The Sharing Economy
Assessing the uncertainties of the business models
driving the sharing economy.
umbrellas. Prime examples here are
Zipcar, now owned by Avis, and Car2Go,
owned by Daimler-Benz. Asset sharing
that is P2P seems new but B2C (
busi-ness-to-consumer) sharing is another
version of the traditional rental business, and may be substituting for that
activity. Even Airbnb may not be totally
new economic activity, as it substitutes
for traditional bed-and-breakfast revenue or hotel and vacation home rentals.
Nonetheless, the confluence of information technology, entrepreneurship, and venture capital has led to the
creation of many new ventures, and
that is generally good for any economy.
Smartphone apps, cloud-based servers,
and GPS technology have made various
sharing services easy to launch and use.
Many apps incorporate social media
functions that allow users and providers to rate each other, which seems to
increase trust among strangers. Venture capitalists have fueled growth by
investing billions of dollars, especially
in room sharing and ride sharing.
THE SHARING ECONOMY seems big and growing fast. In 2015, PricewaterhouseCoopers es- timated that, from $15 bil- lion in global revenue in
2014, car and room sharing, crowdfunding, personal services, and video
and audio streaming would reach $335
billion by 2025.1 These numbers extrapolate from the growth rates of Uber and
Airbnb. Are these growth rates sustainable and is the economic activity really
new? It is time to ask these questions.
The sharing economy depends on
digital platforms that enable people
who do not know each other to access
underutilized assets (see my previous
column “How Established Firms Must
Compete in the Sharing Economy,”
Communications, Jan. 2015). We often
associate these ventures with “peer-to-
peer” (P2P) technology, like Napster in
the late 1990s. However, the recent esti-
mates include two very different busi-
ness models. Sometimes individuals
own and share the assets, like extra
rooms, household tools, music files or
movie videos, their own free time and
skills, and even their pets. Prominent
examples include Airbnb, HomeStay,
Uber, Lyft, Rover, TrustedHousesitters,
and Taskrabbit (recently purchased by
Ikea). In other cases, companies o wn and
lend out the assets, like automobiles, bi-
cycles, scooters, or even basketballs and
and venture capital
has led to
the creation of
many new ventures.