5 Principles That Drive the New Market for Sharing



The pervasive ability and need to communicate constantly and globally through the internet and smartphones is incenting everyone to get more out of their own assets and time and capitalize on the idle resources of others. This new sharing economy is rapidly becoming the new business of sharing, with major winners already including Airbnb (rooms), Uber (rides), and Chegg (books).

If you are an aspiring entrepreneur, or an existing business,and haven’t yet sized any of these opportunities, you may be already late to the game. Until I read a recent book “The Business of Sharing,” by Alex Stephany, who founded JustPark (current valuation estimated at £20M), I too had no idea of the scope of opportunities, and the 200-plus players already out there.

The business tenants of the sharing economy, with alternative names including collaborative consumption, peer-to-peer economy, or “we-conomy,” always imply these five basic principles and assumptions:

  1. Sharing economy platforms creates reciprocal economic value. Usually these are revenue-generating e-commerce sites, or they have the potential to generate revenue. Even if the goods and services are changing hands as gifts, or the revenue motive exists only to make services sustainable, the economic value is evident.
  2. There is value in the “idling capacity” of all assets. Idling capacity is a notion that was first systematically studied and measured in the context of industrial processes. The sharing economy applies the same ruthless logic of how to fully use our clothing, bicycles, driveways, computers, pets and free time.
  3. For utilization to increase, assets need to be accessible. These days, “accessible” starts with being visibly listed online in lieu of the now old-fashioned rental sites and swap-meets. It can mean selling through peer-to-peer e-commerce (eBay), renting (HomeAway), gifting (yerdle), or even swapping (Swapz).
  4. Assets need to move in a community of engaged users. Community means more than supply and demand. Often these communities are built around special interest groups, where the members interact through social media, help each other, and trust each other, and the relationships go beyond the transactions.
  5. Access to assets in a community leads to a reduced need to own. One consequence of the new sharing business model is that goods become services. The Zipcar sharing service is said to take 17 other cars off the road, as opposed to Hertz car rental, which only adds more vehicles into every community.

Where and when is all this leading to? I believe that we have only seen the beginning. Certainly, change happens more slowly in areas encumbered by political systems, long-standing cultures, and large dominant brands. Although the sharing economy isn’t really new, here are a few of the arenas that Stephany and I believe are still ripe for disruption:

  • With US student debt at over one trillion dollars, startups like Skillshare and Udemy provide top-class vocational training for the price of a Harvard hoodie.
  • An example is Berlin-based startup Friendsurance connecting people to create a private insurance pool for payout on household and consumer electronic claims.
  • Cohealo is now allowing hospitals to share medical equipment. Fertility can be helped by less restrictive ways for people to share their sperm and eggs.
  • In Cuba today, there are more than 1,000 restaurants in people’s homes, called paladares. Chefs are beginning to offer peer-to-peer dining platforms or cooperatives.
  • With crowdfunding, entrepreneurs and artists no longer need to wait for family money or venture capital. In the US, we are still waiting for equity crowdfunding, but the rewards, donation, preorder, and debt-funding models are already working.

Yes, the sharing economy is changing the rules of business, and is opening a wealth of opportunity for innovative entrepreneurs around the world. Those that recognize it early still have time to ride the wave, and those that don’t will lose out on a lucrative way of doing business. It is time to start caring about sharing.



Reprinted by permission.

Image Credit: CC by Mapbox

About the author: Martin Zwilling

Martin is the CEO & Founder of Startup Professionals, Inc., a consultancy focused on assisting entrepreneurs with mentoring, business strategy and planning, and networking.

Martin for years has provided entrepreneurs with first-hand advice, mentoring and business plan assistance as a startup consultant. He has a unique combination of business and high-tech experience, and executive mentoring and connecting startups with potential investors, board members, and service providers.

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