The sharing economy and me

You can rent this penthouse in Rio for $258/night on AirBnB

You hear a lot these days about the sharing economy and collaborative consumption, especially if you spend time in northern California. I spent last week in San Francisco, where people told me about AirBnB, which allows people to share their homes or apartments with visitors, RelayRides,  Share My Ride and getaround, which allow people to rent their cars for a few hours or days, and ThredUp, where parents buy, sell and share children’s clothes, toys and books. Meantime, Prosper.com and Lending Club connect people who want to lend money with those who want to borrow. With peer-to-peer lending, who needs Citi or Bank of America?

Last year, Fast Company published a thoughtful and well-reported overview of the sharing economy by Danielle Sacks under the headline: “Thanks to the social web, you can now share anything with anyone anywhere in the world. Is this the end of hyperconsumption?” More than 3 million people from 235 countries have “couch-surfed,” she reported, and more than 2.2 million bike-sharing trips are taken each month.

Many sharing websites, like Freecycle and Couch Surfing, are nonprofits. Seattle and Berkeley have tool libraries, where people can borrow a lawn mower, power saw or drill. But other sharing ventures are business. Some analysts expect the sharing economy to generate real money, Fast Company reported:

Gartner Group researchers estimate that the peer-to-peer financial-lending market will reach $5 billion by 2013. Frost & Sullivan projects that car-sharing revenues in North America alone will hit $3.3 billion by 2016.

I’ve always liked the idea of sharing–hey, I paid attention back in kindergarten–because of its obvious environmental benefits: The more we share, the less stuff we need to own. But I’ve been skeptical of the claim that the sharing economy would end–or even slow down–hyperconsumption. My week in San Francisco made me less of a skeptic. This idea just might spread.

Partly I’ve changed my thinking because of my own experience. For the first time, I stayed in an apartment that I found through AirBnB. Because I planned to spend six days in San Francisco, staying in a downtown hotel struck me as unappealing. I liked the idea of exploring a neighborhood, making my own breakfast and saving a few dollars. So I found a studio in Potrero Hill for $140/night that I rented from a woman named Kepa Askenasy.  I chose it in  part because Kepa was rated a “SuperHost” by Air BnB and had about 70 favorable reviews from renters on the site. It’s the top floor unit, below.

My digs in San Francisco

I felt some trepidation as I boarded the plane for SFO–this wasn’t as predictable as staying at a Marriott, or at one of the Joie de Vivre hotels in SF, which I like a lot–but everything worked out really well. The apartment was small but comfortable, and Kepa kindly provided maps, neighborhood guides and her own advice on local dining and shopping.  I explored Potrero Hill, enjoyed a long walk to downtown for one meeting, got around on buses and the Muni,  went for a run with my pal Adam Lashinsky (buy his new book!) who leaves nearby and hung out at Farley’s, the local coffee shop.

The peer reviews on AirBnB took a lot of risk out of the transaction, for Kepa and me. She got paid in advance. I was reassured by her ratings. Afterwards, we rated one another, to guide future renters and lessors. She told me by email:

Airbnb emphasizes customer service, and accountability on both sides of the equation (host/ guest) through their transparent review process. It’s been exceptionally easy to handle the transactions. My guests seem to be happy with their side of the deal too.

Should Marriott and Hilton be worried by AirBnB? Probably not, but it’s not going to help their business.

Later in the week, I had lunch with Beth Trask of Environmental Defense Fund who told me that she’s renovating a home in Berkeley. And, yes, when she needs tools, she visits the tool library. She told me:

The Berkeley tool library is a real community gem.  I’ve borrowed everything from rakes and hammers to drain snakes, sanders and power tools.   The crusty old guys who run it love to tease me — since I never know the right names for the tools I’m looking for and they usually have to explain them to me – but they always help me out.  I’ve saved so much money and time, and have learned a lot about tools along the way.

On a visit with Net Impact, a great organization of MBAs, young professionals and college students who want to use the power of business to change the world for the better, several young staffers told me that they thought the sharing economy was a real phenomenon among younger people. Liz Maw, the executive director, was planning to rent a car the following day from getaround, but was stymied by a couple of glitches. But others in the group had used car sharing services, which provide peer reviews as well as insurance. Most cars, it turns out, sit around as much as 90% of the time.

I’d readily use AirBnB again, and I’m prepared to try car sharing. I’ve been using Freecyle for years [see my 2007 Fortune.com column, The amazing Freecycle story]. It strikes me that free or government-backed sharing programs, like Capital Bikeshare in Washington, D.C., function as gateway drugs for people who have forgotten the lessons they learned in kindergarten. They can move from there to Zipcar and from there to sharing their own car or apartment, and borrowing from others.

