What’s the Shared Economy?
Over the past few years, a number of entrepreneurs and creative thinkers have developed new companies that use dormant resources, that is, empty offices or rooms or cars not being used. Any way to increase the utilization of something someone else owns can be thought of as the shared economy. These companies connect people to one another in new ways to match up those with spare capacity to those with temporary needs. There are a variety of different businesses that operate in this industry, and they range from renting a home, providing a ride or sharing a car, picking up leftover food from a complete stranger to borrowing children’s toys for a few months and then returning them after the child is finished playing with them.
Two major factors have positively impacted the growth of the shared economy over the past few years. First, improvements in technology and the ability to communicate with others in a matter of seconds on handheld smart phone devices has probably been the largest single factor which has enabled companies to succeed in this industry. Users can be connected with one another in a matter of seconds. In many cities across the world an individual can order an Uber car service from anywhere with a GPS-friendly device. The car will often arrive in a matter of minutes and the ride is paid for through the phone which simplifies the financial side of these transactions. In most cases, the shared economy utilizes technological innovations better than the industries they are disrupting.
The second key factor supporting the growth and development of companies in the shared economy is trust. In order for the shared economy to work, there must be a sufficient level of trust between the users and the ones providing the service. “The more trust we have in our peers, the more sharing — and renting and bartering and trading — we’ll all be able to do”(Ufford). One of the reasons people feel so comfortable with the idea of the shared economy is because they have trust in the people they are meeting and interacting with. Some people cherish the shared economy because they enjoy meeting new people. On the other hand, the individuals providing the service receive the satisfaction of helping someone out and they receive a financial benefit as well.
Will the shared economy lead us towards the end of ownerhsip?
Check out the MIPIM 2015 conference featuring sharing economy company Bureaux à Partager’s CEO Clément Alteresco and Airbnb’s Country Manager Nicolas Ferrary!
Opportunities & Challenges
Recently, Barclays teamed up with 3Space, a charity group from the United Kingdom, “to transform underutilized Barclay’s properties into office space for social entrepreneurs, early stage local businesses, and charities”(Eltringham). For many social entrepreneurs and early stage businesses, finding affordable office space can be very challenging. 3Space’s philosophy is to find ways to repurpose unused commercial buildings across the United Kingdom and help find startup businesses places to work. For example, Barclays repurposed an unused bank vault and turned it into a “marker space, equipped with a 3D printer and workshop tools” (Eltringham), and they offer this office space and equipment for free. This partnership between Barclays and 3Space is providing huge benefits to these startup businesses and creating an arena to foster innovation.
There still are a few challenges to overcome with the shared economy. Government at all levels needs to do a better job with regulating and fairly taxing those involved in these organizations. This requires a careful and delicate balance that addresses reasonable oversight while still not stifling the creativity that has helped the shared economy thrive. In services like Uber, workers are independent contractors and essentially have no rights. They do not receive any benefits or health insurance. At the same time, such volunteers are often working in another job and simply picking up extra income. In cases where the volunteer service providers are at risk, it is not clear if adequate safety measures have been taken or who will be liable if something goes wrong. Sharing economy companies have started to recognize that they must continue to improve background checks and monitoring systems because trust is such an essential part of their success in this industry.
Casey Fashouer is currently enrolled in the Master of Science in Real Estate of the University of San Diego. Casey is also a contributor and curator for MIPIMWorld.
- Eltringham, Mark. “Barclays Converts Underutilised Offices into Free Co-Working Spaces.” Workplace Insight. Insight, 10 Dec. 2014. Web. 26 Feb. 2015.
- Owyang, Jeremiah. “How The Collaborative Economy Is Changing Everything.” Interview by Jacob Morgan. Audio blog post. Forbes. Forbes Magazine, 16 Oct. 2014. Web. 20 Feb. 2015.
- Ufford, Stephen. “The Future Of The Sharing Economy Depends On Trust.” Forbes. Forbes Magazine, n.d. Web. 20 Feb. 2015.
Top image credit : Photobank gallery