Capitalizing on the New Millennial Lifestyle
OLD AND NEW
There is a school of thought that believes that the sharing economy is a fundamentally new way of living that’s being promoted by the millennial generation. However, that’s not completely true since numerous examples of this economic model, such as shared child care and agriculture, have been observed for centuries. In the past, convenience proved to be the primary motivator for adopting this lifestyle but now we as a generation, are placing a premium on social good and our impact footprint.
Is human nature fundamentally selfish or altruistic?
I personally believe that human beings have been soft-wired to be kind and compassionate. This is a core human trait and studies have already shown that children as young as 18 months display an innate selfless desire to help others without being asked to and behave equitably.
THE BUSINESS OF SHARING
Sharing is the $110 billion elephant in the room and an entire ecosystem of partners and platforms has emerged over the past few years to support and eventually capitalize on its development.
The above infographic unpacks and visualizes all the stakeholders of this new economy and their abundance with such clear niche definition is an interesting observation. It also lists the key market forces and thus serves as a great starting point to explore the key tenets of the sharing economy.
Everyone owns nothing.
When sharing is the new owning then eventually everyone owns nothing. This is a marked departure from the ideology of previous generations which prided and often classified themselves on ownership. Thus the sustainability of this economic model rests on its cultural alignment with a geographic region and its people. And this in turn poses several interesting questions…
Will the sharing economy work everywhere? Should it?
We all win*
This is the REAL promise of the sharing economy. It implicitly states that the democratization of ownership will lead to a systemic and exponential utilization of infrastructure & assets thereby creating peer wealth and destroying old power, in this case capitalism. However it also assumes this new distribution of wealth and power to be equitable. This is a fallacy. Yes we may all win but it may not apply to each one of us everywhere all the time.
What will happen when the next generation of humanity sees no reason or has no desire to own anything at all?
Sharing is siloed.
The sharing economy like every other economic model before it isn't impervious to silos, but what is particularly distressing is the fact that its core value proposition itself is plagued by it. Sharing is a unit function of trust and thus its origins are the same as those of privilege. Although the former relies on openness and equity, the latter is built upon the principle of exclusivity. Paradoxically, sharing only within these networks of privilege forms the basis of the sharing economy. However, the success of this new model is contingent on the inclusiveness and gradual extinction of these very silos.
Platforms drive purpose.
The aforementioned silos are not archaic networks from a bygone era, and instead have evolved and extended themselves to include modern platforms such as Uber, Kiva and Freelancer. Each of these platforms share the following characteristics -
1. Digital Existence: This is essential because the internet allows these platforms to satisfy and eventually expand beyond their core geographies and communities, at a cost which strengthens their ability to survive the valley of death.
2. Domain Exclusivity: Each platform operates within a very strong niche so as to garner support from its nascent community and avoid messaging which would dilute its uniqueness or commitment to serve its purpose in the sharing economy.
3. Pure Play: Sharing platforms will always be pure play offerings and this is due to their niche orientation. Consequently, their course for expansion in the near to mid term is limited to vertical scaling and deepening penetration and affinity. Thereafter, these platforms will iterate and experience product line diversification.
Scaling trust with money.
As was stated earlier, sharing is a unit function of trust and thus you cannot share an asset in an environment which doesn't meet your specific threshold level. If it were possible to scale this lack or excess of trust a few orders then we would have been able to accurately determine the model’s fate. However, recent economic shifts have garnered such interest that private entities want to boost adoption by scaling and overcoming trust issues with money. A great example of this would be Airbnb Host Guarantee which provides protection for up to $1 million to each host for guest damages to the property. These capitalist interventions are a critical piece of the puzzle because they create immediate environmental credibility and security.
Erode and conquer.
Capitalists have a vested interest in the success of the sharing economy because a systemic shift in the aspirations or commercial mechanics of our society creates a viable business opportunity. This happened when the agrarian economy evolved to the industrial economy which eventually gave way to the knowledge economy. However, since the global economy is a growing yet finite sum, the emergence of new economic models tips the zero sum equation causing the erosion of value in some areas and creation in others. This occurs through a coupled reaction. Thus, sharing companies operate under the premise that its offerings must irreversibly destabilize existing solutions if they are to conquer the global market.
The gatekeepers are the same.
There are some constants even in the sharing economy and for the most part they are governments from all over the world. In India and other places they have been found to resist changes because at this juncture they are uncertain of the best step forward. These gatekeepers are being frequently challenged on taxation, business administration and regulations. Thus, it is imperative for national institutions to reclaim their relevance by engineering mechanisms which successfully exploit the characteristic lack of ownership and exponential asset usage in sharing models.
The sharing economy emerged from our deep rooted empathy and desire to go further together. However, it brought with it a whole set of new issues and challenges that need to be addressed. Taxation and labor unionization are just some of the growing pains being experienced from the onset of this new economic model, and we would be wise to reflect and then intervene because capitalism never self-corrected.