Now that you can find anything on a moment’s notice via the Internet, people have found that a temporarily unused expensive asset, such as a room in your house, or your car sitting idle, is a new business opportunity. Thus the rise of the “sharing economy,” with collaborative and peer-to-peer (P2P) platforms, including Lyft (rides), Airbnb (lodging), and WeWork (workspace).
As an advisor to aspiring entrepreneurs, I tell people that these platforms are an easy and low risk way to test your fit for the entrepreneur lifestyle, without jumping off the cliff. There are always opportunities to participate in existing platforms, such as becoming an Uber driver, or to start your own platform sharing your favorite hobby. Here are some key principles to consider in every case:
Solve a significant problem for customers with money. Just because you love to share things you cook with the hungry, doesn’t mean you can make it a business. Every sustainable business model has to attract paying customers and revenue, as well as provide something with significant economic or emotional value.
A specific example of a platform failure in this space, Neighborrow, enabled sharing of relatively low-value items (like power tools, bikes, and kitchenware), where the money saved was often offset by the inconvenience of pickup and delivery. It didn’t scale well.
Look for assets that have no “shelf-life” or idle value. We all know that we can’t profit from lost time, or collect revenue from unused assets. Thus if you have a penchant for collecting clothes, pets, or “stuff,” there may be value in a sharing platform. Unused assets, as well as your free time, have no value on the shelf, and should be marketed.
The Uber platform capitalized on the fact that people with expensive vehicles, and time on their hands, were willing to provide rides at a lower cost that taxi companies who had to support a fleet of cars. They also offered an app to make the whole process simpler.
Your assets need to be visible, real, and marketed online. If your potential customers can’t find you, or you don’t find them, no sharing will happen and no business model will succeed. Establishing a brand, providing service with trust and a reputation for value, is critical. Don’t expect to rely totally on social media, word of mouth, or a personal web site.
Airbnb drove its success by a relentless focus on marketing, highlighting top destinations, listening carefully to its user community, and continually testing new ways to improve service and user loyalty. It created a trustworthy brand that scaled well around the world.
You need to foster a new culture, relationships, and loyalty. A business requires a community of advocates and customers who share the same interests and attributes. You have to find or build that engaged community to facilitate a sharing business, which goes well beyond the requirements for an ecommerce or brick-and-mortar business.
Remember too that “sharing” still strikes many as the opposite of the traditional American dream. Our culture grew up on the idea of having our own private car, home, and our things equate to identity and status. People are changing, but your challenge is real.
Minimize any accountability and privacy concerns. For owners and customers to be willing to collaborate and share assets, they need to trust that your platform and process will protect them from intentional or unintentional incidents that might put them at risk. Be sure to provide assurances, processes, and insurance to eliminate these liabilities.
Although the pervasiveness of the Internet and the sharing economy are far from new, I believe the opportunities out there are still large. The current pandemic has already highlighted new things that can be shared online, including access to healthcare facilities, education resources, and even entertainment venues. New business models are changing the rules of business.
Certainly these new rules will impact existing businesses as well as new startups. The trend in the newer generations is to own less and share more. You need to be thinking about how you can capitalize on sharing in your business area, and adding new business models and services to facilitate these changes. Integrate the principles outlined above, and you too will reap the rewards.
