The Shelf-Life of Sharing

An overlooked distinction in the sharing economy

There are few things coming out of the tech industry today that are more celebrated than the sharing economy. As the CEO of Josephine, I’ve spent an incredible amount of time thinking about food systems within the context of the sharing economy, and I think that there is an important distinction in this industry that is being overlooked — a distinction that dictates extremely different growth strategies, treatment of labor, and overall social impact of these companies.

There are two types of sharing economy companies:

1. Companies that will succeed by eliminating humans
2. Companies that will succeed by championing humans

Let me explain:

Give someone a fish

The first category of sharing economy companies aren’t about sharing as much as they are about facilitating direct, convenient, on-demand economic relationships. These on-demand companies use technology to outsource the most expensive parts of running a business to workers that are cheap and easy to aggregate. Unfortunately for the workers in this type of marketplace, work is structured to be a raw commodity. Workers are expendable and can be easily replaced. To grow efficiently, these on-demand companies are racing to the bottom in an attempt to find the cheapest workers.

The obvious example of this type of company would be Uber. The CEO himself has admitted that human drivers are just a stepping stone in their mission to replace car ownership. He explains:

“You’re not just paying for the car — you’re paying for the other dude in the car…When there’s no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle…bring the cost below the cost of ownership for everybody, and then car ownership goes away.” [1, 2]

That’s exactly why Uber poached the entirety of Carnegie Melon’s robotics lab earlier this year — to work towards the cheapest source of labor by far, driverless cars.

Unfortunately, the resources needed to win the race to driverless cars are currently coming from the exploitation of cheap human labor. Uber has aggressively cut driver payout in mature markets, slowly forcing their driver demographic back down to the traditional cab driver demographic — the very people that were displaced from their hard earned cab jobs by Uber’s initial popularity. Except this time, those drivers don’t have benefits, can’t unionize effectively, and have very little job security due to contractor status.

Ultimately, a company like Uber grows by continuing to exploit cheap human labor until an even cheaper non-human solution is developed.

Teach someone to fish

On the other hand, there are companies in the sharing category that succeed by teaching people how to fish. In these cases, the sharing economy empowers people to become makers, helping them offer services and experiences that were impossible without new tools and reform.

A phenomenal example of this type of a maker economy company would be Etsy. Unlike Uber, Etsy’s sellers are offering unique experiences that require creative human touch. Etsy’s value proposition itself relies on the diversity of its offerings — there is no single approach that if replicated, would succeed on Etsy every time. Thus, in order to succeed, Etsy must create the tools, education, and support that will catalyze many distinct brands. The uniqueness of each brand stems not from Etsy itself, but from each individual seller, which is why championing the craftspeople is both ethical and strategically valuable for Etsy.

It’s not an accident that three quarters of Etsy sellers consider their shops to be their own personal business and brand [3]. This identity ownership is so important that 91% of Etsy sellers want to grow their business, but over 60% of them want their shops to remain a size that they can manage themselves [3].

A company like Etsy grows through the empowerment and inspiration of their sellers.

The future of sharing

There is no doubt that the Ubers of the world are beneficial for customers. They more efficiently match supply and demand and will continue to become more efficient by building scale and exploiting cheap human labor until even cheaper non-human solutions are developed. But ultimately, these companies succeed by becoming one-sided logistics operations, not human-connecting marketplaces.

This is why one of our core values at Josephine is “Be More Human”. We believe that the biggest opportunity for impact lies in a true marketplace network effect, and the only marketplaces that will succeed in the long run are the ones that champion the people on both sides of their community. To do this, companies will have to understand the development of these unique millennial behavioral tendencies [4, 5]:

• Social Awareness: We might be slow on getting married and having babies, but we’ve been using our prolonged adolescence to think hard about the world we live in. We take pride in our social consciousness and are only becoming more thoughtful about our role in society.
• Entrepreneurship: We‘re a generation of entrepreneurs. We can’t stand being bossed around and value our own creative license over all. We’re willing to take risks and sacrifice material outcome for our own development and emotional fulfillment.
• Anti-commoditization: Growing up with an abundance of options has led to the fragmentation of choice and more adventurous appetites. We get that the industrial revolution was a big deal, but we’d prefer novel and unique over affordable and consistent [6]. We believe in small brands with big soul, not companies with legacy.

Ultimately, a big reason the sharing economy is so interesting is it’s novelty. New technologies are enabling new means of aggregating and coordinating labor, in a way that is not yet well-documented. I’m excited to push beyond the early opportunistic applications of this technology and into a more thoughtful, measured and equitable approach to responsible and sustainable innovation.

If you want to chat more about this topic or anything related, shoot me an email at charley@josephine.com, I’d love to hear from you.

[1] There’s an opportunity for a “Dude where’s my car” joke here that I’m passing on but want to acknowledge.

[2] Source: Uber will eventually replace all its drivers with self driving cars. The Verge, May 28th 2014.

[3] Source: Redefining Entrepreneurship Report. Etsy, 2013.

[4] Let’s pretend for a second I possess the self awareness and poise to simultaneously observe and be a millennial…

[5] Source: Millennial Munching: A generational shift reshaping the future of food. Goldman Sachs Equity Research, April 19 2015.

[6] We are literally ALL hipsters.