Above image: The Collaborative Economy marketplaces in the maker movement, sharing economy, p2p lending are quickly on the rise
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 Hard to Stop.
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 traditional corporations]
Eight 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.
|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. This database lists the deployments.
- 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.
The above solutions are the strategies we discuss in the Crowd Companies council, that I founded and direct. So in summary, 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.
This post is an updated version of a similar post.
They have new powers. They are backed by powerful companies. And they are starting to organize.
No, I’m not talking about the latest episode of Heroes. I’m talking about the people formerly known as your customers. You may be asking, “What powers do they have? Who gave those powers to them? What are they going to do together?”
I’ll be glad answer that.
They are powerful.
They have new powers, and you can see a collection of stats, that enable them the ability to get all the information they need about you in real time using social networks, mobile devices, and the internet. They can find ratings and reviews about your products as well as your competitors, compare prices and, now, have it delivered to them in under an hour from “the crowd” by using services like Postmates, Instacart, Deliv.co, Google Shopping Express and many others. They can also choose to buy a product one time, and then share it many times with their peers, rather than the whole group buying the same product over and over again. WARNING: This will cause extreme disruption to companies that sell ‘stuff.’ This powerful crowd is also able to act like traditional companies in their own right. They can become like hotels and host people at their own homes using Airbnb. They can transform into restaurants by having strangers over for dinner. They can even morph into a rental car company by chauffeuring or letting friend or even complete strangers borrow their cars. In their most advanced state, these empowered people can build their own products and goods, using Quirky, Etsy, Shapeways, TechShop, MakersRow, CustomMade and other sources, many of which are invisible to the corporate eye.
What it means: Your customers are now starting to be your competitors.
Technology is giving them strength.
Who’s giving them these powers? Small tech companies and big tech companies are. There are hundreds of new startups that have emerged to enable ordinary people to share goods, services, time and space with each other at distinct local levels. Links on Craigslist (from used cars in Chicago to baby goods in Paris) are becoming like distinct companies. These startups are being funded by venture capitalists who see how “two-sided marketplaces” at scale. Also, these are startups have incredibly low upfront costs. A handful of people can build a successful company in a few short months. Big companies are giving ordinary people super powers too. Facebook, Google and Apple immediately come to mind. Most of these sharing startups are using Facebook connect, an instant plug-and-play trust network. Apple’s instant app availability means global distribution at a local level to anyone carrying a smart phone. The average guy on the street can obtain a high-powered, locally-focused app on demand.
What it means: They can get much of what they need from each other –rather than from corporations.
They are organizing as a collective.
While not everyone adopts the empowered state, we often see higher adoption within high density, progressive markets and is common among younger-aged people who were born sharing using the internet. In our last post, we explored how the Millennials will become the dominant workforce generation in less than 15 years. Like all great movements, they have opposition, and these empowered already have many challenges that combat their efforts.
The resistance is coming from municipalities and corporations that do not espouse change and its potential impact on their traditional controls. Dozens of other hardships rise to face them as they come into their own. But the crowd is pressing on relentlessly. Cities are scratching their heads on how to regulate these new P2P business models, and the startups are assembling lobbyists, and getting their users to vote, protest, and be heard. Using communication tools, they will connect to each other, and collectively build their own voice.
What it means: They are connecting to each other, and are self-organizing like a organic company.
The term “customer” or “consumer” is becoming antiquated.
People who used to have the custom of buying from corporate entities will no longer be customers if they are enabled to get what they need from each other. The term “consumer” is unpopular word in sustainability circles, especially as they seek to share products amongst each other, rather than constantly buy anew. This is a new breed of people. They have power. They have strength in numbers. They are organizing. And big technology companies are backing them. This blog, and my ongoing career mission as a whole, is focused on helping corporations connect to their customers. In order to do this, corporations must take the time to listen and to understand how customers are changing.
What it means: They’re empowered to turn their homes are hotels, their cars, taxis, they’re makers, funders, lenders…they’re micro-entrepreneurs
Savvy corporations will collaborate with the empowered people.
Savvy corporations that want to benefit from this massive economic revolution will collaborate with these empowered people, and, in return, create resiliency within their corporation. Make no doubt about it, this is a business opportunity. But if ignored, this is a threat that could unravel corporations.
What it means: Corporations who want to be resilient know the crowd becomes part of their company.
(image used with creative commons licensing, by Lalit, a prior version of this was posted, two years ago, this one, is updated)
It pays to share, as the crowd shares your brand for you.
Marketers first adopted the internet and then social media. The next digital phase is the Collaborative Economy. What’s that? If you’ve heard of Airbnb, Uber, Lyft, Kickstarter, Indiegogo, and the Maker Movement, this is the Collaborative Economy.
