There is a powerful cultural force that continues is shaping the way we consume and behave; it didn’t come into existence overnight. The Collaborative Economy was born with the start of the Internet, and has grown and impacted the economy as it builds in strength. Forbes reported in October 2013:
The revenue flowing through the share economy directly into people’s wallets will surpass $3.5 billion this year, with growth exceeding 25%. At that rate, peer-to-peer sharing is moving from an income boost in a stagnant wage market into a disruptive economic force.
I first heard about Collaborative Consumption via a TedX Video that introduced one of its founders, Rachel Botsworth. In her talk, she spoke of this force, instigated by the internet, that had the ability to match have-nots with haves. Back then (2010) the new dynamic was
…technology which enabled trust between strangers… producing a coincidence of wants
…and created the groundswell for the economy that exists today.
As Rachel notes, the key factors that gave rise to the collaborative economy include:
- The renewed belief in the importance of community
- Peer to peer networks and real time technologies to enable increased connections
- Pressing unresolved environmental concerns
- A global recession that has shocked consumer optimism
In essence, as per Rachel:
Sharing is to ownership what the iPhone is to the CD…I don’t want that CD; I want the music that it carries…I don’t want stuff; I want the need or experience it fulfils…Usage trumps possessions
GenY grew up sharing (files, video games, music) but GenX grew up in the ‘old world,’ and transitioned when the Internet introduced itself in their early adulthood. In this Hangout we explored the growth of the Collaborative Economy from GenX’s standpoint and their views on its value and sustainability.
Our GenXTT panel included:
- Brian Carter – A middle GenXer, entrepreneur, digital marketer, and author
- Doug Haslam – An older GenXer, content and SEO specialist
- Mila Araujo – A middle GenXer, director in financial services
- Stevie Duren – A middle GenXer, entrepreneur in the services industry
- Jason Konopinski – A younger GenXer, entrepreneur and digital marketer and this week’s moderator
You can watch or listen to the entire hangout or read the recap below:
What is your experience with collaborative services?
Most of our GenXers were early adopters of collaborative services; Brian attributes his successes to their existence. From free sharing of information to crowdsourcing platforms to funding platforms like Kickstarter, collaborative services are the reason he’s been able to launch his book and teach himself digital marketing. Doug “crossed the bridge” from consuming music from his collection to adding it to Spotify and continuing to build on the subscription services.
Mila remembers a home exchange service similar to AirBNB 20 years ago where you had to physically write to other home owners within the exchange program. It was clear from our discussion that the notion of collaboration was not invented with the internet, but their strength has grown becaus ofthe Internet. It may have started with intelligence sharing, but has moved to the physical sale of used goods and services.
Where the definition of “collaborative economy” comes into question
I introduced this statistic about eBay in 2014
In 2014, 130MM people bought and sold goods on E-bay.
At any given moment in time 1/2 billion products are for sale, many of which are secondary goods
Jason questioned whether a platform like eBay would fall under the definition of collaborative economy since it is a platform that allows for the sale of goods. “Collaborative” from his perspective was more about the exchange of goods in a way that’s shared without money necessarily changing hands; an example is Freecycle. While I argued that AirBNB provides an opportunity for people to rent out their homes, it also provides the broader market more competitive options as an alternative to hotels. eBay has allowed anyone to sell anything (new or used) without the need to pay retail prices.
The early eBay was like the Flea Market of the internet. One element of “collaborative” is creating efficiencies and reusing things that are idle. eBay was king of that. It was also a real community that relied on reputation of both buyers and sellers… now eBay has evolved and has become more corporate with time.
Brian posted this definition to bring clarity to the discussion:
The collaborative consumption model is used in marketplaces such as eBay, Craigslist, Tradepal and Krrb, emerging sectors such as social lending, peer-to-peer accommodation, peer-to-peer travel experiences, peer-to-peer task assignments or travel advising, car sharing or commute-bus sharing.
Perhaps this brings into question the Freemium model, as Brian pointed out, where instead of a pure capitalistic definition, the model has evolved to the option to exchange or buy services.
Does the collaborative economy actually exist?
Jason brought up an interesting point about Uber. In some ways it is “philosophically” taking the definition of collaborative economy, however, in reality, they may be just reducing cost. Doug responded and said Uber is less collaborative and more of a disruptor to a corrupt taxi industry. Within the practical definition, however, where people have their own cars there is excess inventory of driving time.
Brian agreed with Doug and added Uber, while less collaborative, provides additional options for the market. However, ZipCar, which owns its own fleet, provides opportunities for people to rent cars only when they need them. I clarified that while this was a different model than Uber, it still falls within the definition of collaborative because it provides a need for people who can’t afford vehicles but would want access without having to pay much more money for a taxi service.
The rise of ZipCar was founded on the notion of “unlocking the value of underutilized resources.” Cars, on average, stay idle 23 hours a day. It also costs an average of $715 per month to maintain. If people want access to this luxury without outright ownership, ZipCar provides that. As a capitalist, Brian was more concerned that this will impact the car industry and jobs; where the industry banks on this demand for ownership, the new understanding of the idleness he questioned,
Is waste really required for capitalism to exist?
