The Collaborative Economy defined: An economic model where commonly available technologies enable people to get what they need from each other.
There are over 37 terms being used for this market, but the one that makes the most sense in terms of scope and accuracy is the Collaborative Economy. The above image is a screen capture from my powerpoint slide that I use in presentations, research, publications and with the Crowd Companies council, that we founded at the end of 2013. The honeycomb metaphor is an apt one; as it’s a representation of many individuals working together as a collective, see the matching market infographic.
While each term has drawbacks, the Collaborative Economy moniker is a wide enough scope of the overall trend: P2P transactions. An example of these peer based transactions include: crowdfunding where people fund each others projects, the maker movement where people make their own goods instead of buying them from traditional retail, P2P lending where people lend each other money instead of from traditional lenders, crypto currencies where the crowd owns the ledgers, and the sharing economy a term popularized by the media where people rent homes, cars or services to each other. The popularized term, sharing economy, while a misnomer in it’s own right, is just a subset of the overall movement of P2P commerce.
I’m not alone, it’s worth noting that the core thought leaders are using the term Collaborative Economy like Lisa Gansky, Rachel Botsman, and Robin Chase and the premier festival Ouishare was the first to use this, even before I. The Collaborative Economy moniker and definition is the right scope and is most accurate for this growing movement. I welcome your feedback in the below comments.
As part of our ongoing research on the Collaborative Economy industry, we collect, analyze, and forecast where this market is heading. In the spirit of transparency and sharing, we openly share this data with the open market.
Each of the three sheets are in continual production and improvement. They don’t stay static for long. Although you cannot edit the online sheets, you can download the files, then edit, splice, or use in your own presentations at will.
The first sheet, Startup Funding in the Collaborative Economy, is the most developed, with over a dozen tabs, which include analysis, graphs, and more. The second two, are works in progress. As the data in both fills up, we continue to analyze data, for charting.
In any case, please bookmark this page. If you found it useful, please share it with others on social media or email.
Above: This mature sheet features a comprehensive aggregation of funding in this market, which has ballooned to over $10 billion in a few short years. The workbook has multiple sheets for viewing by market and industry type, funding size, trends by date, and more.
Above: Since Jan 1st, I’ve been collating data from articles, media, and studies in this handy Google sheet. It’s an index to where many studies on adoption, earnings, attitudes, growth, disruption are located.
Above: Way over a year ago, I started a timeline of brands (first edition) deploying in this market, launched an updated (second edition) version, and designed it to convert into a Google sheet that can be scored and used to derive case frequency information. The analysis is completed and graphs will emerge, shortly.
If you seek more in-depth information, please check out my Body of Work on the Collaborative Economy, a comprehensive starting point to all my publications. If you work at a large corporation, consider joining Crowd Companies, the council I created, focused solely on this topic.
As much as I personally enjoy analyzing markets in order to understand what it all means, and enabling decision makers to chart the landscape, this practice is also useful for understanding where things are likely to head over the coming years in this exploding market. I look forward to your feedback.
This is the second time I’ve posted links to these databases, the timing is right to re-inform folks as I see many questions about market data.
On-demand startups, which are a subset of the Collaborative Economy, have been under scrutiny on worker treatment. They’re under the magnifying glass more than ever.
This new industry, which was birthed the 2008 recession, provided rise to the “gig” worker, or independent contractors. These part-time workers were offering their idle time, working multiple jobs, and offering their spare bedrooms to make ends meet. Many of the workers see the benefits of “being their own boss” as they can choose the time, service, and how they work –rather than reporting to a salaried job.
In past months, there’s been increasing pressure to shift the relationship from contractors to employees. There have been lawsuits against Uber, where a single driver was able to win business expenses, but also we’re seeing American presidential candidates like Hillary Clinton suggest she’ll be influencing startups to provide fair wages and benefits to workers, while Jeb Bush takes Uber rides in San Francisco, promoting the service and free market capitalism.