Just as social media enabled people to create media and then share media, in this next phase, the Collaborative Economy enables people to create their own physical goods as well as share their existing physical goods. In both of these examples, they are using digital technologies to make the sharing happen.
This following honeycomb graphic of the Collaborative Economy clearly illustrates the many different industries that are being impacted.
View full-size image.
Crowd Companies has been tracking this movement and is aware of at least 150 leading brands that have recognized the need to adopt and embrace the Collaborative Economy, and we have a Google spreadsheet to track how brands are using the concept in marketing and more. Each of them has acted in some way to deploy shareable products, host marketplaces, and work with makers to innovate. Here are eight companies that clearly demonstrate what marketers can do to adopt this collaborative revolution and to promote the sharing concept.
1: MasterCard and Lyft
Mastercard partnered with Lyft to extend its “Priceless” marketing campaign during the Christmas holiday. It decked out the interior of Lyft vehicles in Christmas decorations and handed out gifts such as cookies and concert tickets.
2: KLM and Airbnb
KLM customized a private plane for use as a unique Airbnb experience, giving a whole new meaning to “flights and accommodations all in one place.” To be fair, the plane didn’t actually fly anywhere. It was the accommodation. And it was luxurious to say the least. Three lucky families got to spend a night in the stylish apartment-in-a-plane equipped with a host of amenities not available in even a luxury hotel room.
3: Comcast and Airbnb
Comcast created three unique Xfinity Watchathon Week Airbnb properties. Families in San Francisco, Chicago, and Baltimore spent an entire week in selected Airbnb properties whose interiors were redecorated to match the sets of Game of Thrones, Boardwalk Empire, and The Wire. Not only did guests watch their favorite series, they were immersed in it.
4: Ghirardelli and Lyft
Ghirardelli sponsored a Valentine’s Day contest and sweetened the ride for some lucky Lyft passengers. Every Lyft rider in San Francisco enjoyed a car packed with free Ghirardelli chocolates. One lucky passenger and a loved one won a getaway in San Francisco, including a two-night stay in a fancy hotel, unlimited Lyft rides, an exclusive tour and shopping spree at Ghirardelli, and of course, lots of chocolate. Sweet!
5: Citibank and the City of New York
Citibank sponsors a New York bike sharing program, which means its brand is pedaled all over the city. With the full backing of the New York Department of Transportation and the sponsorship of Citi, thousands of on-demand bikes and hundreds of bike stations are available and easily accessible. Increasing consumer demand is now prompting expansion to neighborhoods north and east of Manhattan.
6: MADD and Uber
MADD partnered with Uber to prevent drunk driving on St. Patrick’s Day. According to a report issued jointly by MADD and Uber, “It is estimated that every 52 minutes someone is killed in a drunk driving crash.” Uber and Mothers Against Drunk Driving are working toward a world where more options empower more people to make the right choice — where a safe, reliable ride home is always within reach.
7: Honda and Indiegogo
Honda and Indiegogo partnered to preserve iconic American drive-in theaters. The people at Honda figure that without cars there would be no drive-in theaters, so it made sense for them to launch an Indiegogo campaign to engage the crowd in an effort to help save the 368 remaining icons of a bygone, but missed, era.
8: Nordstrom and Etsy
Nordstrom features Etsy products, including home decor items, clothing (even bridal gowns), and accessories. Perhaps the next Vera Wang will be discovered at Nordstrom. There are currently 15 Etsy makers whose products are cataloged by the upscale retail giant. This is a model of corporate marketing vision and resilience embracing the Collaborative Economy for the benefit of all concerned.
Because of the increasing popularity of sharing startups, more and more businesses are considering how they can join in on the “sharing” — either through individual projects or by partnering with other brands. And the industry is moving fast as more and more entrepreneurs come up with business models that build upon the Collabortive Economy model and compete with traditional commerce models. If you want to keep up, consider how your brand can be more “sharing” and how you can facilitate sharing within your customer base.
This was originally posted on the Hubspot blog.
The raw data for this article is available in a publicly-shared database in this Google Sheet, which you can access to see additional details.
VCs, investors, and banks have increased their bets on the Sharing/ Collaborative Economy in greater amounts than ever before. The Collaborative Economy is an economic model that uses commonly available technologies to enable people to get what they need from each other. You’ve likely heard of the sharing economy, crowdfunding, P2P lending, the Maker Movement and cryptocurrencies. Each of these is a part of this emerging economy.
