This was originally posted on VentureBeat, with a wide array of comments and reactions. Silicon Valley has been espousing sharing, making, community through the latest startups like Lyft, Airbnb, LendingClub and more. Yet is Silicon Valley really leading the example? While generalizations can put people off, I wanted to take a stand on some broader trends we see. I’ve received reinforcing and disagreeing feedback, all which I’m open to learning more from.
Photo by Adam Foster
Here’s what Silicon Valley can learn from good old Midwestern values
Silicon Valley startups like Uber, Lyft, Airbnb, Lending Club and others that empower people to get what they need from each other command extensive market attention and sky-high valuations. This Collaborative Economy prospers on the rise of local neighborhoods in home-sharing, friendly human connections with fist bumps in peer-ride sharing, and the ability to share money with each other at better rates than banks.
A year ago, I spoke with an insurance company in Iowa. They shared with me that, while these new startups are interesting, they aren’t really anything new. They reminded me that the Midwest has been participating in these friendly behaviors for a century and a half. They said “Jeremiah, this isn’t new. It’s called being a good neighbor.” What they said stuck with me for months until I decided to understand how Silicon Valley is trying to emulate Midwestern values.
Being a Silicon Valley resident, I asked my Midwestern friends to share with me what Midwestern values mean to them. I tweeted a call for responses, then graphed how people responded. While there was always some variation, a major theme developed around a strong work ethic, modest integrity and helping others. These three tenets formed a common thread: I heard from my colleague, Angus Nelson of Wisconsin, about “the value of working hard”; and from Ben Smith, a Kansas City resident, about the classic Midwest value of integrity: “Your name and reputation are your most prized possessions.” From Zena Weist of Kansas City, I learned about helping others, “A stick of butter and a smile, and no need to pay me back.”
So, how are Silicon Valley’s latest Collaborative Economy startups stacking up to these Midwestern values?
To start with, both the Midwest and the Silicon Valley share a similar work ethic. While Silicon Valley workers start the day later than Midwestern farmers, who are up and at it hours before dawn in the heartland, they do work well into the evenings and even on weekends. Tech startups offer many employee benefits to keep people on campus, enabling satisfying, round-the-clock environments. Despite different working hours, both Silicon Valley and the Midwest share the same ethic of hard work.
Yet, while folks in the Midwest take pride in their individual integrity and humility, Silicon Valley has some lessons to learn here. From ride-sharing companies fighting dirty to unethical executive behavior, from a self-righteous 1 percent viewpoint to the further divide of the rich and poor, Silicon Valley’s meritocratic culture means those that win win big — and think they have a divine right to flaunt it. I’ve seen many a roaring Ferrari or whirring Tesla in front of makeshift homeless tents in San Francisco’s tech neighborhood, the SoMA district, where I often work.
The Midwestern value of helping others without expecting reciprocation is best summarized by the “stick of butter and a smile” axiom when a neighbor is in need. Silicon Valley’s traditional come-get-mine attitude rewards the disruptors and the fiercest competitors. While San Francisco boasts that nearly one of every eight residents are millionaires, a vast majority are not living at middle class standards and are struggling just to get by. The potential for a backlash is rapidly increasing.
When it comes to the three major Midwestern values that Collaborative Economy startups are enabling: Strong work ethic, modest integrity, and helping others, Silicon Valley, as a whole, still has a lot to learn.
But with that, we should acknowledge that the new technologies that enable ride-sharing, home-sharing, and money-sharing are built on powerful platforms like social networks, mobile devices, and apps can extend the barn-raising spirit to all cultures beyond the Midwest.
These new technologies are enabling us to connect to strangers in a human way, as trust data is collected from ratings and rankings features, from social networks for verification of social circles and from mobile devices to help us navigate and find idle cars, homes, and goods.
Remember that Iowa insurance company who appropriately corrected me for glowing over the new Collaborative Economy as just being a “good neighbor”? I responded that these new technologies enable all of us “to be good neighbors to strangers.” They agreed.
We can all benefit in this Collaborative Economy, enabled by both empowering Silicon Valley technologies and Midwestern ethics, leading to further integrity and neighborliness.
Jeremiah Owyang is the founder of Crowd Companies.
Crowd-based business models and marketing are no stranger to the Web Strategy blog –and now we’re seeing the same effect impact non profits, including the much discussed (and debated) ALS Ice Bucket Challenge. I was curious on the actual impacts of this controversial crowd challenge, and decided to tally up some of the numbers. In this above embedded slideshare, you’ll see facts on buzz, assumptions on water usage, influencer impact, money raised, and bottom line of total donated dollars.
