The world is evolving at a rapid pace, with new technological, cultural and societal boundaries being laid to waste by innovative business models. The traditional business cycle seems to be getting shorter, with the rise (and fall) being potentially far quicker than say 20 years ago. And, much like Moore’s Law, I feel this advance in the capabilities of businesses to fulfill customer needs will grow exponentially as businesses come to terms with the cloud, data and mobile/wearable technology and their endless possibilities. In turn, customer expectations will advance, and businesses will ever be playing catch-up with user demands. The sharing economy has been born, developed and surged in recent years, utilizing those aforementioned factors; and in the process fundamentally altering the way people expect to do business around the world. I feel that there are still substantial opportunities for both the sharing economy, and those larger companies that currently feel threatened by it.
Technology has certainly enabled businesses to build platforms that facilitate the sharing of assets already in circulation. Peer-to-peer sharing reduces the costs for the end user, as there is no requirement for an agent to moderate the transaction. Technology has reduced transaction costs, making sharing of assets easier and cheaper than ever before. This has enabled businesses operating in this space to acquire substantial market share quickly and expand operations on a much larger scale than has been previously possible. Airbnb is one such example where it now provides a service in over 30,000 cities globally, and has disrupted the well-established hotel industry with a punchy valuation of $10 billion in just under 6 years of trading. It is my belief that this emergence of a new model of consumption was driven by a desire for greater value, and less reliance on any middleman following the 2008 credit crunch.
Data has enabled businesses to disaggregate individuals’ assets into services. It has also enabled businesses to provide more contextual service offerings from other individuals based on preference, location, purchase history and peers. Sharing sites enable users to become ad hoc providers of a service, and make incremental or continuous income from already owned assets. For the end user or customer this is great, because access is more important than ownership of assets. Rachel Botsman has stated that the peer-to-peer rental market is worth $26 billion. Although there are opportunities for businesses to use this rental model for spare resources and assets, it is predominantly person-to-person rental within which they operate.
It is easy to see how “collaborative consumption” can offer greater levels of value and utility for customers, because owners can make money from underutilized assets and users can gain utility from using an asset they would not have otherwise been able to afford. This is bleeding edge capitalism, and solves the issue of overconsumption and materialism. It is focused on the efficient use of resources, which has environmental (and economic) benefits too.
Trust is inherently built into the mechanisms of these new business models with open, two-way review and referencing systems in place. Technology has enabled the platform providers to validate users, and ensure they are real people; which in turn only increases the trust of users in that platform. David Lee, founder and managing partner at SV Angles (an early investor in Airbnb) states that although a solid payment platform is paramount, the most important aspect of these business models is being able to build a trusting community and enabling users to ‘meet’ one another online before they meet in person.
There are however inevitable regulatory issues with these models, specifically around areas such as insurance, liability and tax. In 2012 the California Public Utilities Commission issued $20,000 worth of fines against three companies: Uber, Lyft and SideCar for “operating as passenger carriers without the required public liability and property damage insurance”. Frustrated incumbents will use outdated regulations to restrict, as best they can, the rise of such businesses. In many states in the USA, such companies are unable to operate and are fighting many legal battles.
Room sharing businesses are also causing a stir, and have run into issues around the zoning regulations and other rules governing temporary rentals in which the property owner is not present. Owners have served some renters notice because the renter was seen to be sub-letting the room on Airbnb. Interestingly it has recently appointed David Hantman, previously the head of government relations at Yahoo, as its head of public policy to tackle this regulatory issue.
Progressive businesses will always encounter fractious times. Inevitably regulatory bodies or governments will play catch up, mediating between the wishes of the end-consumers (which can be represented as the actions and purchase patterns of those customers supporting new business models) and the established businesses fighting to stay in the market, and keep its once loyal customer base.
Interestingly, the larger companies that face disruption are moving into the space through investment into these upstart rivals. GM Ventures invested $13 million into RelayRides in 2011. This has not only offered a vote of confidence to the sharing model, but it has highlighted how old and new business can work together to offer additional value to both the new and old business alike. In this instance, RelayRides was granted access to GM’s OnStar navigation system. Now OnStar equipped cars can now be locked and unlocked from an app, removing the need for individuals to meet and hand over the keys.
I have always felt that the sharing economy lacked any real coherent definition, and that it in actual fact was made up of many various value-adding models. And as with any great surge of capitalism it has been hacked, rebuilt and rolled out across many other markets and industries with a variety of results. The one thing that has seemed to remain fairly constant was that these models focused on the sharing of assets; it was about access and not ownership. Now I believe there is another step change in the sharing economy, and we (Aidan Rushby, Tony Edwards and myself) have built a company based on these beliefs.
Movebubble uses technology to disrupt an old, archaic industry, that of the private residential property lettings market. It does not enable people to share assets in a manner as that described above; instead it facilitates collaboration on key tasks centered on the long-term property rental process. Users are able to work together through technology to reduce the waste of a particular resource; time spent on a task. Through guided collaboration of tasks, aptly timed to reduce delays and confusion, via any device users are able to increase productivity on the move, ultimately reducing the time spent on such tasks. And as the old adage goes, “time is money”.
Such platforms will reduce waste, as user groups work together to achieve common goals, which in the case of Movebubble is a safe and secure rental tenancy agreement. Is the next step in the evolution of the sharing economy the emergence of platforms enabling users to reduce time spent on tasks, and to collaborate faster, remotely? Is this the rise of the Collaborative Customer?
In order for these Customer Collaborative Platforms (CCP) to work, users need to know that other users are validated, real and ultimately trustworthy. This is one thing that is held in common with the sharing economy. CCP’s must build a trusting community that is exclusive and not available to those who are not a part of it. The reciprocal nature of the review system requires that only those involved with transactions with another user are able to offer reviews and feedback. Not only do users need to trust the users of the platform, but they must also trust the platform itself. Data privacy is paramount, and CCP businesses must continue to invest in its security. It can take many years to build up trust in a brand, and unfortunately only a moment to destroy it. Executives of such businesses must work tirelessly to uphold and reinforce the messages that are central to such organizations: openness, honesty and transparency. Trust is the marketing currency of the future, with a vast number of Internet users still concerned about online privacy protection.
Consumers are primarily concerned with Environmental Control, i.e. the ability of the user to control the actions of the vendor (this could manifest as worries over supplying credit card information online) and the secondary use of that information (which is typically a worry that vendors will sell private information to 3rd parties). Although an older study, the 1997 Georgia Tech Graphics, Visualization and Usability Centers’ GVU 7th User Survey showed a whopping 87% of web users think they should have complete control over the demographic information websites capture, and over 71% feel there should be new laws to protect their privacy online. 63% of those reporting that they decline to provide information to websites have done so because they do not trust those collecting the data.
So that these businesses are able to ensure that customers can collaborate quickly and effectively these CCPs will tread the peripheries of public and legal interpretations of privacy. Such companies will need to pre-empt competitor actions with appropriate responses to calls for additional regulation on this subject. However, more importantly these CCPs will need to deliver an explicit social contract with the user, executed in the context of a cooperative relationship built on trust.
Any technology that can equip customers with the ability to undercut the current status quo through collaboration will ultimately win, as mainstream market adoption occurs via word of mouth (or word of mouse!). So get ready, as the rise of the collaborative customer is finally here.