I’ve met with many investors to find out what they like about this space. They’re generally seeking fast-growing, two-sided marketplaces of buyers and sellers, riders and drivers, and hosts and guests that involve frequent revenue transactions. Just as eBay and Craigslist own none of the products offered on their sites, these new startups use technology to find idle assets and connect buyers to them, reducing costs for all parties.
While dozens of smaller startups are winning A rounds in the size of $2-10m on average, there have been two extremely large funding into startups: Uber has raised over $2.7B resulting in a market valuation of $41B (not including the recent debt financing), and a recent round funding of $530M into Lyft, bringing their valuation to over $2B. But let’s look beyond the headlines to see the broader trends of funding into this developing market and to understand how this money has been deployed:
Graphs: How Investors are Sharing their Money into the Collaborative Economy:
Above: Let’s first define the scope and give examples. This market enables people to get what they need from each other, often not from traditional commerce methods.
Above: A snapshot of this market shows over 200 startups funded, with $32M deployed to the average startup, not including outliers Airbnb, Uber, and Lyft
Above: Total of all funding is a whopping $11 Billion funded
Above: Funding has increased year-over-year.
Above: Uber, Lyft, and Airbnb have clinched the most funding. This does not include Uber’s recent billions of debt financing.
Above: Transportation funded above all other industries as expensive, idle goods can be more efficiently deployed.
Above: Not all rounds are equal, most startups have received an A-round, and a few have received a large over $50m
Above: Social Networks, the first market of digital sharing, raised only half the amount of the Collaborative Economy.
Above: This influx of funding poses risks to the ecosystem.
What it Means:
Looking beyond the raw data, what do these trends tell us about this market?
- Bigger than Social Networks. It is astounding that these startups have been funded by more than twice the amount raised by consumer social networks like Facebook, Instagram, Friendster, YouTube and Myspace. This is a very large market, and it is disrupting traditional business models.
- These startups are trying to find those niches. Take transportation, for example: BlaBlaCar is spreading across Europe and Asia, Lyft is focused on the United States (India and China have produced their own versions), Sidecar is adding package delivery and Uber is spreading globally.
- Transportation, disrupted. Transportation has received the most funding as this market is ripe for disruption: cars, boats, and planes are often expensive, cities are becoming dense, and these assets are infrequently used by their owners.
- Not all will last, but this market is not going away. While these startups won’t all last, they are trying to establish themselves in their niche markets. With all of the funding being poured into them, it means that they are not all going to go away – at least not for the next few years.
- Some of these startups are in a conundrum. For those that will stand the test the time some have taken on incredible amounts of funding, and now must balance out the needs of the community (their customers who rely on their service for their livelihood) as well as return money back to their investors within 5-10 years.
If you’ve used Uber, Lyft, Airbnb, oDesk, Kickstarter, or Lending Club, you’ve participated in the Collaborative Economy, ever wondered what’s powering it behind the shiny user interface on the app?
The Collaborative Economy is an economic model in which people use commonly available technologies to get what they need from each other. To put some stats on how large the startup ecosystem of companies in this space is, here’s some facts: The Mesh Directory is tracking well over 9,000 startups in this market. These startups are in twelve industries as documented on the Honeycomb 2, and offer P2P or on demand business models that may disrupt traditional companies. They’ve been funded a whopping $11 billion at the time of this post going live, and there’s more money coming.
Above: The Collaborative Economy Technology Stack, Version 1.0.
There are five technology layers which enable the Collaborative Economy
There’s a number of ubiquitous technologies found in our own pockets that enable this movement, and a few that are not as obvious, hidden in the background. To clarify the technology stack, this post will help to identify, define and give examples of how these pervasive technologies impact our life. This graphic above, in one image, a high-level snapshot of the technologies being used, now, let’s get into the details on how these technologies are being used:
- Shareable Resources layer stimulates awareness of idle capacity. The Collaborative Economy enables people to access idle resources that others own, but aren’t using, like cars, offices, rooms, parking spots and more. For example, each Uber and Lyft driver is issued a smart phone that identifies when drivers are available for riders to summon from their own mobile devices. Breather, a high-end workspace available on demand, enables people to quickly find an office nearby that they can rent, based on availability. Yerdle, a marketplace that powers swaps and trades, encourages users to take photos of things they no longer need to help them to exchange them for things they do need.
- Device and Application layer provide capability for anyone to access resources. Mobile technology is the key platform for local and global enablement. We’re familiar with the smart phone in our pocket or purse, but the location-based GPS technology, ability to host a variety of apps, connect to our credit cards and to display a plethora of information in high-definition graphics make mobile technology the driving force for this movement. EBay and Craigslist are over a decade old. Yet, when they started they were unable to provide real-time sharing, because people did not have smart mobile devices in their pockets like they do now.
