The Sharing Economy: Access Trumps Ownership
The recent ruling by the California Labor Commission the declared an Uber driver was an employee rather than an independent contractor sent shockwaves through the sharing economy – with policy implications that will reverberate for quite some time.
Lisa Gansky was at the forefront of the sharing trend when she founded Ofoto, a photo-sharing service launched in 1999, that was bought out by Eastman Kodak and eventually folded into Shutterfly.
She currently runs Mesh, a global directory of firms in the sharing economy and is an advisor and investor in more than a dozen firms, including: Breather, Honest Buildings, Instructables (sold to Autodesk), Makani Power (sold to Google), OpenRov, OtherMill, RelayRides, Ridepal, Sidecar, Science Exchange, Scoot Networks, Solar Mosaic, Squidoo, TaskRabbit, Vayable and Yerdle.
Gansky agreed to answer some questions about the future of the sharing economy for the Policy Dialogue on Entrepreneurship.
There has been a lot of attention paid to the idea of entrepreneurial cities of late. Talent, customers, investors, markets, and more are all reasons given for why cities are the best locations for startups. Can you tell us why?
Cities are platforms for sharing. Throughout history they have been places where we live and work in tighter quarters – increasing the frequency of bumping into others who are interesting personally or professionally. By 2050, 75 percent of the global population will be urban dwellers and all of this is happening at a time when most cities in the world are operating with a diminishing budget. These realities set up well for the age of the urban entrepreneur. We are seeing impressive entrepreneurial talent address many of our biggest urban challenges – transportation, housing, energy, food, water and workforce. Entrepreneurs are directing teams and funds to build platforms and services like Uber, Lyft, BlaBlaCar, SocialCar, RelayRides, Food Assembly, Solar Mosaic, Provenance, Honest Buildings, Just Park, Neighborly, OpenRov, La Zooz and City Mapper.
There are many names associated with what you have famously named the ‘Mesh’, namely the collaborative economy, the sharing, peer or access economy. Can you tell us about the idea behind the Mesh?
The Mesh is simply the idea that technology enables us to easily tap into the power of our being truly connected. This means that we can often get what we want or need from another person rather than a traditional business. Technology like the web, social networks, mobile devices and peer-to-peer platforms like those for crowdfunding, allow us to locate each other as well as things we need in our lives. Most of the collaborative businesses we have seen thus far arise because people and things such as cars, homes, factories, offices, food and intellectual property, are easily networked and now, via technology, are able to be made visible and therefore available. This technology allows us to access rather than own goods, services and talent. We are easily able to tap into each other’s assets (goods, services and talents), to create a more efficient way of living and working. We have a global index of nearly 10,000 examples, which speaks to the fact that this is truly a global movement and is happening across all industry sectors.
To put it simply, access trumps ownership and unused value is a waste.
The collaborative economy is driven by several key realities of our time that have created the conditions for it to be so rapidly embraced.
As a global community, we are more connected to more people and things than ever before in history.
- Since 2010, most of the world’s population resides in cities. This means that there are many more of us living more closely together.
- In the past decade, big brands, especially energy and financial companies, have become far less trusted by people (particularly since 2008).
- Climate change is causing us to rethink how we live and work.
- Inexpensive mobile technology has made it much easier for us to find each other and things and then to ‘share’ or access them from each other as we need.
In general terms, how would you describe the difference in worldview between companies with traditional business models – those who produce a product or create a service and sell it outright for money – and mesh enterprises?
Mesh or collaborative businesses have a product or service that is offered many times rather than sold once to one customer. Bike sharing is a great example of a collaborative model. Bikes operate as a system; they are networked and benefit from special features as well as the network itself. The bikes often have GPS, repair and relocation services but most importantly, they are made available for free or a small fee to use short-term as urban transportation. We don’t buy the bike; we register as a member of the service and as such, gain access to the network of bikes and related services. The power of the transportation service of bike sharing is in its penetration throughout a city so that we can locate a bike close to where we are and can return it near our destination. Data is also an underlying component of collaborative platforms as the data about the location, distance traveled, idle time and condition of the bike can be monitored through the system. There are also many other gems that arise from the data captured like what time of day or how many people are going to this particular neighborhood or train station. This information is invaluable for city planners as well as entrepreneurs selecting office space or retail locations.
Additionally, these businesses are often peer-to-peer. That is they operate as a two-sided marketplace where both the supply and demand are sourced from individuals rather than a company.
It seems that the most popular sharing economy services have to do with accommodations (e.g. Airbnb) and transportation (e.g. Uber). Do you think there are natural limits to which industries are suited for the sharing economy?
