The folks at NetBase (I work with CMO Lisa Joy Rosner, who’s a client of ours) continue to provide market analysis on social media sentiment in the Collaborative Economy.
Real-world battle between car sharing startups vs business institutions underway.
The timing for this particular Brand Passion Index which showcases how much people Love, Like, Dislike, and Hate topics of brands and institutions. Just a a few hours ago, the local news reported that Lyft and Uber drivers are deemed as illegal at the SFO airport, and citizens arrests could be made. In a very opposite side of the story, the California Public Utilities Commission is considering proposing that these car and ride sharing companies become legal. The timing for today’s study couldn’t be any better.
Sentiment study of social media yields a power shift in public discussions.
The above data suggests that Uber (known for premium towncars) and Lyft (vetted, personable drivers) are widely “Loved” by folks who use social media. It also suggests, that the term Taxi is widely discussed (hence the larger circle), with a majority of the discussion being “Disliked”. Avis, in particular, has negative sentiment in the “Dislike” category, and Hertz and Enterprise are also in the “Disklike” category. Zipcar, Sidecar are in the “Love” category, but Sidecar is border-lining in volume with sentiment aligned with “Hate”.
These new startups empower the crowd of buyers and drivers.
The crowd can use mobile apps from the collaborative economy car sharing providers, and bypass taxi lines. They can also review ratings and reviews of cars and drivers, before hiring. Both the driver is rated, as well as the passenger, ensuring quality systems on both ends. Payments often happen on the backend with a swipe of a finger, rather than fiddling with cash or credit, smoothing business operations. This means the crowd gets what they want, on their terms –bypassing old ways of doing business.
[Just as Social Media Democratized Ideas, the Collaborative Economy Democratizes Business]
NetBase also supplied the above graphic, which removes the term “Taxi” allowing a closer zoom in of the specific car sharing services. This provides clarity, showing that the Collaborative Economy Startups are faring better than traditional car rental services.
What it Means: The Crowd Favors Crowd Services –Over Traditional Business.
Social sentiment analyzes overall consumer opinion across a broad set of users, many who are likely using these services from mobile devices provide insight to how consumers think, and feel about these services.
- High-end service providers like Uber lead the sentiment “Love”. As a customer of Uber, I’ve experienced the higher-end professional service, where drivers have to receive at least 4.6 stars or are at risk for dismissal . These amazing application allows customers to quickly order a car with a few swipes from a thumb, and track the car as it’s on route to pick you up. While Uber has since moved to regular consumer driven cars, they’re leather clad Lincoln towncars and Mercedes are a step above the rest.
- Avis, Hertz and Enterprise are fall within the “Dislike” category. Social media sentiment from these study indicates that consumer chatter indicates a “Disklike” for these brands. Whether it’s older business models, wait time, or price, general sentiment is a strike against this traditional business model. These traditional brands have larger brand discussion than the smaller startups, although Avis’ struggles with negative brand sentiment.
- Taxis have the largest share of voice, but much is “Disliked”. Whether it’s an aging business model, odd business practices or experiences, Taxis have a large share of voice, but much is not pleasant. The collaborative economy startups provide a rating system for both driver and passenger, enabling a two way of marketplaces to see who they’re going to work with before they meet, ensuring higher service for all.
Collaborative Economy startups self-regulate as the crowd ratings enforce quality. Consumers rate crowd based services like Uber and Lyft ensuring quality. Taxis, while regulated by city, are not rated by the people. with the power often in the hands of the Taxi company and driver. The collaborative economy is democratizing business, bypassing business institutions that the crowd doesn’t want. The power is shifting to the people.
[Companies in a power position, with with negative customer sentiment, are ripe for crowd disruption]
The Bottom Line: Sentiment is shifting to the Crowd-Based Businesses
Social media sentiment is a lens on how people think, and feel about brands and experiences as they share it in public, and right now, the crowd favors crowd-based services over traditional businesses. Crowds are empowered with VC backed low-cost startups that provide social software, on-demand mobile apps, and ratings and ranking systems. Now that the crowd is getting what they need from each other, business models that do not deliver –are at high risk from disintermediation. Companies who want to engage and profit with the crowd, should adopt the Collaborative Economy Value Chain.
Above Graphic: NetBase’s research on sentiment and share of voice in social channels finds that, while there’s more share of voice in traditional hotel brands, people prefer 6-year-old peer-to-peer service Airbnb over 88-year old traditional hotel brands like Hilton.
Last week’s NYT article on the Sharing Economy focused on Airbnb, and ties nicely to our continued research on this topic. A few weeks ago, we compared collaborative economy startup Airbnb to traditional travel booking sites, and Airbnb out-shined the traditional market. NetBase (a client) provided me a slice of their data from the Brand Passion Index to show how consumers who use social media feel about Collaborative Economy startups Airbnb and OneFineStay (high-end p2p travel experiences) compared to traditional hotel brands. The size of the circle reflects the quantity of discussions in the social sphere. The location determines the sentiment. Remember, this isn’t my study, nor did I cut the data. It was provided to me by NetBase. If you would like to get more information about their study, please contact CMO, Lisa Joy Rosner.
Findings: Startups Have Smaller Share of Voice, But Are “Loved” More Than Traditional Hotel Brands
- Poster Child, Airbnb, “Loved” by the Crowd. The runaway winner on brand passion is Airbnb, which falls into the “Love” category and has about half the diameter of either Four Seasons or Hyatt. This company allows the crowd to act like a hotel as guests stay at local neighborhoods, homes, and rooms as a friend would. This personalized, local experience is difficult to replicate at larger hotels which must cater to efficiency and consistency of experience.
- Boutique Startup OneFineStay Has Small Footprint, But Is Also “Loved”. Collaborative Economy startup, OneFineStay, which enables hosts to rent out their multi-million dollar homes to those who want to live a life of luxury, has a small-brand footprint in terms of quantity in share of voice, but has strong positive brand sentiment in the “Love” category.
- Four Seasons and Hyatt Have Healthy Market Positions. Both Four Seasons and Hyatt show a moderate share of voice, but are in the “Love” quadrant, although they are closer to the neutral spot. They must continue to grow their positive online sentiment or they risk moving towards the center axis or crossing into the negative sentiment quadrants.
- Marriott And Sheraton Grouped in “Like”. Both brands indicate healthy word of mouth. Both sit in “Like” category, although about one-third of Marriot’s share of voice is in the “Dislike” category. They must continue to bolster guest experience and encourage customers to talk about their positive experiences or risk continued negative or nearly neutral brand sentiment.
- Hilton Holds Greatest Share of Voice, But Most Negative Sentiment. Hilton has the greatest share of voice online, but over half is ”Dislike” content, not positive sentiment. Hilton must evaluate its broader customer experience strategy and double down on social marketing to populate positive customer sentiment. In this brand set, it’s the only one with a large negative sentiment.
Six-Year-Old Airbnb Getting Rapid Adoption
Wonder how fast Airbnb is growing? Here are some key quotes with stats: “Tonight we have 140,000 people around the world staying in Airbnb rooms. Hilton has around 600,000 rooms. We will get up to 200,000 people per night by peak this summer.” Airbnb has 23,000 rooms and homes listed in New York City alone, and another 24,000 in Paris. Worldwide, “we have listings in 34,000 cities and 192 countries,” (NYT, July 2013). Also, “On New Year’s Eve alone, 141,000 people worldwide stayed at an Airbnb. In single-occupancy terms, that’s almost 50% more than can fit in all the rooms in all the hotels on the Las Vegas Strip. To be sure, those figures still pale next to the entire U.S. hotel industry, which according to research firm STR, sold 1 billion nights alone between January and November 2012.” Forbes, Jan 2013. Read all the stats I’m curating on the Collaborative Economy Stats Page of this aggregation page. I want to add that I visited Airbnb’s brand new headquarters in San Francisco last week. It’s going to be quite the hub!
Hotel Brands Must Understand and Embrace Collaborative Economy Business Models
Rather than fight the collaborative economy, hotel brands should instead study the new business models and enable this changing behavior within their own customer base. We’ve identified new business opportunities for hotels, including partnering with these startups or enabling their own marketplace of guest homes for rent, backed by their own brand, supply chain, and even supplying trusted customers from their own loyalty programs. Read the following post: The Six Scenarios for Hotels to Address the Collaborative Economy.
At a broader level, the crowd is starting to get what they need from each other – bypassing the big corporations. Rather than fighting this movement, hotel brands need to become more collaborative and bring the crowd closer before they go away. The data indicates that the crowd is getting what it wants from within itself – not corporate hotels – and the crowd is “Loving it.”
Update: I’m hosting a conversation about this post on Facebook.
The following will have links, sources, and dates sorted in logical orders to find key stats that you’ll need to make decisions. Additionally, I’ll link to other listings and indexes that will provide further context. My goal is to serve as an industry curator to advance our collective knowledge, research, and for my own personal understanding. If you want an overview, with three business opportunities for corporations, read the full report on the Collaborative Economy Value Chain. Please leave comments with your stats and a URL. I’ll be happy to add and credit you.