Lisa Gansky, an entrepreneur and author of a book called The Mesh: Why the Future of Business is Sharing, is the leading evangelist for the sharing economy. In a manifesto called Six Reasons Why the Sharing Society (aka the Mesh) Will Trump the Ownership Society [PDF, download], she has this to say about the environmental advantages of sharing:

Barring some miracle in space, there’s only one planet for us to inhabit. And by mid-century, roughly three billion more people will join us. With this math, it’s not hard to predict that businesses that figure out more efficient ways to use the earth’s resources will thrive. Also, urban areas will inevitably become more densely populated, which really favors the sharing economy. If you’ve got more people in a neighborhood, it’s easier to increase the number of bikes, tools, local farmers markets or clothing swaps you can offer. You can also make your offers more convenient—more shared cars in the lot or on a nearby street. Density deepens community and creates demand for shared products and services. Owning a car outright, on the other hand, becomes a bigger and bigger expense and burden to maintain and park.

Very cool.

Do you think the sharing economy threatens business as usual?

Comments

  1. VERY cool.

    And a huge business challenge for the mainstream economy. Because if a thriving economy and vibrant communities can make do with far less stuff — as this suggests they can — what happens to the standard business model of “make more stuff to make more money”?

    This may be the most disruptive innovation yet — for the companies that can figure out how to flip that equation, and make enough money selling LESS stuff. (The others? Well, I wish ‘em well on the way down.)

  2. Great column, Marc. I’ve been thinking about this theme for about a year now, trying to find an investment angle outside the few carsharing firms like Zipcar (ZIP)… the problem with car sharing it it’s a capital intensive business, but also fairly easy to enter: not a formula for big profits.

    In the end, I think the winners from the sharing economy will be the sharers more than the investors… not a bad thing, but investor profits can be a good thing, too, at least if you want a lot of innovation in the sector.

    BTW, I’ve been using FreeCycle for years, too… ever since I read your 2007 column!

  3. Put me down as a participant in the sharing economy. I have also been using Freecycle to rid myself of excess stuff. To further cut back , I joined the DC library system and use Netflix. I used to own over a hundred videotapes. Now, I own less than ten DVDs.

    I also shared this column through Facebook and LinkedIn.

  4. Awesome post, Marc. Thank you for SHARING these wonderful resources and pointing out the good that they do. I’m bookmarking these links!

    Dave Gardner
    Director of the documentary
    GrowthBusters: Hooked on Growth

  5. Vanessa Lindlaw says:

    If the sharing economy promotes a more efficient use of resources, then it’s probably safe to assume that both lenders and borrowers will end up with more money in their pockets. Some of that money will have to end up back in circulation; if I had to take a guess, elastic industries like travel, dining and entertainment would stand to benefit from the sharing economy. It will be interesting to watch!

  6. Your blog is listed as one our favorite sustainability blog picks in our Strategic Sustainability Consulting blog today! Thanks for the interesting entries and other work you do!

  7. Sounds to me that if the businesses spearheading the sharing economy are innovative enough to spin sharing into a profit, then it should help our economy. Wasn’t Green Business supposed to save our economy when elected Obama in 2008? Maybe sharing is the crucial part of that elusive economic equation.

  8. Great informative piece on sharing economy by way of the social web. I certainly makes sense that using social internet tools to drive business will help the economy. More people should be made aware of this approach to aid the economy.

Trackbacks

  1. [...] they drive (instead of walking or riding a bike) or own stuff they could share (See my blogpost: The sharing economy and me.) Imagine, instead, that people had the option to work 25, 30 or 35 hours a week instead of 40. [...]

  2. [...] To learn a little about car sharing, I arranged to speak last week with Jeff Miller, the co-founder and CEO of Wheelz. Next week, I’ll interview Shelby Clark, the founder and chief community officer of RelayRides, at VERGE DC, a conference organized by GreenBiz, where I’m a senior writer. (Please join us a VERGE DC if you can.) I’ll also be interviewing Steve Case at VERGE; he’s been an advocate for the sharing economy as an investor in Zipcar and in a vacation home-sharing company. [For more, see How Steve Case and his company are driving the sharing economy in The Atlantic and my own blogpost, The sharing economy and me. [...]

  3. [...] To learn a little about car sharing, I arranged to speak last week with Jeff Miller, the co-founder and CEO of Wheelz. Next week, I’ll interview Shelby Clark, the founder and chief community officer of RelayRides, at VERGE DC, a conference organized by GreenBiz, where I’m a senior writer. (Please join us a VERGE DCif you can.) I’ll also be interviewing Steve Case at VERGE; he’s been an advocate for the sharing economy as an investor in Zipcar and in a vacationhome-sharing company. [For more, see How Steve Case and his company are driving the sharing economyin The Atlantic and my own blogpost, The sharing economy and me. [...]

  4. [...] Zimride is yet another example of what’s called the sharing economy [See my blogpost: The sharing economy and me], collaborative consumption or The Mesh. Like Zipcar, and peer-to-peer car sharing services like [...]

  5. [...] people in new ways. The whole idea of the sharing economy, which I’ve written about lately (here and here and here), is built on social networking and the mobile web. So are Good Guide, Climate [...]

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