Also, in case you’re wondering, I was challenged by Scott Monty, I accepted the ice shower (over my garden –in a nod to our drought) and also donated to ALS —you can enjoy my washed up video, here. Lastly, top non profit thought leader Beth Kanter has questioned if this effort can be replicated, and even found other non-profits are emulating or “charity jacking”.
Cruise through the embedded slides above –to see some of the stats of this crowd based effort.
Update: Over the last few days, I’ve started to think about the causes of this blue moon event. I put together this handy guide, so if your boss, client, or charity wants to create their own, they have a simple ten step guide.
Thanks to you, last week’s Report on the Collaborative Economy was readily received, and has been viewed over 26,000 times. The media and bloggers alike have picked up on it. As we digest what it means, it’s important to recognize that this is the next phase of the internet and the next phase of social business. An interesting finding is that the second era (social) and the third era (Collaborative Economy) use the same social technologies but, instead of sharing media and ideas, people are sharing goods and services. This is all part of a continuum. We need to understand how our careers will progress as the market moves forward with us.
[Social technology enabled the sharing of media and ideas called social business –The same tools enable sharing of goods and services called the collaborative economy]
Internet Phases: Past, Present, and Future
||Brand Experience Era
||Customer Experience Era
||Collaborative Economy Era
||CMS and HTML
||1995: Internet had 14% American adoption
||2005: Business blogging disrupted corporations
||2013: AirBnb, TaskRabbit, Lyft, gain mainstream attention
|What is shared
||Personal Ideas and Media
||Goods and Services
|What it looks like
||Brands and media talk, people listen
||Everyone talks and listens
||Buy once, share many, need to buy less
|Who has the power
||Brands and publishers
||Those who use social
||Those who share goods and services
|Who is disrupted
||Traditional mediums: TV, Print
|What must change
||Communication and marketing strategy
|How corporations responded
||Created their own corporate website
||Adopted social tools internally, externally
||Learn to share products, enable marketplace
||CMS and design tools
||SMMS, monitoring, communities
||Marketplace, ecommerce, communities, SMMS, Monitoring
||User Experience, Design, Content
||Social strategy, community managers, communicators
||Agencies that help with trust, customer advocates, ?
||Those who adopt
||Those who adopt
||Those who adopt
What it means to your career, clients, and company:
Change in our careers is good. It leads to new opportunities, growth, and even fun. It often requires us to step out of our comfort zones and be prepared to adopt new paradigms. With that said, here are three insights to remember as we enter into this next phase.
- Prepare for the next phase in your career as we shift eras. The internet continues to evolve and, with, that our careers do as well. The mid 90s saw the blistering heat of the “dot bomb” era. As the internet became a dominant force, it subsided with the global recession and industry implosion until we saw the second phase emerge. We dubbed it “Web 2,” where information creation and consumption was democratized by all. The next phase uses the same principals of sharing and democratization, but involves goods and services.
- Take what you’ve learned in social business and apply it to the Collaborative Economy. If you’re in social business, you’re in a good spot. The same rules apply about letting go of control, shifting to engage, and connecting with customers. Learning to listen for understanding, engaging with customers, developing programs where customers become your advocates, and applying scalability, all topics I’ve researched deeply, will apply to this next phase.
- Change is in inevitable. Prepare for this next phase now. The next phase has already begun. Last week’s LeWeb received international acclaim, and funding to sharing startups is on rise. Even cities like Amsterdam are opening up to the potential of companies like AirBnb. Mainstream media is covering this movement. We must prepare for the next phases of our careers now. We can and will do this together.
I hope this graphic and matrix help to clearly articulate our next phase. Save it, share it and activate on it now. If you’d like to join me on a webinar to learn more and ask questions, you can register on this page.
Remember, those who adapt, win.
Above Image: Headcount of social business (circled in orange) slightly decreases before large growth.
Social Business Headcounts Change as Programs Mature
Like the calm before the storm, your social business headcount is likely to decrease 10-20% before it radically expands. Altimeter found through two independent surveys to enterprise class (Companies with over 1000 employees) survey respondents in different years that they both have a drop off in headcount at year 2-4. We’ve survey corporations both in 2010, as well as in Q4 2012 to find out how social business programs are structured. Much of the research was recently published in the report, the Evolution of Social Business. So why this change?
- After experimentation, unchecked programs get sanitized as a central body takes control. Many companies I’ve seen inside of have often experimental programs occurring for the first 1-3 years. Labeled skunkworks, rogue, or sandbox programs, this “wild west” grows out of control, sometimes causing stress or resulting in a social media crises. Often corporate communications, marketing, blessed by an executive sponsor seeks to wrangle control of these programs, by anointing a working team to build a strategy. In short, the wild wild west moves from unchecked teams in outposts to a new centralized model.
