How do we lay the foundations of a tangible sharing economy?

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When we think of a few successful startups, or as we call them ‘unicorns’ in the tech world, two names top the list - Uber and Airbnb.

Both of these companies bring to mind two age-old theories:

1) A good idea, no matter how simple it is, can work like magic.

Each of the companies has a very simple business idea at its core. So simple, that most people previously couldn't even imagine it, or if they did, probably rejected the idea feeling it couldn't possibly be a business idea!

2) Innovation is often greater than invention.

Their ideas weren’t brand-new. Pre-booked cab services did exist before Uber came along. Home-stays and B&Bs have been available online way before Airbnb was born. They didn’t think of these ideas from scratch.

Rather, they worked on the existing ideas, improvised them, and packaged in a way that choosing Uber and Airbnb is now the most obvious thing to do.

However, this article isn’t about Uber or Airbnb. I'd like to explore here an interesting concept that these two companies have reinforced in our digital-age of business - powered by technology. It’s an idea known as the Sharing Economy.

What is the Sharing Economy?

“A sharing economy is an economic model where assets are shared directly by stakeholders, after coordination has been conducted over the internet.”

In this model, goods or services are not owned by one specific supplier/provider, but rather are owned by many parties and can be accessed by all the members from within that network, either for free or at a certain price. This is also known as a peer-to-peer economy.

Simple, isn’t it?

When we book a place through Airbnb, we don’t have to book properties from a single company, rather, there are multiple options available - from hotels, to bed&breakfasts, to home-stays and we can choose what suits our requirements the best. (As is the case with Uber.)

But like I mentioned earlier, Airbnb and Uber didn’t introduce this economic model. The foundation of today’s sharing economy was laid when eBay first launched in 1995.

So what's the connection? Why discuss the sharing economy today?

Several reasons. Firstly, it’s a new take; a different economic model from the traditional one and perhaps a better one. Why?

Because this collaborative consumption seemingly resolves the traditional issues inherent in production, distribution, demand and supply, and consumption of goods and services. This means optimum utilisation of resources - thus, less waste.

Secondly, this model revolves around the concept of ‘sharing’, a recipe of collaboration and trust, which in turn fortifies a more sustainable economic model, i.e. Coalition Game over Competitive Game.

Maybe that’s why, when the idea first became commonly recognised in 2011, Time Magazine named the ‘Sharing Society’ as one of the 'Ten Ideas That Will Change the World.'

However, there's two sides to every coin and though there are certainly some good things about the sharing economy, the model has attracted some major concerns and criticism as well.

The Guardian published a piece in 2015 stating the term 'sharing economy' needs to die, because, “Nothing is being shared when you hire a cleaner to tidy your house or a car to drive you to work, even if you use an app to do it."

Other industry veterans have also raised their concerns citing that the sharing economy had changed from what it initially promised to be, and rather than saving resources, it has begun exploiting them.

Say what now? What happened?!

While conceptually this model checked all the right boxes, the reality turned out to be different. Be it booking a cab via Uber, or a home-stay on Airbnb, there’s always someone in between - controlling these exchanges.

From a collaborative economy, it soon became a controlled collaborative economy, where one party reaps all the benefits (the middleman), and the others get exploited (the service provider and end user).

The sustainable collaborative economic model that this concept promised, ended up being the same old competitive game - where one wins and others lose.

Can it be fixed?

Perhaps!

We need to innovate this model and take the ‘controller’ out of the system, so that they can’t control these collaborations anymore.

That’s how the real sharing economy will resurface!

Is that easy to do?

Well, not really, for two reasons.

1) The controlling party who reaps the most benefit can do this because they hold a lot of power - largely, in the form information, on both end users and service providers.

2) Sharing is a combination of collaboration and trust. While collaboration can happen without the controller’s presence, trust is a major factor that might be missing without them, as the controller/middleman reinforces trust in the system by validating information for both the service provider and end user. Not just that, they also take responsibility and resolve issues for any parties in case of a foul play.

That’s why people often fall for this model of controlled economic collaboration and end up being exploited in more than one way.

Is there a way out?

There certainly is.

Decentralisation is a solution that fosters the sharing economy. It doesn’t only eliminate the middleman from the system, but also helps establish trust. As a result, all the promises that the sharing economy had made at a conceptual level, like optimum utilisation of resources, no labour exploitation, less waste, etc. can be fulfilled in reality.

The good news is, it's already started to happen.

A number of revolutionary companies that believe in a collaborative business approach have created a decentralised network that's starting to spread. Sylo is one of them. Based in Auckland, New Zealand, Sylo has held hands with Centrality, SingleSource, Plug blockchain, and many more to lay the foundations of a real sharing economy.

Why bother?

Because it doesn’t have to be a zero-sum game. :)

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Shaan is passionate about brand building and loves weaving brand stories that are simple yet momentous. In 2016, he was awarded the 'Star Youth Achiever' from the Global Youth Marketing Forum for creating award-winning work and pioneering digital innovation for a global brand. Shaan believes, every brand has a greater purpose to serve, and our job is to help them reach their full potential by bringing that purpose to life.