It’s an interesting quandry that we need to continue to explore. In the next few years, will the Ubers and Lyfts have significant impact on the sale of vehicles?
Is the definition of sharing/collaboration different than bringing the things you no longer want to a consignment store?
Doug posed this question to the group. Like music streaming, it is access not ownership, or as Brian put it “serial monogamy.” This brought up the challenges that the music industry faces with the rise of music sharing.
Mila responded to Doug’s question by stating that we have not talked about people’s motivations when they choose to participate in these programs. For Mila, putting something online and seeing there is a demand for it has its own rewarding effect psychologically. The interaction is more satisfying and the connections themselves can be very important.
When Mila moved to her new house and had to get rid of some duplicate furniture and appliances, she turned to Craigslist. In one instance she sold some tires to someone who melted them down and use them for brick pointing. This collaboration allows for the reduction of unwanted material into a reusable product.
Why are we seeing the explosion of services built around this idea of shared resources and experiences?
Technology has become pervasive, and our comfort level with it has pushed entrepreneurs across the generations. Brian noted that Millennials want to become entrepreneurs (27% are self employed).
Doug agreed that the rise of entrepreneurialism came from the tech bubble burst in 2001 as well as the housing market crash of 2008.
Millennials understand they will be unable to sustain employment for longer periods (as when economic times were more stable). They have to rely on their own resources keep them moving from one opportunity to the next. I noted that the rise of Massive Open Online Courses (MOOCs) will disrupt the traditional post-secondary education system where anyone can have access to course material, and professors. It promoted open licensing of course material for “reuse and remixing while maintaining free access for students”.
As we continued to explore the morphing of collaborative services into a more capitalistic venture, Stevie noted that Pandora started out as a “free,” and was able to build up a stable base of users who became addicted to the service. Later on, they were able to successfully convert members into paid subscriptions.
Are these models disruptors or do they satisfy a human need?
Doug described how the collaborative economy impacted his life: before AirBNB existed he rented an apartment through traditional services, but this new wave is more peer to peer and it remodels a service that’s really been there for years.
Everything old is new again
The early beginnings of AirBNB started with two guys who needed to pay rent on their place, and provided the option for tourists coming into the city to stay at their home (on an air mattress), paying a much cheaper rate than a hotel. Cost becomes a strong factor. People are becoming more pragmatic about how they spend their money.
Jason argued that the experience is also paramount. While AirBNB offers inexpensive lodging, it can also provide unique options like a 1950’s Airstream RV or a Yurtz. Brian added that technology has enabled convenience and cost savings, but has also brought more competitive opportunities into the market.
At the heart of collaboration is community. We delved more deeply into in our previous Hangout about Volunteerism and Philanthropy, and Jason talked about being drawn to his co-working space because of the access: to meet and collaborate with other independent consultants. Stevie added that in her community there is an initiative called “Vertical Harvest” that includes a community of volunteers to build a giant greenhouse that’s available all year round in a city wrought with massive housing crisis and terrible growing seasons.
What are the underdeveloped markets for sharing/collaboration services that might see growth in the near future?
Mobile banking was an obvious answer. I brought up the mobile payments provider M-Pesa which provides mobile banking access to developing countries (started in Kenya), and now has moved to many other countries in Africa, Asia and Europe. Using PIN encoding people can pay transfer peer to peer through text; purchase goods or redeem mobile currency for cash. Jason noted that VenMo is another disruptor that instantly transfers money peer to peer. The group questioned whether PayPal could be a mobile disruptor because it largely integrates into North American current payment systems, which are highly complianced-based and require much more stringent security because of our banking systems.
What about the Task Rabbit-type services? Doug introduced Solocho, where a group of kids locally provide a snow-shovelling service. This fragmented model now allows for any task, menial or skilled, to have monetizable value.
- While there was initial contention on the very definition of the collaborative economy it is clear that at some point the exchange of information and goods can improve economic conditions and affordability in an increasingly volatile economy.
- Connections, and more importantly, rewarding experiences are evidence of the collaborative economy continuing to perpetuate itself.
- While it was clear that GenXers (at least not these panelists) were moderate users of current collaborative services, they were early adopters of collaboration in its beginnings with the rise of free information, crowdsourcing and peer-to-peer exchanges.
- Mila explained that she met Stevie almost 7 years prior playing a game on Facebook. They had never met in real life. As part of the game, you needed people to help you through the process. Strangers coming together, helping each other was really the birth of this economy spreading.
- Capitalism may have a new model and it may very well disrupt traditional industries like retail, banking, the car industry – more importantly the bricks and mortars model.
About our think tanks:
At ArCompany, we conduct ethnographic research on the generational based attitudes and behaviors. This research helps inform and guide the communication efforts of many brands. We especially enjoy comparing the sentiments gathered from our Gen X group in comparison to Millennials – to show not just generational differences but how our life stages amplify our attitudes and behaviors.