Reflections on life in the sharing economy | Episode 5

 What is mine is ours

As we start this last episode on the “What is mine is ours” series, a brief recap of the last 4 posts:

• On Episode 1, we started this journey of a personal take on the big hype of sharing. The hype is not over: with about ten thousand companies, spanning over 16 industries around 133 countries, it is a transformative social and economic movement
• On Episode 2 we talked about the key role that technologies, namely the internet and mobile communications, had on scaling-up sharing initiatives to a global level
• On Episode 3, I told you about my experience hosting strangers for dinner, and also how incumbents are reacting to the advancements of the sharing model
• On Episode 4, we discussed how YOU can start sharing, by being open, accessing the right technologies and encouraging companies and regulators to adopt affirmative actions

The beauty and the beast of new business models

As with all things in life, the collaborative economy has two (or more) sides to it:

• Some people see it as a new economic imperative, based on humanistic values and intrinsic generosity, which will once and for all destroy the capitalism and the consumerism that have corrupted our society for centuries
• Others see it as ‘devil in hoodies,’ a bunch of unprofitable companies led by unscrupulous founders, that will do anything, break any laws, abuse helpless people, all in the name of venture money

The truth is, most likely, somewhere in between:

• It is true that some businesses such as CouchSurfing, which involve no monetary transactions between guests and hosts, lean in more towards the human side. I couchsurfed a lot during my round-the-world trip in 2012/2013, and had nothing but great experiences
• Other wonderful examples are Craigslist and Nextdoor, respectively a digital classifieds and a virtual neighborhood-building platform. Using those two services, I obtained most of my son’s stuff for almost free, saving over 10 thousand dollars in his first year of life. Cash-based transactions, when they happen, are done outside of the platforms, meaning neither Craigslist not Nextdoor profit from the connections they foster. How do they make money? Craigslist charges for postings of just a handful of categories, such as job postings in major cities like New York. Nextdoor, differently, is venture-backed and does not yet have a revenue-generating stream. Couchsurfing, Craigslist and Nextdoor seem to be exceptionally resilient companies built upon solid communities of users. Exceptionally because, from what I have observed in the market, other initiatives to promote money-free exchanges, for example Yerdel, have not proved to be sustainable business models, and have either pivoted or died
• It is true that billionaire businesses, the most prominent being Uber, were built on the foundation of outsourcing risks (not owning cars), twisting laws, and reportedly engaging in nasty business practices

The Guardian reports on one more Uber scandal. This time, closer to me than I wished

• Airbnb and Grab (Uber’s Asian competitor and my favorite ride here in Singapore), on the other hand, have been proving that it is possible to build large venture-backed innovative businesses while maintaining ethical values and a great experience for both sides of the marketplace

After more than four years researching the sharing economy, what I’ve learned is that, despite objections, reasonable or not, it is a fact that the success of the sharing model was born out of the deficiencies of the traditional capitalistic system. For instance, if consumers were so eager to embrace Grab, Uber and Airbnb to the point that they are becoming household brands, it is because something was missing in the way taxis and hotels were conducting their business, and connecting to their customers.

All over the world, as I talk to people about their sharing experiences, what I hear is usually very positive: drivers, hosts and service providers have gained access to new income sources; riders, guests and service receivers have gained access to a greater variety of service sources. On both sides, people highlight the added benefit of the sense of community and humanity that was lacking in the traditional economy.

The unusual suspect: Facebook

When we moved to Singapore in late 2015, one of the things I missed was Nextdoor, still only available in the United States. In search of a local neighborhood platform, I found what I was looking for in an unexpected place: Facebook.

With over 25% of the population of the city-state being the so-called “expats” – mostly Western professionals that come to work in Singapore for multinational firms for a limited period of time – a strong expat community exists in the island. In recent years, the interactions on these communities have migrated from the social clubs to the social network. More specifically, Facebook.

My main source of sharing for the last two years has been a Facebook group for expat women in Singapore that has over 18 thousand members. It is through the “Classifieds” section of the group that I have obtained and offered (for free or for cash) all sorts of things: furniture, house decoration, books, kid’s clothes and toys, adults clothes and shoes, just to name a few.

Legend: My sharing tool for life in Singapore

Interestingly enough, Facebook is not profiting directly from these transactions. Well, of course we all know that they profit from advertising and from the immense amount of data we share, but, differently from the traditional sharing platforms, Facebook is not taking a cut of what is transacted within the group or charging us a service fee to use the platform for this purpose.

As with other technology companies that are going deep into financial services – Apple Pay, Google Pay, Samsung Pay – I foresee Facebook expanding its reach into our pockets. The feature to send & receive money is already available to Messenger users – although, not heavily used yet – and additional services should come as the company explores the potential of payments embedded in groups and via WhatsApp.

A sample of Facebook’s moves into financial services. credit: Let’s Talk Payment

A shared future

The hype that happened in 2013-2015 is now stabilizing under open market laws and somewhat morphing with the pure trade system:

• Uber, which was considered the breakthrough in transportation for not owning or managing cars, is now associating with rental and leasing firms to provide cars for new drivers. The upside of generating jobs is offset by the fact that it no longer holds the claim that we are just “sharing a ride,” because you are indeed “hiring a ride”. Also, the fact that we could dramatically reduce our ecological footprint by sharing rides is now diminished, because there are more drivers on the roads. Here in Singapore, where taxis are a government concession, the rise of Uber and Grab has notably improved the quality of the transportation service, but has also sensibly increased the volume of cars on the streets
• As the new models get embedded into our daily lives, the little things that made them unique tend to get diluted. In 2013, you would greet your Lyft driver with a fist bump, ride in the passenger seat in front, and give a donation as payment – in its origins, Lyft was a not-for-profit. During my Lyft rides in January 2017, the experience was more that of a normal hired ride. In the early days of Airbnb, you would welcome your guests in your spare room. Nowadays, people rent out whole properties to just sublet to Airbnb guests. The warm welcome that differentiates Airbnb from hotels is still there, from my recent experiences, but no longer the “staying with a local family” feeling

In the years to come, a combination of private and public initiatives will need to be put in place for the sharing economy to become a sustainable business and economic model that can co-exist with the traditional economy, in the hopes that a combined model thrives. One that is economically strong as capitalism and at the same time humane and mindful as the sharing initiatives propose.

While it is required from the sharing companies to abide to reasonable laws and standards, it is expected that incumbents be open to new business models, and that regulators work not in favor of one or the other, but towards promoting a healthy competitive business environment that breeds innovation and ultimately improves the life of consumers.

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Maria Paula Oliveira is a business executive with experience in corporations and startups, in Asia Pacific, Latin America and the USA. Her work spans strategy, research, M&A, and innovation management. In Brazil, she led Experian to TOP 3 most innovative companies, and had founding roles in two Silicon Valley startups. She writes on strategic innovation, creative ways for business growth, and shares insights with a personal touch about ideas, technologies and business models that are shaping the world. Follow @mpaulaoliveira