- A core team consolidates, finds efficiencies in a hub and spoke model. We often see companies emerge in a hub and spoke model, where a core team is serving the rest of the company in a coordinated fashion. This leader, the Corporate Social Strategist, leads the charge, often reducing excess headcount deploying social and along with it, rogue efforts. Interestingly, the data shows this happening in the 2010 early market at year 3-4. Yet fast forward two years to 2012 and we see the consolidation happen much earlier, in years 2-3, as companies have gotten wiser from their peers.
- Explosive growth occurs as team scales in “dandelion”, multiple hub and spoke model. After the consolidation occurs in both program strategy and the headcount as illustrated in the above diagram, companies see explosive growth as the company “gets the social religion”. If the core team has structured their program up for scale, they will have invested in social readiness, as well as have a strategy to avoid massive proliferation.
Social business follows a cycle expansion, contraction, then explosion before maturity. Two data distinct data sets helped to tell this story. Expect to see social business programs hit maturity to consistently spread across the enterprise in a safe manner after 5-6 years with proper care and planning. Watch the patterns in your company, after rapid consolidation and program efficiency occurs, be prepared for radical growth as the rest of the enterprise business groups start to adopt social, including their own social leaders in business lines, departments, geographies and product units.
Brands Focused on Managing Social Proliferation
For those that like to be where they money be, this data is for you. Altimeter’s research continues to survey buyers of disruptive technologies, and continues our coverage on social technologies. In our recent Q4 survey to enterprise buyers, focused on marketing business decision makers, which are global national corporations with over 1000 employees, we posed a series of questions in our survey battery. In particular, we wanted to find out where decision makers are bullish on investing and found the following trends on marketers with intent to increase spending:
- To manage proliferation in enterprise, marketers purchase social media management systems. Altimeter has been covering this software category since March 2010 (see all posts), and has published reports on how companies are managing social using software. These social media management system tools, which allow brands to manage marketing, support, and employee interaction of social continue to spread throughout the enterprise (data). We’ve also seen deal size for this specific market on the increase over the past few years, some deals crossing over the six figure dollar range. We’ve also found that companies are straddled with a number of social accounts (on average, 178 social media accounts) as social strategists struggle to avoid being constantly reactive in a role of social sanitation.
- Insufficient tools means investments in education programs key for employee masses. A solution requires a strategy, education, business processes, then with software to facilitate. While most marketers realize that technology is a key method to achieving their goals, they know that education within an enterprise is required for social business success. Marketers invest in educating various business units (departments, regions, and product groups) to ensure they properly know how to use these technologies and avoid risk. Yet, in our previous research, we’ve seen that brands are eager to educate, they don’t put large dollars against this investment. To help corporations solve this need, we’ve launched our own Academy offering, and are working with large brands, agencies, and consulting firms to roll-out.
- Surprise! Marketers “volun-told” as system integrators of fragmented software. The opposite of volunteering is being volun-told (credit: Zena Weist). Marketers have been VolunTold that they are unwilling system integrators in the era of VC funded startups who’ve created clones serving similar use cases. As a result, brand side marketers and their agency and consulting partners are investing in integration disparate software together to commonly share data, in order to manage a single customer journey, or obtain data on one persona or customer type. While Oracle, Adobe, Salesforce, IBM, and others offer suites, don’t expect this trend to go away anytime soon, as the proliferation of new web tools means that brands will forever be rushing to catch up.
Summary: Companies seeking to scale social in their enterprise.
Above Image: Fire Dancers metaphorically ignite movement in Union Square, the center of SF commerce.
So there you have it, today’s buyers are investing their resources and time on scaling social within their organization before it spirals out of control. They’re deploying software, coupled with internal training, and then trying to glue together many pieces into one system. While I’m not going to provide insights to each one of bullets, here are a number of other trends from this data that we can discuss in the comments.
Your customers are trading products and goods –rather than buying them from you! Do you want to know why? We’re conducting research in a pragmatic method to find out why. Then we will publish what companies should do to respond. Below is a preview of the upcoming report.
[Consumers don’t need to continually buy from companies as they are sharing, renting and lending goods & services among themselves]
I’m knee deep in interviews for the upcoming report on this topic, the Collaborative Economy, which will answer how corporations can be part of this sharing movement and not be left behind. In my previous post, I made the case that this is the next phase of Social Business. I have probed 200 startups from the sharing movement and have compiled a list of brands that are already participating, like Barclays, Toyota, BMW, and Wal-Mart.
