Blindsided by The Sharing Economy
by John Delach
If you had made mention of The Sharing Economy (TSE) to me about a month ago or asked me a question about it, I would have first tried to tune you out or, failing this approach, I would have replied with a rude remark to shut you up.
Not today, thanks to being blindsided by this very same TSE. It began innocently enough during a telephone conversation with my daughter, Beth, who just happened to mention something called Uber taxis that serve her Brooklyn neighborhood. “Dad, they are great. I contact them using an app. on my IPhone. I select an available car based on location of the car and the driver’s rating. I know almost to the minute when it will arrive, how much it will cost and I pay for my ride using the same app. It’s all in real time.”
Yes, I couldn’t help but notice that some of you raised your eyebrows when you read the word “Uber.” Well, although I cannot say this with absolute certainty, I believe Uber is not a Neo-Nazi organization.
But I digress. “Uber is a venture-funded startup and Transportation Network Company based in San Francisco, California that makes a mobile application that connects passengers with drivers of vehicles for hire and ridesharing services. The company arranges pickups in dozens of cities around the world.” So says Wikipedia.
So what! I agree, but here’s the thing; Uber started on August 1, 2009 with $200,000 in seed money. The founders received another $1.25 million on October 5, 2010. After that they raised capital through several offerings so that by last year the company was valued at $3.8 billion. That’s right: 3.8 billion with “B” dollars. Blindsided in deed. If that isn’t enough, Uber is not alone. There are two embryonic competing services, Sidecar and Lyft; I kid you not.
But wait, wait, “You aint seen nothing yet.” You know what Hyatt and Wyndham are, but do you know who Airbnb is? Hint: they are in similar businesses. Hyatt and Wyndham are established mega-hotel chains whereas Airbnb (air: b-n-b) is another tech startup (circa 2009) that finds rooms here, there and everywhere in places owned by ordinary people where travelers may crash. Hyatt’s current market capitalization is $8.4 billion. Wyndham’s is $9.3 billion. Airbnb, on the other hand is at $9.6 billion and it is in advanced negotiations to increase that amount by another $400 million to a cool $10 billion! Too late, like a crazy Golden Retriever undercutting our legs, here we go again: blindsided.
And being blindsided is awful. One moment you’re standing there safely both feet securely on the ground and the next thing you know your legs have been cut out from underneath, your ass is higher than your head and gravity is about to intervene. It hurts and you feel stupid.
The financial analyses swear that this is not the dot-com craze all over again. Of course not. This time as noted in the NY Times, Jim Ellis, a lecturer at Stanford’s business school notes: “…the companies now enjoying the limelight are a far cry from those that rose and fell during the dot-com bubble. Many start-ups now have business models that can lead to sustained revenue and profits.”
The models or plans are based on a concept called “collaborative consumption.” What could be simpler than that?
Here are a few of them:
Snapgoods – for lending or borrowing high-end household goods such as cameras, kitchenware or musical instruments.
Dogvacay – Hosts who will board your pooch while the family goes bye, bye.
Relayrides – Borrow a car from your neighbors for an hour or a day.
TaskRabbit – Hire day workers for various jobs or tasks.
Liquid – Bike rentals from neighbors. (Formerly known as Spinlister.)
Fon – Wi-fi band sharing with neighbors and friends.
Postmark and Neighborgoods – Buy and sell used clothes.
No doubt, excellent business models all. No dot-com repetitions here. This time they rely on collaborative consumption, that’s their plan.
You do know what Mike Tyson had to say about the plans boxers used to fight him? “The first time I tagged them good, their plan ended.”
That drink I wrote about before; I think it’s overdue. But watch out for crazy Golden Retrievers lying in wait intent to blindside us on the way to the saloon.