- Developer layer powers multiple systems to connect. An Application Programming Interface enables developers to connect their software to another companies data, software, and more. In the Social Networking arena, we saw Facebook birth an application platform that enabled thousands of new startups to birth their companies on top of the Facebook platform, like RockYou, Slide, Zynga, and more. To date, Uber has launched an API that’s enabled cities, select startups, and large companies to connect to their API, offering instant connections to Uber rides and data, spurring on growth. Expect this to be one of the highest growth levels in this stack, as Airbnb, Lyft, and other players will follow suit, enabling partnerships.
- Trust layer enables rapid distribution among strangers. Ratings and reviews give providers (those who’re selling goods, services, or offering items for swap) with instant credibility to partakers (those who’re buying the resources) with an instant level of trust and credibility. Lyft drivers rate passengers, and vice versa, to ensure quality service from and for drivers and passengers. Drivers with low scores may be removed from the system. Riders with poor ratings may become ineligible to use the service. Collaborative Economy startups integrate social media features to promote a network of trustworthiness. For example, Airbnb offers Facebook integration, which helps users to find reviews of places to stay from friends they actually know. Social media is being used to promote services like Crowdfunding to advertise the need for investors to back the next digital watch, indie film, or to save a local school program.
- Data Layer charges the startups with instant scale at low cost. I had the fortune to visit a leading ride-sharing startup. It didn’t take me long to realize that, at their heart, they’re a “big data” analytics company for city-based logistics. Airbnb has told me that they are more like data scientists than a hotel brand. They foster trust that enables people to share within a global marketplace of millions of listings, based on advanced technology-based applications that match hosts and buyers, on demand. There are millions of transactions happening on Crowdfunding platforms. P2P lending platforms, like Prosper and Lending Club, require massive amounts of data crunching to analyze, anticipate, Cloud services enable development teams to quickly scale (up and down) applications, data and storage, based on changing market demand. This makes the time-to-market for startups cheaper, faster, and more efficient than ever before. The cost for startups to get into the market has plummeted, enabling thousands of startups, that would previously have been unable, to enter the market at low cost.
Sharing isn’t new, but these technologies birthed at the perfect time.
To summarize how these technologies work in context of our society and businesses, let’s look at the broader picture.
- We’re in a special time in history, where all of these technologies birthed and matured at about the same time in 2008, when the recession was at it’s worst, and people had no choice to turn to each other to get resources to avoid foreclosure, bankruptcy, or to just get food on they table. 15 years ago, Webvan offered food delivery, but lacked mobile devices to enable lower cost transactions from the crowd. Ebay enabled a global marketplace, but due to lack of smart devices, it was difficult to happen in real time at local level like ordering an idle car from Lyft. A variety of internet commerce currencies emerged like Beenz, but lacked P2P block chain technology to enable decentralization.
- To best understand this space, you must look at all technologies as a whole. It’s easy to focus on just one aspect of the Collaborative Economy, whether it’s the internet of things, or trust, or mobile devices, but in reality, it’s key we see the entire comprehensive stack as it all works together. Failure to see all the technology parts working together limits understanding and ability to see where it’s headed next. They’re all interdependent. I hope this graphic provides a full look at how all the pieces work, relate, and connect.
- Technology makes an old human behavior happen at scale. Some people insist that the Collaborative Economy is nothing new, sharing, collaboration, is just being a good neighbor, something my friends in the Midwest pointed out. However, today the difference is simple, technology enables us to scale these sharing and collaboration beyond our immediate trusted neighborhood, now we can be good neighbors to strangers. To sum it up, the Collaborative Economy might be able to exist on some, much smaller, scale without technology.
- Looking forward, we will see new technologies being added to this Stack. It is the increasingly more rapid advances in technology, like microelectronics, seamless payment systems, wireless connectivity, blockchain that are enabling, advancing and expanding the power of the Collaborative Economy to engage others, using in your neighborhood and around the globe. In particular, I’m pleased that Coinbase has joined our innovation network at Crowd Companies, who’s the leading exchange and digital wallet for blockchain technologies, watch this space carefully.
As technology continues to advance, the day is coming when everything and everyone that can be connected to the internet will be connected to the internet – and we are farther down that road than most people think.
I’m grateful to the help of two advisors: A very special thanks to Chris Saad (twitter, website), chief architect at Echo, which connects APIs across many social networks for large corporations, and Rahim Fazel (twitter, website) who was a founder of Involver (now part of Oracle) a Social Media Management System which connected social network APIs into a single software platform, both who provided guidance and input into this above graphic.