Providing worker resources for freelancers isn’t new. For more than a decade, the Freelancers Union, featured here in The NYT, offers centralized healthcare, retirement programs, and other job-related services. Peers, a three-year-old sharing economy advocacy group, is also making signals that they plan to offer resources to these gig workers.
This blog is used to track the trends in this new economy and explain what it means to established businesses. As such, we will track how these contractor relationships are now starting to shift toward full-time and part-time employee relationships.
Startups are shifting from contractor to employees relationships:
Here’s a running list, mostly in chronological order.
- 2014: Zirtual’s shared virtual assistants are employees (W-2 workers). I’ve used this service for more than two years and have worked with a variety of Zirtual assistants. They have dedicated work hours to respond to their clients, and have tools at their disposal. For as long as I’ve known, they’ve been W-2 workers. This group was savvy to figure this out. Edit: Zirtual had a shocking shift a week after this post published, my thoughts here.
- Jun 17, 2015: A single Uber driver was able to win a lawsuit, awarding her thousands in business expenses. Some anticipate this will lead to a class action lawsuit, but Uber indicates this is non-binding. A simple search on Google yields lawyers are chomping at the bit for a class action lawsuit against this heavily funded company. All drivers are 1099 “partners,” to my knowledge.
- June 22, 2015: After the news broke at Uber, Instacart converted some of its workers, those who assemble the groceries for customers and couriers, to employees.
- Jul 1, 2015: Shyp has converted their contractors into full-time workers, citing this would lead to longer-term relationships with the staff.
- Jul 17, 2015: Homejoy has shuttered due to, in part, misclassification of workers. In my interactions with employees at Homejoy, each home cleaning was operating at a loss, compounding the issues, and scaring off would-be investors.
- Jul 25, 2015: Yesterday, Luxe Valet announced its workers are now W-2 employees. This service offers a valet who meets me in an urban area and parks my car for $15 a day –regular parking in San Francisco is $25, and I can specify where to pick up and drop off my car, saving me time. Read about my experience.
- Yesterday, we had food delivered from Munchery, a startup that brings healthy, unique meals to my doorstep. I asked the courier about her employment status, and she was a part-time W-2 employee. They’re known for doing their best to care for employees.
- Aug 3, 2015: Eden, which offers on-demand workers, has converted their workforce from 1099 to W2. Thank you April Rinne for surfacing this.
- Update Aug 3: Some Instacart workers are not happy about the shift to W2 employment, lost hours, less pay, little voice. Thank you Natalie Foster for the link.
- If I missed any examples, please let me know, and I’ll update the post, crediting you.
This means: Short-term suffering for startups, but long term resilience for the Collaborative Economy. Tech startups, under scrutiny from workers rights advocates and the political election, are shifting workers into employee relationships rather than independent contractor status. This does not mean the space will collapse, as nearly every other established industry from retail, to hospitality, to food, has successfully operated with workers that are employees.
It does mean that these companies will need to provide ample training, resources, and also hold employees accountable based on customer feedback and ratings –just as other established companies do. It also means that these startups will need to provide new forms of worker benefits, discounts, and perks under these new relationships.
We already see that these startups, and their workers, are lobbying for a third class of workers dubbed “Dependent Contractors” which could work several services at once while benefiting from 401k, retirement, healthcare benefits, and fair treatment of workers.
Want to learn more? You can check out my full body of work on the Collaborative Economy, which includes reports, graphs, databases, lists, frameworks, info graphics, essays, and points of view.
(Creative Commons, photo from Washington State Dept of Transportation)
The Collaborative Economy market is growing at an accelerated rate. Not only is adoption increasing by individuals at a rapid pace, but the VCs have invested a massive $16 Billion to pad the war chests of these disruptive P2P commerce startups. Corporations aren’t standing on the sidelines waiting to be disrupted, the progressive companies are leading the charge by deploying these same strategies and technologies. The following three slides show market growth, adoption by brands, and indicate how companies are deploying, you can view all the data in a Google Sheet, live on the web and thanks to Amy Bishop for her research analysis managing the sheet.
