THE PROBLEM WITH A SHARING ECONOMY…

THE
PROBLEM WITH A SHARING ECONOMY…

This glimpse of the future was crafted by: John Mcguire and Jody Boshoff

For
many of us, the concept of ‘sharing is caring’ was introduced more as an
ominous warning than a sweet adage in the home (especially when we happened to
be holding the last cookie). But all motives aside, the message seemed to have
got through to this generation; with an annual infusion of $15 billion into the
global market, the sharing economy seems to be a case in point that spreading
the love literally pays off.

These days, just about everything can earn you a quick
buck if you’re smart about it. That’s what Judy learned when renting out an
empty boardroom on pivotdesk to
Craig who needed the space. Of course, Craig has been saving money and making
friends through couchsurfing.com,
whilst renting out his own apartment on Airbnb. Craig’s guests are currently spending the day
exploring the city by bicycle, thanks to Liquid’s peer-to-peer bike share programme. And with dog
lover, Bridget, on the job, the couple can rest assured that their beloved
Baxter is in good hands with DogVacay while they’re away.

Down the road, a single mom is using the money she
made from selling those dusty fabulous heels on Postmark to rent Kim’s
ladder that she found on Snapgoods. And tomorrow Kim will heed Craig’s request
on TaskRabbit and
take an Uber to
the other side of town to prepare the apartment for the next round of Airbnb
users. Six degrees of separation just became four in this new economy of
collaborative consumption.

In one way, it’s simply fabulous; the sharing economy
cracks open fresh value on those underused assets around the house. Although,
in another way, is the concept risky and our intrepid entrepreneurs have just
not realised this yet? 

The prolific pop-ups of sharing platforms are
generally touted as ingenious, but do we have to acknowledge that we’re
realistically still in the honeymoon stage. This process has to see the whole
cycle scoped through ‒ from macroeconomy to public policy ‒ if we are to grasp
its long term impact on society. It’s a robust debate that economists,
policymakers, Craig ‒ even Baxter ‒ need to weigh in on.

Helping the planet

Our future cities are faced with a dizzying dilemma.
According to a 2014 UN report, two-thirds of the world population will be
urbanised by 2050. Considering that another 2.5 billion people will have joined
the human race by then, we have a serious case of imbalanced supply and
demand on our hands. Naturally, any opportunity we have now to minimise our
planetary wear and tear is welcomed. That’s where the sharing economy can offer
a brilliant alternative.

A study conducted by the Cleantech Group found that the
fewer resources spent on travellers using home-sharing companies has resulted
in 66% less CO2 emission than hotel-based travel (including hotels that have
earned five-star efficiency ratings). Home sharing has all kinds of other
spin-off benefits, ranging from less food waste to higher recycling
rates to significant savings in water. Car sharing also contributes to
lightening the carbon load: according to a UC
Berkeley shared-use vehicle survey, every one car made widely available for
sharing takes at least 10 off cities’ congested freeways.

Each innovation seems to have us breathing a little
easier, loosening the grip on our cities’ necks and helping us to speak a new
language of inventive opportunism.

Mind the gaps

But there’s a flip side to the coin. The sharing
economy is a fundamentally viral industry and, as such, it predominantly
goes unmitigated and unchecked. The digital economy is evolving so fast it is outpacing
the rate at which our policy makers can catch up.

Car-sharing network gurus like Uber and Lyft, for example, are
generally not yet adhering to the same taxes and insurance standards that taxis
uphold. Accommodation for disabled passengers is generally sporadic;
contractual obligations are not articulated; and in some countries it’s
debatable whether drivers even make the minimum wage. Those subscribing to
these platforms have to weigh up the privilege of making a buck on the side at
their convenience versus the cost of being thrown in the cold if anything goes
wrong.

The same goes with online hospitality. Startup giant
Airbnb has booked over 80 million nights across 191 countries since its 2008
inception. But many of those homes or venues may not be situated or designed to
anticipate the challenges of noise, congestion, and waste, and neighbours are
occasionally (and understandably) irritated about the additional infringements
on their privacy. While hotels are taxed and frequently inspected for health
and safety, Airbnb hosts are not yet facing such inspections.

Some city residents are now crying out for stronger
regulation while, at the same time, many of their neighbours are greeting their
ubers with open arms. Cities such as Seattle, who were already feeling the housing crunch before
online hospitality entered the scene, now have to compete with the new breed of
Airbnb entrepreneur who buys up accommodation for short-term rental purposes
only. The San Francisco property market has sky rocketed, thanks
to the influx of vacation rentals overtaking the city’s scarce housing
inventory.

The big picture

All of it begs the question, is the sharing
economy actually benefiting the economy at large? 

Many would say it is, as even Granny can now find her
inner entrepreneur and make her pension stretch. Yes, intrepid entrepreneurs
are availing themselves of the new sources of revenue they can leverage out of
their existing unused assets, but the warning to existing traditional
businesses is that they are tapping into a customer who is dissatisfied and
disgruntled with the current business models. And therein lies the wake-up call
to those awake enough to heed it.

Shareable founder, Neal Gorenflo, would argue that
these unregulated ventures are having a disturbing impact on the future socio-economic
fabric and flow of our neighbourhoods and cities. He refers to Uber and Airbnb
as ‘Death Star platforms’ that will eventually outstrip all facets of
traditional competition.

Whatever side of the fence you’re on, you can’t deny
the fact that Pandora’s lid is wide open and off its hinges. Consumers now want
choice. They are tired of faulty and antiquated services that call the shots
and cripple creative mobility by clinging to the past. They seek the personal
independence and disintermediation that mega start-ups like Uber and Airbnb
defend. ‘Death Stars’ they may be, but ingenious opportunists who simply saw
the gap and took it, they are as well.

At either end of the debate, the message is consistent
and clear: business, beware. Those who fail to listen and to see what their
customers actually need, disregarding the invitation to innovate, may very well
be ‘ubered’ some day. In a sweeping digital paradigm that stops for no one,
there will only be winners and losers. And businesses that believe they
are immune to disruption are probably already on the way to being disrupted.
They just haven’t got the memo yet.

The debate is rich and all too early to draw solid
line conclusions. Contrary to criticism, the growth of the sharing economy is
probably not going to be a case of capitalistic ‘checkmate’ where Uber and
their cronies take all. More likely, there’s room for different players on the
board. But traditional business will urgently need to catch up if they
want to stay in the game. Should they stand around and wait for regulations to
evolve and tighten the reigns, they will probably be too late.

(Aurecon’s
award-winning blog, Just Imagine
provides a glimpse into the future for curious readers, exploring ideas that
are probable, possible and for the imagination. This post originally appeared
on Aurecon’s Just Imagine blog.
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