Even beyond
the world of travel, it is hard to argue with the statement that 2014 was the
year of the sharing economy. From Uber’s $40
billion valuation (I apologize in advance if this number is outdated by the
time you read this – it seems to go up on a nearly daily basis), to Airbnb
being named Inc.’s Company
of the Year, it was difficult to avoid coming across a darling of the
sharing economy world no matter where you looked this past year. Given all of
the buzz, it may seem counterintuitive to argue that this year will see a
dramatic shift in how the sharing economy works, and even in what it actually
means, but that is indeed the case.
From the
very start the sharing economy has had a “feel good” vibe about it. In an era
of increasing concerns about the environment, finding ways to better and more
efficiently access underutilized assets rather than building and/or buying
entirely new ones gave people the sense that they were doing good even as they
did well. This overall sense no doubt
helped the sharing economy catch on quickly with a Millennial generation that
prides itself on being more attuned and socially and environmentally conscious
than the generations that preceded it.
Even though the space often had a bubble gum and rubber band feel to it,
this was a tradeoff many Millennials were willing to make. It certainly did not
hurt that the pricing was more competitive on the buy side, and that the sell
side created opportunities to earn more money in an economically perilous
time.
But even as
its popularity grew to ever-heightened levels with Millennials, cracks in the sharing
economy façade began to show.
Regulators, no doubt urged by vested interests in established
industries, began to pay unwanted attention to the space. Not only were existing laws enforced more
vigorously, but also local governments began creating entirely new rules and
regulations seemingly designed with the sole purpose of punishing companies
like Uber and Airbnb as well as their customers. Things got so bad by the end of 2014 that in
December Uber’s CEO was actually indicted
by South Korean authorities.
I have previously argued
that to succeed sharing economy companies will need to find ways to work within
the legal framework, even as they push to change it. Uber’s hiring
of David Plouffe can be seen as a move in this direction. Similarly, Airbnb has started the year by working
with local governments, not against them.
This is all a start, but just the start.
Another move these companies, and the space in general will need to make
as they seek to go even more mainstream, is to provide a better, more curated,
and more professional experience. 2015
will be the year this starts to happen in a big way.
Early on it was enough for sharing
economy companies to operate as siloed marketplaces. They brought parties together enabling them
to transact, but after that initial introduction the companies in the middle
had little to do with the actual experience.
This hands off approach has led to rape
allegations against Uber drivers, as well as squatters
and sex
parties in Airbnb units. News of
this sort is hardly likely to encourage middle class, middle aged, or Middle
America to start using the sharing economy in the way that will be required to
truly make the space transformative.
Fortunately the dominate players in
the space are beginning to realize this, and as 2014 ended and 2015 is beginning
we are seeing a shift away from the amateurism that has defined the sharing
economy to date, and towards the curated professional experience that will be
required going forward. Uber has already
begun an audit
of its driver screenings, taking ever-greater ownership of the experience
once a passenger enters an Uber vehicle.
The growing influence of Chip Conley
at Airbnb speaks to the company’s shift away from a pure marketplace and
towards an integrated hospitality company.
And HomeAway’s integration with
Uber, Instacart, and Gogobot all speak to the company’s shift from simply
serving as a listing site, to becoming more of a purveyor of experiences.
This shift will not occur
overnight, and it will not be easy.
Providing online marketplaces and mobile apps is certainly very
different from delivering operationally in the physical world. Some of the players who succeeded in the
first phase of the sharing economy may find they are unable to compete in this
new phase. And entirely new players will no doubt crop up, to the detriment of
incumbents, but to the benefit of consumers.
Though it will be difficult, it is
a shift we have seen before. It may be
hard to remember, but in its earliest days eBay was a marketplace where soccer
moms sold Beanie Babies to other soccer moms. It was a marketplace built
entirely around and for amateurs. How times
change. As of today, over 80% of eBay’s revenues come from “Power Sellers,”
essentially professionals using the eBay marketplace as their storefront.
Some purists may complain, and even
argue that this shift is a corruption of the vision and the promise of the
sharing economy. In fact, it is just the opposite. The vision was never to provide people with
inconsistent amateurism. Rather, the
point was to make better and more efficient use of underutilized assets and
resources. Operating in a one-off manner
simply is not efficient. Operating at
scale is. As the sharing economy shifts with
the rise of professionals in its 2.0 phase, we are not seeing a corruption of
the vision, but rather the fulfillment of it.
