Similar what we do here at the Green Chamber, the rise of the Sharing Economy shows the profitability of sustainable businesses. The Sharing Economy refers to borrowing, sharing, or swapping goods and services and has seen recent growth in the age of online business and social media.
While I agree, as this article states, that the economy is driven by profitability, I see no reason not to enjoy the kickbacks sustainable business and consumer choices give to the environmental movement. We may or may not see the day when the majority of people make consumption choices based solely on the environmental impact of a product or business. From an environmentalist point of view, I will accept any reasoning for a shift to greener choices.
As for the comment below by Snapgoods founder Ron J. Williams, I disagree. Williams states, “[Peer-to-peer marketplaces] are not driven by the ethos of sharing, but by the fact that people are making real money,” he says, cautioning startup founders from pushing the hippy-dippy movement message. “Most people are talking about this as a movement, but most people don’t care about movements. They care about convenience….”
While I do not see society as ready to accept a new economy solely based on the environmental movement, I think that there is an ever growing number of consumers looking to purchase products that are specifically sustainable and touting that virtue of any product can only help drive your business. Either way, good for the environment, business, or both, it looks like the Sharing Economy will be a major player in the business world with a wealth of entrepreneurial opportunities in the near future.
The Rise of the Sharing Economy
Collaborative consumption, peer-to-peer marketplaces, the sharing economy — it’s been called a few names by now, but no one is denying that the idea of accessing rather than owning is controversial — and it’s taking the Internet by storm.
Peer-to-peer marketplaces, of which Airbnb is the beloved poster child, have been popping up for the past few years, but 2011 was an explosive year for the sector. Whether you wanted to borrow or rent someone’s apartment, bike, car, parking spot or random household good, you could find a marketplace to do it.
This is only the beginning, though; 2012 looks to be a promising year for those involved with the sharing economy. Super angel Ron Conway recently identified it as 2012′s hot area for angel investment in The Economist. And Fast Company deemed 2012 the “year of peer-to-peer accommodations,” thanks to the emergence of Airbnb clones that hinged off of the company’s outstanding growth.
Collaborative consumption services are getting a lot of attention, yes, but I couldn’t help but notice that only a small percentage of my contacts — even my super techie friends — have tried any of them. So, what gives?
On a mission to understand what motivates users to participate in the sharing economy, and eager to learn how we can take this idea mainstream, I interviewed a number of users and founders behind some of the most buzzed about peer-to-peer marketplaces. Read on to see what they had to say about the current state and future potential of the space.
It’s All About Value
The common theme across every interview I held is that collaborative consumption is, for the most part, about value. While there are a number of non-financial reasons for participating in the sharing economy, most of the people I spoke with agreed that the number one driver is cost savings.
Real estate expert Roberto Gonzalez says Airbnb is a “better and much more profitable way” to rent out his extra bedroom than the old Craigslist go-to. Gonzalez cites Airbnb as his favorite website ever — Airbnb hosts in New York City make an average of $21,000 annually through the system, according to Airbnb CEO Brian Chesky.
Knodes and SnapGoods founder Ron J. Williams advises other startup founders to focus on value when marketing peer-to-peer marketplaces, something he says he would prioritize more if he were to launch SnapGoods again. “[Peer-to-peer marketplaces] are not driven by the ethos of sharing, but by the fact that people are making real money,” he says, cautioning startup founders from pushing the hippy-dippy movement message. “Most people are talking about this as a movement, but most people don’t care about movements. They care about convenience — people use ZipCar because it’s convenient.”
Fostering a Lifestyle
Will Dennis, founder of peer-to-peer bike rental marketplace Spinlister, says that he sees “collaborative consumption in the long term as the most efficient way to get what you want when you want it.” It is a shift in consumer behavior brought about by the emergence of social networks and real identity online. “The social web results in trust, access to what you need quickly, and in the long run, a more authentic and interesting experience,” he says.
While all of these peer-to-peer marketplaces offer a more convenient way to share goods and services, the problem is that they don’t currently communicate with each other.
With the current peer-to-peer markets, though, the experience between one type of good and another is fragmented. If you want to rent a car, you go to GetAround or RelayRides; for apartments you have Airbnb and Wimdu; for others’ goods, you can try SnapGoods or NeighborGoods. Wow, that’s a lot of work, right?
Launching this week, Uniiverse is a new collaborative consumption platform attempting to solve the fragmentation problem. Calling itself “the world’s marketplace for collaborative living,” it aims to be the place you go for any of your peer-to-peer needs.
The collaborative consumption space is young, though, so we’ll have to wait and see whether the cultural differences between transaction-based and borrowing-based marketplaces survive.
The Trust Factor
For those building peer-to-peer marketplaces, one of the biggest pain points is figuring out how to communicate trust between users — Airbnb experienced a number of PR setbacks in that area last year, and therefore launched a Trust & Safety Center, which included a $50,000 host insurance guarantee.
Sites like Airbnb and homeswapping site Love Home Swap have focused on integrating a user’s social graph in order to better confirm identity and convey trust to users. Through Airbnb’s Social Connection feature or Love Home Swap’s Social Circle feature, users can rent or swap homes with people from their personal networks.
Love Home Swap founder Debbie Wosskow says that her startup will be taking peer-to-peer marketplace trust to the next level soon. A product that covers the full costs of a host’s home, as well as a traveler’s flight, does not currently exist. However, Wosskow believes that the entire industry will head in this direction.
Whether collaborative consumption is truly a shift in consumer behavior or just a glitch on the radar, at the very least, it has shifted the mindsets of a small subset of our population. People have a new space in which to reallocate resources and lessen waste. Don’t get me wrong — people have been sharing for ages now, but online peer-to-peer marketplaces are making it dead simple.
“Society is simply better when we pool our resources and skills together,” says Domagalski. “There is no need for the pursuit of more when everything we need is all around us.”