[This rising behavior is being caused by three major trends: social, economic, and technology drivers]
Analysis of Three Market Drivers: The Causes for the Collaborative Economy
In the research interviews, books, and content I’ve digested, I’ve found some patterns relative to the causes of the movement. I don’t expect this to be a comprehensive list, and I request your additions in the comment section of this post.
1) Social Drivers
||While also listed in Economic Drivers, denser population enables sharing to happen with less friction.
||Zipcar took off in urban San Francisco, where owning a car is impractical. Zipcar’s scattered storage lots give customers quick access to wheels, often walking distance.
|Mindset of Sustainability
||Greening, Cleaning, and Sustainability have been hot topics for years. This bolsters the need for economic conservation and long term thinking.
||Many of the startups we interviewed explained that this is about re-use or preservation of resources, rather than buying new products.
|Lifestyle Trend among Youth
||In Shareable Magazine’s book, Share or Die, Neal Gorenflo writes that this sharing mindset is common among college students who have limited resources.
||For resource-strapped students, Chegg enables students to trade textbooks, rather than buy at high margin bookstores. Social networking is part of their inherent behavior.
||In some cases, gifting or paying it forward are common in this movement. See list of gifting startups.
||A recent UCLA poll found that over 75 percent of incoming freshman believe it is “essential or very important” to help others in difficulty, the highest figure in 36 years.
||We heard from Molly Turner at AirBnb that many renters of homes found this service empowering. Their own homes were revenue generators for their independent lifestyle.
||Similarly, TaskRabbit advertises that their rabbits are: “College students, recent retirees, stay-at-home moms, young professionals,” enabling those who may not seek a full-time position.
2) Economic Drivers
|Increase in World Population
||China and India have population growth rates at 17% and 30%, respectively. America is at 22%. See Wikipedia.
||When I was born in the ‘70s, the world population was in about 4 billion; today it’s 7.1 billion. It is estimated to be close to 9 billion by the time I am 75 years old (data here).
||The interviews revealed a general sentiment that natural resources are finite and the cost to retrieve them is far greater than the potential return in revenue. Those with less money are more inclined trade, and to activate their inventory for revenue by sharing.
||Recycling programs are evident everywhere, even in the sales offices and break rooms there are recycled plates, utensils and paper
||Where there is a divide fixed between haves and have-nots, these sharing systems naturally seek to shift resources.
||For example, we saw a boost in Bitcoin value as Cyprus was under severe economic strain.
|Excess or Idle Inventory
||One of the root causes of this movement an abundance of idle resources sitting by the wayside that can be shared and often monetized.
||Rachel Botsman discusses in her iconic TED speech that the average usage of an electric drill is a mere 12 minutes per year.
||Those who can’t afford something, can now rent it. One successful Gen X banker told me that, “Access is more important than ownership”
||Why buy a $100,000 Lincoln Town Car, when you can rent an Uber for 30 minutes, saving money and headaches?
|Influx of VC Funding
||Venture capitalists have already put billions into this market of fresh new startups. Our research shows that there has been over $2 billion of funding across 200 startups.
||Category leader, Uber, has received nearly $50m of funding and AirBnb has received a whopping $120m.
3) Technology Drivers
|Social Networking Technologies
||These technologies provide three key features:
- Social profiles and reputations tracking,
- Social graphics that enable people to connect
- Transfer of information, in this case, need for resources or supply of them
|AirBnb in itself is a social network. They have seller profiles, and renters have their own reputation with verified IDs. The goods traded are locations.
||Access to people or other resources requires “portability” for a majority of these services, so mobile platforms and devices for transfer of information become necessary.
||Many of these startups are mobile-driven. For example, Lyft has a thin website and suggests that users download mobile apps for this transportation site
||In the end, this is a marketplace of goods and services. Systems and platforms are required to broach the transactions that may use traditional ecommerce or new bartering methods
||TaskRabbit asks me to use my credit card, while other systems like Bittorrent are fueled by Bitcoins.
What it means: This is a long term movement, not a passing fad
So there you have it. I see three categories and at least thirteen distinct drivers for the Collaborative Economy. Like social was to us in 2007, this is a broader movement that impacts many aspects of society and, therefore, business. If these market drivers are long-term (often social and economic ones are), then it means that this movement is likely to persist and to potentially increase in velocity. If you thought social business was disruptive, this next trend will impact us at a much deeper level.
I’m not an expert on this topic, so instead, I’m interviewing those who are. Here are some of those who I interviewed for the upcoming report (full sources to be cited in report). I highly recommend following them to learn more about the impacts of this movement.
Business Articles on this Trend:
For many, this movement requires blessings from trade papers before gaining the ears of executives. Here are a couple of articles I’ve found helpful:
Image Source: David Yu, creative commons license.