Scope: The sharing of goods, services, space, and money.
Updates: This page was last updated on Oct 25th, 2013.
Market Sizing and Economics:
Stats and data on overall market size, capacity, and impact on economies.
- Market Cap of Industry: “Rachel Botsman, the author of a book on the subject, says the consumer peer-to-peer rental market alone is worth $26 billion.” - The Economist, March 2013
- “UK Consumer earnings from the Sharing Economy totaled £4.6 billion from May 2012 – May 2013. For comparison, US sharers are estimated to make $3.5 billion in 2013. 64% of UK adults or 32.4 million now participate in the Sharing Economy. More than 1 in 3 UK adults have participated in car sharing (36%) with a further 39% who would consider it. 36% of those who participate in the Sharing Economy do so to save or earn money (top motivator to share). ” provided to me by Benita Matofska of The People Who Share, May 2013
- I suspect the following quote is referencing Rachel’s quote: “The sharing economy has an estimated $26 billion value, including online platforms that make it easy to do everything from renting out spare rooms in your home (AirBnb) to car-sharing (Zipcar), clothing swaps (ThredUP), and even sharing extra portions from home-cooked meals (Shareyourmeal, of course).” – Airbnb study, sourced in Fast Company/WSJ, May 2013
- Forbes estimates “The revenue flowing through the share economy directly into people’s wallets will surpass $3.5 billion this year, with growth exceeding 25%. At that rate, peer-to-peer sharing is moving from an income boost in a stagnant wage market into a disruptive economic force.” - Forbes Jan 2013
- Valuation of Startups: “Companies that provide access over ownership could generate $3.5 billion in 2013. Consumer engagement in rent/lease/borrow business models is attracting attention from both venture capitalists and technology industry veterans.” – CNBC, April 2013
- Market Cap of Industry: “According to an article by Jaime Contreras in MIT Sloan Expert, collaborative consumption is a potentially $110 billion market.” - MIT Sloan, Dec 2011. Thanks to Marty Thompson for the link
- People are also sharing money, and crowdfunding is on the rise: “Crowdfunding—the practice of raising funds from multiple individuals via the web—first emerged in an organized form in the low-investment environment of 2008, and has quickly grown into a multi-billion dollar industry projected to reach $5 billion this year, channeling funding to hundreds of thousands of ventures globally.” CrowdFundBeat, Oct 2013
- There are many Airbnb properties in NY, chronicled here: “As of January 31, there were 19,521 unique listings in New York City on Airbnb” Hat tip Paul Papadimitriou, Skift, Feb 2014
Money Movement: Key Milestones
While there are thousands of discrete transactions happening from acquisitions, funding, to deals, here’s a few capstones:
- Lyft raises $60m. Techcrunch, May 2013
- Airbnb raises $120m. Crunchbase, as of Sept 2013
- Zipcar sold to Avis for $500m. NBC, Jan 2013
- Google funds Uber $258m. Techcrunch, Sept 2013
- eBay/Paypal buys Braintree (mobile payment system for Uber and Airbnb) $800m. USA Today, Sept 2013
- Some of these above stats are also listed below, in greater detail.
Market Impacts to Revenue, Taxes, Waste, Loss, and Gain
- Car sharing tax loss: “States would lose out on a minimum of 3.4% in annual tax revenue, or $23.4 billion in 2010 dollars.” - Fortune Magazine, June 2013
- “Dmitri Vorik, president of Rainbow Cab Company in San Jose, estimates that Lyft, Uber and other ridesharing services have cut into his business by 30 percent” San Jose.com, Oct 2013
- Ride service costs: “So does fellow ride-sharing company Lyft, although it does issue 1099′s for drivers who reach over $20,000 and 200 “donations” in a given year.” – Fortune Magazine, June 2013
- New data looking at the impact of Uber on Boston reports: “Uber Boston: $9M of Fares in 15 Months, Barely Denting Cab Market” and “Between its October 2011 debut in Boston and January 2013, Uber collected about $9 million in “gross fares” from rides provided by more than 500 drivers, a judge’s ruling revealed Thursday. That breaks down to $600,000 of revenue per month on average, before paying drivers their considerable cut. As a percentage of the city’s market for cab rides, that’s peanuts. In its investigation of industry corruption, The Boston Globe recently estimated that the Boston-area taxi industry generated $250 million in fares last year, or almost $21 million per month on average.” Xconomy, July 2013
- Airbnb on Paris Hospitality Revenue: “This framework of trust has unlocked huge value from unused bedrooms. ‘In the last 12 months in Paris, we’ve generated $240 million in economic activity,’ Chesky said.” - NYT, read full PDF, July 2013
- FlightCar disrupting traditional car rental: “Zaparde also says San Francisco officials’ claim that FlightCar undercuts other rental car services isn’t accurate. That’s because FlightCar’s services is 30% to 60% cheaper, because it doesn’t maintain or own any cars. In other words, it isn’t undercutting rental car companies, because it has a totally different business (and business model). What’s the impact?” (Traditional rental car estimates of up to half of the $25 billion per year at airports, making them a major next battleground in the sharing economy.” Forbes, July 2013
- SF impact headline: “Airbnb Had a $56 million Impact on San Francisco: Study.” The story said that “$56 million in total was spent by Airbnb travelers over the course of a year in San Francisco. That includes $12.7 million spent on renting that went to Airbnb hosts (not including the approximately 3% fee that Airbnb gets), plus $43.1 million spent on San Francisco businesses. That includes $11.8 million on food and beverage, $10.8 million on retail, $9.8 million on services, $5.7 million on entertainment and $4.0 million on transportation.” - Forbes, Nov 2012
- Uber drops “Cab” from name on threat of fines: “Because Uber was allegedly running and marketing itself as a cab service, but without a permit, the company was threatened with fines, including $5,000 for every transaction it made. The next day, the startup dropped the word “Cab” from its name. So far, that has appeased local regulators.” - Fortune, Feb 2012
- Airbnb host fined $2,400, via NY fines, New York Times, May 2013
- Fines: “SideCar, Lyft and Uber, another ride-sharing service, were each fined $20,000 last fall by California authorities for operating taxi services without the proper permit, and SideCar has been subjected to threats and undercover investigations in cities such as Austin and Philadelphia.” - TIME, May 2013
- “New York City officials are going after short-term rentals – but only when they get complaints. In 2012 the city did 828 inspections and issued 2,239 violations for short term rentals. This year, fines for repeat offenders go up to a maximum of $25,000.″ - Forbes, Jan 2013
Advocacy and Lobbying
- Peers.org launches on July 31st, 2013 with 22 members including Airbnb, Taskrabbit, Shareable and more. - Salon, July 2013
- Peers.org assembles considerable signatures in legalization of Airbnb in hip LA neighborhood, Silverlake: “Within 24 hours, more than 3,000 people (90% Angelenos) signed on to support home sharing in Silver Lake. ” Peers.org Tumblr Account, Sept 2013
- California’s Public Utility commission legalizes some form of car and ride sharing, this is a landmark move which influences other states. LA Times, Sept 2013
Market Drivers and Factors:
Stats and data on what’s causing these trends, multi-industry. Read my post on these three factors.
- Societal Factors:
- Food sharing: “40% of human food goes to waste.” - Inc Magazine, July 2013
- Car Parking: “The average motorist wastes a total of 2,549 hours circling the streets searching for a space, whether it is on the school run, the local high street or a supermarket or airport car park,” “Across the UK, it takes an average of six minutes and 45 seconds to find a suitable space – but this is just the average, according to the survey by ParkatmyHouse.” - Collaborative Consumption via Telegraph, 2013
- “By 2020, there will be 31 million members of car-sharing programs worldwide.” - Taskrabbit Slideshare, June 2013
- Video: “The Case for Collaborative Consumption” offers multiple stats in this TED video, by Rachel Botsman, 2011
- A San Francisco BART subway strike left 400,000 stranded. This resulted in “Ride-sharing apps such as Lyft, Sidecar and Uber [reporting] a spike in ridership–for Sidecar 50% more drivers were on the road and there was a 40% increase in rides.” - Forbes, July 2013
- Car ownership in the USA has peaked in 2006, “But in examining trends between 1984 and 2011, an UMTRI study shows the rate of vehicle ownership on a per-person, per-household and per-licensed-driver basis actually peaked years earlier in 2006.” - Scientific American, July 2013
- Next generation of workers born as digital natives: “By 2025, 75 percent of the global workforce will be millennials, says the Business and Professional Women’s Foundation ” stats on Intuit article on managing millennials, sourcing Business and Professional Women’s Foundation, Intuit.com, July 2012.
- The millennials are tech enabled, but lack resources boomers have: “Frequent technological contact with friends, family, and co-workers. Keep in mind the internet was not yet invented when boomers were 30 years old” and “Buying a home is not possible for many millennials because of the job situation. Boomers flocked to the housing market in their 20s and 30s.” Policy Mic, 2013.
