The sharing economy continues to expand rapidly. And not just Uber and Airbnb. Although generally US initiated, these businesses now have global reach and many next gen firms are launching outside of the US. Which may be helpful if the US decides to “build a wall”! Uber is active in over 60 countries. Which is nothing compared to Airbnb which operates in 200+!
However fast growth of a new sector inevitably leads to issues with disrupted incumbents (e.g. taxi protests) and governments / regulators. This creates societal and legal disputes, and it has caused many of these business to start thinking about their approach to third party publicity and engagement. While unfortunate, if the industry doesn’t get policy and government engagement right there will be inevitable clampdowns on the room for innovation. The sharing economy needs to do more than combat negative publicity, it needs to go on the front foot to positively make its case and shape the regulatory, policy and legal debate.
The sharing economy is a hard to define beast (see my post on “What is the sharing economy“). However business models generally:
- dis-intermediate incumbent middlemen
- reduce barriers to entry for service provision
- increase productivity of service providers
- better utilise excess capacity
While seemingly simple concepts, these principles have allowed Uber to achieve a valuation of more than $50 billion. However there has been a lot of push-back from the incumbents. Airbnb has been challenged on the impact of it’s business model on small hotels and communities (including the impact of rising rents and the risk of poor guest behaviour), and there have been crackdowns in France and other locations. Courts in many European and Asian countries have imposed significant restrictions on Uber’s operations.
Hoping that the community will realise the huge benefits of the sharing-economy before they try and stamp it out is a dangerous strategy. On a related note, ask David Cameron about Brexit.
Making the positive case
On the parallel with Brexit, a key failing of the Remain campaign was that they didn’t actively make the positive case for EU membership.
The economic and societal benefits of the sharing-economy are substantial. These include:
- significant contributions to employment and breaking down barriers to economic activity
- environmental benefits for use of excess capacity (e.g. ride sharing impact on emissions)
- increasing female participation in the workforce
And while we can speculate at the actual size of these benefits, the data-rich nature of these business means they actually have the analytics to support these arguments in a strong and compelling way. To continue with our Brexit analogy, sharing-economy firms also need to robustly dispute incorrect criticism and claims. This includes things like insurance coverage, policing abuse, intellectual property, use of services, etc.
Delivering a strong positive narrative needs to go beyond speaking at industry events or sharing deals on justlooking.
It needs to actively influence regulatory thinking and frameworks. Established industries from telecoms to hotels to financial services recognise the need to educate and lobby policy makers, and it seems to me that the sharing economy needs to think further about more actively making its case. For example, I struggle to think of any active trade associations in this space, and cooperation between firms on the market narrative seems limited.
In short: sharing-economy businesses need to engage in the policy debate alongside further driving market innovation.