Over the last decade, there’s been an outpouring of concern about how Facebook, Google, and other Internet companies treat their user data. This concern continues as the next generation of startups, like Uber, Lyft, Homejoy, and Postmates, are being taken to court by people like worker rights lawyer Liss-Riordan, who formerly filed class-action lawsuits on behalf of truck drivers, waiters, delivery men, cable installers, and call center workers.
Industry leaders have written about how these collaborative economy startups must start sharing value with their own community in order to quell concerns over worker rights, citing examples of how startups like Quirky and models from cooperatives are paving the way by sharing the financial rewards with their own community. Along with the entrepreneurs that run tech startups, we can all learn from these models.
Etsy, a 10-year-old marketplace, features makers from around the globe, and is a registered B Corporation. Recently, the company filled for an IPO. That’s right: Etsy, the social good marketplace empowering mom and pop artisans to sell their wares is now a ticker symbol listed next to companies like Walmart, Exxon, Coke, and Ford.
Etsy’s B Corporation status signifies the organization is aimed at doing social good—not just creating profits for investors at all costs. B Corporations are expected to focus on the fair treatment of workers and partners, and be responsible stewards of the environment, all while providing economic returns to the company investors.
According to the B Corporation website, Etsy has a rating of 105 out of 200 points. The average B Corporation ranks 80 points, which would likely be higher than the average Wall Street traded company that may be primarily focused on investor returns. While there are questions about the profitability of Etsy, the market appears to be responding positively to the IPO, and it is now valued at a market cap of $2.4 billion dollars.
So how will Etsy able to balance out the needs of investors while serving its social good mission?
One way is by offering creatives and partners the opportunity to purchase equity in the company before the IPO. Etsy reserved 5% of its shares for these providers. This was a smart move for the company, as it fosters one of the highest form of loyalty with its community: shared destiny. As Etsy performs well in the market, creators who purchased the shares benefit as well. Those creatives have already seen a 39% increase in the value of those shares since the IPO.
Etsy isn’t the only company to share the rewards with their community. Other large companies are also following a similar path:
U-Haul launched the U-Haul Investors Club to enable the market to invest in its trucks, which offer a share of the dividends of vehicle performance
Hasbro partnered with 3D printing maker community Shapeways to offer up the IP of toys and let makers glean revenue from every created product
Barclay’s Card created the Barclays Ring, which enables communities of committed customers to design and use the credit card as well as distribute profits to the their favorite non-profits.
GE partners with Quirky, where inventors who submit new product ideas share in the financial rewards.
As we go forward, companies that care about longevity of their relationship with their customers will share the rewards with community, fostering long term loyalty, deeper engagement, and advocacy from customers and partners. As companies like Uber and Airbnb prepare for their material events, they might consider sharing the rewards with their own community. In the end, companies that share the ongoing wealth with their community are more likely to survive, since the interests of all parties are aligned for the long-term.
Disclosure: Barclay’s Card is a customer of Crowd Companies, founded by Jeremiah Owyang.
If you’re reading this, you already know how important energy is to us. It powers our transportation, logistics, industry, agriculture, homes, and the very digital device you’re using now.
What’s the Collaborative Economy? An economic model where technologies enable people to get what they need from each other –rather than from centralized institutions. This has impacted cars, hotels, banks, retailers, manufactures, and more.
How is the Energy Sector being impacted by the Collaborative Economy? You might be amazed to learn that P2P lending, Makers, and sharing are causing some changes. This week, I keynoted the North West Energy Conference, Efficiency Exchange, present were 500 energy professionalsfrom utility companies, manufactures, and consultants were in attendance. I shared with them a few examples of how we’re seeing bottom-up, democratized startups enabling people to collaborate among themselves for energy creation, storage, and sharing.
Here are some of the examples I cited:
Crowdfunded Solar Enables the Maker Movement of Energy
What’s a maker in the energy sector? Anyone who’s creating their own energy, and, perhaps, sharing it with others. Solar Mosaicenables thousands of people to have access to affordable solar loans, gives investors opportunities to fund renewable power, and allows clean energy supporters the power to spread the wealth of energy from the sun throughout their communities. Respected industry leader, Lisa Gansky, is on the board.
Yeloha Connects a Marketplace of Solar Energy “Makers” Yeloha is a new company that launched last week. They’re a network that allows for the sharing of solar energy between “sun hosts” and “sun partners.” For the 80% of Americans who would like to install solar panels on their roofs can’t afford to, Yeloha provides them with access to purchase solar energy generated by their neighbors.
Tesla to Provide Home Energy Storage, Enabling Local Resiliency Tesla is now offering a home battery storage system for residences. The target market for these batteries are homeowners interested in backup storage from their solar panels in case of an outage, or for those living off the grid. This makes local neighborhoods more resilient and, combined with solar, potentially more independent.
Dutch startup enable P2P sharing of power credits
Vandebron arranges for consumers to buy electricity from independent producers. Based in the Netherlands, Vandebron, currently has 12 producers providing enough energy for 20,000 households. Customers receive their sustainable energy through the national grid, but from sources (typically farmers) and methodologies (wind, solar) selected by each individual customer. The company’s revenue stream is from subscriptions, which keeps them at arm’s length from promoting consumption.
Cities and contractors are sharing large equipment, increasing efficiency MuniRent enables public agencies to easily share heavy duty equipment internally and with other agencies. Yard Club benefits both contractors who own equipment and those looking to rent. The owners get to make some money on their equipment, while the renters save money compared to what they would pay traditional equipment rental companies. This, of course, begs the question: How else might cities and the companies who work with them become more energy and resource efficient?
Other Collaborative Economy startups enable efficiency in transportation and goods
Ride sharing apps like Sidecar, Lyft Line, Europe’s BlaBlaCar and Uber Pool aim to maximize the number of passengers in a car, increasing efficiency of time, energy used, and traffic. Auto and Boat sharing apps like Getaround, RelayRides, Zipcar, BMW DriveNow, and Boatbound increase utilization of vehicles by allowing them to be shared. It goes without mention that Yerdle, Craigslist, Tool Sharing spots enable local communities to increase utilization of un-used goods, reducing global shipping and manufacturing.
We’re in the Early Days of the Collaborative Economy, As it Begins to Permeate Society. These examples are on the horizon. There are just a few. Some of them have just birthed or have not yet been widely available, but there’s enough evidence to see how sharing and crowdfunding people are enabling to “make” and share energy independently, which could literally create shifts in the balance of economic power. In December 2014, we launched the Collaborative Economy Honeycomb 2.0, featuring a Utilities hexagon which is broken down by Telecom and Energy. Some of the previously mentioned startups were not yet operating. We’ll include them in the next iteration of the graphic. This market is changing rapidly.
Above: This Collaborative Economy Honeycomb maps out how
P2P Commerce is impacting all areas of society,
including Energy (Purple hex, bottom left)
Leaders in the Energy Sector Will Shift Ecosystem Roles, Providing More Value In my presentation, I provided the business leaders of the Energy Sectors examples of how other large companies in other industries are adapting (see timeline, or detailed database), by creating and enabling P2P marketplaces around their companies or by providing a platform for others to co-create with them. In the case of the energy sector, large utilities could first enable solar on homes, take a revenue cut of the excess energy created, and provide marketplaces that enable the distribution of that excess energy within in a region. The role could shift to facilitator or enabler as the crowd continues to buy in.
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.
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.
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.
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.
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 collaboratewiththe 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.
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.
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.
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.
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.
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.