- Dan Schawbel provides 74 stats about the millennial generation ranging from work, attitudes and behaviors. Dan Schawbel, June 2013
- Economic Factors:
- “There are 80 million power drills in America that are used an average of 13 minutes,” says Chesky. “Does everyone really need their own drill?” New York Times, July 2013
- Idle cars: “Private cars, on the other hand, sit idle 95% of the time” Techcrunch, Dec 2011
- “The [market] share of new cars bought by Americans [aged] 18 to 34 dropped from 16% in 2007 to 12% last year, according to Lacey Plache, chief economist of Edmunds.com.” - Forbes, Jan 2013
- Seoul, the “sharing city” of the world, outlines opportunity: “If five percent of such resident-only parking lots are shared, it is equivalent to building new parking spaces for 1,862 cars and can save 23.3 billion won.” - Korea Times, Sept 2012
- Seoul, the ‘sharing city’ of the world, outlines opportunity: ““It is said Seoul is short 15,000 rooms compared to the number of travelers. If 1,000 households participate in the home-stay program, it is equivalent to establishing 20 hotels with 50 rooms each. It is also a way for retired baby boomers to earn money by making their houses available.” – Korea Times, Sept 2012
- Airbnb is cost savings for tourists in San Francisco study: “For Airbnb travelers, visiting was cheaper than staying in a hotel. About 14% would not have visited if not for Airbnb. In addition, those who did use Airbnb stayed longer on average – 5.5 nights in the city – compared to hotel guests, who stayed 3.5 nights. Because they stay longer, the guests end up spending more in the city, the report found – $1,100 in total, compared to $840 for hotel guests. The average rate of an Airbnb property is $117 per night compared to $188 for hotels, the study found.” – Forbes, Nov 2012
- Average car used 1 hour per day, Future of Car Sharing, sourced on 2013
- Poverty: “The new American poor: Four in five live in danger of it.”- CNBC, July 2013
- Unemployment: “Unemployment Rate Still Above 10% in 27 US Metro Areas.” – Wall Street Journal, July 2013
- Human population forecasts: By 2050 there will be 9.1 billion people on planet earth, Wikipedia, sourced July 2013
- Unemployment of youth: “Nearly half of unemployed Americans are under the age of 34, and half of those who are employed are working part-time jobs, which don’t require a degree” – PolicyMic, August 2013.
- Over a third of millennials are living at home, due to lack of jobs: ”When the recession began in 2007, 32 percent or 18.5 million of millennials—defined as 18- to 31-year-olds—had not left the nest. Today, it is 36 percent, or 21.6 million.” also, “A driving factor: declining employment. Last year just 63 percent of young adults in that age group were employed, down from 70 percent in 2007.” The Daily Beast, Aug 2013
- Technology Enablement Factors:
- 34% of humans are online, but with a growthrate of 566% growth rate World Internet Usage Stats, Aug 2013
- 73% of Sharing startups have social features, enabling people to find trusted contacts to share goods and services. - Altimeter Research, June 2013
- 53% of sharing startups have Facebook connect. - Altimeter Research, June 2013
- Facebook has 1.15 billion users, by which many sharing sites are powered. - Facebook.com July 2013.
- Mobile phones are common among many humans. See ratios, such as China as 73 per 100 persons, US is 93, UK is 131, India 72. - World Bank, July 2013
Crowd Behavior and People Data:
Stats and data on consumer behaviors as a result of market drivers and factors. The term “Consumer” is a misnomer, so I use “People” instead.
People Attitudes and Behaviors
- “Adults under 35 are the most digitally savvy and, therefore, the most likely to have participated in sharing or renting online rather than owning. Most people (77%) see the sharing economy as a great way to save money, but among those who have actually tried it, the plurality, 36%, said their motivation was philosophical, not financial. Listing extra goods or a spare room online was seen as a way to help others and, for one in four, to promote sustainability as well.” - Fast Company/Wall Street Journal, May 2013.
- People who share online, may share in the real world: “78% of participants felt that experiences they’ve had interacting with people online have made them more open to the idea of sharing with strangers.” - Shareable Magazine, 2010
- Consumer forecast of sharing: “75% of participants predicted that their offline sharing will increase in the next five years. Similarly, 62% of participants either share household items casually or expressed interest in doing so.” - Shareable Magazine, (which links to a full PDF of the study) 2010
- Sentiment Study: Ride and Car Sharing vs. Traditional Rental vs. Taxis. Uber wins out and is highly “Loved,” Taxis “Disliked.” - NetBase Research, July 2013
- Sentiment Study: Airbnb vs. Traditional Hotels, Airbnb and OneFineStay “Loved,” - NetBase Research, July 2013
- Sentiment Study: Airbnb and Hipmunk vs. traditional travel booking sites. Airbnb “Loved” over big guys. - NetBase Research, June 2013
- Cookening.com, a website that enables homes to be like restaurants provided me with this data from a survey: “Question: What’s your main motivation as a host? Answers: Meeting new people 69%, Sharing my cooking skills 62%, Earning some extra money 31%”. 200 respondents of users and potential users, from Cedric Giorgi, CEO of Cookening.com via email to Jeremiah on Aug 12, 2013.
- UK behaviors and attitudes: “In the UK alone, the sharing economy is estimated to be valued at £22.4bn according to research from community movement group, The People who Share. It found that 33 million Brits (65%) are already sharing, and a further 14 million (28%) would consider it. It further estimated that UK consumers currently participating in collaborative consumption benefit from £4.6bn savings and earnings.” Edie.net, August 2013.
- A study was done on middle-aged Amsterdam citizens and their behaviors and attitudes around the sharing movement, “The overall results indicate that 43.8% would take part as a consumer, and 31.9% as a provider.” Collaborative Consumption, August 2013
- There’s a wealth of information on Vancouver’s sharing, in this report, titled A report on sharing in Vancouver.
Financial Benefits for Sellers and Hosts, The “Empowered”
- Dog services: “Sabrina Hernandez, a student at San Francisco State University, charges $40 per night through Web site DogVacay to take care of dogs in her apartment. She made an average of $1,200 per month this past fall.” - Forbes, Jan 2013
- Car rental: “Dylan Rogers, a Chicago sales executive, makes $1,000 a month renting his little-used BMW 6 series on RelayRides. He recently bought a Jeep Grand Cherokee and plans to also buy a Prius purely to rent, and estimates he could net $40,000 a year for his three vehicles.” - Forbes, Jan 2013
- Home rental: “Nikhil Balaraman of San Francisco rents out his city bike on Liquid for $20 per day, making $50 to $100 per month.” - Forbes, Jan 2013
- Home rental: “Average Airbnb Host In NYC Pockets $21,000 A Year” (and some up to $100,000). - Techcrunch, Jan 2012
- Airbnb host need revenues in SF: “About 14% had an annual household income below 14% and another 27% were between $40,000 and $70,000. For these hosts, the extra income is very substantial.” Additionally, “While 59% of Airbnb hosts are employed full-time, about 20% are freelancers, 12% are employed part-time and 7% are unemployed. So, for those working freelance or part-time, Airbnb can help them stay in their apartment or home. As a measure of that, a survey found that 42% of hosts used Airbnb money for regular living expenses. Another 48% used the money for extra spending money. Separately, 56% of hosts said they used their Airbnb income for rent or mortgage.” - Forbes, Nov 2012
- “Airbnb hosts made an average of $9,300 annually for listing a home and $6,900 for listing a private room or shared space.” Hosts really use Airbnb to make ends meet.” - Forbes, Nov 2012
- Getaround drivers: “Meg Murray, a marketer at Getaround, said the company has more than 10,000 cars listed for rent on their platform, with the average active renter making around $350 per month, and one renter making as much as $1,300 per month.” – VentureBeat, Jan 2013
- Assumption model of total income possible is $41k a year. “Renting her apartment out occasionally on Airbnb, she can make $667 per month or $8,000 per year. Doing two to three tasks per day on Taskrabbit five days a week, she can make $2,000 per month or $24,000 per year. Lyft told me driving part-time she could make $750 per month or $9,000 per year. When not using her car, she can supplement income from Getaround at $350 per month and do as needed.” - VentureBeat, Jan 2013
- Uber drivers: “Bringing in upwards of $500 a day, a sum some cab drivers only make after a week’s work.” - Fortune, Feb 2012
- Home based kitchens are becoming restaurants, enabling home cooks: “If you were determined enough and wanted to make two lasagna trays instead of one, you could certainly be making $50 a day, pretty easily,” Calas reasons to me, sitting in her dining room. “If you’re a mom, that’s $800 a month. That’s not insignificant to a family.” The Atlantic, August 2013
Venture Capital and Acquisitions:
Overview of investments, key new board members at companies, and high level exit data from acquisitions.
