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Industry Insight

The Sharing Economy

One of my favorite plays is Eugene Ionesco’s The New Tenant,

By Richard Romano
Published: February 26, 2013

One of my favorite plays is Eugene Ionesco’s The New Tenant, a “theater of the absurd” piece in which a gentleman moves into a new London apartment and throughout the play two furniture movers continually bring in all of his possessions, piling it up around him until he is virtually buried in it all. Toward the end of the play, the movers comment that all his possessions have stopped traffic in the streets, stopped the Tube from running, and has even dammed up the River Thames. “Some furniture! It’s cluttering up the whole country!” says one of the movers. An exaggeration, to be sure, but today we would call such a person a “hoarder,” and we all know people like that. Even when it doesn’t veer into what is considered a behavioral disorder, many of us simply have more stuff than we really need—or even know what to do with. (The last time I moved, the mover commented—after hauling box after box of books—how much a fan he was of Kindle e-books. I can sympathize.) And of course “a house is just a place to keep your stuff while you go out and get more stuff,” George Carlin once quipped. There has been a movement afoot to combat the problem of all this “stuff”—by sharing it with others. At the GreenBiz Forum last week, Adam Werbach of Yerdle gave a short talk on what he felt was the rise of the so-called “sharing economy.” That is, instead of just buying new stuff, we will simply swap the stuff we’re not using with each other. (That’s a highly oversimplified description.) This idea isn’t especially new; flea markets have been around forever, and other stores that sell used goods—books come to mind, and in high school I was a frequent habitué of many of Boston’s used record stores—have also been around for a very long time. Modern variations include Zipcar’s car-sharing service which is an excellent solution for people who don’t want the hassle and expense of owning a car but still occasionally need access to one. (Zipcar was recently acquired by Avis.) The “sharing economy” (alternatively referred to as “collaborative consumption” or “access economy”) is evolving, and today comes up increasingly in discussions of sustainability. Whilst I’d be happy to be proven wrong, I remain generally unconvinced that it will ever be anything other than a niche. But it is being pursued enthusiastically, and Time magazine weighed in and called it one of “10 ideas that will change the world.” New start-ups are picking up where rent-a-car, video renting, and garage sales began and are facilitating online swapping of goods and even services. Have a power drill you use maybe once a year—or need a power drill but don’t really need to buy one? Go to SnapGoods and rent what you need. Want to rent out your home to travelers? Go to Airbnb. Want to have a local chef cook and deliver a meal? Try Munchery. There are many other “peer-to-peer” sites that let you trade or rent items and services in virtually every category. Not all of it is “sharing” or barter; some of it just sounds like basic e-commerce. Triple Pundit has been doing a series of posts on “the rise of the sharing economy.” The movement has been largely driven by young people, largely by economic circumstances, but also by what is touted as an aversion to overconsumption and wasting the natural resources making all new stuff when the old stuff is just sitting in storage. (Even post-recession, self-storage remains a lucrative industry. We need somewhere to put all our stuff.) Today’s installment features a “round table” of several sharing economy entrepreneurs who discuss the opportunities and challenges of fostering the sharing economy while also setting up these services as successful businesses.
Just like most other sharing-based companies their revenue model is fee-based. Yet, the answer to the question of how to make money doesn’t end here. An aspiring entrepreneur still needs to figure out what the value offering of the business, target market, positioning in the marketplace, core competencies and scope are in order to build a successful business model.
Commented Jennifer Lee of ClosetDash shop, “With any sharing-based business, trust and community are two of the biggest components that make it work. Transparency and communication are key when building up both.” The majority of sharing service sites start locally, within a small-ish community or even a city, and gradually scale up organically. I am unsure what the macroeconomic effects of the sharing economy would be if it ever achieved sufficient critical mass (although I doubt that it ever would), and I do wonder if a substantial economic recovery would derail it, but for the nonce it appears to be one solution to the problem of dealing with all our stuff.

Please offer your feedback to Richard. He can be reached at richard@whattheythink.com.



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