The longest graphic in the history of my career is embedded below, some mobile devices may not properly render.
As the Crowd Economy Rises, Brands Seek to Collaborate
We’ve been tracking corporations in the Collaborative Economy, and released version 1.0 in April, 2014. Now, as we approach the Crowd Companies members-summit in NY next week, we’ll be dissecting and analyzing the different deployments large companies are rolling out to participate in sharing, marketplaces, as well as co-innovation with makers. The scope? This collaborative or crowd based economy continues to rise (study, and daily numbers), and therefore corporations are adapting their business models to adjust to this peer-to-peer commerce movement.
Below Graphic: Frequency of Deployments
Since our initial tracking in Feb 2013, the frequency continues to increase. Since April 2014, we’ve found 27 new case examples, some that were before April 2014, but most were after. We’ve updated the following frequency chart to show the consistent deployment. It appears March was a slow month in terms of deployment (we do see a lot of conferences that month) and we saw a heap of deployments in August, which were due to Uber’s API partnership with several brands. We only counted the large brands like United, Hyatt, and Starbucks for the Uber API deal, as some of the others were smaller startups.
Below Graphic: Timeline Shows Each Deployment
The below timeline contains many of the deals, partnerships, deployments of corporations in the collaborative economy, using the same data set used in the above frequency chart. A great deal of these deployments are partnerships with startups, but we’re seeing many companies launch their own initiatives, which is a signal of corporations starting to invest more in these programs. There’s over 30 deployments in 2014 only, and most are partnerships, aside from Verizon launching a sharing service, starting with cars, and Walmart enabling game exchange.
The Future? Tracking will be Challenging as APIs Accelerate Exponential Adoption
It is my assumption that it will be nearly impossible to track this in just a few quarters. Since Uber has launched an API, expect Lyft and Airbnb to follow suit –resulting in Facebook-app-platform like adoption across the industry.
The crowd is bypassing traditional companies by sharing goods, services, space, and money with each other in the Sharing Economy. People are being empowered to build their own goods in the Maker Movement by crowd funding, tapping global marketplaces, and preparing to accelerate this with 3D printing. You see, the crowd, is starting to perform like a company: self-financing, self-designing products, self-manufacturing, and self-selling to each other.
So, what does this growing trend mean for traditional businesses?
In my closing slides to corporate audiences about the Collaborative Economy, I attempt to tie everything together on this one summary slide. While it’s best understood after the full presentation, the slide can, hopefully, stand on its own. I’ll try to succinctly summarize how we achieved each of these insights, so you can quickly grasp the changes that are occurring. Let’s break down these specific five points into further detail.
1) People are empowered to get what they need from each other. The Sharing Economy empowers people to get products from each other – without have to buy new from traditional retail or wholesale sources. Whether they’re sharing cars, homes, or money, they’re depending on each other to get information. Further, they’re making their own goods and products by tapping a global marketplace of individual makers. Soon, 3D printing become a force that will catalyze this at scale. It’s not new. We saw this ten years ago with social media – people were bypassing corporate communications, marketing, and customer care to obtain information from each other.
2) The crowd is becoming like a company – bypassing inefficient corporations. Of course, this is forcing business change, as the internet tends to bypass intermediaries that don’t provide lasting, value added services. Rather than buy vehicles, people can rent or borrow cars from each other. We’re also seeing the rise of peer-to-peer lending in LendingClub (funded by Google), which has served up $2.8billion in loans in a few short years – bypassing traditional banks. Watch this LendingClub chart carefully. This growth rate is starting to take a significant bump in a vertical line.
3) Corporations must use these same tools and strategies to regain relevancy. Just like we did in social business, to match customers launching blogs, video, and social networking accounts, we saw corporations apply the same strategies to engage in the same channels. Taking a cue from the first phase of sharing, which we call social business, we’re already seeing over 50 corporations that have transitioned into the Collaborative Economy, with significant upward rewards.
4) This requires business model change. No one said this is going to be easy. Significant new mindsets and business investments will be required to satisfy this paradigm change. BMW now rents cars in addition to selling them. Toyota is giving away 1,000 cars for the social good. TOMS shoes now offers a marketplace selling other people’s products beyond their own. Nokia voluntarily gave up their specs to their phone cases to allow 3D printing to occur. U-Haul allowed the crowd to fund their own vehicles. We will need internal champions (whom I call catalysts) who are able to lead this change inside of big companies and turn those large gears a different direction.
