The rise of Uber, Airbnb is no passing fad, according to Rachel Botsman, the author and founder of the Collaborative Lab.
“This is not a startup trend”, Botsman told the Adobe Digital Marketing Symposium in Sydney today.
She says many businesses are going to be born in the sharing economy over the next few years but warns many will also die.
“Think of [the sharing economy] as a transformative lens in how you think about assets and creating value and more importantly a massive transformation in how we think about trust,” she says.
Defining the sharing economy
The sharing economy is certainly booming with $US15 billion invested in startups in the sharing economy in the last year.
But what exactly is the sharing economy?
Botsman defines it as decentralised platforms, marketplaces and networks taking underused assets and making them liquid.
This is underpinned by a “massive shift” away from top-down hierarchical centralised institutions which could control the creation, production and distribution of goods.
“It completely changes the way products and services are distributed and made,” she says.
Botsman says the sharing economy reimagines three key business questions:
1. How is value created?
2. How is value scaled?
3. How is value trusted?
Asset light businesses
“New technologies unlock a hidden wealth of underutilised resources,” Botsman says.
As an example, Airbnb is now the second highest valued hospitality brand in the world just after Hilton Hotels, with a value of around $US25 billion dollars.
The business which allows individuals to rent vacant accommodation to other individuals has achieved this dominance incredibly quickly.
It took 93 years for Hilton Hotels to build its portfolio of 610,000 rooms but Airbnb already has over one million rooms on its site.
“What Airbnb are disrupting is how value scales,” Botsman says.
While old established companies like Hilton Hotels are asset heavy, the sharing economy is based on the emergence of “asset light” businesses which don’t have inventory or employ many people.
In urban areas we waste 103 days of our lives looking for parking, a frustration which new sharing economy business JustPark looks to address.
JustPark allows users to find and pay for a park utilising a network of private and commercial parking spaces.
“We are seeing the sharing economy meet on-demand gratification,” Botsman says.
Changing consumer behaviour
Transport company Uber’s meteoric worldwide uptake sees it valued at $41.2 billion.
“If you are in the taxi industry you are kind of asking – ‘are you having your Kodak moment?,” Botsman says.
While the taxi industry has been campaigning for greater regulation of Uber, Botsman says regulatory change won’t make a difference to the change in customer behaviour, which has already occurred.
“The consumer has realised there is a new way to get around and you can’t put that genie back in the bottle,” she says.
Emphasis on trust
Botsman says the “most profound” change the sharing economy brings about is greater emphasis on trust.
“We talk about change but we are in an accelerated period of trust,” she says.
Not only do customers rate businesses but now businesses also rate customers.
“What we are seeing emerging are these two-way rating systems,” Botsman says.
“We want the information to decide how we trust individuals and not just institutions.”
“This fundamentally changes the information we have to present to people. It’s a form of capital that could become more powerful than credit histories over the next 10 to 20 years.”
Rise of community and end of the passive community
Community is a buzzword in the business world but Botsman says businesses operating in the sharing economy live and breathe community.
“Community is one of the most overused words in advertising and for many brands it is an add-on,” she says.
But for businesses in the sharing economy “community is ingrained in their DNA”.
The rise of the community means the end of the passive consumer according to Botsman.
Instead of consumers there are creators, collaborators, financiers, producers and providers in the 21st century collaborative economy.
“There are tremendous threats but a huge untapped world of opportunity,” Botsman says.
SmartCompany was a guest of Adobe at the Adobe Digital Marketing Symposium in Sydney.