By Jeremiah Owyang, Founder, Crowd Companies and Alan Webber, Government Insights Research Director, IDC, (profile and twitter). Last week, A version of this article appeared in the WSJ.
The Collaborative Economy is emerging as the defining societal narrative for 2015 and beyond. In this burgeoning, economic model, individuals use commonly available technologies to obtain resources from their peers, like use of homes, cars, money, and other goods and services. These technology-based companies enable people to bypass inefficient corporations, find favorable alternatives to entrenched, established channels, and confront existing, draconian, government regulations.
Above Graphic: Spectrum of Political Perspectives on the Collaborative Economy
How big is this market? We know that the startups in this space have already been funded with nearly $11 billion, Most of that funding has come in just the last few years. According to PwC, this movement could be worth $335 billion by 2025. Sharing and circular economy strategy was a featured topic at the World Economic Forum at Davos in January, an indication that we should expect to see more Collaborative Economy models and businesses emerging in the future.
Above Slideshare: Spectrum of Political Perspectives on the Collaborative Economy, detailed
Early sharing idealists hoped the sharing model would produce a Libertarian Socialism in which, by using technology, people would operate communally, sharing their homes, foods, clothes, etc. The injection of billions of dollars of venture capital to fund infrastructure and growth for these tech startups means that investors will demand a return in their investment, resulting in IPOs and a return to Wall Street economics. In reality, this is actually a form of tech-based capitalism, not the app-powered, hippie communes some perceived it would be.
As social movements, markets, and industries grow and become more visible, they also become larger targets for politicians and bureaucrats trying to keep public interests in hand, extract relevant tax revenue and spin them for political value. The Collaborative Economy is no exception. Each individual facet might be seen politically as either a positive or a negative. For example, eBay, one of the older sharing marketplaces, allows people to recycle goods and receive money for it. A liberal might consider eBay as a positive in that it reduces the amount of waste that is deposited in landfills and because of the additional tax revenue it generates. A conservative might see eBay as a positive in that it provides a platform for individuals to start and build their own businesses.
Both liberals and conservatives have embraced different aspects of the Collaborative Economy. For example, Senator Marco Rubio (R-FL), speaking at the DC Uber office, praised the “innovative startup,” backing the idea of breaking the juggernaut of big unions and regulated medallion cartels. Rubio said that, “regulation should never be a weapon that is used by connected and established industry to crowd out innovation and competitors” (Miami Herald).
Uber recently hired David Plouffe, a political strategist for the Democrats who was the campaign manager for both of President Obama’s presidential races. Liberal politicians haven’t embraced specific startups in the Collaborative Economy in any political messaging or action, but some have embraced the idea that the underlying social and economic architecture that allows this new economy to grow is dependent on social programs like Obamacare to provide for the growing number of freelancers and small entrepreneurs. California was an early adopter in proposing legalizing many forms of ridesharing, led by the Public Utilities Commission in 2013. The City of San Francisco has legalized Airbnb, gleaning a 14% hotel tax from its transactions.
When it comes to the emerging Collaborative Economy, the only thing that is clear is that there is no definitive ideological line. Both liberals and conservative see aspects of emerging companies and business models that they like and dislike. These technologies will amplify behaviors and value propositions from both perspectives.
A few things are becoming clearer as the Collaborative Economy becomes more normalized across society:
- A new, more flexible, regulatory framework across all levels of government may be necessary if these companies can’t, or won’t, effectively self-regulate. These regulations would likely focus on providing levels of protection for contract labor from both established companies and end users.
- Startups, taking a page out of the dot.com playbook, will be quick to hire politically-connected individuals and lobbying firms to push their case for more flexible regulatory programs in city council chambers, state capitals, and in Washington. Expect a new lobbying group to emerge to protect interests across the entire Collaborative Economy.
- Both political parties will attempt to use this to their advantage in appealing to the American public. Expect the liberals to point out the benefits of sharing within the concept of the Circular Economy highlighted at the World Economic Forum in Davos. It wouldn’t surprise us to see the Right replace Joe the Plumber with “Carl the Uber Driver” and use the sharing economy to appeal to conservative values like independence, community, and resilience.
Sitting in the back of a car during an Uber or Lyft ride, it is possible to see that, like any other company or business, the Collaborative Economy has many different facets that are either liked or disliked across the political spectrum. But, what both sides can agree on is that the Collaborative Economy takes advantage of technologies in both existing and emerging industries, empowering the working person, building resilient and sustaining communities, and leveraging the government for economic benefit.
From the liberal left to the conservative right, there’s no clear ideological perspective, as there’s something for everyone in this growing Collaborative Economy.