5) The crowd will become the company, making corporations resilient. We’ve seen the crowd become the media and the communications in the first phase of social business: Customers became the marketing and customer support departments. Just as we saw companies integrate customers into their media and communications, expect them to integrate them into their business models. Expect new models to emerge where the crowd is augmenting traditional business processes. They will co-fund, co-ideate, co-design, co-build, co-support, co-deliver, co-market and more for a growing variety of products. We’ll also see new forms of marketplaces emerge where products that customers make will be sold alongside those of big brands.
Companies that do this will achieve Resiliency: They’ll be agile, innovative, connected, empowering others, built to last, and profitable.
Want to learn more? Advance and read the full body of work on the Collaborative Economy, or if you’re a large corporations, join the Crowd Companies Association, with 42+ other corporations. This post was originally posted last year, and I’m republishing due to ideal market signals as disruption accelerates.
(Above pic: Thousands of HK protesters link their phones together using Bluetooth to become their own internet –overcoming the government ban on social media sites. Photo credit: Alex Hofford)
If you thought peer-to-peer-based Uber, Airbnb, Lyft and Lending Club were disruptive, you haven’t seen anything yet.
People are empowered –through commonly used technologies
Previous revolutionaries have used pitchforks, wagon barricades, pamphlets, signs and drums. Today’s revolutionaries are using Firechat. It’s not just for revolutionaries, as I just downloaded Firechat. If you want to communicate during an emergencies, in the subway or on a plane, you can download Firechat too.
Seven month old app enables the crowd to become the internet
Seven month old Firechat enables people to become the internet themselves by turning their phones into a network, bypassing access to the worldwide web. The preceding picture shows Hong Kong protesters “armed” with smartphones, using their devices as a single, united network to communicate, call in resources, talk to media, and tell their story globally – even when the government had shut down many internet services. This video tells first hand.
Firechat enables the crowd to connect to each other as one resilient network
Meet Firechat, the app for crowds, communities, and revolutionaries. Downloadable for free, Firechat enables you to chat with other people around you WITHOUT the internet. That’s right, it uses Wi-Fi and Bluetooth signals to create a “mesh network” where individuals can pass messages to each other on a peer-to-peer basis. It can also be used on the grid for further access. When it was first launched in March, Taiwanese protesters quickly adopted Firechat.
When would such a use case be common?
- With friends are on a plane that doesn’t offer Wi-Fi
- Camping with a troop of scouts
- In the desert at Burning Man when the weather goes bad
- In the subway with a group of colleagues
- At a concert or sports event when cell infrastructure overloads
- Austin during SXSW as cell networks are crammed from selfies
- At a protest when a government disables social media or the internet
- On a cruise ship in the middle of the ocean with your extended family
- For victims and first responders after a natural disaster
- In a foreign country where you’re concerned that someone might be sniffing your data
- In a village in an emerging country, where people have phones
Firechat enables P2P communication, bypassing centralized powers
Firechat enables people to connect to each other, peer-to-peer, without relying on a central telecommunications source, like an ISP, a government, or other system. In fact, in the last few hours, Firechat has been reported to have been downloaded 100,000 times, especially by Hong Kong protesters who are demanding people’s democracy after the government shut down the internet. Bruce Schneir, a top electronic security expert, writes the following:
“Firechat is theoretically resistant to the kind of centralized surveillance that the Chinese government (as well as western states, especially the US and the UK) is infamous for. Phones connect directly to one another, establish encrypted connections and transact without sending messages to servers where they can be sniffed and possibly decoded.”
Part of a broader suite of products – nearly impossible to stop
I had a chance to get some answers from Christophe of the Firechat team. The parent company is called Open Garden, which has the mission of: “…helping build a new decentralized mobile Internet.” The only way to stop Firechat is: Forbid people to download it (impossible through P2P file sharing), disabling power to a phone, or confiscating the phone. When it comes to speed, he told me that news broke of the closure due to weather at Burning Man on Firechat before it hit Twitter. In a remote area, the P2P network was stronger and faster.
