Profiting From the Sharing Economy
If you’re a fan of the television program, ‘Parks & Recreation’ – which every sane human should be – then you’re all too familiar with the hilarious entrepreneurial antics of the chubbishly charming Tom Haggiford.
His latest enterprise and happily his most successful endeavor is a company called: ‘Rent-a-Swag’. And if it were a real business – which it should be - then it’d be a perfect example of a rapidly growing and very powerful cultural phenomenon that economists are calling a ‘shared’ or ‘sharing’ economy.
Here’s the concept of ‘Rent-a-Swag’: Tom Haggiford owns an abundance of well-made suits and other high end apparel. Due to his short stature Tom rents his rarely used clothing – his ‘swag’ – to teenage boys who don’t need to invest in a suit quite yet but need one for a special occasion.
Okay, so here’s the real definition of a shared or sharing economy: it’s a socio-economic system built around the sharing of human and physical assets.
Some good examples of business that operate in the shared economy are:
- Uber: a venture-funded startup and transportation network company based in San Francisco, California that makes mobile application software, which connects Passengers with Drivers of vehicles for hire services.
- Airbnb: travelers can rent privately owned/currently occupied apartments for a night, castles for a week, or a villas for a month, in 34,000 cities around the world. It’s a cheaper, more unique ‘hotel’ experience.
- DogVacay: allows dog owners leave their dog with a host when they go on a trip. It’s cheaper than a kennel and gives the dog a more comfortable place to stay.
The sharing economy has come on so quickly and powerfully that regulators and economists are still grappling to understand its impact. Although people have always rented their assets to others – we at Fueled think that the Internet can take sole responsibility for the vast expansion of private, ‘consumer to consumer’ business.
As the Internet allows private citizens the ability to reach a broader audience, it starts to make sense that an American backpacker in Europe can thwart the common hostel stay in Denmark and opt for a better nights rent in a quaint village, in an occupied house, just out of town. Companies like Airbnb and Uber allow owners to use their assets more efficiently, to the benefit of all that are involved.
What does that mean for the already established or more traditional companies who provide the same services, though? Frankly, they’re not happy… at all. Major hotel chains are looking to policy makers to regulate shared economy services like Airbnb by imposing strict health code and safety clauses.
In New York City, the Taxicab companies banded together in a failed effort to oust Uber from the streets of Manhattan. Also, major hoteliers asked the city not to allow Airbnb lodgers to make private rentals for under a month.
Here’s the thing: unless consumers tell regulators – which they won’t – about their length of stay or any health code violations or if an Uber car is unclean, then there’s really nothing our policy makers can do.
So, here’s the solution – we have to allow the Shared Market to operate. It’s the future of capitalism. Competition in the marketplace is a fundamental part of capitalism, after all.
Sure, some traditional companies will be driven out of business by Americans sharing unused assets with each other, but think of the positives that can happen for the individual. The college student can see the world; the working household can supplement income and provide a better education for their children, and most importantly the sharing economy embraces the ideals of the entrepreneur. It embraces the belief of the ordinary citizen pursuing the allure of the American Dream by sacrificing - or sharing - what they have in order to achieve what they want.
About The Author:
This Guest post has written by Diana Zelikman. Fueled is the world’s premier development and strategy firm specializing in creating Android and iPhone apps.
Share this article Link with your friendsThis Guest post has written by Diana Zelikman. Fueled is the world’s premier development and strategy firm specializing in creating Android and iPhone apps.
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