The sharing economy has been taking a bit of a beating recently. Uber continues to attract controversy, Airbnb seems to be in the news for all the wrong reasons, and car sharing is yet to become a genuine replacement for inner city vehicle ownership.
But, innovators are a lot like tightrope walkers in the circus. They require a delicate balancing act between many masters – clients, practitioners and others. Every year we may have heard the same old story, but we’re at a time where innovation is taking the road less traveled. Sustainable startups in the sharing economy are exploding. A recent survey from PricewaterhouseCoopers shows that the sharing economy is growing faster than ever.
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Of the 44 percent of American adults who are familiar with the sharing economy, 86 percent say it makes life more affordable, 83 percent say it makes life more convenient and efficient and 78 percent say it builds a stronger community, according to NPR.
Take for instance the case of VIA, an up and coming transit app. They are the latest startup to attract funding and recently raised $27 million. The startup is a ride-hailing app that connects several passengers who are headed in the same route, sends a professional driver to pick them up within 10 minutes and drop them off in one spot. Likewise, Yeloha, a peer-to-peer solar network is gaining attention in the same market. The trend of ‘sharing is caring’ seems to be unavoidable, from sharing cars to homes.
Sharing, being the operable word, as this is one of the first lessons we learned as a child in kindergarten. While traditional businesses follow a simple formula: create a product, sell it and make money. In the past few years, an alternative model has come into play based on a childhood exercise. One where consumers have more choices, tools, information and more peer-to-peer power.
If you look through the eyes of a corporation, the role of customers and employees have become blurred. Conceptualize a scenario, where you walk into a convenience store and they announce that a specific brand will pay you $100 to help fill shelves that need restocking. Since you’re already in the store, you might as well take the opportunity to make a few dollars. There’s a company that does just that called, Wonolo.
They find workers to complete odd jobs and the crowd can become apart of your company. You’ll be able to crowd-augment every single business unit on demand, flexibly, at a local level. This startup actually belongs to a major retailer brand, Coca-Cola, and if corporations such as these are getting on the ‘sharing’ ship, one should board before it sails away.
Amiad Soto, CEO of Guesty (a fellow sharing economy enthusiast) is right on point when he explains that,
“the emerging sharing economy represents an entirely new way of doing business – such a different model from the past that it could even be defined as a new economy altogether. This new economy is already disrupting many aspects of the old one. “
Many economists refer to this as the era of Hypercapitalism.
Taking into account all the buzz about the sharing economy, one cannot argue that this year we’ll see a dramatic change in this industry, how it works and what it means.
A history lesson
Sharing economy, ‘peer economy’, ‘collaborative economy’ and ‘collaborative consumption’, all go hand in hand with ideas like ‘crowdsourcing’ and ‘co-creation’. The sphere is getting foggy as these terms have been manoeuvred to fit different situations.
But if I had to try define the sharing economy, it’s a trending business concept that highlights the ability (and perhaps the preference) for individuals to rent or borrow goods rather than buy and own them. The idea is to share under utilized assets from spaces to skills to stuff for monetary or non-monetary benefits.
Previously, people would find out about shared assets via newspaper ads or by word of mouth, but with the outburst of the internet and the ease of online payments these things have changed immensely.
Here and now
The sharing economy is flourishing, and at a quick rate for that matter, with the potential of doubling within this year. At present, almost a quarter of the population in the U.S., the U.K. and Canada are using a form of economic sharing. We are seeing a shift away from amateurism that has defined the sharing economy to date, heading towards a curated professional experience which is required to move forward. But all this would not be possible without the element of trust.
The sharing economy is nothing without this important ingredient. While in many ways the emerging sharing economy represents an entirely new way of doing business that is disrupting the old order, sharing economy companies still rely on the age-old concept of trust to promote transactions between actors. This same element trust, that was once present among community members is now established by utilizing reviews, ratings, and social media features.
From taking a ride with a stranger or renting a room from a person you’ve never met, trust is a characteristic amongst the Millennials which adds fuel to the sharing economy. According to research conducted by PwC, even though only 29 percent of consumers said they trust people today, PwC claims that: “If trust in individuals and institutions is waning or at best holding steady, faith in the aggregate is growing.”
The question can be pondered as to why the concept of trust thy neighbour is the premise behind the success of the sharing economy. The advent of these startups changes the way we interact with strangers, and fundamentally changes how we trust one another. In the past, after several mishaps in the economy, the idea was to build systems where you don’t have to know or trust the people you’re interacting with in order to get things done.
But think about a different perspective, if there are systems implemented to help safeguard your interactions and give a profile of the people who are supplying these services to you, it only makes sense that they will then be willing to go the extra mile once that bridge was burned. Take for example, Airbnb, they would not exist without individuals trusting one another.
Trust and reputation are a crucial element of these services, and arguably the main thing that sets them apart from the more established businesses they are competing with.
Ultimately, if the future is one of collaboration, it will increasingly be reliant on trust and innovative ways to recognize those peers and its potential. By making sure that this up and coming economy is rooted with high standards and firm values, it will continue to evolve.
This post is part of our contributor series. The views expressed are the author's own and not necessarily shared by TNW.