Above: These five stats indicate the growth of the disruptive startups: Young companies, rapid growth, high volume, low assets, and high valuation show how business models based on networked based technology quickly achieve scalable growth. Often, traditional companies are based on the principals of the Industrial Revolution, owning many assets and achieving linear growth.
Above: Large corporations, which we define as companies with over 1000 employees, $1B in revenue, and are often Fortune 1000 companies are also adopting, many in the last two years. Towards the end of 2014 we saw a significant increase in adoption in part from Uber’s API which led several partnerships, and Lyft’s aggressive partnerships in early 2015. Coincidentally, Crowd Companies is just over a year-and-half-old, launched right before the large companies started to deploy in scale.
Above: You’re probably wondering what corporations are doing, in order of frequency, they’re deploying what we call as “Brand as a Service” which include on-demand models, such as Whole Foods partnering with Instacart, rental models like BMW’s DriveNow program. Corporations are also launching their own marketplaces, such as Cisco’s used networking marketplace, Patagonia’s used apparel store, and Ikea’s marketplace of used goods. Lastly, companies are sponsoring the startups with advertising, or co-marketing such as Lyft and MasterCard for “Priceless Rides”, or KLM partnering with Airbnb to offer a unique airline apartments for rent.
Companies are quickly jumping into the Collaborative Economy, but frequency doesn’t indicate success. While there’s been over 190 case examples, I only know of the business results of a few, and to my knowledge only one company (BMW) has indicated that a program was profitable, in public. One thing is for sure, this is the market for the brave early adopters who want to lead the charge, not wait for the movement to pass them by, and in many cases these corporations embrace innovation, and therefore the risk of not seeing direct results for a few quarters or years. Also, when we launched Crowd Companies there was approximately 70 case examples, and since then, there’s been about 120 more deployed in a year and a half, many by our own members, the pickup is certainly increasing. The adoption will only continue to increase in frequency, to the point where we can no longer accurately track deployments as every corporation will have dozens of iniatives.
Disclosure: MasterCard, Cisco, Whole Foods, BMW are paying members of Crowd Companies, an innovation council I founded. Want to learn more? view the entire live database on this Google Sheet, see the multiple tabs. Photo by Misty
Many are excited about the new collaborative economy, where people use common technologies to get what they need from each other. This has created disruptions for some industries, but overall, holds much business opportunity for progressive companies.
Progressive companies can glean greater loyalty through crowdfunding, turn to the crowd for new co-innovation and launch their own sharing programmes to expand how they serve their customers new desires. Companies who ignore this trend are likely to suffer from disruption, but those that lean in can benefit from using the crowd to their advantage.
In the next section, I’ll share examples of what the crowd is doing, and how large companies are responding to integrate the crowd into their strategy.
Crowdfunding is at an all-time high, there’s been $16 Billion of investments made by the crowd, reports The Economist. Despite the growth, there’s been concerns that in the case of the crowdfunded Occulus Rift being acquired by Facebook, that the investors are making donations for perks, and not actually gaining equity.
To solve some of these woes, large companies are applying crowdfunding into their strategy, DIY brand U-Haul has launched a crowdfunding platform called U-Haul Investors Club, enabling the crowd to fund new trucks, and in return these investors would receive dividends from the performance of the specific vehicle.
The crowd is creating their own goods in the maker movement, which appears to be a disruption for large companies who create physical goods. However, savvy companies like Hasbro are enabling makers who use 3D printing services to alter and 3D print Hasbro approved toys, fostering deeper engagement, and even generating new revenues as each 3D Print of a toy provides Hasbro with new revenues, see the Hasbro and Shapeways partnership called SuperFanArt.