- Venture Capital Funding: Across 200 startups, nearly 37% have been funded at $29 million, on average. Total funding across the 200 is $2 billion. This does not include data from recent Lyft funding and additional pending Uber data. – Altimeter Group, Feb 2013
- Data: Meet the top investors by frequency of the collaborative economy, both firms and individuals, by Jeremiah Owyang, Web Strategy, 2013
- Milestone Funding Events:
- Airbnb, over $120m funding. – Crunchbase, July 2013
- Lyft over $60m in total funding. – AllThingsD, May 2013
- Uber over $55m in total funding. – Crunchbase, July 2013
- Uber raises large round of $258 from Google Ventures with Valuation over 3B., Techcrunch, August 2013
- Google invested $125 in LendingClub, peer to peer lending – NYT, May 2013
- Boards: Notable board member movement:
- LinkedIn CEO and investor Reid Hoffman joins Airbnb as board observer, Greylock.com, July 2013
- Lending Club obtains Lawrence Summers, 71st Secretary of the Treasury and former World Bank Chief Economist on BoD. - LendingClub.com, 2012
- “Getting into the share economy was the reason Avis Budget Group CAR +0.39% last month chose to pay a whopping $500 million for Zipcar, despite the fact that the pioneering, rent-by-the-hour startup generated a paltry profit of $4.7 million over the past years.” – Forbes Jan 2013
Specific data that don’t fit into the above categories, but are honed in on specific verticals, often supplies from specific startups. Please note, there’s also vertical specific information in the above sections that could easily fit in both areas.
Workforces on Demand
- “Market Share: 1.9X compared to 2nd largest online workplace.” Jobs Posted in 2012: 1.5 million. Registered Freelancers: 3.1 million. - Odesk.com, July 2013
- “1,000 new Taskrabbits are added each month.” - Taskrabbit Slideshare, June 2013
- Elance stats: “3,426,190 Jobs Posted (Lifetime), $3,727,071,739 Lifetime Value of Jobs Posted (in USD)″, Elance.com, July 29, 2013
- On Taskrabbit: “ the company has received funding totalling $37.7m to date, and now has over 13,000 background-checked TaskRabbits in 14 US cities. But progress hasn’t been plain sailing. Last month Busque, 33, confirmed the company had laid off an unspecified number of staff.” The Telegraph, August, 2013
- Stats shared from an oDesk study: “$1 billion+ has been spent on oDesk alone. oDesk has more than four million registered freelancers today, and 2.6 million skills tests proving their expertise were completed in the last twelve months alone. A long tail of skills is emerging In 2007 just four categories of skills represented 90% of spend on oDesk. By 2012, 35 categories represented 90% of spend. Almost 2,400 skills were listed on oDesk in the last twelve months and this number continues to climb. ” oDesk study, August 2013
- Stats shared from an oDesk study on US businesses hiring: “ More than half (58%) of businesses hiring on oDesk classify themselves as startups. The availability of “talent-as-a-service” is empowering startups everywhere, by increasing flexible access to the skills they need for growth. Last year, startups in the West did the most hiring through oDesk ($104M) while the South came in a strong second ($63M), followed by the Northeast ($43M) and the Midwest ($22M). oDesk study, August 2013
- Crowdflower, with Amazon Turk, has 500,000 workers available on demand, 50% are from United States, with a wide range of workers across 190 countries. Some are paid in dollars, bitcoins and other forms. From Crowdflower Webinar, heard first hand, August 2013
Co-working, Office Sharing
- “On average, four to five new co-working spaces open every single day.” - Taskrabbit Slideshare, June 2013
- Liquidspace stats: “2,000+ bookable spaces available in 250 cities across the U.S. 20,000+ transactions per month.” - LiquidSpace.com, July 2013
- Sharedesk stats: “more than 1,500 locations in 65 countries.” - Pando Daily, July 2013
- “According to the survey, 80% of travelers are comfortable with the idea of renting someone else´s vacation home on a trip so long as the property meets their personal standards for a vacation stay and that someone is available to contact locally if needed. Additionally, almost one in three (31%) vacation property owners in the United States are eager to travel somewhere new for a change, but feel guilty not utilising their property and losing out on money spent to maintain it. Among these owners that feel guilt, almost half (47 %) would favor renting or sharing their vacation home in exchange for the ability to visit new places. ” Demeure study, Financial News, Sept 2013
- “Tonight we have 140,000 people around the world staying in Airbnb rooms. Hilton has around 600,000 rooms. We will get up to 200,000 people per night by peak this summer.” Airbnb has 23,000 rooms and homes listed in New York City alone, and 24,000 in Paris. Worldwide, we have listings in 34,000 cities and 192 countries.” – New York Times, July 2013
- Chinese version of Airbnb “According to Xiaozhu.com, its Series A investor Morningside has supplied nearly $10 million. Since its launch last August, Xiaozhu.com is booking 1,000 nights per day and its registered resources of over 30,000 rental spaces and 1,000 individual hosts are expanding.” SacBee, Aug 2013
- Airbnb host generates, “but in leveraging his hard assets into seamless income streams, he’s generating $3,000 a month.” - Forbes, Jan 2013
- “300,000 rooms were made available to rent globally via Airbnb in five years of development.” - Taskrabbit Slideshare, June 2013
- Airbnb: “Last night 40,000 people rented accommodations from a service that offers 250,000 rooms in 30,000 cities in 192 countries.” - The Economist, March 2013
- “Since its launch in 2008 more than 4 million people have used it – 2.5 million of them in 2012 alone.” – The Economist, March 2013
- Airbnb says hosts in San Francisco who rent out their homes do so for an average of 58 nights a year, making $9,300. - The Economist, March 2013
- Airbnb: “On New Year’s Eve alone, 141,000 people worldwide stayed at an Airbnb. In single-occupancy terms, that’s almost 50% more than can fit in all the rooms in all the hotels on the Las Vegas Strip. To be sure, those figures still pale next to the entire U.S. hotel industry, which according to research firm STR, sold 1 billion nights alone between January and November 2012.” - Forbes, Jan 2013
- In a related way, online courses enable peers to self-teach each other, or be taught as massive scale, with or without traditional colleges, see this large collection of stats on Huffington Post by Vala Afshar, hat tip, Wendy Lea, August 2013.
- Patients are sharing their time with doctors: “Since 2005, the percentage of practices offering group visits has doubled, from 6% to 13% in 2010.” HealthLand, August 2013
Transportation, Car Ride Sharing Stats
- UC Berkeley studies found that one properly shared car reduces need for nine cars off road. – Sharable Magazine, 2011
- Stats: “Last summer, when RelayRides was featured in TIME, the company had roughly 1,000 vehicles in its network. After acquiring Wheelz, RelayRides boasted a marketplace with “several thousand cars in more than 1,500 cities in all 50 states.” – TIME, May 2013
- “Ten-year-old carpooling.com has 3.5 million members and one million people using the service every month. It’s the equivalent of 2,500 TGV trains without laying a track or building a train.” - TED, quoting Robin Grant, June 2012
- “Car owners who rent their vehicles to others using RelayRides make an average of $250 a month. Some make more than $1,000.″ - The Economist, March 2013
- FlightCar (parking and peer -o-peer rental): “FlightCar is still operating at SFO. The company says it has been growing quickly, at a rate of at least 40% per month, since launching in February. As of this past weekend, FlightCar has had 1,800 total listings and 2,000 rentals this month. That’s up from 1,000 listings and 1,400 rentals in mid-June. FlightCar also began operating at Boston Logan Airport in May.” - Forbes, July 2013
- Lyft hits 1 million rides, 65k of the riders and drivers had mutual friends, launched in May 2011. Lyft.com, August 2013
Financial Services Stats
- Peer-to-peer lending player, LendingClub: “Loans funded to date: $2,138,108,325. Loans funded last month: $158,063,125. Interest paid to investors since inception: $188,685,650.″ - Source LendingClub data, July 27, 2013
- “In 2012, 2.7 billion dollars were raised via crowd funding in the United States.” - Taskrabbit Slideshare, June 2013
- “Total amount lent through Kiva: $456,754,450. Kiva users: 1,461,395. Kiva users who have funded a loan: 966,663.″ - Kiva.org, July 2013
- Kickstarter releases data showing $1b in funding from the crowd, – Kickstarter, March 2014
Notable Archives and Books:
Collection of key archives, books, and Slideshare collections.
Above is the research report I lead, complete with facts, data, charts, examples, and a listing of the startups.
Please leave a comment and URL with your stats, and I’ll quote and credit you. I’ll be updating this on a regular basis during 2013.
Photo used under creative commons attribution, by David Randomwire
(Update: Weeks after I wrote this post, Google invested over $250 million into Uber. Google has Shopping Express delivery, self-driving cars, a social network that may categorize things you own, this is in general alignment with the following thesis)
Collaborative Economy startups like Airbnb and Uber will play a major role in changing the economic culture if they continue at their current growth rate. Airbnb could be the next eBay, and Uber could be the next Amazon.
You’re probably familiar with the global news about Airbnb and Uber. On July 20th, Tom Friedman featured Airbnb in his column in the New York Times. Uber is in the process of raising additional funds beyond their apron $57 million, thrusting their market value into the billions. That’s just now. Let’s see what happens when we forecast what the future of these two companies might be.
[Airbnb and Uber are local marketplaces that compete at a global level --powered by the low cost crowd]
Before we prognosticate about the future, however, let’s first discuss the overarching trends in our society. I’ve collected these from my personal interviews, events at Stanford, and as a participant at the Aspen Institute. Here are some of the broad trends that I see happening and giving wind to the backs of these growing startups:
- From global to personalized-local. Stemming from the public’s growing desire for local experiences and for eliminating the costs of global shipping, the driving force in the global marketplace for local, personalized experiences will continue to increase. Economic models demonstrate that purchasing items at the local level is cost-efficient, thus favoring this trend.
