Catching up with trends

The sharing economy: are you still buying or already sharing?

Will increasing investments in the sharing economy lead to fairer economies or to new, big players? What is “good sharing” and what is “bad sharing”?

Another trend is going around and I’m asking myself yet again whether I might be a “dinosaur”.

Sharing instead of buying? Well, I am still buying. Sharing economy? By now everyone is familiar with the success stories such as Uber or Airbnb. But I am still booking taxis and hotel rooms directly. As I am writing this, however, I have decided to start trialing some “sharing” options from now on, too…

The sharing economy (also “shareconomy”, “collaborative consumption”, or “peer economy”) is the next big thing with disruptive potential. That’s what we increasingly get to hear. Renowned economist Jeremy Rifkin even assumes that the sharing economy will displace the current economic system and trigger the downfall of capitalism.

What I find most amazing about this is also the reason I decided to write this post: there are actually two opposing streams that are driving the sharing economy to its increasing height.

Stream 1: money flows to where it multiplies

Experts predict enormous business potential in this area.

The global analysis 2014 “The sharing economy – sizing the revenue opportunity” by PwC reported that “by 2025, the five main sharing economy sectors could generate over half of overall sales in ten sectors – a potential revenue opportunity worth USD 335 billion.”

And such good outlook motivates investments: so far, a capital investment of USD 12 billion went into start-up businesses in the sharing economy – as reported in the Deloitte study “Share and make money”As per the study, this is more than comparable investments in the area of social media.

Uber alone collected USD 2.7 billion, which leads to believe that this trend may – at the end of the day – fill the pockets of just a few big players in the market.

Investors believe in the simple, general concept: everything that is not constantly being used can be rented. This way, goods that are already produced (and paid for) but are not currently part of the economic cycle can be capitalized numerous times. And again, it is digitization that is providing the foundations for it: by bringing market offer, demand, and transaction management together in real-time.

Stream 2: making the world a better place

Representatives of the first stream have nothing whatsoever in common with the most famous of all “sharers”: Saint Martin. There was no commercial interest driving him to share his coat. The second stream, however, which provides a vital momentum for the sharing economy, is driven by similar motives as Saint Martin. Innovators from this side of the stream are motivated by the idea to better the world – to do something good.

  • An example in this area is GoodSAM: their app augments the capacity of medical emergency response services by allowing callers to dial official emergency services and at the same time notify nearby responders with medical qualifications. By alerting responders of an emergency, this online service connects those in need with those who have the skills to provide critical help before emergency teams arrive.
  • Or GoodGym: a social enterprise that encourages physical health and connects runners with different kinds of community tasks. Members deliver community benefits while running including support of the elderly, weekly social visits, community projects, or one-off missions. As part of the program, GoodGym also provides qualified trainers to support runners in achieving their goals.

Also here, it’s about putting idle resources to good use. However, not from a commercial perspective, but rather from an altruistic point of view – in a more selfless manner.

From a general, economic point of view, the sharing trend also harbors potential to channel economic growth pressures and bring us back to healthy levels. Redirecting the value creation in the sharing community from major capital investments to numerous small investments would also support reducing the income gap between poorest and wealthiest participants of global economies. And as a result, it may drive a long overdue change of course through natural development within the system itself rather than through measures by central, regulating bodies. At least, that’s the hope.

Or, is the trend maybe just based on Zeitgeist – to not “own things” anymore these days? Also maybe, because ownership has its responsibilities…?

What’s the catch?

No matter if you consider yourself part of the first stream or the second stream (or “dinosaur” 😉) , there is also a downside to the sharing economy. The article “Gutes Teilen, schlechtes Teilen” (“Good sharing, bad sharing”) in the German magazine ZEIT ONLINE by Nadine Oberhuber delivers tangible examples:

  • The basic principle of the sharing economy is to make major possessions as far as possible available to everyone. But the reality often doesn’t look as rosy as this sounds: protests against Uber are on the rise because drivers operate at their own cost and own risk. In addition, the new service is threatening the existence of trained taxi drivers in many countries.
  • And services as offered by Airbnb have long since had negative impacts on metropolises such as Berlin, too: rent levels have risen in parts also because people with second homes rather rent on short-term basis to tourists for expensive daily rates instead of committing to long-term tenancy agreements to combat housing shortages.

More critical aspects can be found in the article “How BIG is your GIG (economy)?” by Steven Hill.

Or in the following video “The Pros and cons of the sharing economy” by Fusion – just click on it to play it.

What now? Good or bad? Disruptive or not?

I personally think that the sharing economy has the potential to adjust our “economic mind maps” – to reset our pattern of thinking with reference to economic models. But I don’t think that it will wreak havoc on prevailing economic systems.

Resources will be managed better, yes. But at the end of the day, whether this will lead to fairer structures in capitalism or to the rise of central, big players that quickly dominate entire branches of the economy – that’s a prognosis I don’t dare to make today.

I do have a clear favorite though… 😉 – do you, too? I look forward to your comments on LinkedIn. And sign up to our newsletter to stay in the loop of developments.