Ride sharing and rides as a service continue to dominate the media landscape as Uber, Lyft, Sidecar, and BlaBlaCar continue to grow in adoption, funding, and market attention. Executives at some of these start-ups are aiming to reach a point where car ownership ceases to exist. Innovation groups at BMW have launched a new program called BMW Drive Now, which offers a membership programme for customers to borrow Electric 1-Series vehicles at lots in Urban cities. This innovative program enables BMW to offer a single car to more customers, increasing utilization, reducing inefficiency and generating recurring revenues.
In each of the above examples, the crowd shows growth, and large companies are tapping this trend to harness this strategy for their own benefit. What can we learn from U-Haul, Hasbro and BMW? They enabled the crowd to help them with funding, which in turn increased loyalty, let the crowd co-create products like Hasbro, and let customers rent your products instead of own them, like BMW. In each of these cases, companies are altering their business model, to tap the crowd movement.
This post was originally posted on the Virgin blog, read it here.
I partnered with VentureBeat’s market intelligence arm (VB Profiles) to further develop data on the funding, valuation, and employment impacts to the growing Collaborative Economy, this post originally was posted on VentureBeat’s website written by John Koetsier of VB Insight, I’ve republished their content, to share the key findings and you can find a summary of the research here.
Sharing is big business. Big big business.
There are now 17 billion-dollar companies with 60,000 employees and $15 billion in funding in the sharing or collaborative economy, according to Jeremiah Owyang and VB Profiles, a market intelligence firm partly owned by VB. That includes the venerable eBay, founded in the dim mists of technological antiquity, and relative newcomers Etsy, Chegg, WeWork, Airbnb, and — of course — Uber.
Uber uber alles, right?
While most of the startups are relatively recent — many became billion-dollar companies in less than four years — they have their roots in tough times, Owyang says.
“Many of these startups birthed from the trough of the 2008 recession,” he told me via email. “The startups received unreported friends and family money, then got market traction with adoption, then were able to seek out traditional investors, resulting in the investment boom a few years later.”
Owyang classifies collaborative economy companies in a honeycomb rubric with 12 core verticals or categories, including transportation (where Uber and Lyft belong), space (where Airbnb sits), and goods (where he’s placed Etsy and eBay). Interestingly, the largest number of billion-dollar companies are in those three spaces, plus a fourth: money, which features LendingClub, FundingCircle, Prosper, and TransferWise.
Other spaces, such as utilities, municipal, health, food, and corporate, have yet to see any kind of billion-dollar players.
Interestingly, eight of the 17 are based in California, while 12 of the 17 are U.S.-based. That preponderance may not last, Owyang says.
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“While these startups are often based in the SF area, they often serve global national markets,” he says. “Ola is an India-based ride sharing company that is well-funded, and existing Chinese tech companies are building their own versions which means that publicly funded data is unlikely to be surfaced. France’s BlaBlaCar recently received $100 million of funding which they used to purchase a competitor, earning them the title of largest ride sharing company in Europe.”
Perhaps the most unusual thing about the space?
The collaborative or sharing economy has received $15 billion in funding — more than the entire social networking space that has spawned giants like Facebook, Twitter, Snapchat, and more. If that’s any indicator, the collaborative economy is still in its infancy, and many more billion-dollar companies (and unicorns) are coming soon.
One thing that these often counter-cultural startups won’t do is totally upend our capitalistic one-percenter economy.
“It’s worth noting that the early hope that this sharing market would foster altruism and a reduction of income inequality can now be refuted,” Owyang says. “The one percent clearly own the sharing startups, which means this is continued capitalism — not idealistic socialism.”
The 10 “unicorns” among the 17 billion-dollar sharing economy companies? Owyang defines those as the companies that are still private.
- Prosper: $1.7B
- Ola: $1B
- Uber: $40B
- Instacart: $2B
- Lyft: $2.5B
- WeWork: $5B
- TransferWise: $1B
- Airbnb: $10B
- FundingCircle: $1B
- Kuaidi Dache: $8.8B
The full Collaborative Economy ebook is available at VBprofiles.