- From ideas & media to goods & services. The first phase of social connection was the sharing of ideas and media. PR, media, journalists, marketers, and communications at governments were radically disrupted. The next phase is already using the same tools to share goods and services. We are seeing it happen.
- From corporations to crowd-powered institutions. This trend, where the people in the crowd connect to each other using these sharing startups, enables people to get what they want from each other, rather than using traditional corporations. I’ve even documented the true story of a crowd building a 100 mpg car, and selling it legally.
- From latent delivery to on-demand. Amazon delivery of 3-5 days, or even overnight, will begin to feel slow, as on-demand services, like Uber, make renting a car happen in real time. Last night, I had to wait for five minutes for my car, before traversing San Francisco.
So how do Airbnb and Uber deliver on these overarching trends?
Airbnb delivers personalized, local experiences, powered by the crowd. They provide that personalized experience at the local level of properties and experiences available to rent, but have an inventory that spans the globe. In fact, the New York Times has reported that Airbnb is putting 200,000 heads in beds per night, and they’re still in their formative years. It’s local and specialized, and often less expensive than hotels.
The future state of Airbnb could go beyond just beds, disrupting eBay. This is a massive marketplace that can add any product mix that the crowd wants. I imagine the next natural phase for Airbnb is to help restaurants, local retailers, and artisans to provide services to guests at Airbnb facilities, and then to everyone else – all at the local level. Need a new shirt? Use Airbnb. Need more furniture for the guest room? Use Airbnb. Need a place to eat in your neighborhood instead of a restaurant? Use Airbnb.
Uber delivers services, and now goods, on demand. On July 18th, the Huffington Post reported that Uber put its toes in the water of delivering physical goods at the local level, on demand. By simply pushing a few buttons on your iPhone, you could summon an ice cream truck in the heat of summer to your location, supplying cold confections for you and your friends – all on demand. Imagine what will happen when they activate this service for delivering groceries, shirts, and meals.
The future state of Uber delivers anything you need on-demand, disrupting Amazon. I imagine that Uber will expand beyond town cars and ice cream trucks and activate the crowd to become couriers at the local level. Anything you need, on-demand with a push of the button will be made available. As they’ve already been savvy enough to provide helicopters to wealthy people in Manhattan who wanted to find a way around the traffic to get to their mansions in the Hamptons, or ice cream during a heat wave, they know how to seek out inventory that’s readily available and make available, on-demand.
Welcome to the Collaborative Economy. Instead of relying on Amazon or eBay, the crowd can turn to Airbnb and Uber to get durable goods, media, and products at the local level and on-demand. Welcome to the Collaborative Economy where the people in the crowd can get what they want from each other, faster, cheaper, and in a more personal way than our industrial institutions can provide.
If you’d like more information, start with our open research report on the Collaborative Economy.
Update: Discussion on Facebook with smart folks is occurring, and I cross-posted on Huffington Post.
Screenshot from Keynote: Business opportunities await for hotels to bless and certify peer to peer home sharing, matching trusted customers from loyalty programs to local experiences, and selling value added services and goods like cleaning, concierge and those fancy soaps. Read full report and see keynote video.
Update July 25: I visited Airbnb HQ, see my notes in the comment section.
The industry is abuzz from the NYT article by Tom Friedman blessing the sharing revolution, his closing line states; “The sharing economy — watch this space. This is powerful.” In this piece, Tom cited Airbnb starting to eat away at market share, and compares this rapidly growing startup to other giant hotels, like Hilton. I’ve been conducting research on how corporations can be involved in this new revolution, called the Collaborative Economy, and see some business opportunities.
For most large corporations and established institutions, the natural reaction to an invader is to fight them. For hotels, they’ve continued to fund lobbyists who support the established hospitality industry, and are fighting Airbnb at every guest room, house, and city around the globe. I’m here to tell you that hotels like IHG, Marriott, Hyatt, Hilton, Starwood and others don’t have to fight this inevitable movement. Instead they can collaborate with this market and profit. How? They can provide by adding new value added services, take a cut from the transaction costs, and reduce operating expenses.
[The Collaborative Economy is an economic model of shared ownership and access between people, startups, and corporations all working together]
In this most advanced form, hotels themselves could create their own two sided marketplaces and host their own HiltonBnB. Then they could facilitate the matching of hosts and guests at local locations like guest houses, vacation homes and other inventory on AirBnb. Following this, hotels could take a cut of every transaction, and provide new value added services like cleaning, concierge services, and even sell branded goods to local hosts. Local hosts get trusted customers, guests get local experiences at a standardized quality, and the hotel gets new revenues.
The Six Scenarios for Hotels to Address the Collaborative Economy
The scenarios are listed in a maturity order, from easiest but greatest listed first, to the highest investment with highest return listed last. Companies should build their plans based on this scenario based model.
|1) Ignore it, and hope it goes away. An easy solution is to avoid it, or don’t look at it. Head = Buried.
||Rather than give any attention to the sharing revolution and legitimizing its existance, ignore it, and it will go away.
||High risk. The risks are that if it doesn’t go away, your company will significantly be behind as the world has moved forward.
|2) Fight it with policy, lobbying, or marketing. Using the law, aggressive marketing attacking quality or lobbying groups, corporations can attack the sharing revolution in an assertive stance.
||Current investments in legal, lobbyists, are already made, and are setup for business model protection. These systems are already setup in place for the defense of the company.
||Short term win. While it can be deemed illegal in some marketers, global coverage will be impossible to stop, and nearly impossible to enforce. Amsterdam guests and hosts were able to connect to each other –bypassing local laws.
|3) Sponsor the startups. Corporations can add their brand to this movement, such as Barclay’s card sponsor London bike sharing, Citibank in NY, BlueCross BlueShield for Minnieapolis bike sharing or NBC sponsoring Yerdle.
||Low investment with a high brand association with this sharing movement. Also reduce liability as the brand sponsors “aka advertises” on the sharing revolution.
||Lack of business model change means great visiblity for the CMO but does not direclty increase revenues from a sharable or collaborative business model. In the end, this model can’t sustain on its own.
|4) Acquire the startups. To date, we’ve seen smart purchased by Avis of Zipcar and Enterprise Holdings making acquisitions, showing the value of getting into this market at an early stage.
||An easy way to get into the market is to acquire the threatening startups. Great way to enter a new existing marketplace and recoup revenues faster than buying.
||This can get expensive quickly, and doesn’t stop new competitors from emerging if your business model itself has not changed. Short term, and expensive. VCs see this pattern and will pump more money into startups, raising valuation.
|5) Integrate your business model. Corporations can work with startups by enabling their own products to be shared and passed along in these marketplaces. Patagonia has worked with eBay, and GE has partnered with Quirkly to innovate new products
||A great stepping stone without fully committing your company, investments, or assuming full liability as your partner with these startups.
||While an increased involvement in the collaborative economy this partnership could fall short as the brands are not onwing the experience, data, potential revenues and profits.
|6) Build your own marketplace and platform. In the most advanced model, I expect a new class of corporations to host their own communities that enable customers to trade, rent, resell their goods and services in a brand hosted community, enabling new value for the brand, and offering the brand new ways to extract value.
||Own it yourself, build your own branded marketplace or platform that enables customesr to buy and sell and build next-generation products. This yields greatest potential return as brand owns data, all revenues, and potential IP from collaboration.
||Highest liability and highest investment required to fulfill this model, where a company becomes like an eBay or AirBnb or innovation platform.
Companies need not fight the revolution –instead they should collaborate in this economy. In Tom’s article, he did a great job of stating that the movement is here, and that corporations are becoming disrupted. What he didn’t do is state the solutions that hotels (and all companies) must wrestle with to engage in this market. If you want to learn more about the solutions, read the report on the Collaborative Economy Value Chain and learn about the three business solutions: 1) Company as a Service 2) Motivate a Marketplace, 3) Provide a platform. In it, we identify new business opportunities for hotels to profit by enabling the sharing revolution, rather than fighting it. To quote Tom Friedman, “we must watch this space, it’s powerful”, I want to challenge business leaders to take it to the next step, and not just watch this space, but lead it. Join me.
Above image: The collaborative economy empowers people to get what they need from each other –without even having to go the store. Read about four of the many startups that are enabling this behavior below.
I’m a little worried this morning.
I’m in Minneapolis, the capital city for consumer packaged goods, durable goods, and some of the top retailer brands in the entire world. I’m here to speak to 300 corporate folks, at an event hosted by Magnet 360, Salesforce, and Marketo.
What am I going to tell them? That people are shifting their behaviors and, enabled by internet tools, that they can share products with each other – rather than buy them. I’m going to tell them that people can buy once and that then they can share the products that they have acquired with each other many times over.
I’m going to tell them that the people in the crowd can get what they want from each other, and that their reliance on corporations can be reduced. I’m going to tell them that they could be facing reduced revenues. I’m even going to tell them that they could potentially lose their jobs.