Security and identity still questionable
I asked the team, how safe and secure is it, really? They responded, “Firechat is a public chat app. Everything that you type is public. Our mantra is, ‘do not use your real name or type anything you would not want someone else to read,’ But give us enough time and you’ll see what we come up with…” They mentioned that, in the future, they may be able to develop new forms of verified identity. I’ve seen these emerge in now defunct apps like Honestly, which verified if you had a real LinkedIn account without disclosing your name or identity.
Requirement: Adoption and Proximity
It’s also key to note that Firechat requires density and velocity to work well, adoption strategy is key. Also, users must download the app –before a severe outage –meaning adopting is required. There’s two scenarios: People anticipating to connect while going off the grid while traveling, or two: in response to an emergency, opposition from powers. The software worked well in dense SF (the second most dense city in USA) but when off the grid in the suburbs there were not folks in immediate proximity available to create a mesh network, see screenshot.
Forward looking thoughts:
- Expect Facebook, Twitter and Google to acquire or build these mesh technologies. Expect Facebook, Twitter and Instagram, each of which has been blocked by various governments, to develop this same P2P technology, enabling their experience to be shared all the time, regardless of a central power.
- A distributed network puts centralized telecom players on notice. This poses interesting questions to governments, internet service providers, telecommunication companies, and even marketers who rely on platforms like Facebook or Twitter. We’ve already seen the rise of FON, a peer-to-peer Wi-Fi device that enables people connect. This is more of the same.
- This is part of the continued trend of the crowd-based collaborative economy. I’ll likely include Firechat in some aspect of the next iteration of the Collaborative Economy honeycomb framework, as the next step is enabling people to share the physical world with each other using this P2P communications network.
The bottom line: People are empowered to get what they need from each other using commonly available technologies. It means the crowd is becoming like an organized company – and that they will bypass inefficient institutions. Get your organization ready now.
See the original Honeycomb graphic, which spurred this “Day in the life” graphic.
Data shows collaboration in the new economy is accelerating.
People are crowdfunding, making, sharing, collaborating, all kinds of their things in life. Some are getting food on-demand, rather than going to traditional grocery stores or restaurants. The world is speeding up, and people are transacting between each other, or rapid-delivery services. We expect this to continue to accelerate as the funding from VCs dwarfs many markets, adoption rates are doubling, and the media has endless coverage over this collaborative movement. To help make sense of this dizzying environment, we attempted to take a snapshot of this world in motion, to try to find out what a single day comprises of.
Infographic: A Day in the Life of the Collaborative Economy (Ver 1.2)
Data Methodology and Sources
Data was aggregated from online sources, first, then in many cases, I asked for clarification from startups contacts that I know. All data was from 2013-2014 sources. Only four of the eighteen sources are from 2013. Some companies declined to provide data, or it wasn’t listed, therefore we did not include. In many cases, data was annual, or monthly, and we divided to find out an average daily rate. In many cases, companies would not provide a daily rate, so we had to conduct this exercise on our own.
- Adoption Data: (far right column)
- Lyft: From email discussion with company
- Uber: GQ, Mar 2014
- BlaBlaCar: From email discussion with company
- The Mesh Directory, by industry leader Lisa Gansky lists out over 9,000 companies in this market.
- The Collaborative Economy Honeycomb which shows many of the startup logos
- See VC funding of this market, on a Google Sheet I manage.
- An older collection of stats and figures in this market.
- Full body of work, research, data, reports, and slides.
Contact: If you’ve recent data on your startup growth, please send to me directly at jeremiah at crowd companies.com. You can read the designer, Vlad at TransartDesigns.
- Version 1.1: The Indiegogo data was incorrect, and now reads “$285,714 a day” Thanks Chelsea Rustrom for pointing that out. (Sep 30, 2014)
- Version 1.2: Includes updated info from Lyft, that was announced just days ago. (Oct 1, 2014)
(Above: Read the full article in the SF Chronicle, and, please, read the comments. There’s no mercy for the taxi industry from former customers. Here are my recommendations to the taxi industry to lead this movement –not fight it)
The Collaborative Economy is a crowd commerce revolution.
