Pretty soon the participants in this system will realize they are being taken for a ride. As the hose of capital from VC investors is switched off these services will no longer be subsidized and the price will rise for users.
On the other side of this equation are the service providers themselves, the drivers, property owners and people whose excess capacity enabled the sharing economy to thrive and become the easy to access behemoth we love.
The problem is that it has only led to greater exploitation, not the prosperity it promises so grandiosely. Rather than becoming partners who shared in the upside of the success, we are realizing that we are simply lining the pockets of the few who profit from our participation. Of course, this is the typical cycle of all startups, but what’s different here was the implicit, insidious nature of the promise that we are in this together as partners. Platforms that we participate on take a negligible risk while receiving maximum rewards and sharing little with the people — participants and consumers — who elevated them.
That’s not to say that people haven’t seen tremendous benefits. The stories of people able to remain in their homes because they were able to rent out a spare bedroom a few days a month show that there is a significant reason to participate, but the stories of drivers working for below minimum wage after covering the cost of participation leave little to the imagination of who is the real beneficiary. As we progress through these awesome IPO’s, at a scale rarely seen before in human history, and the returns of the early investors rise to prominence — spare a thought for the drivers who provided the service at the time those investments were made. They took a similar risk, all be it while being paid a small amount of capital to do so.
I don’t think there is a huge switch that has to be made here, rather it is subtle and it redistributes some of the inconceivable financial growth to the very people who provided the service. In the same way early startup employees receive equity as an incentive to participate, a new mechanism of tokenized reward which equates to a fraction of equity in the platform for every trip or journey facilitated could align the providers of these platforms and the owners even more. Not only does this create users who are incentivized to participate over a longer time horizon, but they also become evangelical about the service they are providing. They help significantly with growth.
For me, the true joy of capitalism is in hearing how an early startup employee now has enough money to afford their first home from their returns when a tech behemoth hits the public markets. That should translate to the earliest service providers on gig economy platforms. That is drivers who can now send their children through college, homeowner being able to pay off their mortgage so they no longer have to rent that spare bedroom out as they age.
The gig economy is close, but it falls some way short of the promise that the sharing economy sold. I truly hope that one day, democratized ownership of platforms emerge while redirect rewards to the people who made them possible. It’s far too easy to elevate startup founders and investors to genius savant status when far more of the credit should be shared with the faceless, tireless providers of the service ensure I have somewhere to stay or I get to my destination on time on a daily basis.
I don’t think that is an exaggerated expectation either, nor at I belittling the technical expertise required to make these platforms work at an almost unimaginable scale.
The creators deserve the reward they receive for birthing the service.