As I prepare to head to the stage in a few hours, I must admit that some ominous thoughts are racing thoughts my mind.
I’m going to deliver some bad news. How will they react? Will they tune me out and surf Instagram, ignore me or tweet bad things about me? Or, maybe, throw those little Italian hotel candies at me?
I’m here to tell them there are many reasons why this sharing movement is happening. Not only does social technology make it super easy for people to connect, but, for some people, sharing used goods is often just as good as buying new. I’ll tell them that a new class of “Conscious Consumers” wants to reduce needless consumption. I’ll also tell them that, due to the rapid increase in world population, we really don’t have a choice as a planet, but must be more careful with our fixed resources
I’m even going to tell them that I, myself, have become a Conscious Consumer. Aside from consumables, like food, gas, and personal health items, I can count on one hand the physical goods I’ve purchased in the last two months: A fancy hands-free phone for my home office, a fancy purse for my ever-deserving wife, and a pair of customized Nike ID running shoes. I may even read my heartfelt letter to brands, telling them how my lifestyle is starting to change. That means my relationship with brands will change along with it.
You’re probably wondering, who does this? Is it just Asian-American Industry Analysts with four-syllable first names and impossible-to-pronounce last names that live in Northern California? It could be, but if you read, “Share or Die, by Neal Gorenflo of Shareable magazine, he talks about how this “asset-light” movement is common among Generation Y, people who are accustomed to sharing on the internet, yet are saddled with an enormous burden of college debt. They really have no choice. Or I may tell them about internet leader Andrew Hyde who reduced his personal goods inventory to 39 items and experienced the feeling of freedom. I might tell them about my trips to Europe and Asia, where this practice has been common for a quite a long time. Or about how is becoming more prominent in densely populated American cities like New York and San Francisco with sharing of bikes, cars, houses, gardens, and even food.
I’ll share with them these four examples of startups that will ultimately reduce their revenue:
- Yerdle taps Facebook to find and share goods. This clever website, which uses Facebook connect with your friends, enables you to share goods and products with people already trust rather than with than some stranger on Craigslist or eBay. It was founded by Andy Ruben, the former Chief Sustainability Officer at Wal-Mart (shocker!). I had the chance to have breakfast with Andy a few weeks ago and learned how he believes products can be easily gifted to each other, which ultimately also put a drain on corporate revenues. I quickly realized this idea also has profound impacts for governments who depend on taxable revenues.
- NextDoor connects you with your local neighborhood. Startups popped onto my radar thanks to Viv Wang who’s actively watching this space. This is a local social network. And by local, I mean very local. After you verify your identity and location, it connects you with your geographic local neighborhood. Your local community becomes a place to exchange ideas and sell, or even gift, goods and services to each other. Need sugar? You can get that from a neighbor you haven’t yet met just a block away. Need to get rid of some old skis? Sell them on NextDoor or gift them to that college kid down the street. Need to borrow a lawn mower? That should be there too.
- Stokebox provides for the sharing of collections of goods. The newest one, which was placed on my awareness list by Liz Philips, allows people to get a box of hand-me-downs from strangers rather than family members. You can do things like offer a box of clothes and toys for an infant, and in exchange, or for a very low fee, get a box of clothes and toys for a toddler. Imagine how this can simplify the lives of already overwhelmed parents by reducing trips to the store and increasing their disposable income.
- GiftFlow empowers people to ask for what they need. What if you need something, but don’t have something to offer? The “gift economy” enables people to ask for what they need. Those who have can give within this new form of economy. People who continue to give and gift are rewarded by their own intrinsic satisfaction. Reputation reporting systems may eventually emerge to show who the digital Mother Teresas are in this generation.
That’s just a small list. If you want to see more, I have compiled a list of over 200 of these startups (with the help of a Taskrabbit, I might add) that are emerging in every vertical and sector around the globe. In each case, the crowd can get what it needs from each other, without having to go to corporations, brands, retailers, or merchants.
The good news is that our research has found a solution for brands, retailers, and corporations. The hard part for the companies is that it requires them to let go of trying to control the market. But, in exchange, they’ll actually gain more of the market! Here’s how it works:
We call this the “Collaborative Economy Value Chain” (try saying that fast, five times), and we’ve identified three business models where companies can work with the startups and the crowd:
- Company as a Service: Where companies offer products on demand for rental, rather than for sale.
- Motivate a Marketplace: Where companies enable their customers to sell used goods. The companies can make a percentage, or profit from value-added services.
- Provide a Platform: Where companies collaborate with the crowd to reduce costs and promote innovation.
If you want to know more about this subject, you may read the full report on the collaborative economy value chain (available to anyone) and watch the video, which delves into deeper detail about how companies can use this movement to their advantage, rather than be displaced by it.
I leave you with this final thought: When the people in the crowd begin to collaborate to get what they need, it means that corporations must join in, or risk serious disruption of business.
This is part of our Collaborative Economy coverage. Read the definitive report for corporations or peruse all my posts, which go back a few pages. First, let’s define what we’re talking about. Like Craigslist or eBay, we’re seeing new marketplaces emerge with a more concentrated focus on every business. They offer features that enable sellers to offer their ware, and buyers to offer bids, exchange of information, goods, and currency in both directions. Every stock exchange is set up in this manner, allowing for efficient trade, despite location and time differences.
[Definition of a two sided online marketplace: An online exchange that allows sellers to offer their goods and services, and for buyers to obtain information, often barter, and purchase offerings using internet technologies]
These marketplaces are disrupting traditional business.
Here’s what we’re seeing at the trend level and what it means to corporations:
- The Crowd Can Get What They Want From Each Other, Bypassing Corporations. These two-sided marketplaces are actively disrupting corporations. We have seen hotel chains fund lobbyists to influence policy to fight AirBnb. We have seen cities that have lost taxi revenues pass ordinances that make tools like Lyft and Uber illegal. In perspective, most corporations aren’t fully aware of this growing groundswell arising against them.
- It’s not New. It’s Native to The Internet. Which Means it’s Unstoppable.
Craigslist was one of the first, and is often attributed as a cause of the demise of the newspaper classified business revenue. It sure has forced third-party sales teams to understand how to benefit, or be disrupted, by ecommerce. In fact, these are just examples of the broader impact of the internet, which is disintermediating traditional business flow and forcing middle men to react as monies are routed around them.
- Marketplaces Are Emerging in Your Market, Amplifying the Disruption
We’re seeing these marketplaces in every niche, vertical, and segment in the market, and now they have a few things that are different:
[Disruption to Corporations: These marketplaces enable the crowd to get what they need from each other --bypassing corporations]
Nine Examples of Two-Sided Marketplaces Disrupting Traditional Corporations
To bring this to life, I want to list examples of those these marketplaces (beyond simple Craigslist) are emerging in nine distinct verticals:
||The industry to be impacted the most has been the mobility and transportation space. From Uber, Lyft, RelayRide, Sidecar, and many others, these tools enable on demand access to cars or a ride as a service.
||Traditional taxi corporations and companies have cried foul, taxable revenue to airports and cities, and rental car companies who haven’t acquired or adopted these services
||New startups have emerged that enable the crowd to host people in local experienecs at their guest house or individual couches or rooms, these players include original player Couchsurfing, AirBnb, and OneFineStay for luxury rentals. Even hotel room sharing has emerged, I just learned of EasyNext.
||The hotel industry has been disrupted. As a result, they’ve funded lobbyists to help protect their business model, public and consumer safety to educate and combat this growing trend.
||A new class of startups is emerging that enable to people to turn their own kitchens into ‘restaurants’ for friends and strangers at a cost. EatFeastly enables the crowd to host dinner parties for inspiring or off work chefs, and make a profit.
||While nascent, this will start to impact restaurants if people are able to self organize food events around each other at homes, parks, or offices, bypassing traditional restaurants.
|Staffing and Talent:
||One of the early models we saw emerge was online marketplaces of staffing tapping into remote workers from opportunity markets to developed markets. This includes eLance, Odesk, and even TaskRabbit and RedBeacon at a local level. For higher level skills PopExperts enables specific experts to find buyers.
||Traditional business process outsourcing, consulting firms and staffing firms like Kelly Services, Manpower, and Robert Half agencies. At the local level, the Yellow pages or local listing sites like Craigslist are impacted
||Companies with excess office space, but are locked into long leases can now offer their desks, rooms, or offices on demand, generating new contacts and revenues. Players include Sharedesk, LiquidSpace, Pivotdesk, and more.
||Traditional property management firms are impacted, real estate agents, hotel services for meeting rooms, and even the local coffee shop are disrupted as the crowd gets what they need from each other.
||Graphic and web designers can now tap into a marketplace of buyers using websites like CrowdSpring and 99Designs that enable a marketplace to connect to each other.
||I was covering this contraversial market a few years ago, and even participated on a panel at SXSW where long term formal designs cried foul, and even involved industry groups to comment, my coverage is here.
