceeds split equally, or allocated by effort expended, results achieved, or targets met? Contemporary levels of inequality suggest we have made little progress on this problem.

The current economy readily embraces startups in the ownership/value quadrant. They do not radically challenge the existing system: they respect property, encourage ownership and rely on the profit incentive. If the business model scales, they can deliver efficiencies by turning downtime in to uptime. A good example would be Crowdcube, making it easier for companies to raise money through equity crowdfunding.

The purpose/usage quadrant is a little more revolutionary. Timebanks like Echo show us how a moneyless world might look. As the consumer’s mindset shifts from ownership to usage, product sales go down. People whose skills are no longer well compensated can start to opt out of the mainstream economy. Governments may struggle to collect taxes as more transactions become non-market. As products and services are increasingly delivered through mediating platforms, where does power reside?

It’s too early to tell which route the sharing economy will take, but this seems a good time to start feeling out some possible futures.

Startuple is François Hoehl and Sinead Doyle. Find out more at startuple.works