I don’t think that there are industry sectors that won’t be significantly altered by these collaborative platforms and brands. At its core, we are questioning the need for someone to own something without it being networked and thereby offered to others. Certainly there are people who will want to own something and keep it all to themselves. That’s not a bad thing. We are correcting from the overuse of the ownership model as many of us own highly valued things that we simply don’t use. Tools, sports equipment, car parks, rooftops, farmland, music studios, intellectual property and talent are all examples of valuable assets often wasted. Many experiments in the form of startups and/or partnerships with corporates or cities are taking place right now to explore how these services would work and how best to refine them for various types of customers.
Many of the most successful mesh enterprises were started in and focus on the developed world – predominantly North America and Europe. How do you think the idea and norms have translated in emerging and developing countries?
While much of what has made the press has been venture-backed companies based in the Americas and Europe, I expect three things to happen in the next few years.
- Many more community-based cooperatives and startup ventures will emerge from Africa, India and Brazil. This is happening where there is an emphasis on energy, water, maker movement (DIY) and blockchain.
- Emerging countries are both adapting models that work elsewhere (Ola Cabs in India) and appear to be leapfrogging over the west when it comes to building peer-to-peer infrastructure for finance, energy and water. We are already seeing this regarding the blockchain and cryptocurrency as Africa is ingeniously applying core principles to accelerate trust and transparency. Companies like iHub, BitPesa, Traity and Provenance are focusing on emerging communities.
- These models are efficient and are fueled by visible waste in the system. Emerging countries will accelerate their adoption of these models and will invent exchanges based on collaborative models.
Most mesh services have relied largely on self-policing efforts like background checks or user reviews and ratings to weed out bad actors. In the five years since your book came out, there has been increasing government involvement, particularly around issues regarding insurance and legal liability. What do you think of this trend?
We are missing a language to frame and support this type of economy. Certainly there have been issues though less than one might predict. Governments have gotten involved, minimally, to more deeply understand how these marketplaces work and where the risk lies. Generally speaking, few have declared new regulations shaped by these collaborative models. Seoul, Korea, and Amsterdam, Netherlands, jumped in front of the pack to declare themselves as sharing cities. Most are exploring issues around taxation, safety and trust. I expect these marketplaces to be taxed but in a manner more appropriate for peer-based income rather than a full-fledged commercial enterprise. That is to say that the producers of this economy are often people like you and me. We rent out our home, boat, bike, car or office and in addition to meeting cool people, we generate ancillary income. In the collaborative economy, when we operate on the supply side, renting a home on Airbnb, driving for Lyft, hosting a dinner on Feastly or performing tasks on Taskrabbit, we are considered producers. These services and their related revenue is typically augmenting another job or adding to the income produced by family members and so is quite different than operating a hotel. Many cities are in learning mode – observing how things are evolving and working to develop a meaningful and accurate lexicon.
Are you concerned that industry-specific regulations like those that regulate taxi services, zoning rules, landlords clamping down on sub-letters, or, increasingly, tax collectors, have damped the sharing economy’s growth prospects?
No. It is predictable that governments and related industries like insurance need to define what is happening and how to support their constituents as we shift how we work and live.
How do you think the FCC ruling on net neutrality, which many commenters say will allow the agency to regulate rates, set terms and conditions of business relationships, and increase the cost of network deployment, will affect the development of the sharing economy?
I do not believe that the net neutrality ruling will be upheld. We are working for an open internet. I have been actively supporting that since the early days of the internet and I’m not about to give up now!
Increasingly, larger established companies have gotten involved and some have embraced the concept. Do you think that, in the long run, the Mesh idea will become mainstream, or will it become interwoven with existing business models?
It is already on its way to being largely accepted. Governments are actively exploring how these communities and marketplaces operate and observing how, or even if they self-regulate.
The world’s largest brands and industries are partnering with, investing in, acquiring and attempting to create or compete with these models. They are here to say and in my view, it is quite reminiscent of 1995 when the internet and ecommerce and digital advertising were just really taking off. We are still in the early days of the collaborative economy and society. We are creating a new kind of social operating system and its taking shape before our eyes. It’s very exciting and we’re all invited!
Lisa Gansky is an entrepreneur, investor, speaker and author of The Mesh: Why the Future of Business is Sharing and the chief instigator of Mesh Labs www.meshing.it. She works in the design of new products, policies, services, partnerships and models in which ‘access’ to goods, services and talent triumphs over the ownership of them.
Photo courtesy B-cycle
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