|Consumer Packaged Goods:
||Rather than buy products from a store, a neighborhood can now share goods and products with each other, rather than buy. Websites like Yerdle (who are founded by an ex-Walmart executive) and NextDoor which empowers neighborhood online discussions enable people to share and gift, rather than buy
||Retailers are impacted as people learn to share among themselves –rather than buy. Season goods, sporting goods, transportation goods, kichen appliances, landscaping equipment and even cars are items likely to be shared rather than purchased.
||Rather than go to a traditional bank to obtain money, the crowd can tap into each other to get money, websites like LendingClub, Propser, and even micro loans like Kiva enable the crowd to loan each other money, eToro is an online community of traders that enables peer to peer advice to emerge after analyzing top traders in the crowd. On the startups side, Kickstarter disrupts traditional early funding models.
||Traditional banks, and finanicial advisors are impacted as the crowd seeks to get what they need from each other. This has radical implications across every vertical that requires funding or loans including real estate, cars, colleges, and more.
||The newest startup on my radar is AirPR, which is like Angie’s List for PR professionals. This site enables the clients of PR consultants to identify who the top 1% of PR professionals are for starutps and midsized companies.
||I’ve hosted an in-depth conversation on AirPR as this new market disrupts traditional business models in the PR space, enables some PR professionals and those that don’t make the listing are impacted.
|Many more Industries:
||Here’s a list of over 200 startups in the collaborative economy, across dozens of industries. With the rise in VC funding on this space, expect more to emerge
||Nearly every industry, niche, and vertical is being disrupted.
The Six Strategies Corporations Can Take to Address the Collaborative Economy
Right now, I’m seeing companies react in a few different ways, each with different levels of investment and outcome. Here are the scenarios, are far as I can see:
- Ignore it, and hope it goes away. An easy solution is to avoid it or don’t look at it. The concept is that not paying attention to this market will, hopefully, result in it going away. The risks are that, if it doesn’t go away, then your company will be behind those that have already adopted this.
- Fight it with policy, lobbying, or marketing. A common reaction is business model protection, and using lawyers, lobbyists or aggressive marketing and sales to counter this movement. While the costs of this effort are high, it’s hard to stop a movement that’s pinned off the internet. It’s an unstoppable force.
- Sponsor the startups. Some companies have sponsored these startups. For example we’ve seen Barclays Card sponsor London bike sharing, Citibank, and NBC in New York sponsor Yerdle. Brands can harness this movement for marketing and recognition, not to mention profit.
- Acquire the startups. To date, we’ve seen smart companies like Avis (Zipcar) and Enterprise making acquisitions, showing the value of getting into this market at an early stage. The downside is that companies, like AirBnb, have been able to raise over $120 million in venture capitalist funding, increasing their value, making them an expensive purchase.
- Integrate your business model. Corporations can work with startups by enabling their own products to be shared and passed along in these new marketplaces. Patagonia has partnered with eBay to encourage consumers to buy used goods, and Scottevest apparel has done the same, promoting the growing eBay community from their own corporate webpage.
- Build your own marketplace. In the most advanced model, I expect a new class of corporations to host their own communities that enable customers to trade, rent and resell their goods and services in a brand hosted community, enabling new value for the brand, and offering new ways to extract value from the brand.
So there you have it friends. We’ve gone through a definition, reasons why this is important, examples of marketplaces disrupting corporations, and a six-stage maturity model demonstrating what corporations can and will do.
Image by Dez Creates, used with creative commons
Update: The sample for the 200 startups was collected in February 2013, and does not, therefore, include a few startups that have since been launched. I’ve added a fourth graph at end of the article showing some additional Angel investors who have supports startups not in the original sampling.
As part of my ongoing research as an Industry Analyst on the Collaborative Economy (read all the posts), I have talked about market drivers, the market challenges, corporations who have jumped in, provided a list of startups, and published a definitive report called The Collaborative Economy. I will now help you to better understand the funding aspect of this growing movement. We obtained a list of 200 startups (appropriately using a Taskrabbit, I might add) in order to get our initial sample. I recently published an infographic helping to reveal the patterns in this sample. Now I want to expose some additional data about the force that funds this space.
Key Findings from the Collaborative Economy Funding:
- Heavy Funding Has Spurred this Market Forward. Across the 200 startups, I have found that 37% had been funded, with startups receiving an average of $29 million in funding. The 200 had received over $2 billion in total funding, which is a very high amount for a largely undeveloped, pioneer market. Interviews with several of the Venture Capitalists in this space indicated that they favor two-sided marketplaces which scale and have low inventory costs. They are basically transaction machines akin to eBay or Netflix.
- A Few Startups Received Exceptionally Large Funding Amounts. Not all startups are equal. Some have received far more funding than others. These giants include players like AirBnb which received about $120 million; Lyft, which recently raised around $60 million; and Uber, securing over $57 million. Most startups have not yet obtained such large funding amounts, although, as this market heats up, it will find additional funding opportunities.
- SV Angel and Benchmark Funded Most Frequently. San Francisco and Silicon Valley-based firms funded these firms most frequently, which coincides with the high concentration of Collaborative Economy startups in the SOMA district of the city. In particular, SV Angel and Benchmark were the highest frequency funders, followed by Incubator/Accelerator 500 startups Andressen and Floodgate, which are located in the Silicon Valley and San Francisco area.
- Market Has Received Early Stage Funding. Of the total funding of the nearly 80 startups, most are in an early stage, with the most dominant being Seed round, followed by ‘A’ round. The other category includes non-disclosed personal loans, bootstrapped self loans, and the ambiguously termed ‘Venture Round,’ which could be construed to mean a variety of things. This early market funding, which started to emerge about 3 years ago, matches the funding levels being shown.
- Individual Investors Include Hollywood Stars and Internet Veterans. Early stage funding often includes celebrity investors who want to get in on the action, angel investors, and a “friends and family” round of other successful entrepreneurs. Ashton Kutcher has invested in 5 startups in this market, and seasoned internet exec, Keith Rabois, is reported to have individual investments in many startups in this market. We should assume there are other personal loans and investments made that were not apparent in our public searches.
Graphics: Key Investors in the Collaborative Economy:
After segmenting the data, we comprised these graphs, based off frequency patterns per startup.
Above: Individual investors are based off an updated sample size in Feb 2013, while data is accurate, it did not include new startups that were added to this market.
Above, On July 14th, I’ve added the following graph, which includes new investors not in the original sample size, collected in Feb. In all cases these graphs are correct, but they represent different sample sizes. New investors include Mike Walsh and Shervin Pishevar, who take the lead, in terms of frequency.
Methodology and Data Notations
See the full data sample was from 200 startups in the Collaborative Economy. Read the infographic to obtain a summary. Special thanks to the Collaborative Consumption crew, as many of the names were obtained from their site. Of the 37% who’d been funded, we mined public records ranging from Crunchbase, startup website, investor website, Wikipedia, news sources, and press releases to obtain data. We don’t believe this list is complete, but it is a representative sample of funding from easily obtained public sources.
We included the term “venture round” is an ambiguous term which can be used in a variety of ways, in the ‘other’ category, as it’s used both in early stage and later stage funding rounds. Obtaining the exact amount of how much each firm or individual invested is next to impossible, so obtaining frequency, and estimating per round helps to determine a relatively reliable figure. Compounding this complexity, multiple investors are often involved in each round, making specific dollar amounts even more difficult to determine. This information should not be used for official financial advice or guidance, but only for entertainment purposes only.
If you liked this post, see all my coverage and data on the VC market. Photos used under Creative Commons, by Philip Taylor.
Above Image: The orange Wikispeed SGT01 Roadster: crowd-funded, crowd-designed, crowd-produced, hitting the streets in small batches now for $25k, oh, and it gets 100 miles per gallon.
What if I told you the next affordable, long range, fuel efficient vehicle might be assembled in your garage or built by your neighbors? That’s what I was surprised to hear, when I learned about the Wikispeed auto project.
Wikispeed is a business that crowd sourced designs, production, development, and has created a SAE registered, road legal approved car the Wikispeed SGT01 Car, now on sale in limited quantities. This case example is part of my ongoing coverage of the collaborative economy, on how the crowd becomes a company.
I had the opportunity to meet Joe Justice (pic) of Wikispeed at the Aspen Institute, a center dedicated to the advancement of thinking, our roundtable has been focused on how institutions must innovate in the rapidly changing environment. I’ve shared elements of the Collaborative Economy research, which has been one of the under current themes at the event.
Above: Wikispeed cars boast modularity, where individual components are assembled by crowd and shipped to a buyer’s garage to assemble. A car can quickly become a truck, by removing and replacing body.
What’s Wikispeed, it’s a project that taps into the crowd to design, create, manufacture, produce, and bring to market products. Their most notable project is producing a 100 mpg vehicle made of modular, interchangeable parts. Some findings of note about the Wikispeed project:
- Like Wikipedia, a global set of experts are People are participating, in various levels of commitment.
- They competed in XPrize challenge, against Tesla, Tata, and others
- They’ve crash tested front and side impact tests, and created a suite of impact test simulations to test rapidly.
- Design was crowdsourced, using Dropbox and Google apps like Groups, Hangout, Talk, Cal, Drive, and more.
