The appearance of services like Uber, Lyft and AirBnB that promote the monetization of underutilized resources has created controversy. Is there a truly new phenomenon here? Will the Sharing Economy produce a lasting impact, or is it a flash in the pan?
Online communities are not new, and sharing and barter have always been part of the informal economy. What’s new is the power of reputation systems combined with the convenience of electronic payment systems to reduce the friction inherent in sharing with strangers. The fact that the new services assume some of the risk of the transaction and act as escrow holders of fees make users comfortable enough to participate.
Trust is paramount in transactions with strangers. When AirBnb arranged a stay that resulted in massive vandalism of a condominium owner’s property, the business shut down for two weeks to consider how to prevent a recurrence, and opened with new safeguards. The fact that both the seller and buyer get to submit ratings of each other greatly increases the value of the system to new customers.
Seasonality and surges in businesses naturally create idle capacity that makes the sharing economy possible. Amazon created Amazon Web Services due to its need to provision its data centers for the Christmas rush. Cars sit idle almost all the time, while occupants are at work or sleeping. Powertools and evening clothes are used only intermittently. Will startups appear to monetize all such excess capacity? What are the barriers to starting a new service? Regulation, some of it unnecessary, and government scrutiny are certainly problems for some sharing-economy businesses.
A less famous sharing site is NextDoor, which is a hyperlocal version of Craiglist. Craiglist is remarkable for its minimalist interface compared to marketplaces like E-Bay.
Services like Uber and YourMechanic internally view themselves as analytics engine companies. Intelligently matching buyers and sellers is harder than it looks, and an engine that learns increases in value.
A potential great product is an open-source sharing framework that has as its core an analytics engine that performs simple matching. Plugins could then provide the calendaring, reputation, object database and payment systems that sharing systems typically need. Such a system could be self- or provider-hosted, similar to a wiki or a blog. Such a sharing framework sounds like a viable basis for a business.