People are empowered to get what they need from each other, using now common, mobile technologies in their pockets. Several quarters ago, people told me it was a fad; it wouldn’t last; peer-to-peer commerce can’t happen at scale. Like social media was disbelieved in 2005 (I vividly remember the attack of the blogs), we’re seeing disruptions, but these impact real revenues, not just communications.
Above Graphic: A TNC (Transportation Network Company) is the designation for Sidecar, Uber, and Lyft. From SF Municipal Transportation Agency, SF Examiner.Real revenues are being lost by incumbents.
Yesterday, at newsstands across the San Francisco Bay area and online (my pic, above), it was reported that taxis are suffering a 65% loss in rides – two thirds of their revenue lost in less than 3 years. It’s not limited to San Francisco. DC taxis are down 22% and a once dominant taxi cab company says they have less than 18 months of life left. A recent study by Boston University shows that, for every 1% growth of Airbnb, hotels are impacted half a percent – and Airbnb is growing at an incredible rate. How fast? Uber’s revenues are doubling every six months, and Lending Club, where people lend to each other instead of going to banks, is having hockey-stick like growth, having brokered $5 billion worth of loans in five years.
The startups are heavily funded in every industry.
Investors are funneling incredible amounts of money into this market: $2.7 billion in just under the last ten months (see spreadsheet), with Google being a leading investor in the market. It’s not limited to cars and homes and dollars. The Collaborative Economy is impacting many industries, including food, business services, retail, business space, and more. You can see the Honeycomb Framework to see how goods, food, services, transportation, space, and money are each impacted. The next version of the honeycomb infographic will include health, utilities, education, and more.
Progressive corporations augment their business model to partner with the crowd.
It’s important that you prepare your company for these changes now. People are empowered to get what they need from each other. The crowd is becoming like a company. The good news is that companies can use these same technologies and strategies. Ford has provided special cars to Lyft drivers, Hyatt has partnered with Uber for instant bookings using an API, Whole Foods has partnered with Instacart for crowd-based, home deliveries, and Verizon has enabled sharing of many objects using their vast network. (Disclosure: The above companies are members of my company, Crowd Companies)
Taxi chief steps down, article suggests no relation to ride sharing: “It’s not,” she added, “because Travis has kicked my ass.” –read article. For context, Travis is Uber’s CEO
If you work for or with large companies, access the Body of Work in the Collaborative Economy and discover how other companies are crowd-proofing by joining this movement.
Investors are doling out money by the fistful, $241 million deployed in less than three months.
See the Google Sheet that has all this data, broken down by industry, amount, and date. You can read part 1: Meet the investors, and part 2: The investors are in love with this market.
Since my last analysis on July 3rd, 2014, there’s been continued funding into the Collaborative Economy market –where the crowd gets what they need from each other. Investors are infatuated in this market as it provides new supply, disrupts incumbents, using faster technology powered by mobile, social, and internet of things, the Phoenix Business Journal did a recent write-up of my keynote at a business conference, highlighting the market changes.
In just 2.5 months there’s been even more money flooding the market. SMB FundingCircle raised a massive $65m round, followed by big rounds to Rockettaxi to aid the disrupted incumbents, and Fiverr raised a $30m found, as they enable crowd-based tasks to be completed on a two sided marketplace. In these past two months, there’s been $241k invested into this growing market.
Recent Funding in the Collaborative Economy
Analysis: The Last 9 Mos of Funding
Here’s a breakdown of the 2014 Funding from Jan 1st-Sept 20th:
- Total Funding Events: 39
- Deals per month: 4.3
- Average Funding Per Month $301,052,222
- Average per Funding Round $69,473,590
- Median $10,000,000
- Average funding amount without Uber (outlier) $42,084,857
- Average funding amount without Uber and Airbnb (outliers) $27,282,973
- 2014 Sum: $2,709,470,000
Bubble? I’m often asked are we in a bubble? My answer is yes and no. First of all, unlike the first web boom I experienced in late 90s or social media phase, there’s clear revenues being generated from peer to peer commerce. Unfortunately, you can’t sustain this many competitors in each arena –particularly in the transportation space. I recently told CNBC that there’s only room for three playersin each of these markets: “In the end, the market can’t sustain this many car-sharing or ridesharing start-ups—there’s typically going to be room for three—the most convenient, the cheapest experience and a unique experience,”
Photo used within creative commons licensing, by 401k