Ready, steady, share

In the beginning there was sharing. To share and to support each other are at the heart of what it means to be human. Charity and hospitality are virtues in all of the great religions of the world, systems of thought that often insisted that the duty to share extends beyond family and tribe. To share your bread with strangers is one of humanity’s most timeless moral imperatives.

Sharing can also mean things like infrastructure. Such sharing of important common resources has been the norm for centuries. In agricultural society, use of common land was regulated by a host of rules, including when you could pick nuts and berries. When industry made its appearance, roads and other transportation infrastructure became the critical common resource that needed to be managed together.  

Despite a long history of sharing, we are only just now starting to talk about ”the sharing economy”. A lot of the new sharing economy is the old sharing economy running on updated technology; for instance non-profit organizations that create online solutions for sharing tools, couch surfing on a much larger scale than is possible by personal relationships, or platforms enabling people to support entrepreneurs in developing countries by microfinancing or donations. It can be as simple as pooling your money to bring broadband internet connections to your small village.

The crucial ingredient in the 21st century sharing economy is, however, profit. The difference profit can make is demonstrated by the meteoric rise of Airbnb, which eclipsed its more idealistic cousin Couchsurfing by focusing on letting renters make a profit. Seven years after its founding, Airbnb is valued at 25 billion USD and referred to as the largest hotel corporation in the world, administering over one and a half million beds without owning any of them. Couchsurfing, which relies on non-profit hospitality, shows less impressive growth. But they do keep an impressive roster of 4,8 million members in 246 countries. 

What’s now

The sharing economy as a concept is much larger than just Airbnb. It encompasses a large variety of services, all the way from neighborhood loans and friendly help to commercial services like Uber and Upwork, the global employment office.

How big is the sharing economy, exactly? And where is it going? Depends on how you count. PWC:s forecast from 2014 suggested the sharing economy will grow from 15 billion then to 335 billion USD in 2020. That would put it on equal footing with the traditional renting industry. Compared to global GDP (75000 billion USD) it isn’t much, only a half percent. It is just above half of small Sweden’s GDP, and a bit under ten times the total valuation of Uber. But PWC only counted commercial services in finance, transport, music/video streaming, accommodation and staffing – and that’s only part of it. 

It’s all about the money, isn’t it?

Yes. Probably. With money being the primary driver, prospects are looking good for the sharing economy. Both consumer and producer, the UberPop driver and their passenger, the profit/savings seems to be the primary motivator. From a sharing economy perspective, Uber should be seen as a network-capitalist company. That’s very different from genuinely volunteer enterprises like Wikipedia.  

This spring, when Kairos Future asked 1200 Swedes about their experiences and motivations in the contexts of sharing services, prices were the major factor. More than half said better prices was the number one reason for using sharing services. Convenience came third, with 30 percent, indicating that Swedes value it slightly less than Americans and Brits, who both gave it the no 1 spot in earlier surveys. UberPop drivers who throughout the world have faced accusations of undercutting legitimate taxi companies claim that it’s been a way to make some money and gain a foothold in the job market for those who have difficulty doing so in other ways. People offering their services on global freelancing sites are of course also driven by the opportunity to make money, as well as building their job portfolio.

The bottom line is the bottom line for the platform owners Uber (and Airbnb etc.) too, and it looks good for them. The first stage is a large intake of funds, coupled with steadily increasing valuation, used to finance global expansion. Next is using autonomous vehicles to transport passengers and goods at low cost and high margins. These investments are already under way. Uber’s competition Lyft is already collaborating with General Motors to build a fleet of self-driving cars.

The confluence of strong financial incentives, mobile access and global scale makes all forms of commercial sharing services potential successes. Non-profits can still thrive, but may have difficulty growing as quickly without the powerful profit opportunities that have been driving expansion so far.

Watch out, institutions!

The consequences are likely to be great and far-reaching. The sheer size and transnational character of these operations pose a challenge to institutions like tax systems, employment laws and traditional industry players. What we’ve seen so far from governments, unions and industry organizations is probably just a few early shakes warning about a much larger quake some time in the future. The great challenge for politics becomes crafting legislation and institutions that help us harness the power of the sharing economy rather than preventing people from making a profit by sharing their property or talent, or entrepreneurs wanting to help it happen. Established players are relegated to staving of the advance off the new sharing companies. As we know, change rarely comes from within the inner circle; it wasn’t Hilton or Marriot who came up with the idea to share homes. 

Sharing services in employment and staffing are less mature today, but their eventual impact are likely even greater. If knowledge work can be traded across the globe, wages will be equalized. But not only that, the capability of governments to keep eyes on their citizens’ income will also be diminished. Global transparency and collaboration with tax authorities will be necessary for the companies in the global oligopoly that is the likely consequence of current trends. This applies to other industry leaders too, like Airbnb, Uber etc.

A way in?

One interesting aspect of the sharing economy with its reciprocal rating systems is that it creates new possibilities for cooperation. A critical survival strategy in times past has been to trust our friends, or our friends of friends, and distrust others. Fortunately, in open and historically homogeneous societies like Sweden, the circle of trust has expanded to encompass most strangers as well. According to our long term surveys assessing attitudes and values in Sweden, as many as 70% of Swedes agree with the statement ”most people can be trusted”. This is actually somewhat higher than 19 years ago, and at no point during this period has the number been higher.

Airbnb and Stanford University recently conducted a study on trust and its dependence on similarity and recommendations. Unsurprisingly and a little depressingly, in the beginning people tended to trust others only if they were similar to themselves. But when third-party ratings were introduced this started to change, and at about 10 recommendations from strangers, preconceptions were beat.

The sort of mutual rating systems common among sharing services could very well work as a way to gain entry to the job market for those who may face difficulty or discrimination when using other methods. If you get the change to prove yourself and demonstrate skills and reliability, other factors will become less important.

How to prepare for the sharing economy 

Regardless of what industry or sector you may work in, you’d be wise to think about the sharing economy and how its mechanisms – peer-to-peer structures, reciprocal rating systems and digital transaction platforms – could reshape your own work or offer solutions to perennial problems.

  • Look for unmet needs. One way to find out where sharing opportunities are to be found is to look for unmet needs. The inception of the Swedish crowdfunding platform Tessin is no accident: it is almost impossible for entrepreneurs without deep pockets to finance small real estate development projects while at the same time small investors are looking for ways to make a safe return. Neither is Swedish delivery-company Urb-it, or UberRush. The last leg of the journey from door to door is the weakest part of the whole online retail system, and there are lots of people looking for an easy driving or biking gig. Where problems can be solved with sharing services, sharing services there will be.
  • Find parallels. Look for examples from other industries and consider if they could be applied on your own. Are they industry-specific? Or are there general patterns you can use? If you keep your eyes open you too can see the opportunities.
  • Think again. When you’ve identified an opportunity, look at it closely. What are the consequences? Where could this lead over time? Construct scenarios that explore all eventualities and examine the consequences in depth. That way you can prepare for what’s coming, or play an active part in creating the future yourself.

Article written by Mats Lindgren

Want to know more about how to prepare for the change? Contact Mats Lindgren or Hanna Häggqvist. This article is based on the report produced for the members of the network Kairos Future Club, read more about membership here.