When we talk about “sharing economy”, we typically think of companies like Uber and Airbnb where people share their flats or car. What differentiates these organisations from “traditional” companies is that their services or products are made available in a very decentralised and sometimes “peer-to-peer” way, where one individual offers a service or product to another, a sharing that is more and more often done through an online platform.
Looking a bit closer, it becomes clear that the level of “sharing” varies a lot from one platform to another, and when building up an organisation in this field, it’s important to be specific about what is shared and what is not.
We can define three main levels of sharing:
1. Community controlled and community driven (Peer-to-peer, P2P)
Peers share something with peers. The whole thing is owned and controlled by at least a part of the peers themselves. Examples
- Credit unions or cooperative banks: People borrow each other’s money through a central system that they own themselves. The Raiffeisen banks count today among the biggest banks in several European countries.
- Mobility Carsharing Switzerland is one of the oldest carsharing organisations worldwide. It is a cooperative that is fully owned by its members.
- Wikipedia: Knowledge is shared among individuals through a non-profit platform.
- Open Source Software
2. Company controlled, community driven P2P via C
A company controls a key element of the infrastructure. In the case of Airbnb, Uber or Couchsurfing this is the online-platform/app as well as the database of users or service providers. At least theoretically, neither the users (clients) nor the service providers have a say in strategic decisions. Examples:
- Airbnb: People share a room in their apartment or house with others. The infrastructure that allows the sharing (website/app and database) is however owned by a company.
- Uber: Similar
- Couchsurfing: (while initially developed as a non-profit and community developed project it is now an investor funded corporation).
- Amazon: You may be surprised to find Amazon on this list. Amazon is traditionally not considered a member of the “sharing economy”. But by now, Amazon allows anyone to sell (e.g. used books). But there is more: The reviews. Users sharing their opinion on a product is an important competitive value for a company like Amazon.
3. Company controlled, company driven, (Company to peer, C2P)
Like in a traditional company, the key infrastructure as well as the production / service delivery itself is controlled by a company. It’s just the (geographic) distribution which is decentralised.
- Zipcar: While originally inspired by the Swiss Mobility Carsharing cooperative (mentioned above), Zipcar is a corporation that now belongs to the Avis Budget Group that also owns Avis Car Rental. Its only difference from a traditional car rental is that the cars are distributed throughout a city/region and can be booked on a more flexible basis than usual car rental.
- oBike: The Singapore based bicycle rental system is what Zipcar is for cars. It considers itself a part of the sharing economy.
If as an entrepreneur you would somehow like to be part of this sharing economy, what model should you choose? Which one is better?
The answer obviously depends on your motivations: Do you want to build a start-up and become very rich? Then you need something where you have control over the key infrastructure. The community driven things are not for you. If you would you give away the control, you would also give away the money.
Now imagine that there is an online platform (website and app) for a taxi service that in every regard is exactly like Uber, with the only difference that it is owned by the drivers themselves and not some “owners” (either the entrepreneurs themselves or some investor) that make millions with it. What would be different? First of all: There would be no money going to the owners / shareholders. Whatever benefit the organisation makes would go back to the drivers or the prices for the clients would be reduced. Secondly, any decision taken would be fully in the interest of the owners, meaning here the drivers (who themselves have an self-interest in delivering a great service to their customers.
If you could choose between this organisation and Uber, which one would you choose? As a driver? As a client?
The reason why there are so few such community owned projects is that it’s hard to develop them: The main difficulty is that normally you have to bring together competitors. As long as each competitor sees only an enemy in the other and not a potential partner, things are difficult. But just the fact itself that there are many, many people you have to bring together makes it difficult.
However, there are examples that show that this works. The Swiss carsharing service Mobility is one of them. In Switzerland they have a very dominant market position. There are actually hardly any serious competitors in this specific field in Switzerland. But the prices are still very low. There is indeed no reason for them to increase the prices, because all the benefits would go back to the owners who are the drivers themselves.
Credit unions and peer-to-peer lending got popular with the subprime crisis in 2007/08 (which some people say is still not really over). The concept is however much older. One of the main figures in this context is the German Friedrich Wilhelm Raiffeisen. When he was a mayor of a small city, he saw farmers struggling in the grip of loansharks. So he founded the first cooperative lending bank in 1964. Today, the “Raiffeisen banks” are among the biggest banks in many European Countries.
Raiffeisen was convinced that there is a connection between poverty and dependency, and thus, to fight poverty, one should fight dependency first. He came up with the three ‘S’ formula: self-help, self-governance and self-responsibility (in German: Selbsthilfe, Selbstverwaltung and Selbstverantwortung).
The Spanish Mondragon Corporation is a very similar project. By now there are over 70’000 people working for (and co-owning) in over 250 companies and organisations.
So if your intention is to generate a lot of income, don’t go for community controlled model. If your goal is however to rather do something good and useful for everyone, and the cash you have on your account is important but not the main thing you focus on, then go for the community owned model.