Moderate Moment | Moderate Moms

The Share Economy

ModerateMoms love stories about innovation. Here’s a great one from Forbes.com: 

On paper, Frederic Larson is just one data point in five years of U.S. government statistics showing underemployment in dozens of industries and stagnant income growth across the board. The 63-year-old photographer with two children in college was downsized by the San Francisco Chronicle in 2009. He now spends his time teaching at Academy of Art University with occasional lecturing gigs in Hawaii. A far cry from the salary, benefits and company car he used to have.

But Larson is also a data point in an economic revolution that is quietly turning millions of people into part-time entrepreneurs, and disrupting old notions about consumption and ownership. Twelve days per month Larson rents his Marin County home on website Airbnb for $100 a night, of which he nets $97. Four nights a week he transforms his Prius into a de facto taxi via the ride-sharing service Lyft, pocketing another $100 a night in the process.

The “gig economy,” the plethora of microjobs fueled by online marketplaces offering and filling an array of paid errands and office chores, has been well-documented, and sites like TaskRabbitExec and Amazon’s Mechanical Turk continue to grow apace. What Larson finds himself in, however, is something lesser-noticed and potentially far more disruptive–a share economy , where asset owners use digital clearinghouses to capitalize the unused capacity of things they already have, and consumers rent from their peers rather than rent or buy from a company.

While Airbnb is the best-known example of this phenomenon (to most casual observers, it’s the only example), over the past four years at least 100 companies have sprouted up to offer owners a tiny income stream out of dozens of types of physical assets, without needing to buy anything themselves. “The sharing economy is a real trend. I don’t think this is some small blip,” says Joe Kraus, a general partner at Google Ventures who has backed two car-sharing sites, RelayRides and Sidecar. “People really are looking at this for economic, environmental and lifestyle reasons. By making this access as convenient as ownership, companies are seeing a major shift.”

The sharing concept has created markets out of things that wouldn’t have been considered monetizable assets before. A few dozen square feet in a driveway can now produce income via Parking Panda. A pooch-friendly room in your house is suddenly a pet penthouse via DogVacay. OnRentoid, an outdoorsy type with a newborn who suddenly notices her camping tent never gets used can rent it out at $10 a day to a city slicker who’d otherwise have to buy one. On SnapGoods, a drill lying fallow in a garage can become a $10-a-day income source from a homeowner who just needs to put up some quick drywall. On Liquid, an unused bicycle becomes a way for a traveler to cheaply get around while visiting town for $20 a day.

Getting into the share economy was the reason Avis Budget Group last month chose to pay a whopping $500 million for Zipcar, despite the fact that the pioneering rent-by-the-hour startup generated a paltry profit of $4.7 million over the past year. But Zipcar in some ways misses the larger point of what’s going on: Its fleet, as with Avis’, has been centrally owned. A more profitable model may lie in peer-to-peer car-sharing services such as RelayRides and Getaround, which mimic Hertz or Avis except that the service itself owns nothing. Their fleets, about 50,000 combined at last count, draw from the tens of millions of autos idling in America’s driveways. SideCar and Lyft slice that market finer, monetizing an empty seat by letting owners tote along fee-paying passengers on routes they may already be taking.

Just as YouTube did with TV and the blogosphere did to mainstream media, the share economy blows up the industrial model of companies owning and people consuming, and allows everyone to be both consumer and producer, along with the potential for cash that the latter provides. Shervin Pishevar, a venture capitalist at Menlo Ventures and an investor in Getaround, TaskRabbit, Uber and other startups in this space, believes these services will have a major impact on the economics of cities. “This is much bigger than any specific app,” he says. “This is a movement as important as when the web browser came out.”

FORBES estimates the revenue flowing through the share economy directly into people’s wallets will surpass $3.5 billion this year, with growth exceeding 25%. At that rate peer-to-peer sharing is moving from an income boost in a stagnant wage market into a disruptive economic force. Technology has vastly improved on the newspaper classifieds that brokered the sweating of assets for a century. Ebay‘s much duplicated rating system bestows commercial credibility on individuals. With Facebook you can go further, checking people’s profiles before renting to them. Smartphone apps let sharers transact anywhere, see what’s being shared nearby and pay on the spot. “We’re moving from a world where we’re organized around ownership to one organized around access to assets,” says Lisa Gansky, who started the Ofoto photo-sharing site, before selling it in 2001 to Eastman Kodak.


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