- Specifications are modular allowing interchangeable and fast assembly
- Production Methodology is “Extreme Manufacturing”, bringing a new iteration of product every week. Like the agile software method deployed by many tech companies, a similar mindset of rapid iteration rather than long term planning has emerged at WikiSpeed.
- Assembly of vehicles can happen anywhere, including in Joe’s Garage in Seattle
- Car Specs: 100MPG, maximum speed is 149 MPH. For safety, they’ve built for NHTSA and IIHS specifications and await official rankings
- Features: Airconditioning, Radio (but no cup holder), using a Honda engine, but they’ve built the housing so other engines could be used, as a modular component.
- The car body can be quickly interchanged with a pickup truck body, allowing instant versatility.
- Multiple forms of currency are accepted, including crowd created Bitcoins
Corporations at Risk as Crowd Becomes Empowered
From my perspective, the disruptions are coming at an accelerated pace, sharing, markers movement, augmented reality are quickly emerging. Companies who don’t adopt the Collaborative Economy are at risk to being disrupted as their own customers start to develop their own products, build new services. A natural reaction of most corporations is to battle these trends with legal, policy, and competitive measures such as deploying fear uncertainty and doubt, or combative marketing and sales measures.
Corporations and Crowd Have Complementary Resources
As the crowd starts to become like a company, it offers risks and opportunities for all corporations, although I prefer to focus in on opportunities. In a broad stroke, corporations lack flexibility, the ability to customize for individual needs, and struggle at constant innovation. In general terms, the crowd lacks a trusted brand, mass production, an army of customers, resources, and mass distribution. Together, they can create a new resilient organization that negates these weaknesses and that taps best of corporations and the crowd.
Together, Startups and Corporations must adopt Collaborative Economy Value Chain
Companies who want to avoid disruption and benefit from opportunity must follow the Collaborative Economy Value Chain (read the full report), which taps into new models of Company-as-a Service on demand offerings, motivating a marketplace for resell of goods and services, and provide a platform to allow customers to augment and enhance every business function in your company.
This was initially posted on Huffington Post, I cross-posted here.
Above Image: Bamboo is resilient by being both rigid in maintaining its structure, while also being flexible enough to bend during a variety of weather patterns.
Most of the coverage of the collaborative economy has focused on what it means for consumers (Airbnb, Lyft, Uber) but what does it mean to corporations? This post will answer that question. Companies that tap into the crowd for instant workers (oDesk or Taskrabbit for business), or to unlock their idle inventory to it into cash (Liquidspace, Shardesk), or to tap into the crowd for new services (Crowdspring, Uservoice), can benefit significantly from reduced costs, unlocking new business potential.
[Corporations that tap into the crowd benefit from new product offerings, unlocked idle inventory, and reduced risks]
Over the past few months, I’ve been focused on the Collaborative Economy, the next phase of social business that involves the sharing of goods and services. In prior posts, I’ve discussed how it has impacted the luxury vertical, and even goods and products. Now let’s explore how it impacts a corporation’s workforce, talent, and resources. To describe the movement, which we call the Collaborative Economy, I define it as: “An economic model that is characterized by shared ownership and access between corporations and the crowd.”
Here are five examples of how companies can tap the crowd in many business functions:
- A company can tap into an on-demand workforce using Taskrabbit for business, or oDesk for coding, office admin, writing, and pretty much any other service.
- A company can instant-lease their unused desks to travelers or other companies who need meeting and workspaces furnishings, using Sharedesk, Liquidspace, Pivotdesk and others.
- An executive who needs a quick, clean, place to work in New York can quickly access meeting rooms on demand at Breather room or access an Uber to get to a key meeting.
- Marketers who want to infuse consumer-created content that’s trusted and cheap can use Mass Relevance, LiveFyre, or About Echo to integrate social content into their digital marketing on demand .
- Research & Development teams can tap into the crowd to generate new ideas for products using Uservoice, Salesforce Ideas, or listening to their communities in Communispace, Passenger or Vision Critical.
Four Impacts to Corporations as they join the Collaborative Economy
I see at least four major benefits that traditional organizations will gain by joining the Collaborative Economy.
- Quickly expand or contract workforces. Popup companies mean corporations can assemble a team on-the-fly, at low cost and lower risk. For most companies, staffing is the highest cost of operating. Companies who properly tap into this on-demand workforce can always stay ‘right sized” by adding staff on demand as needed. Expect new forms of contract groups to emerge that work well in tightly-collaborative teams, akin to virtual agencies. Expect the future of work to continue to move towards “individual enablement.” Future workers can serve many masters as they offer specific niche skills. Expect that knowledge management, core institutional knowledge, and a permanent team that drives company strategy to still be key in-house resources.
- Activate unused resources to generate incremental revenue. Companies can generate new revenue by activating unused inventory and assets such as unused real estate. They could also outsource idle workers into workplace marketers, serving other partners and corporations. Instead of laying-off skilled people, why not loan or lease them to other companies until you need them again? Often, physical locations are the second-highest cost to corporations. These can be utilized as crowd resources by turning them into rent on-demand to other partners and corporations. It works in reverse as well with companies renting from others, reducing overhead and the liabilities associated with managing multiple properties. Expect the Regus model to eventually be extended to management consulting firms, companies with seasonal businesses or companies that have many locations, like retail.
- Reach new markets through new business models. Corporations that have idle resources, inventory or products, can activate these resources and rent to new markets on demand. For example, Bloomingdales, Nordstrom, and other high end retailers can benefit from replicating the business model of Bag Borrow and Steal, which makes high-end purses available to a whole new class of on-demand consumers. Don’t sell a product once, sell it a hundred times. I’ve listed many new models emerging just for the luxury market. Corporations that have idle, consumable inventory, such as food, can shift to Eat Feastly, a growing consortium of local chefs at home. Unsold cars sitting on dealership lots can be put to rent like Toyota Rent a Car or BMW’s version.
- Tap the crowd for new innovation of goods and services. Finding, hiring and retaining creative people are difficult things to do. Instead, seek new models that enable desk-sharing that brings “creatives” together to work when they are available, at your office, spreading some of their ideas and energy to those around them. Pepsi, which used Mass Relevance, was documented tapping into the broader crowd by aggregating their messages to improve digital and real-world marketing. Take, for instance, models like Kickstarter or Quirky that tap into the crowd to fund and source new ideas. This is the next form of innovation. Software providers like Spigit, Crowdtap, BrightIdea, also enable corporations to glean these opportunities on their own branded platforms.
The Future: The Crowd Becomes the Company
I see three distinct phases as corporations take to the collaborative economy. While they all warrant posts and research of their own accord, here’s a sneak peek:
- Phase 1: The sharing startups will unveil APIs for new growth. Like oDesk, expect new APIs to be available from Airbnb, Lyft, Taskrabbit, Liquidspace and others that connect social media management systems like Sprinklr, Expion, Spredfast, Hearsay, Adobe, Oracle, Lithium, and Salesforce. Together they will enable corporations to manage inputs and outputs of the collaborative economy. For example, last week I was briefed by oDesk, which has a number of APIs that enable their customers to manage large batches of tasks of their vast supply of on-demand workers. oDesk shared with me that they see opportunities for even more developers to engage, expanding their market share with new applications, unlocking new value propositions that traditional corporations have yet to realize. I expect that, as the sharing startups mature, they’ll unleash these APIs, just like Facebook, LinkedIn, Microsoft and Google have done.
- Phase 2: A new era of Collaborative Economy Enterprise Software will emerge. Don’t expect these startups and social media management systems to be the only game in town. There’s already a broad range of enterprise software, such as Uservoice, Get Satisfaction, Oracle, Salesforce, Lithium, and Adobe, that offers enterprise-level collaboration of media and ideas. I expect a new class of software to emerge that enables branded marketplaces (like Airbnb) for corporations to manage their own two-sided marketplaces of buyers and sellers so as not to have to rely on the sharing startups. I wrote a post, putting out a call to the market, identifying this “blue ocean market,” but no providers having emerged as yet.
- Phase 3: Corporations will tap into the crowd for non-crucial goods and services. In a not-so-radical vision of the future, expect that the most resilient corporations will start to engage the crowd for non-essential business functions in their attempts to reduce their overhead. In this scenario, it will be difficult to tell the difference between customers and employees. Companies that tap the crowd for most of their business functions will reduce costs, maximize productivity on demand, and might end up with the only remaining long-term assets being an ecommerce system and a brand, which should directly translate to more profits for shareholders. In the future, the on-demand, creative, and resilient crowd actually becomes the company, reducing risks and costs while providing the opportunity to increase profits.
Closing Thoughts: The Collaborative Economy Can Make Corporations Resilient.
Corporations have an opportunity to tap into the same sharing behaviors we are seeing in the consumer market. I’ve given you a definition, clear examples, insights, and a roadmap for future phases. Companies who tap into the crowd will reduce costs, some forms of liability, and can generate new revenues by activating existing resources and collaborating for new value creation. The crowd makes corporations resilient.
Image by Jeff Garris, used under Creative Commons